Warren Truss (Wide Bay, National Party, Minister for Trade) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends the Export Finance and Insurance Corporation Act 1991 by making changes to the governance arrangements of EFIC. These changes will result in its current board management structure reflecting more closely the broad corporate governance model set out in the Review of Corporate Governance of Statutory Authorities and Office Holders, conducted by Mr John Uhrig.

EFIC is Australia’s export credit agency. EFIC’s mandate is to profitably support the growth of Australian business internationally, particularly in the market gap where private sector capacity is insufficient or unavailable. This bill forms part of the implementation of the government’s response to John Uhrig’s review of corporate governance of statutory authorities and officeholders. The government has been reviewing all statutory agencies in the context of Mr Uhrig’s recommendations to ensure that we have the most effective accountability and governance structures across the whole of government.

The government has assessed EFIC’s existing governance structure against the recommendations and principles of the Uhrig review and identified that the board template is suitable on the basis that EFIC operates primarily as a commercial organisation and (except in relation to national interest transactions) its board has a high degree of power to act.

The changes are of an operational and enabling nature. The amendments do not impact EFIC’s functions, nor EFIC’s delivery of export facilitation services to Australian businesses. EFIC will continue to be focused on assisting Australian businesses to enter and develop export markets.

On behalf of the government, I would like to thank the current and previous EFIC boards. I am grateful for their extensive expertise and commitment in supporting the growth of Australian businesses internationally and I am confident that the board will continue their good work.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

I rise today to speak in support of the Export Finance and Insurance Corporation Amendment Bill 2006. It impacts on one of the key challenges that face this nation—that is, the issue of improving our export performance. EFIC actually undertakes a number of key functions. It facilitates Australia’s trade by providing insurance and finance to Australian companies and individuals who are involved in exporting, it encourages banks and financial institutions to provide financial assistance to exporters and it provides information and advice to Australian exporters regarding insurance and risk. EFIC provides these services on a commercial basis where the private sector will not. It is a very good example of where government must become involved to correct market failure and to provide a service which assists our economic growth, a service which, if left to the market, simply would not exist.

The provision of these services has become all the more important over the past decade. A growing share of opportunities for export growth in fact goes beyond our traditional developed economy markets, with some of the greatest gains to be found in developing economies and the large number of newly created states. At the same time as presenting new opportunities for export growth, these emerging market economies also present much greater risk, risk which the private sector would probably not be willing to bear. In the circumstances, EFIC can step in and provide the insurance, finance and information for these markets that would not otherwise be available.

We support the bill because it does, as the minister has indicated, really implement a number of the recommendations that were made by the Uhrig review. Essentially, Uhrig came to the view that EFIC should be managed by a board. The bill will result in a managing director being appointed by the board after the board has consulted with the minister. It will also see a reduction in the size of the board. I, too, join with the minister in giving our thanks to those who have served in this capacity in the past. The bill itself will have no regulatory and financial impact on the Commonwealth and EFIC’s mandate and functions; they will not be affected. Along with interest groups and EFIC itself, we support the bill. I note that the webpage of EFIC states that it will be self-sustaining in its operations. We will continue to monitor that as an outcome.

Important as these changes are, they will not arrest Australia’s woeful trade performance. That woeful performance is even more apparent when one considers the appalling trade performance over the past 10 years, particularly the past five years. We had a timely reminder of it on Friday of last week, with Australia recording yet another trade deficit. The deficit, for December 2006, was not only a massive monthly deficit of $1.3 billion but also the 57th in a row. Australia reached a new milestone in 2006 when foreign debt passed the half a trillion dollar mark. I can remember when this government came to office and was making great play of the debt trap. Foreign debt at that stage was around the $180 billion or $190 billion mark. It is now $522 billion, up 170 per cent. That means Australians spent almost $30 billion over the past 12 months on foreign interest payments. That is $30 billion that we had to send overseas just to pay the interest on loans borrowed to buy more goods and services from foreign countries. Interest payments on foreign debt have more than doubled under this government’s watch, yet they want to lecture the opposition about debt and financial pressures.

Australia’s higher debt places upward pressure on interest rates as the risk of lending to Australia increases. That is why Australia has the second highest interest rates of the OECD countries. Australia’s standard household mortgage rate is 7.05 per cent. Compare that with housing interest rates in Canada at 6.3 per cent, the United States at 6.14 per cent and Germany at 5.27 per cent—just to name a few. This is a government that likes to compare what it has achieved in interest rates against the past; it never wants to compare it with the present—the present, as we have indicated, shows that we are well ahead in interest rate payments as a consequence of the massive foreign debt that this country is experiencing.

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

I understand that the member for Hotham wants to move an amendment. At present, he is not speaking to the bill. If he wants to move his amendment, he should put himself in order.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

I appreciate the point that you are making, Mr Deputy Speaker. The point I am making is that this bill is being introduced to assist the country’s trade performance. That is what it is being introduced for. That is what the explanatory memorandum says. Whilst we support the bill, I am highlighting what that trade performance is.

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

If the member for Hotham could just simply move his amendment, that would facilitate it.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

I formally move:

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:

(1)

notes that the bill will do little to correct Australia’s trade balance which:

(a)

has been in deficit for a record 57 consecutive months;

(b)

recorded a trade deficit of $11.7 billion in 2006;

(c)

is contributing to a current account deficit of $54 billion; and

(d)

is contributing to a record $0.5 trillion foreign debt; and

(2)

calls on the Government to take all necessary measures to address these failures”.

The point I was making before I moved the amendment was that we are paying more in interest rate payments than the rest of the world, and our massive foreign debt is a contributing factor. Australia’s high foreign debt also puts it at risk of a sudden loss of confidence in Australia as an investment destination. Such a sudden loss of confidence would cause depreciation in the dollar and an increase in the cost of imported goods, leading to inflation and leaving the Reserve Bank with no choice but to raise interest rates even further.

The fact is that this is a government that has racked up the worst trade performance in Australia’s history. I have mentioned the deficit figure from last week of $1.3 billion; that is for the 57th consecutive month. This is the longest uninterrupted period of trade deficit in the nation’s history. Each trade deficit adds to our current account deficit. In 2004-05, Australia recorded its worst current account deficit on record—$55.2 billion—with only a marginal improvement last year. What is more, this has happened at a time when Australia has been experiencing the best terms of trade in 50 years.

At other times in Australia’s history when we have experienced a resources boom, Australia’s trade balance has in fact gone into surplus, with the value of our exports exceeding the value of our imports. This is not the case with the current boom. As Access Economics points out:

Superheated commodity prices were meant to send our trade accounts whirring back towards surplus. Instead, the current account deficit is lingeringly large.

Instead of the surplus that should have been the story out of the resources boom, we have had an endless string of trade deficits. It did not have to be this way. What we have really had in this country, in my view, is a squandering of the nation’s prosperity. That has been contributed to by our poor trade performance.

I remind the parliament that Australia’s exports averaged annual growth of eight per cent a year in all of the years when Labor was in office. From 1983 to 1996 there was average growth of eight per cent per annum. How does it compare with the figure during this government’s 10 years in office? There has been average yearly growth of just four per cent per annum over the past 10 years and, over the last five years, just one per cent.

The point I make is that, had Australia maintained the rate of growth in exports achieved in the eighties and early nineties, Australia would now have an annual trade surplus of $14 billion rather than the actual outcome, which is a trade deficit of $12 billion. Not only would that have taken pressure off interest rates at home; it would have seen an improvement in the quality of job prospects in this country, an increase in the nation’s prosperity, stronger growth and, importantly, a rebalancing of the components of growth being driven and contributed to strongly by exports.

They were the overall figures—eight per cent being halved and then going down to one per cent. But let us look at manufactures. Elaborate manufactures exports have slowed to a crawl over the past five years. Between 1982-83 and 1995-96—again, under a Labor government—elaborate manufactures exports averaged 13 per cent per annum. Under this government, the figure is just three per cent per year. Is it any wonder that our manufacturing sector has lost 145,000 jobs—60,000 of them since the last election? It is a similar story when you talk about services. Export volumes in services averaged growth of 10½ per cent under Labor, but during the last five calendar years under this government they have averaged a decline of 0.3 per cent a year. I am talking about volumes.

I notice that the minister, in response to a piece that I had done in the Age last Wednesday, accused me of choosing selectively from history in making these comparisons and then went on, in the same breath, simply to talk about the last five months performance of his own government. Talk about selectivity, Minister! The real question that you need to respond to, it seems to me, is: why has Australia failed to take advantage of the current resources boom and why can’t we get our trade balance into surplus?

If we take an even closer look, disaggregating it by price and volume, we find some further interesting conclusions. It is not just manufacturing and services that have suffered; it is also the resources sector. I quote CommSec economist Craig James, who had this to say last week:

Australia is in danger of squandering the benefits of one of the biggest commodity booms ever seen. China and India can’t get enough of our iron ore, coal and metals, but Australia’s production and infrastructure aren’t able to keep up. Frankly, it must be regarded as a national embarrassment that Australia is still recording trade deficits of about $1 billion each month in a period of stellar global economic growth and soaring demand for mining and energy resources.

Warren Truss (Wide Bay, National Party, Minister for Trade) Share this | Link to this | Hansard source

Fifty ships lined up at the ports.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to this | Hansard source

Where is the failure of this government in terms of the infrastructure and the skill base, Minister? You have been in charge for over 10 years and you want to blame someone else. Why do you not accept responsibility and recognise what is capable of being done if you have a comprehensive strategy for dealing with it?

It is important to distinguish between the growth in the price of exports and the growth in the volume of exports. That is value versus volume. The value of resource exports has grown by 9.2 per cent over the past five years. That is because of the resources boom. But the ABS measure of export volumes—the growth in value is 9.2 per cent but this is the growth in volumes, which strips out the impact of prices—shows that the volume of resource exports has grown by just 1.1 per cent per annum. I note that in his piece in the Age last Thursday the minister made no mention of the growth in volumes of exports—and why would you, with such an appalling achievement in the biggest and longest resources boom that we have experienced in a long time?

Despite the resources boom, the volume of our resource exports has failed to fire. Our failure to respond adequately to the resources boom by increasing the volume in exports is due in part to that infrastructure bottleneck and the failure of the government to take appropriate action to deal with it. It is due to the failure of the government to deal effectively with skill shortages and its failure to keep the momentum going in research and development in this country. Under its policies we have seen research and development grow at half the rate of that of our competitors. That is why this country is currently wasting its opportunities.

There is no guarantee that the boom in resources will continue forever. Every other resources boom in Australia’s history has come to an abrupt end. The simple economics of a boom in resource prices are that every resource-rich country is attempting to increase its output. While Australia has so far been unsuccessful—and I have just highlighted that problem—other countries have not. You only have to look at the huge growth in China’s volume, also that of India. There are already signs that resource prices have peaked. Access Economics, the IMF and ABARE have all indicated that the prices for Australia’s resource exports are likely to fall.

While we hope that Australia does not experience the kinds of commodities busts it has seen in the past, we have to remain aware of numerous forecasts that commodity prices will not maintain the heights we saw at the beginning of this year. The fact is we have been lucky to experience the boom in resource prices over the past three years. The boom in prices has cushioned the impact of poor export performances in manufacturing, services and resources. But Australia has to be more than just the lucky country; we need to be a productive country, a country that does not rely on resource exports alone but has a broad export base that includes manufactures and services. Australia simply must produce more goods and services that the world wants to buy. Australia’s manufacturing and services industries must have a future; they must become competitive and productive again. That will underpin, if we achieve it, sustained export growth, as was experienced in the eighties and the early nineties.

Consider this, Mr Deputy Speaker: between 1990 and 1998, Australia’s productivity level, benchmarked against the United States, climbed from 78 per cent to 85 per cent, but by 2005 it had slumped back to 79 per cent. Those productivity gains that we drove have now been dissipated. Productivity has effectively flatlined in the past two years. The most recent national accounts, released in December, showed that productivity actually fell 1½ per cent in the December quarter. So getting productivity growth back on track is the key to making Australia competitive again and putting our trade accounts back in the black.

Australia’s trade policies are making the situation worse rather than better. The government’s preoccupation with free trade agreements was because they were supposed to build trade. Labor supports the notion of free trade agreements but at the end of the chain and on the basis of strengthening the multilateral round—the WTO—through regional arrangements and then using the free trade agreements to build again.

That is what we did to get a successful outcome in the Uruguay Round. Labor took the issue to APEC, secured the Bogor Declaration and then sought to build on that through free trade agreements. The problem with this government is that it has reversed the order. It has really made the lead come from the free trade agreements. We have seen the consequences of those free trade agreements. All of the bilateral free trade agreements the government has signed on behalf of Australia over the past three years have seen our trade balance with those countries worsen.

It is now two years since Australia’s bilateral free trade agreements with Thailand and the United States came into effect. Over those two years, Australia’s exports to the United States have averaged an annual growth of just three per cent, while imports have averaged nine per cent. As a result of the first two years of the Australia-United States Free Trade Agreement, Australia’s merchandise trade deficit with the US increased by 30 per cent, from $11 billion to $14 billion.

Australia’s exports to the US have grown just $500 million over the two full years of the operation of this free trade agreement. It is a long way short of the $3 billion per annum that this government was asserting would be the benefit to the nation. Through a study the government commissioned, it argued that we would also get large gains from increased investment flows between the two countries; however, the figures show that US investment in Australia has fallen since the agreement came into effect. In 2005, US investment in Australia fell by $32 billion.

A number of key sectors in the economy were left out of that agreement. Sugar is the classic example. There was a dud deal in respect of the yarn forward proposal and also the agreement to allow the US to extend their copyright. There was no consistency in what the government sought from that trade agreement. I do not doubt that some very good work was put into looking at what we should have achieved but, in the end, the government wanted a political trophy rather than a strategic outcome that secured the basis of our trade with the United States.

In respect of the services sector, there was no mutual recognition of Australian financial market qualifications. US qualified licence brokers are automatically recognised by Australia and are able to trade in Australia. However, Australian brokers must go through an onerous process with the US Securities and Exchange Commission to be allowed to operate in the United States. What sort of reciprocity is that? The government hails the agreement as its great step forward, but the agreements have worsened the trade perspective between the two countries.

Bilateral trade deals are a very poor second cousin to multilateral or regional agreements. Bilateral agreements can lead to trade diversion rather than trade creation—that is, we merely end up trading with the bilateral free trade partner because they offer us preferential tariffs, when the cheaper and more efficient product could be sourced from a third country which cannot compete with those preferential tariffs. It is also not possible to negotiate the removal of domestic industry-wide subsidies or export subsidies in bilateral agreements. That is why we have to ensure that we get the outcome out of Doha.

Bilateral agreements also divert attention and resources for multilateral and regional negotiations. Australia is essentially participating in a trade arms race in the region, with each country rushing into bilateral agreements lest they be undercut by the other. No wonder David Spencer, our ambassador to APEC, stated last month that countries in the regions do not have the resources to devote to multilateral agreements while there are a burgeoning number of bilateral agreements. We must pursue as a guiding force a trade policy that gives our exporters access to all markets—not just to individual markets.

At the same time as reducing protection on imports, we have to support programs that encourage exports. Exports are our future, but naturally they have not been Australia’s culture beyond the commodities groups. We believe in multilateral agreements first, regional free trade agreements second and bilateral agreements third. We also believe that there is another side to free trade, and that is having integrated trade industry and trade promotion policies. We do not believe in negotiating the opening of markets only to leave our exporters to hang in the breeze. Instead, we believe in supporting industry to take advantage of greater access to opportunities through import and export programs. EFIC is one of them. There is also the Export Market Development Grants Scheme and two other programs that existed when we were in office: the International Trade Enhancement Scheme, which I introduced in 1990, when I was Minister for Science and Technology, and the Innovative Agricultural Marketing Program, which I was responsible for when I was Minister for Primary Industries and Energy.

These programs generated support for projects which had the potential to generate export earnings. They financed export market entry and expansion and the development of significant new markets. They were implemented as a result of the Hughes review, which the Hawke government commissioned. Our economy, which had for so long been protected and insular, was recognising the real opportunities resulting from globalisation, but we needed assistance to move in that direction. ITES financed up to 50 per cent of project expenditure, up to $2.25 million. An evaluation in 1994 of that program found that it was a significant factor in encouraging firms to expand their exports. Every ITES dollar spent up to that date had produced $18 in net exports in return, yet both of these programs—ITES and the Innovative Agricultural Marketing Program, which was more modest but terribly important in getting our food industry into those markets—were abolished by the government when it came to office. I believe that these programs need to be considered again. We need to understand that these programs were important drivers of export growth. As part of Labor’s comprehensive approach, it will reassess those programs, including the underspend this government has overseen in the Export Market Development Grants Scheme.

In terms of where we go from here, a golden opportunity presents itself to this government this year, as we are hosting APEC. This gives us an enormous opportunity in terms of input to the agenda as well as the type of meetings we have. About a year and a half ago I foreshadowed what I saw as Australia’s role in APEC this year in a report I presented to the parliament as part of a study trip I undertook. A couple of recommendations that were made were, firstly, that we need to look at how APEC can drive a successful outcome from the Doha Round in the same way as the Bogor Declaration complemented the Uruguay Round. I do not believe this will be a wasted effort because, if Doha falls over, APEC becomes the next-best multilateral option for this country. It has countries in it with which we can talk. We should be using APEC to drive Doha and, in the event that it falls over, to be the fallback.

On the back of that, we also need to pay a lot of attention to strengthening the guidelines that were established at the Santiago meeting to give consistency to free trade agreements and to make them consistent with the multilateral framework. The second important thing that I think we need to do as a matter of urgency is to see it as not just trade liberalisation but capital flow enhancement. We need to learn the lessons of the Asian economic crisis, argue for better governance provisions and better openness for capital flows. For this reason, I believe the economic ministers have to play a stronger role in APEC. I would like to see Australia insisting on the economic ministers, not just the foreign and trade ministers, playing an important part in the lead-up to important APEC meetings. This is a golden opportunity. It should not be passed up. The government’s woeful trade performance is a sorry indictment on their record. We believe that it can be done better and when we win office we will do those things. (Time expired)

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I second the amendment. The Export Finance and Insurance Corporation Amendment Bill 2006 implements the recommendations of the Uhrig report, which improved the management and corporate governance of EFIC. On that basis and on the basis of broader community support for this legislation, Labor is happy to endorse and vote in favour of the bill. Our overriding concern is that this legislation, as important as it is, will not in fact go very far in improving Australia’s trade performance. It is for that reason that the member for Hotham has moved a second reading amendment which does not decline to give the bill a second reading but at the same time asks the House to note that the bill will do little to correct Australia’s trade balance, which has been in deficit for a record 57 consecutive months. A trade deficit of $11.7 billion was recorded in 2006, which is contributing to a current account deficit of $54 billion and to a record $0.5 trillion foreign debt. The amendment calls on the government to take all necessary measures to address these failures.

These are very big numbers. Fifty-seven consecutive trade deficits is a record, and a very undistinguished record, on Australia’s part. That we have had such a succession of trade deficits, most of which have occurred during the best mineral prices and terms of trade in 30 years, is no mean feat. It is hard to imagine. If you look around at other countries of the world which are major exporters of mineral commodities, most, if not all of those, are in surplus, but here we are in deficit and there are very few signs of things improving. You could imagine that the recovery was truly just around the corner and say, ‘Well, it has been bad, but things are getting better.’ Indeed, Treasury documents, if you care to peruse them, over the past five years have consistently said that the recovery in export volumes is just around the corner and that literally next financial year the volumes will recover in response to the high prices—the best prices in 30 years. But it is just not happening and we must ask why.

The Minister for Trade said that it is because of ships being lined up in ports like Newcastle—my goodness! For a start, not a lot of iron ore comes out of Newcastle. Most of that comes out of Western Australia. But I am sure that the minister would have an excuse, no doubt laid at the feet of the Western Australian government, of a local council or of a regulatory authority, but which has nothing to do with the government. It is never the government’s fault.

If you look at the litany of explanations, which are really excuses for our appalling trade performance, you see that they started with claims that there was this world economic slowdown. There was a slowdown for a while, but then the world economy took off. It was zooming ahead, but it did not stop the government saying that our export performance had slumped because of the world economic slowdown. Then along came SARS—in many ways for the government a blessing in terms of another excuse: ‘It’s SARS, that is why our trade deficit is so bad.’ Then it was bird flu. Then of course it was international terrorism—but it is never the government’s fault!

The opposition leader talks about the blame game. This government is expert at the blame game because when things are going badly it blames everyone and everything but itself, and when things are going better it claims all credit. It claims all the credit for the strong economic growth that has occurred in Australia over the last 15 years, even though the government has actually been in place for 10½ years. It has claimed all of that credit, despite the fact that it was a consequence of a productivity boom created by the economic reform program of the Hawke and Keating governments which unleashed a decade of record productivity growth in Australia.

But what has happened since the year 2000? This reform-lazy government has allowed productivity growth to slump and in the last three months for which data is available—that is, the three months to September of last year—productivity growth was not zero; it was minus 1.5 per cent in one three-month period, and that came on the heels of minus 0.2 per cent in the previous three months. Yet we had the Treasurer in the parliament on 1 November crowing about productivity growth being at or marginally ahead of the previous productivity cycle. So the only person in the country who is happy with Australia’s productivity performance is the Treasurer of the country—which is a pretty bad situation, because he is the one who should be doing something about it. But he does not even acknowledge that a problem exists. It is because of that poor productivity growth that our competitiveness in international markets has deteriorated so dramatically, and that has been reflected in the performance of our manufacturing and services and indeed our resources exports.

In volume terms, under the previous Labor government, over the period 1983-96, manufactured exports grew by nearly 13 per cent, but in the period of this government up to 2005 they grew by just over five per cent per annum. So there was a drop from almost 13 per cent to just over five per cent per annum. If you look at services exports, you see that the story is similar. Under the previous Labor government, service export volumes increased by more than nine per cent, but under this government they increased by only around 2½ per cent. If we now go to resources—the area where we should be doing really well on export volumes in response to the best prices in 30 years—we see that export volumes of resources under the previous Labor government grew by 6½ per cent and under this government they grew by less than four per cent. So what is going on; what is going wrong?

A lot is going wrong, and it is not helped by the Treasurer believing that there is no problem with productivity growth in this country and the trade minister getting up in parliament chortling about our wonderful trade performance. If they both believe everything is going magnificently then we will never get the policies put in place under this government to remedy these structural weaknesses in the Australian economy. That is why it will require the election of a Rudd Labor government in order to deal with the structural weaknesses in the Australian economy.

We do rely substantially on the export of resources from this country, not only agricultural resources but mineral resources. I was very disturbed last night when watching Lateline to see the Australian of the Year say that we should already have ceased exporting coal from this country. He said that we should already have ceased exporting coal—not that we should phase it out over time but that it should have ceased already because it is wrong to export coal from Australia.

In responding to the greenhouse challenge we need a mix of policy responses, but at the heart of those responses has to be a clean coal future for this country. We cannot simply rely on generating power in Australia by solar and other renewable sources. Nor should we be saying to the rest of the world that it is wrong to generate electricity from coal. We should be investing in and supporting the development of clean coal technologies. We are sitting on a coal seam that extends from the Bowen Basin in Queensland through to the Latrobe Valley in Victoria, and the Australian of the Year is saying that we should not be developing those resources, exporting them and giving developing countries an opportunity to go along the economic development path that wealthier countries have followed. I hope the Prime Minister does not associate himself with the remarks of Professor Tim Flannery, as the Australian of the Year, as he associated himself with Professor Flannery when he was made Australian of the Year, because these remarks are irresponsible. They are a recipe for massive job losses in Australia and a recipe for economic dislocation in this country and around the world. That is the truth of the matter whether people like it or not.

I have been talking about resource exports, but let us look at services exports. I compared the figures from 1983 through to 1996 with figures from 1996 through to 2005. If we update those a little all the way to September 2006—that is, the period of the Howard government up to September of last year—we will see that the growth in the volume of services exports was 3½ per cent per annum and for the same period of the previous Labor government it was more than 10 per cent per annum. Everywhere we look, the volume of our exports has deteriorated under this government. I need to acknowledge that there is one exception: rural exports. I need to correct myself there; they too have declined. I thought I was going to be able to say something good about the government’s export performance, but I have disappointed myself. I was trying to give credit where credit was due, but no credit is due. Rural export volumes increased by four per cent under the previous Labor government but by 1.2 per cent under this government. Of course, the government will claim that that is all due to the drought, but there are other problems as well.

What has the government sought to do in relation to our international competitiveness and access for our rural producers, service exporters and manufactured exporters to international markets? It has essentially given up on multilateral trade liberalisation. You have to doubt whether the government has ever been committed to multilateral trade liberalisation, because again it took the previous Labor government to kick-start the Uruguay Round of multilateral trade negotiations, which produced real outcomes, including for agriculture. Were they ideal outcomes? No, but they were real outcomes and there was meaningful progress. What have we had since the completion of the Uruguay Round in terms of multilateral trade negotiation? Nothing. What outcomes have we had? None. One of the reasons, as Jagdish Bhagwati has pointed out, has been this spaghetti bowl of preferential trade deals which have proliferated in the last few years. Australia, once a proud contributor to multilateral trade negotiations, now is very much in there with these preferential, discriminatory trade deals. We were told that these trade deals were going to unleash wonderful benefits for Australia and that is why the government was going down the preferential bilateral trade deals path. By ‘preferential’ I mean giving preference to one country while discriminating against all other countries. That is what a preferential trade deal is and that is the sort of deal this government likes to strike.

There was a very long and controversial debate about the Australia-US Free Trade Agreement and whether that would have merit. We were told, on the basis of consulting reports, that it would unleash enormous benefits for Australia. Let us have a look at what the outcome has been so far. In the first two years of the Australia-US Free Trade Agreement, Australia’s merchandise trade deficit with the United States has actually increased by 30 per cent—a great deal. ‘Come here—strike a deal,’ says Mr Howard to the President of the United States, and they agree to negotiate and fast-track an Australia-US Free Trade Agreement that so far has led to an increase in Australia’s trade deficit with the United States of 30 per cent.

The consultant’s report that the government paraded all around the country and all around the world said that in fact the main benefit would occur by liberalising the Foreign Investment Review Board processes so that there would be a lot more American foreign investment in Australia. The report said this was worth billions and billions of dollars to Australia and this is what was really going to drive the economic benefits of that trade deal. What has happened? In the time since that trade agreement came into force, what has US investment in Australia risen by? Nothing. US investment has fallen.

This big liberalisation program was going to lead to all of this American foreign investment coming into Australia, and in the first two years it has fallen. I will not be churlish and say that that therefore proves that there will never be any benefits from such deals for Australia. But you would have to say that the early days are not encouraging.

We will look now at the Singapore-Australia Free Trade Agreement. It came into effect in mid-2003. Our trade balance with Singapore has gone from a surplus of $165 million to a deficit of more than $7½ billion. So the early days are not very happy days there either. Now let us have a look at the Thailand-Australia Free Trade Agreement. Since that deal came into effect in early 2004, Australia’s merchandise trade deficit has increased from $700 million to $2 billion.

These are very discouraging figures. It shows the folly of putting all of your eggs into the basket of bilateral trade deal negotiations, especially those preferential deals. It is true that the previous Labor government, while it was negotiating and pushing for multilateral trade liberalisation, was also negotiating bilateral trade deals, obviously, with individual countries. But it did so with countries like Japan, Korea and China, not on the basis of seeking preferential access to those markets but simply wanting an opportunity to compete—that is, the then Australian Labor government asked those countries in the negotiations not to provide a special deal for Australia but to open up the market to competition from exporters around the world, one of which would be Australia. That is what we asked for and that is what we got. So there is merit in having a dual process of multilateral trade negotiations and bilateral trade negotiations where the bilateral trade negotiations are not preferential and are non-discriminatory. But that has not been the approach of this government. That is why our export performance has been so disappointing.

Services export is a completely forgotten area for this government. There has been no strategy put in place to boost Australia’s services exports. Some of our service exporters, such as in the financial services area, are starting to make real gains, sometimes with the help of some trade officials—I acknowledge that. But as to strategy, services contribute 80 per cent of Australia’s gross domestic product and yet contribute such a small proportion of our exports.

Increasingly with globalisation, more and more services are traded services, so it is not good enough to say services are overwhelmingly non-traded goods and therefore there is no point in trying to encourage and support the export of services. Increasingly they are traded goods and other services such as shipping and insurance, which, by definition, are traded goods. But where is the strategy? Where is the government sitting down with service exporters and saying to them, ‘We want to help open up access to service markets in other countries?’ Services exports must be an integral part of any trade strategy, but they have not been because this government has been slothful on economic reform. It has been slothful in terms of our trade performance, and as a consequence we now have a very big foreign debt of half a trillion dollars, which is to this government’s eternal shame.

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I am very glad to follow the opposition members in this debate on the Export Finance and Insurance Corporation Amendment Bill 2006. All we have had from the government on this very simple, non-controversial bill is a bit of a second reading speech in here, a bit of a touch-up on the way through from Senator Sandy Macdonald in the Senate and at least a considered speech from Senator Grant Chapman, where he actually tried to make more out of this bill in a positive sense than one otherwise might do. Senator Chapman made a considered speech based on his experience, arguing the case of the central tenet of what is proposed here by a fellow South Australian, Mr Uhrig, who was given the task in 2005 to look at corporate governance across Australia’s statutory bodies. Finally, the Uhrig report is to be put into play in this bill after consideration by a Senate committee which Senator Chapman was involved in.

This bill is wonderfully indicative of what this government are about. When they were elected to office, they put in the National Commission of Audit. They told the National Commission of Audit what they wanted to be found in that audit, they told them what they wanted the outcomes to be and then they produced a tome, canary yellow in colour, that was probably about an inch or so thick. But the foundation stone of that report was the protestation that the Commonwealth government of Australia should not deliver one single service to anyone in Australia. The recommendation was that the sole work of the federal government of Australia was to benchmark and audit. Well, what have we got in this bill? Yet another demonstration that the horizon of the coalition is an auditor’s horizon, a benchmarking horizon. When they look at export finance and insurance, they do not look at the key thing that they should be fundamentally concerned with, and that is Australian exports and ensuring that we have a vibrant export culture and that everything we do should be bent towards ensuring that, in good times and in bad, that culture is supported and extended. What is most important here? Running government departments and agencies as if they were just normal businesses in the corporate area.

It is very instructive to closely listen to what EFIC are supposed to do under this bill. The act charges EFIC with undertaking four key functions. The first function is to facilitate and encourage Australian export trade by providing insurance and financial services and products to persons involved directly or indirectly in such trade—hardly earth-shattering. It is something that has been done throughout and something that is important to India and China and to some of our other markets. What else should this organisation do?

The second function is to encourage banks and other financial institutions in Australia to finance or assist in financing exports. I would like a report card on that over the past 10 years. Have we seen this corporation or a government minister or any government spokesman in the past 10 years cajoling Australia’s banks to get in and export Australian goods? There has not been the mentality, on the part of this lazy government, to convince, cajole and actively go out and sell Australia’s exports. Instead, what do we have? Mr Deputy Speaker Adams, as you well know, from your experience as a committee member, we have got bilateral treaties and agreements. That is the big go. What did this mob do in opposition? They spent ages talking about the fact that they needed a committee to look at the treaties we were signing up to because they were fearful of the broad, wide world and what might happen to Australia if we signed up to multilateral pacts.

This is a government that thinks of export and trade only as two-sided bilateral agreements. You can make one with Singapore. They are not a bad bunch of people. They actually know how to trade in Singapore, I can tell you that. They know how to export in Singapore. They know how to be an entrepreneur. They know how to actively put together government enterprises. They know how to do public-private partnerships for the good of the Singaporean people. They are outstandingly good at making themselves an integral part of the growth in China. If you go to Guangdong province you can see what Singapore is doing and what it is exporting into China, with its explosive growth. They are at the very core, the very bed, of what China is doing.

Are Australian corporations involved in developing Chinese assets from the ground up—building them, designing them, providing the fundamental infrastructure, providing the photonics and the communications? Singapore has got all of that wrapped up. They not only speak the language but they actually understand that they can build wealth for their country by exporting their expertise and putting their money where their mouth is. These are people who deserve to succeed. We should follow their example closely.

What do we do instead? Encourage the banks, do a bit here, do a bit there, and say, ‘Won’t you help these people?’ This is a government that is afraid of multilateral pacts. This is a government that has tut-tutted about the problems in the Doha Round. The Europeans have put the Americans up against the wall and said: ‘We’re going to do 20 per cent of renewables. If you people would come in to the show we’d up that to 30. We’re actively trying to fix the problems that we’re causing in regard to climate change. What about you clowns?’ The Americans finally are being forced to make some response. There will be greater problems now, having regard to the impact of the election of a Democratic-controlled congress. I refer to the reservations of the Democrats and the US government, and of the President, Republican or Democrat, who will be elected. Those reservations will be very deep. They will make multilateral pacts, agreements and an understanding more difficult. They will make it harder for the Cairns Group to drive home the lesson that those countries that have things to export should get a decent price for what they export to the richer world.

You will not win against the United States and Europe by being their little friends and buddies. The United States are the best marketeers in the world. They are also privateers. They will cut you to pieces in any export market that you can find. They are renowned for being savage and difficult. A one-on-one deal with them, as we did in the bilateral treaty, will get you somewhere. Australia, as a primary producer, is still a commodity dependent nation, despite the vast reforms introduced during the Hawke-Keating period which provided a foundation stone for a new kind of productivity—a greater productivity. We have seen a fall in the export area, as indicated by the member for Hotham, from the 85 per cent figure that we took it to down to 79 per cent. It is a flatlining performance from a lazy government that does not really understand activism. I do not like the word ‘proactive’ but certainly you could never apply it to this government. Reactive, yes, but activist in these areas? These are the auditors, the benchmarkers, the onlookers, the journalistic government that want to comment on what everyone else does and float along on the back of the fundamental work that we did while we were in government, and on the backs of Australian exporters who are doing it much harder than they should be because this finance corporation is not being driven in the way it was driven under Labor.

The third function of EFIC is to manage the Australian government’s aid-supported mixed credit program—they will not be managing it for all that long, will they, because it has been given the flick; it has been destroyed—a facility which is now discontinued, although loans are still outstanding under it. This government does not believe that you can continue to drive our programs by providing such things as a mixed credit program. This mob does not understand the conjunction between aid and trade. It does not understand that we should be exporting not only goods—it has always been easy to flog minerals, wool and coal—but also services. We should be exporting Australian trade services and Australian building services in the region. Instead, the government says, ‘We’ll facilitate that, we’ll encourage that, we’ll manage this and we’ll provide information and advice regarding insurance and financial arrangements to support Australian exports.’ Whacko. This is emblematic of a government that has a narrow, flattened horizon. That is why this bill sits with and fits this government extremely well—because the government does not see the necessity beyond it.

Why is it important for me and others on our side to support the amendment moved by the member for Hotham? It is because the world is bigger, tougher and more difficult than this government could ever envisage. When you look at the last 10-year period, you find that the fundamental failing in any organisation has been in projecting the circumstances of the time into the future. It is a common human failing. It is a failing in statutory bodies, in countries, in companies, in governments and in the broad populace. During a period of low interest rates or high interest rates, or whatever, people tend to take those factors and project them. That has certainly been the case during the mineral boom. I do not know how long this mineral boom is going to continue or how long these prices can be sustained.

It is witchery or necromancy to try to forecast what will happen. You can take a few good runs at it. My experience on the Standing Committee on Industry and Resources has given me a bit of background on it. My interest in this area tells me that there are a couple of fundamentals involved here. When you look at our export performance you find that, again, we have been the recipients of dumb luck in this area. I know that the government did not take up the recommendations of the industry and resources group. Despite the fact that we made recommendations in the last parliament and have made further recommendations now in relation to uranium, they still have not looked at flowthrough shares. They have not looked at the impact of this on the Canadian mineral sector. They have not looked at the hard things we really need to pursue in minerals exploration and minerals export. It has just been easy because the demand has gone up. Why has the demand gone up? It is because our governments have not adequately explored our resources. They have not encouraged them in the manner they should have.

Mr Deputy Speaker Adams, you will remember that when you were Deputy Chair of the House of Representatives Standing Committee on Industry and Resources we produced a report on Australia’s fundamental problems in exploration. The much lower mineral prices we were getting had left us in a situation where there was a fundamental change in Australia’s mineral sector. That change was simply this: Australian ownership went out and largely British and South African ownership came in. They were only interested in brownfields development—taking the existing resources, getting as much out of them as possible, and as effectively as possible, and pouring the money back into London, Cape Town and Pretoria, and not putting the money where we really needed it in Australia—that is, into the exploration of new resources.

When was the last time we opened a zinc mine in Australia? Why are zinc and other minerals in such demand worldwide? We know that China is expanding dramatically. We know how much demand there is. We saw last night’s report that Hu Jintao is spending $10-plus billion in Africa doling out money in order to secure resources. Because this government overplayed its hand trying to be deputy sheriff to the United States, it then had to pay obeisance to China and run to them cap in hand and take a 30 per cent cut on our gas exports to Guangdong province. This government does not understand that China is imperial and hegemonic, and it always acts in the way it has historically acted. It will protect not only its markets but also itself by ensuring that it has the widest spread of provision of raw materials that it can have. It will make you bend at the knee in order to get them, but it will sew up those resources in the whole of Africa. It will sew up whatever resources it can in South America. It will sew them up from Canada and elsewhere, and the privileged position we have been in so far will not exist in the future. That is part of the reason why prices will be driven down.

The recrudescence of India—a very strong country which is moving forward in population terms; they have 200 million to 300 million people in their middle class—poses fundamental problems for us. Our area of safety in export was going to be—in the eighties we knew what it was, but how long has it been since any member in this House heard of this?—elaborately transformed manufactures. It has been a while, hasn’t it? I can remember PJ Keating, the former member for Blaxland, talking about elaborately transformed manufactures. Do you know why he did that? Because Australia’s manufacturing capacity in clever products that people wanted to buy rocketed under the Labor government. The reason it rocketed was that there was a Labor government determined to export and help our people here. After the cataclysm of 1985-86, in a few single months we had a half a per cent to one per cent reduction in our terms of trade. We lost 25 per cent straight off the top of the terms of trade. You will remember the banana republic bit, but the fundamental reason for that was the crash in the terms of trade. The response to that has shaped the growth of the Australian economy ever since.

We are no longer just dependent on those commodities. Thank heavens for that, because, when you go out of a commodity boom, you need a much broader, wider and deeper economy. Circumstances forced us into that. The lucky country under Menzies—that dumb luck that Australia had; they would not put in the work and the thought and would not be clever about what they did and just flogged whatever they could for whatever price they got—still persists under this government. Where are the efforts to support the export of smarter products—products that will return much more to Australia? There are some, of course. There is a new sports utility vehicle that has just come into Australia called Captiva. It has a six-cylinder Australian engine produced by Holden, but most of it is made in Korea. There is one version, the MaXX—the top of the range—which is produced in Europe. That is part of the global economy. We drove part of that and played our part to ensure the survival of Australia’s motor industry. In my electorate of Blaxland in particular, the components industry is such an important part of that, but you have to drive out into the world in order to secure that. The car component industry is part of the elaborately transformed manufactures, but unless you support it and drive it, it will not be successful.

We are just having a look at doing deals with Mexico. Mexico is part of NAFTA and has done extremely well there. It is an integral part of the car manufacturing industry of North America, along with Canada and the United States. The only thing the Mexicans would get out of doing that would be exporting their products into Australia. We would have some access to theirs. It is likely at this time they would say they would not want to be part of it, but there are vibrant parts of other countries where they are renovating what they have and are driving it forward. They are signing up to broader pacts. It was an initiative of Mr Clinton, a Democrat, to form NAFTA. We saw that as a significant problem for us, but we responded. What was the response of the Australian Labor Party and of Treasurer and then Prime Minister Keating? The response was to boost along and radically transform APEC.

As my colleagues have indicated, we have a massive chance this year. In large part it will no doubt be squandered, but it should not be if this government really was an activist in the export area. The very first meetings in relation to APEC are currently taking place, and the Commonwealth drivers are taking off for Perth tomorrow because the first exploratory stuff is being done.

The government do not fundamentally believe in activism on a multilateral front, and that is why they have not driven this process for 10 years. That is why they have only lately become converts: because it suits them. They have no real belief in the fundamentals of multilateral activity. They are the ideologues of the bilateral path, which is a short, narrow path that leads only one way. It is not the fundamental that the future of a commodity-dependent country, as Australia still is, is determined by. I fully support our second reading amendment. It goes to the substance of what the problem is, and this bill indicates the narrowness of the view of this government. (Time expired)

Warren Truss (Wide Bay, National Party, Minister for Trade) Share this | Link to this | Hansard source

May I at the outset thank members for their contributions. Some of the contributions were a little on the colourful side, and few were actually relevant to the nature of the bill and instead were a general discussion in relation to trade and trade performance, as reflected in the opposition’s amendment which, needless to say, the government will strongly resist. It does so because the amendment is fundamentally flawed and is not relevant to the legislation.

The honourable member for Hotham, in his response, said a number of things with which I agree and much with which I do not agree. His speech contained numerous factual errors and misrepresentations of the government’s position and was mainly devoted to criticising Australia’s trade performance. In particular, he referred to the Australia-US Free Trade Agreement in less than complimentary terms. I think he has misrepresented substantially the performance of the Australia-US Free Trade Agreement. The figures for the financial year 2005-06 show that Australian exports of both goods and services to the United States have increased. You would not get that impression from the comments of the honourable member for Hotham. Services exports, which comprise about a third of all of our exports to the United States, increased by 5.7 per cent, to almost $5.4 billion. There were significant increases in a range of contracts, particularly new government procurement contracts. We have seen over $95 million worth of government procurement contracts which simply would not have been possible without the Australia-US Free Trade Agreement because Australian companies were precluded from those contracts prior to the agreement.

There have been some increases in significant agricultural products, in dairy in particular and in lamb and mutton, as a direct result of the benefits of the free trade agreement. But it must be said that, historically, Australia has had a trade deficit with the United States which has been going on for generations. I wish we could turn that around, but the reality is that the US is the source of a lot of the technology that is essential for the growth and development of Australian industry.

A couple of other things have happened which have made an enormous impact on the Australia-US trade balance. The first is that, when the Australia-US Free Trade Agreement was negotiated, the value of the Australian dollar was significantly different from what it is today. In 2001, for instance, the average exchange rate for the US dollar was A52c. In 2005, it was A76c. That clearly makes a difference to every figure in the trade balance, but it also alters the competitiveness of Australian products in that particular market.

Another major factor has been the diversion of Australian crude oil to Asia for refining, which has significantly altered the impact on our trade balance. I will also refer to the impact of the decline in beef exports to the United States. There has been a reduction of around $500 million worth of beef exports to the United States since the Australia-US Free Trade Agreement was put in place. Essentially that is because markets in Japan and Korea became very much more attractive following the BSE outbreak. We now have as much as 90 per cent of some of those markets; hence, that product has been diverted away from the US and into those markets, though probably only for the short to medium term.

The member for Hotham also referred to the decline in US investment in Australia without acknowledging that most of that can be attributed to the changed arrangements resulting from the restructure of News Corporation. That has had a significant effect on that statistic, but Australian investment in the US has grown substantially. I am sure that the US’s interest in Australia has also benefited from this free trade agreement.

Everyone can selectively quote statistics. The honourable member for Hotham made a quite extraordinary statement in the Age a few weeks ago that, if you projected the figures on trade under Labor today, we would have billions of dollars of trade surpluses. I responded that, if you use that same methodology, we would also have government debt running into trillions and budget deficits would be in the hundreds of billions. The reality is that the methodology is unsound; things change in time. I am not suggesting that Labor would be running deficits of hundreds of billions—probably many billions, but not hundreds of billions—therefore the arguments that the honourable member for Hotham put were simply mathematically unsound.

I would obviously like Australia’s trade to always be in surplus, and that must be an objective that we all work to, but I was surprised at the statements by the honourable member for Blaxland and the honourable member for Rankin. The member for Hotham also made a complaint about the fact that Australia has not been able to take maximum advantage of the resources boom that is occurring at the present time. I have some sympathy with that view—I think it is a pity that Australia has not been able to sell more to the markets that want our products—but then they avoided the reason for the problem: that is, 50 ships lined up at Newcastle and Dalrymple Bay because the state governments did not have the initiative to provide the port facilities that were required. The infrastructure—railway lines and so forth—is inadequate, but it is all controlled by Labor state governments. They should not point the finger of blame at this government; they should look at the reason for the failure to get a lot of those minerals out of the country in a timely way.

Labor also suggests that there have not been any new mines. I agree there have not been enough new mines, but who stopped the mines? The problem is at the state level, with the red, green and black tape that has been put in the way and that encouraged Australian mining companies to look to other parts of the world. I think the states also need to look very seriously at how on earth we can take advantage of the available commodities boom when so much red tape has been put in the way.

I would remind members opposite also, when they are lamenting the fact that we have not sold enough coal, that there are some amongst Labor who want to stop coal exports altogether. Some want to close down coalmines in the Hunter Valley. That kind of woolly thinking needs to be stamped out if the Labor Party want us to believe that, somehow or other, they would achieve higher commodity exports if they were in government.

The Australian trade performance has some quite pleasing elements. It is clear that exports are growing substantially. Even last month, when we had a disappointing trade balance, it was actually the fifth-highest month for exports on record. Indeed, we have had most of the highest months on record in the last 12 months. Our exports are growing substantially, but they have been offset by a growth in imports, mainly in consumer goods but in some instances in the equipment we need to upgrade our mining industry and to improve our manufacturing sector so that it can be more competitive into the future.

Another factor which will have an impact on the Australian trade figures over the months and years ahead, and which was reflected last month, is the importation of aircraft. Last month imports for the defence forces were significant, with the importation of the large new C17 aircraft making an impact on our trade balance. We also imported a lot of munitions in that month. Qantas have orders on the books for something like $50 billion worth of aircraft. When those aircraft come into the country it will have a big impact on our trade balance. On the other hand, we are exporting parts for those aircraft, and that provides a useful boost for Australian industry. There will be some improvements also on the export side.

We still have a long way to go in improving the world trade environment so that trade is freer and fairer. We all need to work constructively towards ensuring a better outcome from the Doha Round and any multilateral and bilateral free trade agreements we are able to achieve. Many countries want to do free trade agreements with Australia and we need to encourage that process. On the other hand, Australia sets high objectives for these free trade agreements. We want high-quality, comprehensive agreements. We do not believe there is a benefit in just putting marks on the wall for all the agreements we have; it is the quality of those agreements that counts. A lot of effort needs to go into negotiating the best quality agreements.

Doha remains the Australian government’s highest priority, and maximum effort will be put into ensuring a good outcome. I assure the honourable member for Hotham and others who are interested that that multilateral arrangement remains our highest priority. We will not compromise the resources available to those negotiations to pursue other free trade agreements with countries like China and Japan. They are high priorities and we will put the necessary resources into them as well, but it will not be at the expense of our multilateral work. The next six months or so will be critical in knowing where we are heading in relation to multilateral trade outcomes and Australia will be putting the maximum effort into achieving a good result. But we are interested in other multilateral trade agreements and bilateral agreements that can benefit Australia. We will certainly also focus our attention on that work.

Turning to the Export Finance and Insurance Corporation Amendment Bill 2006 and the reason for the discussion, I note that the opposition has indicated its willingness to support the bill and the proposed changes. This bill is a response to the Uhrig recommendations under which the government is reviewing corporate governance of statutory authorities and office holders. The response in this bill reflects the Uhrig recommendations and as a result will deliver an EFIC arrangement that is the most effective and that delivers good accountability and governance structures for the organisation. In the Foreign Affairs and Trade portfolio six statutory authorities, including EFIC, have been reviewed under the Uhrig arrangements. The Australian Trade Commission recently implemented changes to its governance structure as a result of this process.

The bill provides for the EFIC board to have the power to appoint the managing director and deputy managing director after consultation with the minister. It provides for the removal of the managing director of Austrade from the EFIC board. The size of the EFIC board is to be limited to between six and nine members and the quorum of a meeting of the EFIC board is to be reduced to three. Appointments to the EFIC board other than in respect of the government member will be limited to three years, with the introduction of a limit of two terms, or three terms for the EFIC board members who serve as chairperson. These changes are also consistent with the recommendations of the Uhrig report. The Senate Standing Committee on Foreign Affairs, Defence and Trade examined the bill in September 2006 and has recommended that the bill be passed. It is relatively uncontroversial and will have no financial impact. EFIC’s mandate and function will not be affected in any material way by this bill.

I thank honourable members for the debate on trade issues. It is important that there be opportunities to discuss those issues about which there is a reasonable degree of bipartisanship in what our objectives are. Some may disagree about what the right route to get to those outcomes is, but all Australians want our country to sell more goods. Everybody says that we want fewer imports, but it is in their hands to guarantee that we have fewer imports: buy Australian goods and do not buy imported goods. But the reality is that they do not do what they say. When it comes to the supermarket, they buy what is cheapest or what they think is best for them. When they go to the electrical goods store or wherever it might be, they tend to buy increasing amounts of imported goods. So this is a classic case where ordinary Australians can actually do something about our exports and our trade balance. They can buy more Australian goods and encourage Australian industry, and those who adopt those sorts of practices deserve encouragement and support. Thank you to those who have made a contribution. I commend the bill to the committee.

Question negatived.

Original question agreed to.

Bill read a second time.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

I would like to pose a question to the minister.

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

Do you want to speak on indulgence?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

Yes, please. I seek the views of the Minister for Trade as to the very strong view expressed by the 2007 Australian of the Year, Mr Flannery, on Lateline last night, that we should now very seriously start to reduce as a matter of urgency our coal exports.

Warren Truss (Wide Bay, National Party, Minister for Trade) Share this | Link to this | Hansard source

Reduce our coal exports? In response to the honourable member’s question, I have to say that I found the remark quite extraordinary. It is not a policy that the government intends to pursue. The government does, however, recognise that we need to do what we can to improve the technology associated with the burning of coal in power stations and in industry. We support the introduction of clean coal technology. We have done that through research and development, direct financial support and encouragement to the sector. It is very important for a country like Australia, which is a major supplier of energy, to be responsible in playing our role in reducing global greenhouse emissions. But to stop exporting coal from Australia would in my view probably not reduce emissions, because the coal would simply come from other parts of the world that do not have such high standards. His call was not well founded and does not reflect government policy.

Ordered that the bill be reported to the House without amendment.