Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

This is certainly a difficult debate to argue for the members for Groom and Mallee, given the Howard government’s export performance. I feel for them. I thought while the Minister for Trade was speaking earlier that I have known him for 23 years. Given his breadth of experience, commitment, skills and knowledge of industry, it is difficult to conceive of someone better positioned to serve as Minister for Trade in this government and for this country.

The minister has already correctly identified the hypocrisy that underpins the matter of public importance proposed by the member for Groom. He has also discussed the two pillars that are driving the Rudd government’s approach to trade policy. As he identified, the first pillar is trade reform at the border by multilateral and bilateral mechanisms to increase market access. The second pillar is promoting reform within our own economy to improve infrastructure, to boost productivity, to lift innovation and to drive national competitiveness. The challenges that we face in boosting our exports demand that we lift competitiveness across our economy. I am adopting these two pillars in my own portfolio responsibilities in defence procurement, with a strong focus on improving defence export performance, but I will come to that issue in due course.

This government has a two-pillar policy underpinning our export strategy—to improve competitiveness and to improve our performance in negotiating on a multilateral and bilateral basis. That is fundamental to improving our export and trade performance. The previous government failed in that task. What did the last government do? What was its performance? How did the member for Groom perform as the industry minister in the Howard government over the past 12 years? That government certainly was not serious about ‘behind the border’ reform. I will highlight its performance in that regard in a moment. Suffice to say, the Howard government failed to address export performance by improving national competitiveness.

What about the other pillar, which we have heard a bit more about in this debate today? That is the policy of negotiating multilateral and bilateral mechanisms. The last government completely abandoned multilateral trade negotiations. That is in fact what it did. It paid lip-service to the World Trade Organisation trade rounds but did not perform. As the Minister for Trade identified, on bilateral trade reform over 12 years it managed to negotiate only three free trade agreements. The last government, of which the member for Groom was a senior member, did not adequately address the other leg of our approach—that is, the competitiveness of export performance—nor did it pursue multilateral negotiations. Members need only to look at bilateral FTAs and the fact that the last government managed to negotiate only three in 12 years to see the evidence of that.

In fact, its approach to some of those FTAs disclosed a deficiency in negotiating skills. We should never forget the FTA negotiated with the United States. I am sure that, if he were to be frank, the member for Groom would admit that he was disappointed with some of those negotiations. The exclusion of sugar from the FTA with the US is one example. It also included an 18-year phase-in period for a reduction in beef tariffs and for a full phase-in of dairy quota increases. They demonstrate deficiencies in the last government’s track record of negotiating on a bilateral basis. That was the foundation of its approach to trade policy.

The previous government presided over 70 consecutive months of goods and services trade deficits. No other government in our history has presided over such a poor export and trade performance. That happened in the last six years of the Howard government, despite the resources boom and a massive improvement, it has to be said, in our terms of trade, which improved by 50 per cent from 1999 to 2007 off the back of the resources boom and improvements in commodity prices. In that context, one would think our trade and export performance would be pretty solid. However, total export revenues grew at an average annual rate of only 5.8 per cent in the last six years of the Howard government compared to the 10.7 per cent average growth in the previous 18 years following the 1983 float of the dollar.

The trade deficit for the final quarter of the Howard government reached a massive $7 billion, which was the worst on record. In the area of elaborately transformed manufactured goods—which involve high-value, high-wage industries at the heart of world trade—the last government also failed. In the 18 years from 1983 to 2001—which were predominantly Hawke government years—elaborately transformed manufacture exports grew at an average annual rate of around 11 per cent. Since 2001, the growth rate has been only four per cent. The competition for these goods involves knowledge and skill and that is where Australia must improve its performance. The previous government’s performance was declining. On the broader economic front, that can have a significant impact on trade performance.

The last government’s performance was woeful. On whatever level one wants to base it—productivity, innovation, skills, investment or infrastructure development—the last government failed. On innovation, the last government experienced growth in business research and development at a rate less than half that of the Hawke and Keating governments. Australia’s labour productivity growth rate this decade is almost 40 per cent below the average productivity growth for all OECD countries. From 1991 to 1999, Australia’s productivity growth was almost 50 per cent above the OECD average. That is a shocking and appalling performance and turnaround in that area.

By contrast, the Rudd Labor government is committed to lifting our national competitiveness. We must do much better on all of those indicators if we are going to improve the country’s trade and export performance. This government is committed to serious investment in infrastructure. Of course, we have announced the $20 billion Building Australia Fund. We are also committed to improving productivity; for example, we have established a $200 million Enterprise Connect and Manufacturing Centre network, which will help businesses to improve their export performance by finding and adapting the latest research and technology and getting help in solving identified problems and cutting through red tape to identify sources of government support for their innovation activities.

The government also committed $19.3 billion to education and training in the last budget. That is the basis for having a more highly skilled workforce and therefore a more competitive economy and improved trade performance. All of these measures will lift competitiveness and will allow us to take advantage of the improved market access that will come courtesy of the pillars of our trade policy.

The government is committed to pursuing multilateral mechanisms to open up trade. The minister’s commitment to pursuing the Doha Round is unflagging. At the same time, we have also been successful in using bilateral mechanisms to improve market access, as the Minister for Trade indicated. It is the fact, and you cannot escape the fact, that in the last nine months agreement has been reached on two FTAs: one with ASEAN and one with Chile—two in nine months versus three in 12 years.

In my own portfolio area of defence procurement, we are applying the twin pillars to lift defence exports. This was an area completely neglected by the previous government. No-one in the previous government had any responsibility in relation to defence exports. One of the first actions I took in my role was to launch the Defence Export Unit. This unit is providing important assistance to the defence industry to boost exports and find market opportunities. In fact, I had a session this morning on planning some export marketing strategies with the leader of the Defence Export Unit. I also met with the National Executive of the Australian Industry Group Defence Council at lunchtime today to discuss our approach to improving defence exports.

In the first nine months of the government, we have not only established the Defence Export Unit but implemented the Australian capability industry plan. This plan requires defence prime contractors to show how they will ensure opportunities for Australian SMEs in their supply chains should they win large contracts. This is directly aimed at leveraging Australian companies into the global supply chains of the defence industry and boosting defence industry exports. For example, we are encouraging prime contractors such as Thales to continue manufacturing their Bushmaster in Bendigo for export to other nations—(Time expired)

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