Kevin Rudd (Griffith, Australian Labor Party, Shadow Minister for Foreign Affairs and Trade and International Security) Share this | Link to this | Hansard source

When it comes to the Australian Trade Commission Legislation Amendment Bill 2006 we have to ask ourselves a key question. We are dealing with exports, with Australia’s economic future and with the future of Australian manufacturing itself, so what does our manufacturing industry require for the future? What does it say it needs? The Australian Industry Group quotes one Victorian manufacturer as saying:

At a national level we need a business plan. We need a clear set of objectives so we know where we are going, where infrastructure is taken into account and the issues of developing people, getting good leadership, looking at the ways we can be smarter and finding niche markets are taken into account.

This hits the nail on the head and it is to this that the Australian Labor Party is responding in our approach to a future manufacturing policy, plan and strategy for the country. We have no intention of standing idly by while Australian manufacturing sinks quietly below the waves.

Labor has a plan to ensure that the manufacturing sector will be viable beyond the end of the resources boom—a plan to increase skills by abolishing TAFE fees for traditional trades; a plan to increase labour force participation through the provision of more child-care workers; a plan to facilitate exports through a coordinated approach to infrastructure through Infrastructure Australia. We also believe that a new approach is needed to boost Australian exports—an approach which focuses on all industries, not just resource related industries.

Australia needs a new export strategy for the country, one which tackles the productivity challenge head-on across infrastructure, skills, R&D and innovation, one which maximises Australia’s efforts to secure greater global market access through the current WTO round, one which reforms Australia’s approach to export promotion through Austrade and one which implements concrete measures to create a better export culture right across the economy through practical assistance to Australian exporters.

The bill that we debate today does not of itself address Australia’s systemic export problems. It does not of itself address the systemic problems concerning our current account. It does not of itself address the problems that now arise with our staggering half-trillion dollar foreign debt. The opposition, however, will support this bill because it does provide for the administrative transition of the Australian Trade Commission from a statutory authority under the Commonwealth Authorities and Companies Act 1997 to a statutory agency which will be part of the Commonwealth, subject to the Public Service Act 1999, and a prescribed agency under the Financial Management and Accountability Act 1997.

One of the consequences of this bill is that, upon its proclamation, the role of a CEO will be established to replace the Austrade board. The Austrade board was established by the Hawke Labor government in 1985 for the very reason that it would bring the commercial acumen of the private sector into facilitating Austrade’s trade performance. Labor recognise the valuable input that business and industry can provide to policy, and this is particularly important at a time when Australia’s trade position has registered such bad numbers for the economy. We recognise that the legislation allows for the continued involvement of industry through the existing Free Trade Agreement Export Advisory Panel and the Trade Promotion Advisory Committee. Our concern, however, is that there will be no high-level input from business and industry leaders of the type that the current board structure provides. Our view, therefore, is that this question will need to be revisited under a future Labor government. We believe that business input is critical to Austrade’s future success. We are prepared to support this bill because it nonetheless allows Austrade to become a statutory agency. It is for this reason that I now move the second reading amendment that has been circulated in my name:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House notes the bill will do little to correct Australia’s trade balance which:

(a)

has been in deficit for four years (48 months);

(b)

recorded a total deficit of $18.7 billion in 2005;

(c)

is impacting on a record current account deficit of $55.1 billion; and

(d)

is contributing to Australia’s record foreign debt of half a trillion dollars.”

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Graham Edwards (Cowan, Australian Labor Party, Shadow Parliamentary Secretary (Defence and Veterans' Affairs)) Share this | Link to this | Hansard source

I second the amendment.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I call the honourable member for—

Kevin Rudd (Griffith, Australian Labor Party, Shadow Minister for Foreign Affairs and Trade and International Security) Share this | Link to this | Hansard source

Fisher.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker Adams. And I thank my friend the honourable member for Griffith for his assistance to you as to the name of my electorate. It is interesting, Mr Deputy Speaker:  so many people from your electorate are moving to mine, I would have thought that you would have known where they were escaping to.

I am pleased to be able to join the debate on the Australian Trade Commission Legislation Amendment Bill 2006. I listened carefully to the contribution made by the honourable member for Griffith. As always, it was thought provoking. Sadly, in this case it was not entirely on the subject of the legislation we are currently debating. His second reading amendment, as so often happens in the House of Representatives, seems to deal with issues other than the issues being dealt with by the Australian Trade Commission Legislation Amendment Bill 2006. Having said that, politics is politics. But I think it is important for all of us to appreciate that the desire of all governments is, or should be, the efficient provision of good services to those people they govern. It is widely recognised not only throughout Australia but indeed throughout the world that this government over the last 10 years has been responsible for sound economic management. We have brought about an enormous number of positive changes. We have repaid every last cent of government debt. We have brought the budget into surplus at a time when we have been able to reduce taxes and improve the quality of life of all Australians.

It is important also for governments to always remember that, no matter what good a job is being done, the job is never finished. This government would be the last government to suggest that our good governance over the last 10 years means that there is no need any longer for more sound economic management in the future. Governments must always be wary that unwise spending decisions could ultimately have an adverse impact on the quality of life of residents.

Mr John Uhrig AC is a person who is highly regarded. In earlier times he would have actually been a Knight of the Realm, because the award of Commander of the Order of Australia was supposed to replace knighthoods. So in 2002 we chose a person who is eminently well regarded in the community to conduct a review of the corporate governance of Commonwealth statutory authorities and office holders to determine whether any of the management operations could be improved or modified to ensure more efficient operations, thereby reducing costs and improving service delivery to the people. The review was known as the ‘Review of Corporate Governance of Commonwealth Statutory Authorities and Office Holders’—quite a mouthful, I am sure you will agree, Mr Deputy Speaker. But the name of the review summed up rather nicely what the review was all about. Mr Uhrig was also asked by the Australian government to utilise the review process to formulate suggestions about how things could be done better. He was asked to provide options to the government to get the most efficient results from the statutory bodies. The honourable member for Griffith, in his contribution, has outlined how the character of the Australian Trade Commission will alter in accordance with the recommendations of Mr Uhrig.

Mr Uhrig also came back with a standard framework of good governance guidelines that the government could use for statutory bodies and then apply more widely to public sector organisations. As one would expect with a review of this nature, input was derived from a wide range of areas, including ministers of the Crown, office holders in statutory bodies, various departments, consumer groups and business organisations. This was not a review that the government arranged overnight. It was a genuine review whereby we consulted widely with the Australian community, because the purpose of this review was to ensure that we did have better governance when the recommendations of Mr Uhrig were handed down.

Among Mr Uhrig’s recommendations, it was decided that those statutory bodies that have a service provision role should be subject to the guidelines in the Financial Management and Accountability Act 1997. The Australian Trade Commission Legislation Amendment Bill 2006 helps to introduce some of the amendments suggested by the review in how they relate to the Australian Trade Commission. The commission, known as Austrade, is a statutory body whose role is to assist Australian business to acquire more successfully overseas sales, thereby boosting our international earnings and ensuring a better quality of life for all Australians.

Austrade—and I think this is accepted generally—have the expertise and the know-how to assist in the international business arena and their experience can help greatly reduce the hurdles, risks, costs and difficulties that would otherwise be faced by those operators eager to export to the world. I think most honourable members would have approaches from constituents from time to time who, having been successful locally in their business, are keen to spread their wings and export to the world. Often it is so difficult for a small business which has had a good idea and has successfully developed that idea to take that next step. That is one of the reasons why, under successive governments, Austrade has done a very good job.

The Austrade mission is to contribute to community wealth by helping more Australians succeed in export and international business. It is a noble and niche service. This bill will enable the Australian Trade Commission to be transformed from a statutory authority, governed under the Commonwealth Authorities and Companies Act 1997, to a statutory agency administered through the Public Service Act 1999 and a prescribed agency under the Financial Management and Accountability Act 1997.

Honourable members might be interested to know that there are around 170 Australian government statutory authorities and that they have all been subject to reviews under the provisions as suggested by Mr Uhrig’s review. The Austrade changes are not the first to be implemented as a result of the review. Last October, changes were made to the operating frameworks of Medicare Australia, whereby the Medicare board has been dissolved and an executive management system has been introduced. Also, the recommendations by the review will lead to operational changes to the Australian Research Council, which will transform to a set-up of executive management similar to Austrade. The National Health and Medical Research Council will become an independent statutory body, but with the appointment of an executive management.

These changes are all designed to improve the efficiency of these bodies. As one would expect, some statutory bodies will not be changed as a result of the review. Honourable members may or may not be aware that these would include the Australian National Audit Office, the Australian Public Service Commission, the Inspector-General of Intelligence and Security, the Commonwealth Ombudsman’s office, Geoscience Australia, as well as the more visible bodies such as the Reserve Bank of Australia, AusAID and Australia Post.

A number of other statutory bodies have had their operations assessed. The Australian Trade Commission Legislation Amendment Bill 2006, which is currently before the House, is part of this ongoing process of reform by the coalition, which, after 10 years of effective government, is not reform-weary. We are continuing to do the job entrusted to us by the Australian people in successive elections from 1996 to 1998 to 2001 and 2004.

The Australian Trade Commission Legislation Amendment Bill 2006 will help deliver greater efficiencies and greater accountability to Commonwealth statutory bodies. I am very pleased to commend the bill to the House and, in doing so, I place on the public record my opposition to the second reading amendment moved by the honourable member for Griffith.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Australia’s monthly trade deficit for March 2006 was $1.5 billion. This is the 48th monthly trade deficit in a row. This means that for four years now the value of Australia’s exports has been exceeded by the value of our imports. By November 2004, Australia’s trade deficit of $2.6 billion was the highest on record. It is a record that we have, regrettably, come close to equalling on a number of occasions since. For example, in February the monthly trade deficit reached $2.4 billion. Australia’s annual trade deficit for the calendar year 2005 was close to $20 billion. These record trade deficits have contributed directly to record current account deficits. In the federal budget, the government forecasts export growth in 2007 of seven per cent. But it is an optimist of Olympian proportions who would set any store by that forecast.

The government’s record on export forecasts over the past five years has in fact been hopeless. In 2001, they forecast five per cent export growth; exports fell by 0.8 per cent. In 2002, they forecast six per cent export growth; exports fell, again, by 0.8 per cent. In 2003, they forecast export growth of six per cent—undeterred; exports grew by barely more than one per cent. In 2004, bloodied but unbowed, they forecast eight per cent export growth, whereas exports grew by only 2.5 per cent. In 2005, they forecast seven per cent export growth; again, exports grew by barely two per cent. So, over the past five years, the government have overforecast growth in exports by an average of 5½ percentage points every year. So, if we are lucky this year, we will get export growth rather than export falls. Continually forecasting six per cent, seven per cent or eight per cent growth is surely a triumph of hope over experience.

The root cause of Australia’s parlous external balance is Australia’s recent performance on exports. If that external imbalance is not addressed, there is every potential that interest rates will suffer as a consequence. Rather than looking at a comprehensive solution to Australia’s export problems, the government is focusing its attention squarely on the resources boom. There is no doubt that Australia should take advantage of its resource stocks to enhance its export performance, but we should not throw all of our eggs into the resources basket. The 2006-07 budget papers effectively hauled up the white flag on manufacturing exports. Budget Paper No. 1—Statement 3: Economic outlook—states:

Other categories of exports—

that is, other than resources—

are forecast to pick up 2006-07, although they are unlikely to grow at the strong rates experienced in the 1990s. Exports of elaborately transformed manufactures are forecast to grow moderately over the next two years ...

In fact, the total value of manufactured exports is now $2 billion less than it was at its peak in 2001. Such a performance is simply not good enough.

Australian manufacturing exports were one of the great success stories of the 1980s and 1990s. Between 1986 and 1996 the volume of exports of elaborate manufactures increased by 13.9 per cent per annum, whereas between 1995 and 2000 they dipped to an annual average growth rate of 7.2 per cent. Manufacturing remains the largest sector in the economy, accounting for 13 per cent of value added activity, but as a share of the economy this is less than the 15 per cent of 10 years ago and the 18 per cent of 20 years ago. It also does not compare well with other developed countries. The manufacturing sector accounts for 20 per cent of GDP in Italy, 19 per cent in New Zealand and 17 per cent in the United Kingdom.

In 2004-05, Australia’s manufacturing trade deficit was $87.5 billion. This is unsustainable in the long term. Of course, there are external factors which have impacted on the manufacturing sector. The average OECD country has lost six percentage points of global market share over the past five years, but over the same period Australia’s share has declined by three times this amount. The question is: with all our eggs in the resource basket, who will be our exporters once the boom is over and what should we do in the meantime to ensure that these industries do not collapse? This is the question the government should be asking itself. Once the resources boom is over, what will be left of our manufacturing industry, an industry we are going to rely on to fill a gap created by a slowing resources sector?

While it is clear that across-the-board tariffs are not the solution, there is a role that government can play in smoothing out the economic cycle. In an editorial last year, the Australian Financial Review argued that there was a role for government in ensuring a balance between industry sectors in the economy. It said:

Industry policy has moved a long way since manufacturing was equated with high levels of industry protection. But now there is a need to do more than simply leave manufacturing to its own devices—as long as we follow the incentive route and do not revert to protection.

Labor is not talking about tariffs or massive industry subsidies and nor is industry. We are, however, about listening to what industry needs to survive—and what does the manufacturing industry say it needs? The Australian Industry Group quotes one Victorian manufacturer as saying:

At a national level we need a business plan. We need a clear set of objectives so we know where we’re going, where infrastructure is taken into account and the issues of developing people, getting good leadership, looking at ways we can be smarter and finding niche markets are taken into account.

This is the sort of thing government ought to be listening to to address the trade deficit. Unfortunately, the Howard government is not listening. The fact is that we cannot simply abandon the manufacturing sector. We cannot haul up the white flag on the largest employer in the country. We cannot just wait for the resources boom to end and leave a devastated manufacturing sector to try to fill the gap. Labor believes that the manufacturing sector needs to be viable beyond the end of the resources boom. We have a plan to increase skills by abolishing TAFE fees for traditional trades, a plan to increase labour force participation through the provision of more child-care workers and a plan to facilitate exports through a coordinated approach to infrastructure through Infrastructure Australia.

We believe that a new approach is needed to boost Australian exports, an approach which focuses on all industries, not just resources. A new national export strategy should tackle the productivity challenge head-on across the infrastructure skills and R&D sectors, maximise Australia’s efforts to secure greater global market access through the current WTO round, reform Australia’s approach to export promotion through Austrade and implement concrete messages to create a better export culture across the economy through practical assistance to exporters.

This bill will not address Australia’s systemic export and current account problems. We will support it. However, what it does is to provide for the transition of the Australian Trade Commission from a statutory authority under the Commonwealth Authorities and Companies Act 1997 to a statutory agency which will be part of the Commonwealth subject to the Public Service Act 1999 and a prescribed agency under the Financial Management and Accountability Act 1997.

The member for Griffith has raised concerns over one of the consequences of this bill—that is, upon its proclamation the role of the CEO will be established to replace the Austrade board. As he points out, the Austrade board was established by the Hawke Labor government in 1985 for the very reason that it would bring the commercial acumen of the private sector into facilitating Australia’s trade performance. The Labor Party recognises the valuable input that business and industry can provide to policy, which is particularly important at a time when Australia’s trade position is in such a parlous state. It is somewhat ironic that the party that holds itself as the champion of free enterprise has taken it upon itself to reduce the level of private sector involvement in facilitating Australia’s trade performance.

The legislation does allow for the continued involvement of industry through the existing Free Trade Agreement Export Advisory Panel and Trade Promotion Advisory Committee. However, there will be no high-level input from business and industry leaders that the current board structure provides. The bill implements the executive management corporate governance model, as per Mr John Uhrig’s Review of Corporate Governance of Statutory Authorities and Office Holders. The Australian Trade Commission Act 1985 established the Australian Trade Commission and defined the organisation’s structure and operational framework. This bill is intended to enact revised governance arrangements in the enabling legislation. The changes, according to the explanatory memorandum, will improve governance and accountability in the Australian Trade Commission—and I certainly hope it will.

The recent AWB scandal has raised several serious governance and accountability questions for the Australian Trade Commission and, so far, we are yet to hear answers to these questions. Austrade has been peculiarly silent about AWB providing hundreds of millions of dollars in kickbacks to Saddam Hussein. The fact is that Austrade, the Australian Trade Commission, was one of many government agencies that were aware of substantive information about the link between Alia, AWB, Saddam Hussein and the coordinated subversion of the UN’s oil for food program.

Austrade continues to be responsible for assisting Australian firms to develop export markets and international business. But, in light of its silence about information concerning Australian traders breaking laws and subverting international conventions, its understanding of its responsibilities appears to be limited. It kept quiet—or at least its concerns and the information it was privy to was kept quiet.

This bill was an opportunity for the Trade Commission to have been given an explicit directive to uphold Australian law in matters concerning international trade. The bill was an opportunity for the Trade Commission to be given an explicit directive to uphold Australia’s reputation in matters concerning international trade. Had the Trade Commission done so in recent years, perhaps the trade sanctions put in place by the United Nations would have worked more effectively. Perhaps—instead of propping Saddam Hussein up—enforcing trade sanctions would have weakened him, lessened the threat that he posed and negated the need felt by the coalition of the willing to invade Iraq. Perhaps tens of thousands of men, women and children would still be alive today. Perhaps tens of thousands more would not be suffering as they are today.

What could Austrade have done? It could have made inquiries. It could have taken some responsibility. It could have reported to the government upon the results of its inquiries. I will give the House a couple of examples of what I am thinking of and two incidents where Austrade had the opportunity to do the right thing spring to mind. First, there was Alistair Nicholas, Austrade’s commissioner in Washington in 2000, who said in his statement to the Cole inquiry that he was approached by Ms Felicity Johnston of the UN oil for food program in early 2000. She told him that the UN oil for food program had raised concerns about AWB’s kickbacks with Australia’s mission to the UN but that they still did not have an answer from that mission. This was an appeal by the UN oil for food program, as far back as 2000, to another arm of the Howard government, at a time when few kickbacks had been paid, and much of the scandal could have been averted. Alistair Nicholas then raised the issue with AWB executive Tim Snowball, who assured him that there were no irregularities. Let me quote what Tim Snowball wrote back to Mark Emons, the AWB Middle East section chief, about the matter:

Alistair mentioned that someone at the UN was asking him quietly/informally about payments AWB was making to Iraq for discharge/trucking ...

We played down the issue and said we would look at the UN request.

We do not want Alistair sticking his nose into our Iraq business and causing us problems ...

What a disgraceful response from AWB. Commissioner Alistair Nicholas was apparently not entirely convinced by Tim Snowball’s assurances, because in late 2000 he sent a cable back to Canberra saying:

... AWB do not understand the seriousness nor the urgency of this matter. It may be necessary to advise the Minister of the situation.

But it would seem that Alistair Nicholas did not ultimately ‘stick his nose in’ and Austrade elected not to cause any problems—which is a shame. Austrade could have done more to avert this scandal. Austrade had further information about these kickbacks that, had it been operating under more explicit legislation, represented at least one other opportunity to do the right thing. In 2003, Ayman Ayyash was Austrade’s manager in Jordan, where he helped secure, among other deals, wheat deals for AWB. General Manager of Alia, Othman Al Absi, told the ABC’s 7.30 Report in April this year that he knew Ayman Ayyash and that he had known him since at least 2000. They had all been to parties at the Australian ambassador’s residence in Amman, Jordan. He went on to say that Austrade’s Ayman Ayyash also knew the Chairman of Alia, Sheikh Hussein al-Khawam.

Bruce Billson (Dunkley, Liberal Party, Minister Assisting the Minister for Defence) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The speaker has been good in mentioning the bill occasionally, but could you encourage him now to refer to the bill?

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Does the honourable member have a point of order?

Bruce Billson (Dunkley, Liberal Party, Minister Assisting the Minister for Defence) Share this | Link to this | Hansard source

My point of order goes to relevance to the bill.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I ask the honourable member for Wills to address the bill.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker—I am. The changes, according to the explanatory memorandum, will improve governance and accountability in the Australian Trade Commission. I am pointing to the need for this to be done and I am speaking in support of the opposition’s amendment.

Othman Al Absi also told the 7.30 Report that Austrade’s Ayman Ayyash kept in touch with them all ‘so many times’. I wonder what about? The Australian public has a right to know. Why would an Austrade official who was in the business of selling wheat talk ‘so many times’ and ‘party’ with the chairman and general manager of a kickback receipt company? So far neither Austrade nor the Australian government has provided anything like a satisfactory response. Here again was an opportunity for Austrade to have asked a pointy question or two: did Austrade know that Alia was 49 per cent owned by Saddam Hussein and that all the kickbacks were going straight back to Saddam’s treasury? This is something the Australian public has a right to know about.

Unfortunately, in February this year, during the last round of Senate estimates hearings, Senator Coonan chose to gag Austrade officials appearing before the committee. The government’s contempt for parliamentary democracy took another leap, and public servants working at Austrade were gagged. They were not permitted to speak about AWB. So we really have no way of knowing. The Prime Minister, the Minister for Foreign Affairs and the Minister for Trade have repeatedly claimed that they are being open and transparent about the ‘wheat for weapons’ scandal, so why is it that we cannot ask Austrade in Senate estimates about what they know? We want to know about the role of Australia’s man in Jordan, Ayman Ayyash. Just what were his dealings with Alia? Just what did he know about AWB kickbacks?

The Cole inquiry’s terms of reference do not call for an assessment of what Austrade did or did not know, or did or did not do. The government has made sure the Cole inquiry protected them from such important questions. The government claims it is being honest and transparent about the AWB scandal, but it has not given the Cole commission any terms of reference to inquire into the conduct of Austrade, much less government ministers themselves. Nor will it allow senators to question Austrade officials about the AWB scandal as part of normal Senate estimates processes. This is a government which claimed it would not abuse its Senate majority. What a joke. This bill claims it will improve the corporate governance and accountability of Austrade. I say that nothing would sharpen the sense of corporate governance and accountability quite like a couple of sessions in front of Senate estimates committees.

In closing, I refer to the current wheat deal. A transparent and accountable Austrade might even be able to give us a full account of what has happened to our on-again, off-again wheat deal with Iraq. We had the trade minister saying today that it is going to be secured. The question is: just how much is Iraq going to pay Australian farmers for 350,000 tonnes of wheat? Hard-working wheat farmers deserve to know where they stand and certainly deserve a transparent and accountable Trade Commission. I encourage the House to support the amendment.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am pleased, as always, to speak in the parliament on a piece of legislation being promoted by the Howard government—the Australian Trade Commission Legislation Amendment Bill 2006. I have also had the opportunity to hear the member for Wills speak on this matter—another occasion where I have heard a great deal of diatribe from the member for Wills. I have had the opportunity of following him in the parliament on a couple of occasions and it never ceases to amaze me the extent to which the shadow minister, the member for Wills, engages in remarkable muckraking. I am not sure if he is self-appointed or whether he has been appointed by the opposition as the opposition’s muckraker, but little of what he had to say was of substance or about the bill.

All those in the parliament who know the member for Gwydir will be horrified at the remarks of the member for Wills and his attacks on the integrity and the probity of one of the most decent men who has given of his time to the national interest of the parliament. I repudiate the attacks that the member for Wills has engaged in today and on previous occasions against the member for Gwydir, the former Deputy Prime Minister, Mr Anderson.

As a member of parliament and a member of the Howard government—I am in my second term in office, sharing in the victories of the Howard government—I am pleased to speak on this important bill. It is important because it makes significant changes to the government’s structure of the Australian Trade Commission, or Austrade. It brings about some key reforms to the management structure of Austrade that will make that important government agency more efficient and more productive in the overall architecture of the Howard government’s trade policies.

As a statutory authority under the Commonwealth Authorities and Companies Act 1997, Austrade is governed by a board whose members are drawn from business and government. It reports directly to the Minister for Trade. The current bill intends to transition Austrade from a statutory authority under the Commonwealth Authorities and Companies Act 1997 to a statutory agency subject to the Public Service Act 1999 and the Financial Management and Accountability Act 1997. This transition comes through as part of the government’s response to the Review of Corporate Governance of Statutory Authorities and Office Holders—also known as the Uhrig review, after John Uhrig AC.

The Uhrig review recommended that two templates be applied to ensure good governance of statutory authorities. Agencies should be managed either by a chief executive officer or by a board structure. Both templates detail measures for ensuring the boundaries of responsibilities are better understood and the relationship between Australian government authorities, ministers and portfolio departments are made clear. The Uhrig report recommended that the selection of the management template and financial frameworks to be applied should be based on the governance characteristics of a statutory authority. In general, agencies that exclusively manage Commonwealth appropriations should be represented and governed by a CEO. A board structure is favoured if there is a strong commercial focus to the organisation or if the agency is intergovernmental.

Austrade is currently governed by a board and is subject to the Commonwealth Authorities and Companies Act 1997. Under the amendments proposed in the bill, the Austrade board will be replaced by a CEO, who will be appointed by the minister. The governing act will change from the Commonwealth Authorities and Companies Act 1997 to the Financial Management and Accountability Act 1997, and staff will be employed under the Public Service Act 1999. In short, this change comes about essentially because the government has concluded that an executive management template is more suitable to Austrade’s role as the Australian government’s premier trade facilitation agency.

Members of the House will be aware that Austrade is the Australian government’s statutory authority, responsible for helping Australian businesses to succeed in exports and the international business arena. It does this through the provision of advice, market intelligence and ongoing support to Australian businesses preparing, commencing and undertaking export activity. Austrade maintains 17 offices and 52 TradeStart offices across Australia and a network across the globe that includes some 130 offices in more than 60 countries.

Its most fundamental role is to act as a bridge between the Australian exporter and a potential international partner. As part of this role, Austrade provides mentoring, information seminars and training in export related activity. Austrade officials have a fine reputation for identifying export opportunities and potential partners, and provide in-country advice and support from advocacy and research to facilitation and translation services. Austrade also administers the Export Market Development Grants Scheme, the EMDG Scheme, which provides partial reimbursement of approved marketing expenses in export activity.

Another unheralded role that Austrade fulfil is the role of fostering and encouraging a culture of exporting and trade in the Australian business community. For this reason alone, I am a big fan of Austrade. For their overall contribution to Australian exporters and the Australian export industry, I put on record my very strong support and encouragement for our Austrade officials both in Australia and throughout the world. In today’s very competitive world it is vital that Australia develops the business culture of looking abroad for commercial opportunities. We have a history of innovation and entrepreneurship in this country that quite frankly is second to none. We must do all we can as a government to support and encourage greater innovation and entrepreneurship on the back of what we already have. Clearly Austrade has a critical role to play in how Australia promotes trade in goods and services to the world.

We all know that the Australian economy today is experiencing remarkable activity, growth and strength. A few weeks ago the Treasurer delivered his 9th budget surplus out of 11 budgets, and there will be a cash surplus of some $10.8 billion. Unlike the state Labor governments, all of which are likely to be delivering budget deficits in the weeks ahead, the Commonwealth has no foreign debt. The Commonwealth government does not have any debt whatsoever. I have heard previous speakers in the parliament, particularly the shadow minister for foreign affairs, the member for Griffith, talk about the half a trillion dollar debt. Quite frankly, he should know better. He should know that that is private sector debt. It is not debt owed by the Commonwealth.

This economy is a trillion dollar economy. It is a trillion dollar economy because of the strong leadership of the Howard government and the strong stewardship that the Treasurer has demonstrated in his role in the past 10 years. The furphy that the opposition keep putting out that the government somehow has its hands in debt needs to be addressed and addressed very quickly by members of the government, because quite frankly they are again trying to mislead the Australian public.

I want to say again that whatever debt there is in the country is private sector debt; it is not debt owed by the government of Australia. This confusion from members of the opposition is unwarranted in the eyes of the Australian community, and I think they will be held to account. More members of the opposition should come clean on that. I notice that it is only one or two of them who go down the path of misleading the Australian community about the so-called half a trillion dollar debt. The $28 billion that Qantas is expending on aircraft purchases is an example I can give the parliament and those who may be listening of a private company buying overseas made products. That is separate from any expenditure that the Australian government might engage in. That is a very good example of how the opposition is wrong when it talks about a half a trillion dollar government debt.

In the 10 years during which the Howard government has been in office the Australian economy has grown by an average of 3.5 per cent. By comparison, Japan has had four recessions, Singapore has had three recessions, Hong Kong has had three recessions, Taiwan has had two recessions, Korea has had a recession, and the United States went into recession in 2001. At the time of the Asian financial crisis in 1996-97, when this government came into office, we were very strong in helping the Asian economies when they needed a friend. Australia can be very proud of the contribution it made to the economies of Asia when they were desperately in need of a good neighbour. It certainly makes a mockery of the description attributed to the former Prime Minister of Singapore, Mr Lee Kuan Yew, that Australia was in danger of becoming so-called ‘poor white trash’. Notwithstanding our good relations and good friendship with Singapore, I think today’s economy stands in stark contrast to the sentiments behind that unfortunate comment.

In relation to Australia’s trade figures, I have heard members of the opposition again try to confuse and mislead the Australian public. The Australian trade figures represent just how healthy the Australian economy really is. Australia’s total trade in goods and services continued to grow steadily last year, rising to $373 billion, representing a 12 per cent increase in total exports. The latest official publication from DFAT has some very good news for Australian exporters and indeed for all Australians who have a strong interest in our prosperity and our growth. The report tells us that in 2005 our 30,000-plus exporters achieved their best-ever year in sales. The value of exports of goods and services rose some 15 per cent in 2005, to $177 billion. Japan remains our largest merchandise export market, accounting for 20 per cent of exports, which are valued at some $28.4 billion. China remains our second largest export market, accounting for $16.1 billion. South Korea is our third largest export market, at some $10.9 billion.

If anyone needs to be persuaded of the importance of trade to this country, let me give a very compelling reason. We are of course a trading nation. Trade affects our standard of living. Trade affects our job market. One in five jobs in this country rest on the success and prosperity of our exporting companies. In rural Australia, one in four jobs depends upon the stability, continuity and growth of our exports. I remind anybody who thinks that trade is not important to this economy of those very important figures—that is, one in five jobs in this country depends upon successful exporters, and in rural and regional parts of Australia that figure is one in four. In the last 10 years 1.7 million jobs have been created in Australia. Our unemployment level is at a three-decade low of five per cent.

Many of my fellow Australians will not need reminding that under the Keating Labor government unemployment levels were into double digit figures. I am sure many of them will remember the horror days of being unable to find a job, being unable to secure employment, because of the shocking economic management of this country by the Keating Labor government. If anyone thinks that the economy today is in good shape simply due to good chance or good luck then they ought to reconsider. These sorts of things do not happen by good luck or goodwill. They happen through very strong policies of the government of the day. This government can be very proud of the policies that it has implemented to bring about job growth and a strong economy.

The business of government, as I like to remind small businesses of the Ryan electorate, which I have the great privilege of representing, is to try and create the environment and the climate in which businesses can get on with doing what they are best at doing—that is, finding purchasers for their products, finding customers for their products and creating jobs for their local communities. The business of government is to get out of the way of businesses, to allow businesses to do what they do best. They do not want the heavy hand of any government. They want minimal intervention, minimal interference by governments, and that is how they are able to prosper in the community. This is the Howard government’s view. This is the policy of the government and this is our practice. It is little wonder that the Howard government are seen as the best friend of the workers of Australia. The last four elections are evidence of that. I think it is important that we remind the Australian community that there was a time when unemployment in this country was at double digit levels.

While I am on my feet talking about the strength of Australian businesses and the Australian economy, I think it is important also to make some general remarks about the international economy. Of course, Australian businesses in this country cannot conduct their operations in isolation of what takes place in other parts of the world. Whether we like it or not—whether Australian businesses like it or not and whether the government likes it or not—we do operate and exist in an international environment, where the policies of other governments and other companies can have a significant impact on the viability of our own businesses. We live in such an integrated, interdependent and interconnected world that we cannot pretend that external forces and external dynamics are not relevant to the success of Australian enterprises and Australian companies.

This state of affairs, of very strong economic integration, interdependence and interconnectedness, is often referred to as globalisation. One of the most powerful reasons for this deep integration, interconnectedness and interdependence—or the so-called globalised world—is the depth and the nature of technology. Technology really has transformed our world in the last few decades, particularly in the last 15 or 20 years. Some people would have us believe that globalisation is a relatively new thing and that it is also an evil thing. Those who hold this view are wrong on both counts. Globalisation is neither a new phenomenon nor an evil thing. The world was globalised in ancient times when the Romans and the Greeks sailed beyond their shores to conquer new lands. The world is globalised today in the same way. The only difference is in the characteristics of that globalisation.

The world may think it can escape globalisation; it cannot. What is intrinsically different today is how that globalisation is manifested. Globalisation today is characterised not so much by sailboats but by jet planes and supercomputers. The instantaneous nature of transactions and the flow of funds and services that connect our world in such an unprecedented fashion are the hallmarks of today’s global economy. No longer does the international exchange of goods or services take weeks or months, as it did in previous decades or centuries. Now it takes only moments—or not even moments but split milliseconds. That is the defining characteristic of our modern, 21st century world.

The other things that the critics would have us believe about globalisation is that it is a terrible thing and that it is evil. I strongly disagree with that. Perhaps it could even be said that there is not enough globalisation in the world today. The problem is not that there is too much globalisation but that there is far too little globalisation. I say that because I am a very firm believer that globalisation is the vehicle by which prosperity and trade can reach people who are actually outside the international economy. Globalisation brings these people back into the economy. It gives them a chance to get a job. It gives them a chance of hope and of employment that they would not otherwise have.

One feature of our global world is the increasing number international trade agreements that are being concluded. I want to end my remarks by very quickly talking about the free trade agreements that we have with Singapore, Thailand and the US. We are also in the process of negotiating free trade agreements with the United Arab Emirates and China. When completed, both of these agreements will open up to Australian businesses greater markets in all kinds of areas. Our UAE agreement will give us a unique platform into the increasingly significant, prosperous and growing Middle East market. The other, with China, will aim to provide us with access previously off limits to the most populous nation on earth and the third largest economy in the world. China’s entry into the WTO in December 2001 and its re-emergence in the international global trading regime will continue to have a profound impact on the fabric of international economics.

I am pleased, as a member of the Howard government, to strongly support our respective negotiators in trying to bring about an agreement that will advance the cause of Australian exporters and Australian businesses. I want to also end my remarks by continuing to encourage those involved in the Doha Round of negotiations to stick at it, to persevere. Nothing could be more fundamentally important to aiding the developing world than concluding the Doha Round and opening up the agriculture sectors of the European economies and the European nations, and those of some of our Asian friends, to the trade that the developing countries so desperately need. A cow in the European Union typically receives a government subsidy of $US2.20 a day. This is untenable. (Time expired)

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to 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.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

It is sometimes said that debate on legislation in this parliament is stage managed and entirely predictable, but we have just heard a contribution from my colleague the member for Fraser, as a former Minister for Trade, which presents a compelling case that the Australian Trade Commission Legislation Amendment Bill 2006 before us tonight should not have entered this parliament. I am persuaded by the arguments of my colleague. I do not have anywhere near the experience that he has had as a trade minister in face-to-face dealings with Austrade, but it certainly stands to reason that a board of Austrade, comprising very busy people who are otherwise financially independent and professional in their work, would bring a value to the whole exercise of the duties of Austrade that with the passage of this bill will be lost. That is a great pity, but I do take comfort in joining with the member for Fraser in the observation that this is an initiative of the government of the day, which does have the numbers in both the House of Representatives and the Senate, which can easily be undone by an incoming Labor government. I am sure my colleague will be arguing for that to happen and he has certainly presented a strong case as to why it should be undone.

But, given that the government does have a majority in both houses and to some very considerable extent has a right to govern, subject to parliamentary scrutiny, we will not be opposing this legislation. We will support it, but so too do I strongly support the second reading amendment moved by the shadow minister for foreign affairs and trade which notes that the bill itself will do very little to correct Australia’s trade balance, which has been in deficit now for 48 months—four years. Just in the last calendar year of 2005, trade deficits totalled more than $18 billion. We have experienced in this country a current account deficit of more than $55 billion, and that too is feeding successively into our foreign debt, which is fast approaching $500 billion or half a trillion dollars. It is not so often in Australian economic language that we talk about trillions of dollars and it does seem to be ironic that the most common expression of that number in this parliament relates to the size of our foreign debt, which is fast approaching half a trillion dollars.

If this government has a trade strategy, it is a very well kept secret. It appears to me that it is a shambles and that our trade performance is suffering as a consequence, yet every year at budget time the government says that the recovery in our export performance is just around the corner. So I want to have a look at the budget forecasts of our trade performance and the actual performance of the relevant years. In 2001-02, the budget forecast for export growth was five per cent. The outcome for that year was minus 1.5 per cent. In 2002-03, the budget forecast for export growth was six per cent—not to be deterred by the very bad error that was made in the previous budget papers. Yet again the outcome was minus 0.5 per cent. With the government forecasting that the export recovery was just around the corner, another six per cent was forecast in 2003-04 and the outcome was 1.6 per cent. Not to be outdone, as the government became bolder and bolder in its predictions that the recovery in Australia’s exports was just around the corner, in 2004-05 the government lifted its forecast of export growth to eight per cent and the outcome was 2.5 per cent. In 2005-06, the government said, ‘The export recovery is just around the corner,’ and forecast a growth in our exports of seven per cent, and the outcome was two per cent.

In total, over the last five years export growth has been overforecast by more than 5.5 per cent. This is a huge forecasting error, yet the government, persisting with this rosy view that the recovery in exports is just around the corner, in the 2006-07 budget is forecasting export growth of seven per cent. In the last five years the government has massively overestimated export growth and, in so doing, has come up with a multiplicity of excuses. At first it was the world economic slowdown. You have to go back to 2000 to be talking about a world economic slowdown, because world growth has been around four to five per cent through much of this forecasting period. So, far from Australia struggling in a sluggish world economy to sell its exports, the world economy has been screaming out for imports and Australia has failed to come up to the mark.

Then there was the SARS virus and that apparently was responsible for our poor export performance. Then there was the bird flu. That was responsible for our poor export performance. The Minister for Trade, who has joined us here, has invoked every possible excuse for Australia’s poor export performance. When there is an improvement in value terms, the minister claims credit, as if he engineered the economic miracle that is occurring in China—as if he, by going to China, has given them advice and said to the Chinese authorities, ‘This is how you grow your economy; make it grow at 10 per cent per annum and then I’ll go back to Australia, bob up in the Australian parliament and claim the credit.’ The trade minister claims credit for the price increases but never takes the responsibility for the sluggish and often negative growth in the volume of our exports. There is now an ever so slight recovery in the volume of our exports, but that has been held back by infrastructure bottlenecks and, again, the government is saying that that is a problem not of its making but a problem of the states. So it is time for the trade minister and the Howard government to articulate a coordinated, coherent trade policy.

I want to go back in Australia’s history and talk about the folly of the approach that this government has taken, which is the folly of pursuing preferential trade deals. During the Great Depression the government of the day increased tariffs, with a beggar-thy-neighbour approach to economic management, and began a policy of preferential trade deals. By preferential trade deals I mean doing a deal with another country, or a region, to the exclusion of countries that are not party to that agreement. Then it got worse, with the Lyons government entering into preferential trade deals. It is reasonable to conclude that the exclusion of countries like Japan from these trade deals, through the Commonwealth arrangements, was one contributing factor to the Second World War. Far-sighted people understood that restricting trade and entering into discriminatory arrangements was not in Australia’s national interest or the world’s interest. So after the Second World War these far-sighted people got together and created the General Agreement on Tariffs and Trade, which evolved over time into the World Trade Organisation. The founding principle of the General Agreement on Tariffs and Trade was the principle of non-discrimination: if you entered into an arrangement with one country to reduce your barriers to protection then those same arrangements would apply to all other countries.

But since 1990 there has been a massive proliferation of preferential trade deals, such that this principle of nondiscrimination, called the ‘most favoured nation’ principle, is now the exception rather than the rule. This is a tragedy not only for countries like Australia, which are independently wealthy in their own right, but for the developing countries of the world that are being locked out of trading opportunities by rich countries getting together and forming preferential trading arrangements to exclude developing countries. This is folly.

I know the trade minister says, with some legitimacy, that pursuing the Doha Round of multilateral trade negotiations on a non-discriminatory basis is very hard work. There are entrenched interests that do not want to see that global trade round succeed. There are interests around the world that do not believe in trade liberalisation. But that does not mean we give up; it does not mean that we become distracted and enter into preferential trade deals. It means that we have to work harder to harness the value and power of the Cairns Group of fair trading nations to achieve more through multilateral trade forums than is being achieved at the moment.

This is a time, again, for Australia to show genuine leadership in trade negotiations and to put our credentials on the table. This occurred during the Hawke and Keating era, when we liberalised our trading arrangements to the benefit of the Australian people but provided structural assistance to those who were adversely affected. We repositioned Australian manufacturing so that it could be competitive not just in the narrow, fragmented domestic market but in the tough international markets where we needed to get costs down, get quality up to be able to compete and were able to compete. But the tragedy for Australia is that this government has returned Australia to a farm and a quarry. We know that by 48 successive trade deficits.

At a time when mineral prices are the highest in at least 30 and perhaps 50 years, Australia, as one of the most resource rich countries in the world, is running trade deficits. Very few, if any, other countries that are resource rich are running a trade deficit. We have run 48 of them in a row. We have had in the last couple of years a current account deficit that has passed seven per cent of gross domestic product. Compare that with the time when Paul Keating warned of the dangers of Australia becoming a banana republic because it was overly reliant on primary commodity exports. The current account deficit at that time was 6.2 per cent of GDP. In the recent past we have hit more than seven per cent of GDP. There does not seem to be the improvement in prospects that the government continues to forecast, and that is because it has failed to continue the process of diversifying the Australian export base.

That is where Austrade comes in. As my colleague the member for Fraser pointed out, the expertise in the board of Austrade is precisely in the areas that we need it: services exports and exports of elaborately transformed, sophisticated manufactured goods. We must not give up on this sector. Australia has strong advantages in these areas, but with the high exchange rate caused by the resources boom they are not as competitive as they were before. That means we must redouble our efforts to ensure a strong, viable, growing, export oriented manufacturing sector, but that is not occurring. We must not allow a situation to continue where the government is saying: ‘We’ve got a resources boom. That has an impact on the exchange rate. Sooner or later the exchange rate will fall and then some other sector of the economy will pick up the slack.’ If we lose the engineering base of this country, if we lose the skills base of this country, then it will not be two, three or five years before we regain that—it will be 20 years.

The member for Macarthur is at the table. I have visited his electorate, and in the Macarthur area there is a large number of small export oriented manufacturing operations—very inspiring outfits—but they too would be suffering under the high exchange rate and the lack of interest of this government in the future of those manufacturing enterprises. They are all struggling because of the lack of a coherent trade policy, and a coherent trade policy is what this country desperately needs.

The growth in exports of sophisticated manufactured goods has tapered off badly under this government after enormous growth under the previous Labor government. The House of Representatives Standing Committee on Economics, Finance and Public Administration has just agreed to a major inquiry into the future of Australian manufacturing and services industries, entitled ‘Beyond the resources boom’. That is what we need to be concentrating on—retaining that skills base rather than letting it go. It is falling away all the time. Why can’t Australia be a great supplier of manufactured goods to the factories of China? Why can’t we supply the equipment, as Germany did after the Second World War, to go into factories? Why can’t Australia become a centre of engineering excellence? They are exactly the sort of businesses that I visited in the area of Macarthur: small manufacturing businesses producing one, two or three units of very high value which are then used to create more manufactured goods.

When we think of the automotive industry, we think of Australia producing 70,000 or 100,000 vehicles going into a tough export market. What about, on top of that, thinking about producing components to go into two million vehicles? Why can’t Australia become not necessarily simply a supplier of completed automobiles to the rest of the world, but a supplier of the electronics, the brakes or the steering columns—other areas that require high skills and innovation—and produce those not just for our cars but for the world car? China will be producing automobiles very soon in massive numbers, which will provide enormous competition against Australian finished automobiles. But will China have the capacity to produce the high-quality components for those cars?

Let us think ahead. Let us think progressively about the future of Australian manufacturing. Let us as a parliament think about the future of Australian manufacturing. That is why I am encouraged that the House of Representatives economics committee has agreed to this inquiry, ‘Beyond the resources boom’. I hope that business organisations, trade unions and local chambers of commerce, including those in the area of Macarthur, all contribute to that inquiry. I will be asking the inquiry to visit those areas so that we are not just sitting behind a table while others tell us their stories, but actually visiting their factories.

But the problem is that this government is fixated on a resources boom that cannot last forever. We need to prepare for the period beyond the resources boom. The board of Austrade is well equipped to do that. The board of Austrade deserves the support of the Australian parliament. The board of Austrade does not deserve to be abolished, and that is what this minister is doing. He did not put out the press release. Obviously he does not agree with the cabinet decision to abolish that board, which is a great shame, and I would love to hear from him the real reasons that this board is being abolished, because it cannot be in Australia’s national interest.

Mark Vaile (Lyne, National Party, Minister for Trade) Share this | Link to this | Hansard source

For the information of the previous speaker, the member for Rankin, I was the minister who took the submission to cabinet on this. I will just make a couple of points before I talk about the substance of the Australian Trade Commission Legislation Amendment Bill 2006. We are talking about the Australian Trade Commission Act, the amendments that we are making to that act and the work that Austrade does. Of course, Austrade spends a significant amount of taxpayers’ funds supporting and promoting Australian exports across the world. There are some very telling statistics that I know members of the Labor Party like to ignore when attacking the government over trade policy and the status of the economy. The one most telling figure is the significant increase in the total value of exports between 1996 and 2005. In 1996 total Australian exports were worth $99 billion. In 2005 total Australian exports were worth $176.7 billion. So over that almost 10-year period they went from $99 billion to $176 billion.

The member for Rankin, as is his wont and that of a number of his colleagues, often likes to talk about the manufacturing sector and what has happened to it, particularly when you break that into the subsets of simply transformed manufactures and elaborately transformed manufactures. In 2005 the total manufactured goods exported out of Australia grew by nine per cent from the 2004 figure so that in 2005 there were $37 billion worth of manufactured goods exported out of Australia. Interestingly, a lot of those were fully built motor cars, but there were probably between $2½ billion and $3 billion worth of automotive parts coming out of all parts of Australia. Seeing as the member for Macarthur is here, and he has been referred to quite a bit, we will continue on that. A lot of those components are manufactured in his electorate. But there are automotive component manufacturers exporting to the rest of the world and adding to that total figure in 2005 of $37 billion. If you break that down into, firstly, the simply transformed manufactures, those exports grew by eight per cent up to $11 billion in 2005. Secondly, exports of elaborately transformed manufactures grew by nine per cent up to $26 billion in that same year. So there are improvements and increases in those critical areas where there is value adding taking place and a higher skill set being deployed in those industries.

The member for Rankin gave us a little lesson about the history of trade policy, the GATT, the changes that took place under the GATT and then its evolution into the World Trade Organisation and the core principle of multilateral trade negotiations—that principle being the MFN, the most-favoured-nation status—that is, a benefit you agree on with one country is delivered to every other member of the WTO system. Surprising as it may seem, we agree. That is our policy. Our primary policy in trade is to achieve much more in the multilateral system, because that is where you deliver the most benefit to the most countries, opening up markets across the world.

That has been very hard to achieve since the conclusion of the Uruguay Round. The major industrialised countries of the world have really been dragging their feet in liberalising their markets, particularly to the developing countries in the world, and it has been a hard task. I have obviously been pursuing that since 1999 in this position as Australia’s Minister for Trade, and we are getting much closer. I reiterate: this is in pursuit of that principle of most-favoured-nation status as far as liberalisation is concerned.

But we as a government also took the view a few years ago—as did many like-minded governments across the world—to try and energise this system and move it forward. To try and push some of the major players forward in efforts to liberalise their markets, we needed to deploy another economic principle called competitive liberalisation. This might mean that when you negotiate an FTA—it is a preferential agreement—you are providing preferential access to your market and receiving it in return, with one country bilaterally or in a group of countries. It is not done on a multilateral basis, but these agreements are done in an attempt to continue to feed the growth of market access that is required for an economy like Australia’s. If we cannot get it in a timely way out of the multilateral system, we need to continue to improve opportunities for Australia’s exporters. So, yes, we do negotiate bilateral free trade agreements. We do it with the objective of providing greater opportunities for Australia’s exporters, but we also do it with the objective of providing competitive liberalisation and injecting that into the multilateral system. And it is working.

Since this started, more countries have been engaged in bilateral negotiations. Since the failure of the Seattle WTO meeting in 1999 we have seen movement. We are at a stage this year where we are on the verge of being able to put a deal together if a number of the key players can agree on compromises in the key areas of agricultural market access and non-agricultural market access or access for industrial goods. That is a prospect in the coming months. It has taken years of work since 1999 to get to that point. But that is the very reason why we need to continue to pursue new opportunities in other areas—so that our industries can grow, so we can see exports of STMs grow and so we can see exports of ETMs grow. Our pursuits and our trade policy are not just about the resources boom.

That is the rationale, very simply put, behind our trade policy. We believe it is working and opening up markets. It is also working to consolidate our position in our major markets, like the United States, South-East Asia and Singapore. That is why we are negotiating with China—to capitalise on our market presence that is already there so that we can continue to occupy that space ahead of our competitor nations trying to get into that market, plus the markets of the large emerging developing economies like Brazil and India. So we are pursuing a very clear objective. Make no mistake about the commitment and determination of our government to achieve the desired outcome in the multilateral trading system. I hope and pray that will happen this year, not just for Australia’s sake and not just because our exporters need new market access and the commercial gains that can be accrued that generate new jobs and help underscore and develop our skills base in Australia. We need this round to succeed so that there more opportunities for the developing countries, particularly the least developed countries, of the world so that they can lift themselves up the now much maligned ‘ladder of opportunity’ in a global trading sense, help themselves get off the drip feed of aid and debt forgiveness and start trading to become stronger economies. That is probably the most important reason we have got to achieve a successful outcome in this round that we are negotiating at the moment.

The bill amends the Australian Trade Commission Act 1985. We all know that Austrade has done a fantastic job and will continue to do so, but we do not operate in a static environment. As the global circumstances are not static, we need to continue to reform and change things to make sure that Austrade is focused on the best way of delivering its services in the most efficient and economic way to Australia’s exporters. This bill amends the act by establishing an executive management structure with a CEO directly accountable to the Minister for Trade and by bringing the agency under coverage of the Financial Management and Accountability Act and the Public Service Act. The changes introduced in this bill stem from my assessment of Austrade against the principles and recommendations of the review of corporate governance of statutory authorities and office holders. The government’s response to this review will ensure that we have the most effective accountability and governance structures across the whole of government.

On 2 May, the Senate Foreign Affairs, Defence and Trade Legislation Committee, having considered the bill, recommended that the bill be passed. The committee also recommended a statement of reasons be provided explaining why the board was being abolished, taking note of the opinion in 1985 when the board was formed that it would provide a valuable advisory mechanism to government. The recommendation focuses on the question of what has changed over the last 21 years, and that means the private sector input provided by the board is no longer valuable. Let me be clear: the government’s commitment to seeking industry advice and input on trade issues continues unchanged. This government has always welcomed the advice of the private sector in promoting and developing export markets for Australian business, and we will continue to do so.

The bill before the parliament does not deal with nor change industry consultation mechanisms. It is focused squarely on the appropriate governance arrangements for Austrade. What has changed since 1985 is the awareness that a board that has not been delegated full power to act is not the most effective governance structure. The government’s commitment to improving the governance framework of statutory authorities means that, to establish a sound governance base in legislation, Austrade should move to an executive management structure.

A governing board is not the only means of seeking the views of the private sector. This is demonstrated by the government’s ongoing commitment to non-legislated consultation mechanisms on trade promotion, including the Trade Policy Advisory Council, the national trade consultation process and the Free Trade Agreement Export Advisory Panel. In fact, the flexibility allowed by non-legislated mechanisms empowers the government to seek input on key issues as they evolve. The formation of the Free Trade Agreement Export Advisory Panel in 2005 is an example of the government’s proactive engagement with business to help inform our efforts to promote and develop export markets.

This bill will establish a sound governance framework for Austrade. It does not affect the ability of the government to expand and modify new and existing non-legislated consultation mechanisms to seek the views of business in a manner best suited to the needs of the day. These changes do not have an impact on the role or function of Austrade. It will be business as usual for Austrade in dealing with their clients and the Australian community during and after the transition, meaning that we can continue to look forward to more great results from Austrade, which last year assisted over 4,000 clients to secure export deals worth in excess of $18 billion. I commend the bill to the House.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Griffith has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.