Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice, Customs and Border Protection) Share this | Hansard source

I rise to speak on the Customs Amendment (New Zealand Rules of Origin) Bill 2011. Whilst this is a relatively dry bill—just updating some definitions within the framework of the free trade agreement that we have with our very good partner New Zealand—I think it is a reasonable time for us to think about the success of that free trade agreement. It was Australia's first free trade agreement. It was negotiated in the early 1980s and implemented in 1983, at a time when free trade was probably less fashionable than it is now. You will obviously still hear arguments for and against free trade now and those arguments have been ongoing literally for centuries within the political sphere. But this agreement has done a lot to advance the economic interests of Australia and the economic interests of our partner New Zealand. Although this is a relatively dry bill, it is important for us as a parliament to reflect on the success of that free trade agreement and about how it was a precursor for future free trade agreements that we negotiated with other partners.

I always like to refer back to Adam Smith when we look at economic issues. Although he wrote many centuries ago, his insights into the way an economy works are still relevant today. On trade, he said:

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. ... If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

Essentially he was talking about the economic law of comparative advantage—though he would not have called it this at the time—which was developed slightly later by another British economist. But the words that Adam Smith wrote in his classic book The Wealth of Nations are still very relevant to us today, and a great reminder about how important free trade is and about how politicians constantly get people arguing with us about why free trade is not that important. The way those arguments are put to us varies greatly. In the old days, there were mercantile arguments between free traders and protectionists, about why it was in the national interest not to trade freely with other countries. Now these arguments come to us in different ways. They come to us in possibly more sophisticated ways. They come to us in ways in relation to industry policy or in the guise of fair trade, which is a term which I do not think is necessarily very well understood.

I see the member for Brand at the table. I am sure his father-in-law would have agreed with what I am saying. If the Labor Party still had men of that calibre, I suspect they would not be having the political problems they are having today.

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