Bob McMullan (Fraser, Australian Labor Party) Share this | Hansard source

I rise, as other opposition members have, not to oppose the Australian Trade Commission Legislation Amendment Bill 2006 but to express my strong reservations about some of the changes that it is making. In the course of that I want to talk broadly about what I think it is a serious trade problem for Australia, so I start by responding to just a couple of the points made by the previous speaker, the member for Ryan. I will not waste much of my time with it, because it was essentially banality dressed up as profundity. There are two things I want to refer to. One is the claim that somehow or other our export performance recently has been terrific based on the value of exports of goods and services. That is simply a reflection of the fact that there is a boom in resource prices. When you look at the volume of exports, you see that we continue to have a serious crisis, reflected in the massive and unsustainable current account deficit.

That leads me to the point of the foreign debt, which is in essence an accumulation of our current account deficits. When the then conservative opposition, led by the member for Bennelong and the now Treasurer, were complaining and running the debt truck around the country in 1996, the numbers they had up on the side of that debt truck were not for government debt; they were for foreign debt. When the then shadow Treasurer, the now Treasurer, spoke about having a ‘cold anger’ about the level of debt, he was not talking about government debt; he was talking about foreign debt. It cannot be a crisis in 1996 and okay in 2006. Either it was a bogus problem then or it is a real problem now. I suspect that it is a real problem now.

I do not oppose this legislation, simply because the government has the right to put in place the governance structures for agencies under its responsibility that it chooses. These are not changes that are irrevocable. If they prove, as I suspect they will, not to be improvements in the operation of Austrade, it will be possible for an incoming government to change them. It is not appropriate, in my view, to actually seek to defeat this legislation. The government should be able to manage its arrangements for structural reform of governance in the way that it chooses. But can I make it very clear that I disagree strongly with what is being proposed. I particularly disagree with the proposal to abolish the board of Austrade. I am singularly unimpressed overall with the Uhrig review about governance in the public sector. I think it is an inappropriate application of reasonably old-fashioned private sector principles and an attempt to extrapolate them to public sector circumstances. I will come back to that.

I have a very high regard for Austrade and for the work that it does, particularly for those people based overseas who represent Austrade in posts around the world. It builds on the basis of the longstanding Australian Trade Commissioner Service, which had and retains under Austrade a wonderful esprit de corps and which makes a continuing contribution to assisting Australian exporters either begin exporting, break into new markets or sell new products into those markets. The Trade Commissioner Service was revamped as Austrade by the then trade minister, John Dawkins, and I think it has been strengthened since that time by that enhancement. One aspect of that enhancement was the establishment of the board. I think it is a great pity that it is going to be abolished, and I will come back to that. I want to reiterate that I think it is a step backwards, not forwards; it is the inappropriate application of out-of-date principles in the private sector to the public sector.

Why does it concern me if I am here saying, ‘The government should be able to make the administrative arrangements it chooses, even when I disagree with them,’ which is my view? What is the issue? The issue is that we have a very profound trade crisis in this country. We have a serious current account deficit and ballooning foreign debt, even at a time of record export prices. When other developed countries that have resource based economies are running up trade surpluses, we are running up trade deficits—a serious, substantial, continuing, increasing trade deficit. It ought to be a cause of serious concern to us that that is continuing.

It is because of failure of export volumes, and most particularly a failure in our export volumes with regard to manufactures and services, that Austrade does best. It is therefore the size and the shape of the export crisis that gives me concern. There is the size of it: we are running an unsustainable current account deficit of six-plus per cent of GDP. Recently there have been very interesting submissions to and analysis by a Senate committee indicating the extent to which there will inevitably be an adjustment. When you run an unsustainable current account deficit, at some point there is an adjustment. The question is whether it is sharp and painful or slow and gradual. The longer it lasts and the bigger it gets, the higher the probability that the adjustment will be painful.

It is the size of the export crisis that causes me concern, but it is also the shape of it, because our trade performance is moving back to the quarry and farm export performance of the sixties and seventies and losing the momentum of increased exports of manufactures and services, which was the strength of our economy through the eighties and nineties. We transformed the Australian economy to one that was a successful exporter of manufactures and services in the eighties the nineties, and we are taking a deliberate, conscious, strategic set of changes that is leading us back. Most of the changes that need to be made to solve that current account deficit do not relate to this bill and do not relate to Austrade; they are about domestic productivity and international trade policy. They are broad parameters. But there are two aspects that I want to refer to that relate particularly to Austrade.

One of them relates to the Export Market Development Grants Scheme. I will not speak at length about that, because we debated the Export Market Development Grants Scheme bill in the Main Committee recently and I outlined my views there. I simply think that that very successful, very worthwhile scheme is now a bit tired and needs a revamp. It needs to be enhanced and reformed and, while I support the extension of the existing scheme because there is no reform proposal on the table, we do need some sort of support for exporters to move into those new markets.

The Export Market Development Grants Scheme has been reviewed and the indications are that it is successful. I think we need to modernise it, revamp it and enhance it. But I also think that we need to look at some aspects of Austrade, our very successful Australian overseas trade promotion support service, which many countries around the world look upon with envy. Its long-term success is important to Australia, as having a more export focused economy is not just good because it enhances trade performance and is likely to reduce the current account deficit; an open trading economy with more focus on exports adds a productivity spur. It enhances the activity of the domestic economy, because individual firms that export tend therefore to be more efficient performers in the Australian market. Companies that have to innovate, reform and become more efficient to compete internationally provide better services domestically. More exporters, more exports and an enhanced export focus and export culture add a productivity spur. For those reasons, this general question of how we should structure our trade support and what the shape of Austrade should be is an important part of a broad program of measures that need to be undertaken to do something about the current account deficit.

I want to come back to that which most directly relates to the bill: my profound disagreement with the proposition that we should abolish the board of Austrade. I start with my problems with the Uhrig report. From the time the report was sought, it seemed to me simply to be an exercise to fulfil an obsession of the Prime Minister with getting rid of statutory authorities. Sometimes I agree with getting rid of them and sometimes I do not, but as a prime ministerial obsession—and this was merely a backdoor way of achieving it—I think this is an example, and not the only example, of an inappropriate application of that principle.

I saw recently an interesting review by Minter Ellison expressing concern in a report titled Implementing the Uhrig templates—a time to pause and get it right. It states:

The abolition of boards or statutory authorities that fit the Uhrig Executive Management Template, on the grounds that it necessarily delivers better governance is rather simplistic.

The abolition of these boards will produce different governance challenges certainly, but whether the outcome is better will depend on more than a mere change to the model.

That is a neat and forthright expression by Minter Ellison, not one of Australia’s more radical law firms. It is not an attack on the government; it is some governance experts looking at what, in my view, is a flawed template applied inappropriately to Austrade.

I want to conclude my remarks with the argument as to why Austrade needs a board. It seems to me that the recently announced decision to abolish the board of Austrade, which we are, in effect, implementing with this legislation, is extraordinarily silly and will almost certainly be counterproductive to Australia’s desperate need to improve its export performance, particularly in manufactured goods and services. It is a decision that reflects the triumph of ideology over analysis.

The general idea of reviewing the proliferation of boards and agencies and their governance is reasonable. It is clear that some agencies have grown beyond reasonable justification or outlived their usefulness. Some others would be more appropriately brought under more direct ministerial control. But Austrade does not fit into either category. Over the years, Austrade’s board has enhanced both the effectiveness and the credibility of the organisation. The government has apparently based its decision to abolish the Austrade board on an application of the recommendations of the Uhrig review. This review, unfortunately, is a very weak basis on which to make such an important decision. Some of the decisions arising from the Uhrig review have probably been justified. But the Prime Minister has got it wrong this time.

It appears that the Minister for Trade thinks so too. After all, he was Acting Prime Minister at the time the announcement which directly affected his portfolio was made and yet the Minister for Trade, the then Acting Prime Minister, chose not to make the announcement himself, allowing the finance minister to make it on behalf of the government. If the trade minister did not disagree, he should have. While there are many causes of our current appallingly bad export performance, there is no doubt that our weak performance in the competitive sectors in which Austrade specialises is one of them. We should be strengthening it, not weakening it.

In my experience as trade minister and as a consequence of my subsequent ongoing interest in our trade performance, I have observed the fact that the board of Austrade has often added a commercial awareness, a market focus and a business credibility to Austrade’s very important activities to assist and encourage Australian firms to export or to export more successfully.

Many prominent Australian business men and women have given significant amounts of their valuable time to the task of providing leadership and advice to Austrade because they considered it a useful contribution to the national interest in general and to the interests of Australian business in particular, and they were right. Many of these men and women who contributed their time were hard-headed and astute businesspeople. I was always confident that, if they felt that they were not making a useful contribution to Austrade’s activities, they would have made that view plain and put their valuable time to better use.

I remember in particular the contribution of the late Robert Johnson, then CEO of Toyota in Australia, Alan Jackson, one of Australia’s most successful manufacturers, and Grant Latter, then head of Pacific Foods. In discussions with these three men it was clear to me that, in their experience, the business input into the development and implementation of Austrade’s plans were seen as a valuable contribution. Whatever the performance of the current board of Austrade—and I am not in a position to judge that—a good independent board is important to the success and strength of the organisation because it can bring a perspective which is not Public Service focused and which is independent of schemes dreamt up in ministerial offices or departments. Such a board can drive a focus on the contemporary needs of the new and expanding exporters we most desperately need.

The most worrying aspect of the proposed changes is the trend that will inevitably emerge for Austrade to be drawn into the culture of the Department of Foreign Affairs and Trade. DFAT is a fine policy agency which serves Australia well, but it is not well suited to the task of trade promotion. Previous National Party trade ministers such as John McEwen and Doug Anthony would be horrified at the prospect that the strength and independence of the Trade Commission service might be compromised. A competent, well-focused board of Austrade would ensure that, while Prime Ministers and diplomats might negotiate preferential trade agreements, so-called free trade agreements, however useful they may be proving to be—and I always had grave reservations about that—we had people who understood business to help Australian exports take advantage of the opportunities that diplomatic and economic developments might generate.

Australia’s recent export performance has been abysmal. At the time of a resources boom and record terms of trade, our balance of trade has gone from bad to worse. It is in the area in which Austrade can contribute the most that we are lagging most seriously. What Australian exporters need is a trade promotion agency which is focused on their needs, not on the government’s political agenda. That is what a good board would ensure. That is why the decision to abolish the board of Austrade is wrongheaded. Therefore, while I support the passage of this bill because, as I said right at the outset, I accept that governments are entitled to structure the agencies for which they are responsible as they choose—and if, as I suspect, this proves to be a mistake it is one that will be readily and easily remedied by an incoming government—I profoundly disagree with the underlying philosophy behind these administrative changes and their consequences for Austrade.

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