Madeleine King (Brand, Australian Labor Party, Shadow Minister for Trade) Share this | Hansard source

Thank you to the minister for his contribution on this matter and for all of his efforts in the trade portfolio, as well as those of the department and, of course, his personal team in his ministerial office. Australia has a rich history of trade and foreign investment with the United Kingdom. Before that, of course, we know our First Nations peoples traded internationally for thousands of years with the communities of South-East Asia. But, without doubt, the UK is certainly our oldest trading partner of the modern era.

Like many other Australians, I have British heritage. Indeed, until early 2016, I too was a British citizen. My dad moved over here in the early 1950s and was one of the first employees of British Petroleum. He worked at the Kwinana Oil Refinery, sadly now closed. This investment from a British company in our country and in my state of Western Australia built the town of Kwinana and the suburbs of Medina and Calista, in which I was born and which I am now very lucky to represent in this place. These days, the UK-Australia trade relationship is worth over $30 billion, and that is only going to grow, as Britain has abandoned the European Union and the UK now has to seek new markets.

We in Labor know that the vast market potential for Australia now and into the future lies in our region. The Indo-Pacific is the fastest-growing region in the world, and it's on our doorstep. The member for Grayndler, the Labor leader, has referred to this recently as 'the privilege of proximity', something my former colleagues at the Perth USAsia Centre, at the University of Western Australia, have known and have been talking about in Perth for many years.

However, it is fair to say that the rise of ecommerce and digital trade, turbocharged by the effects of COVID-19, has meant that Australia's geography is less of a barrier to trade with the UK and Europe than it once was, especially in services that can be delivered digitally. Following the decision by the UK to exit the European Union, it was clear that bilateral trade agreements were to be pursued as a matter of priority. Indeed, I understand that, having not negotiated a trade deal since the 1970s, the UK government sought the advice and expertise of Australian trade negotiators to get the ball rolling on these processes.

The process of negotiating this free trade agreement has not been without problems. I was concerned, for example, that I, my office and the general public learn more about the direction of negotiations for this free trade agreement from the UK government itself than we do from our own government. I want to thank the British High Commissioner, Vicki Treadell; and the former High Commissioner, Menna Rawlings, who were very open and active in their engagement and dialogue with me in this place.

I am concerned about the lack of transparency displayed by the Morrison government and also former Liberal governments on what impact this secretive approach has on the outcomes of this agreement, which we've only had a chance to look at since it's been signed in December. The government has not released any modelling or an impact statement in relation to the Australia-UK FTA, although I note that the national interest report was delivered today; nor has it consulted widely on its provisions before signing. The UK itself, new to free trade agreements, adopts a more open approach, seeking the views of the community, stakeholders and business to inform the negotiation process before they undertake it. We do the reverse.

I am concerned that, in this government's haste to secure a deal, it has negotiated away some of the protections that we in Labor believe are crucial for any international agreement to operate in Australia's national interest. There are a number of red flags that I will highlight. Firstly, this agreement includes procurement provisions which go well beyond current World Trade Organization obligations. There is a side letter proposing further dialogue between Australia and the UK regarding local government procurement options, which is sometime in the future. We are yet to know what that will entail.

Procurement is one of the most powerful levers Australian governments have to support Australian jobs and Australian businesses. This agreement obliges Australian governments to treat British companies as though they are Australian companies, with the financial thresholds contained in the WTO agreement on government procurement completely eroded. It will be open slather on government procurement into this country. It's unclear at this moment to what extent this might undermine state and territory governments' own local procurement arrangements. The Commonwealth's procurement budget was worth over $69 billion last year, yet, as I stated before, our trading relationship with the UK is worth $30 billion. We need to think about the disparity more substantially when we think about procurement.

I note Australia will maintain existing safeguards as outlined in the WTO agreement, including the ability to preference small and medium enterprises, protect national treasures and provide advancement and welfare for First Nations Australians. But will liberalising our procurement with the UK provide a net gain, and is this truly in Australia's national interest? It will be up to the government to assure Labor and the Australian public that they have done enough in this regard. These are questions they will continue to ask, as will of course the Joint Standing Committee on Treaties. I note that the treaties committee requires 20 joint sitting days to consider treaties. We have 3.5 of those days left in this parliament, so it will undoubtedly be a task for the 47th parliament.

This agreement includes the movement of people and mutual recognition of qualifications. It is in large part a migration agreement. Labor has expressed concerns about the unwarranted waiving of labour market testing in relation to international recruitment. This FTA not only waives labour market testing; it allows unlimited numbers of temporary workers to come in from the United Kingdom. I note that these provisions are not contained in the principal text of the agreement but inside letters that can be cancelled at any time by any party. It doesn't feel like much of a commitment. The prolific use of side letters in this agreement simply demonstrates the undue haste with which this FTA has been pursued by this government.

The agreement establishes a professional services working group to facilitate effective implementation and administration of systems for recognition of other professional qualifications. The Australian government must be clear as to exactly what other professions will be included. Labor will not support conditions that seek to water down Australian standards or undercut Australian wages. While Australia depends upon a robust international intellectual property system, Labor is concerned that seemingly innocuous IP provisions in this agreement could undermine the PBS and Medicare, particularly in relation to generic-brand pharmaceuticals, although I note the minister's comments in relation to this earlier. These concerns need to be addressed as a matter of urgency, and no doubt the treaties committee will look to that.

Finally, Australian wine exporters have been in contact with me quite furiously and regularly regarding the function and utility of this agreement, given the proposed amendments to the UK's alcohol duty system announced by the Johnson government in October. More than one-third of Australia's wine exports are sold to the UK, making it now Australia's No. 1 wine export market following the loss of our trade into China. In May 2021 the International Wine and Spirits Record estimated the value of Australian wine sold in the UK in the past year to be 2 billion pounds, the equivalent of A$3.8 billion. But exporters are concerned that the UK's proposed duty changes will create a system that is simply unworkable for them. That's because the proposed duties significantly favour some countries over others.

Currently, any alcoholic beverages, including wine, are taxed based on the concentration of alcohol by volume, which is known as the ABV. Under the new regime, wine and sparkling wine between 8.5 per cent ABV and 22 per cent ABV would be taxed at 25.88 pounds per litre of pure alcohol. Wine Australia claims this would result in a significant increase in the duties payable on still wine above 11.5 per cent ABV. We know that 97 per cent of still wine exported from Australia has an ABV of more than 11.5 per cent. In fact, the average alcohol concentration of Australian wines exported to the UK in the last year was 13.2 per cent.

Many Australian viticultural areas typically produce wine grapes that ripen at a higher sugar level than other countries, particularly those throughout Europe. More sun and less water mean fruit with a more intense flavour. It's great for producing our amazing Australian wines, but as a result Australian wines are on average higher in alcohol than the weaker, less sun unexposed wine products of Europe. On top of this, the alcohol content is widely influenced by the seasonal conditions. Under the proposed duty regime, the duty rate in one vintage year is likely to vary from the next, meaning a logistical nightmare for exporters in terms of tax rates and labelling requirements. If implemented, these duty changes would mean an estimated debilitating 11 per cent tax increase on Australian wine exports to the UK.

I'm sure these proposals—they're internal proposals of the UK government and of course we don't interfere in the work of other governments—of the UK Conservative government are not intended to be protectionist, but they will operate to significantly disadvantage Australian wine producers and will completely wipe out any gains that have been made for red wine producers in this UK-Australia free trade agreement. Red wine producers across this country that export to the UK or seek to export to the UK are quite rightly asking: what is the point of this free trade agreement for our industry?

Stakeholders have proposed various changes to the incoming regime, and I implore the minister and his government to consult with these crucial exporters to seek a solution to the problem that is coming their way. Given the hits Australian wine exporters have already faced with smoke taint from bushfires, tariffs and trade sanctions from China and increased shipping rates due to the global shipping crunch, they simply do not need this. They should not be left out in the cold. The Morrison government has often made a show of its bromance with Boris Johnson's government, and I call on the minister and I call on the Prime Minister to leverage this to ensure that our vital wine industry is supported and that the UK-Australia FTA is the best possible agreement for every business across this country.

Labor knows and understands that trade diversification is key to the future prosperity of this country, but we do need to diversify the products we sell and not just the markets we sell them to. The Harvard Atlas of Economic Complexity recognised recently that Australia's relative economic complexity is in decline. We are now ranked No. 86 in the world, between Paraguay and Uzbekistan. This government doesn't seem to have any plan past the pomp and ceremony of signing up to agreements, but we need to do the hard work to ensure that these deals are good for Australian exporters and Australian jobs, and that they seek to ensure that we make more things here so that we have more things to export that are more complex, that cost more and that therefore increase our export earnings.

The Morrison government prove time and time again that they are all about the photo op and not about the follow-up. Labor is the party of free, fair and open trade. It was Labor that opened the doors to open trade with other nations. We welcome reducing tariffs on Australian goods and are comforted that the Australia-UK FTA does not include ISDS provisions. I doubt whether this would be the kind of agreement that Labor would have negotiated and concluded with our British counterparts were we in government. We look forward to this free trade agreement going forward for the consideration of the treaties committee, and I guess we will do something similar in the next parliament and again refer it to that committee as the inquiry will naturally expire when this parliament terminates.

Labor has an open view on this agreement. We'll study it carefully. We'll ask questions, as well we should. We will continue to work with the minister's office. I accept that the duties issue with the UK is a very complex and difficult problem, and I can only imagine the red wine producers of this country tearing their hair out at all the adversity they're facing. This feels like a nasty blow at the end of what was a hopeful road to the UK-Australia FTA. Again, I look forward to the Treaties Committee considering this deeply, and I thank the minister for his efforts.

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