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

I move:

That the House:

(1)

notes that:

(a)

strong and sustained export growth is essential for long-term economic prosperity and for providing more rewarding, well-paid jobs;

(b)

despite the resources boom, Australia has been seriously and consistently underperforming in relation to its export sector;

(c)

Australia’s average annual export growth rate over the past ten years is half that recorded under Labor;

(d)

Australia has now experienced 60 consecutive monthly trade deficits—the longest period of trade deficit on record;

(e)

the Government has failed to double the number of exporters by 2006, as it said it would; and

(f)

at the same time, the Government has halved the level of financial assistance to Australian exporters; and

(2)

calls on the Government to urgently adopt a comprehensive trade strategy to address the underperformance of Australia’s exports.

Despite the resources boom and significant demand from China, Australia’s export performance under this government has been appalling. This motion highlights the government’s failure on trade, and my colleagues the members for Holt and Bendigo will be pointing to what this means at the local level. The reality is that exports have been underperforming because the government has not put in place the right policies to maintain our competitiveness or our productivity, and it is not just Labor that says this. In the Financial Review today an article by Adrian Rollins states:

A Committee for Economic Development of Australia report to be released today has found that export volume growth has virtually stalled, expanding by just 2.1 per cent a year between 2001 and 2006 ...

The article goes on to say that this is in contrast to growth ‘by an annual average of 7.3 per cent in the 1980s and 1990s’. Despite the resources boom and international demand, export growth in the past 10 years under the government’s watch has been only four per cent per annum. When Labor was in office it was eight per cent. Exports are a crucial part of the economy; they should make a positive contribution to the nation’s GDP. They did so in just about every year in which Labor was in office. In contrast, in just about every year this government has been in office exports have made a negative contribution, and the budget papers forecast that this year will see a further deterioration.

The government has also failed to meet the promise it made in 2001 to double the number of exporters, from 28,000, by 2006. The number of exporters is just 42,000 today, only halfway to that target. In all, this appalling trade performance has translated to 60 consecutive months of trade deficit. No government in the history of this nation has presided over such an appalling and consistently bad trade performance. Each trade deficit adds to our current account deficit, which in turn adds to our foreign debt. We remember John Howard’s debt truck, when he was seeking to become the Prime Minister of this country. He said he would reduce foreign debt. But foreign debt now amounts to half a trillion dollars. Of course, higher debt places upward pressure on interest rates, and that is why Australia has the second highest interest rates in the OECD. On the international competitiveness front, the International World Competitiveness Yearbook for 2007 shows that Australia’s ranking has fallen from sixth to 12th place.

Frankly, other countries are passing us by. It is interesting to look at how Labor was able to achieve stronger export growth when it was in office. It did it because it had a multifaceted approach to policy in this area. We had an integrated trade and industry policy; we put multilateral trade agreements—not bilaterals—at the forefront of our negotiations; we invested in skills, infrastructure and an industrial relations framework that linked wages growth to productivity and supported our trade export sector; and we adequately funded trade assistance. What we have instead is a government intent on getting political trophies through its free trade agreements, with the United States in particular. The three free trade agreements that this government has signed have seen the trade position deteriorate in every one of those countries. On the export assistance front, where Labor introduced the Export Market Development Grants Scheme and the International Trade and Enhancement Scheme, which saw a multiple effect—12 to 1 and 18 to 1 respectively from those investments—this government has not only abolished the ITES but also halved the total expenditure on trade assistance. Little wonder that we are seeing a halving of the rate in growth in exports. The services sector is another classic example where the government has failed to direct its energies. We need to return to the sorts of integrated policies that saw this country able to have exports contribute positively to GDP. (Time expired)

David Hawker (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

I would like to strongly contest the arguments put in this place today by the member for Hotham in relation to Australia’s trade figures. This is merely an attempt by the Australian Labor Party to find anything negative in Australia’s current economic data. It is a credit to this government that that has been such a difficult task. After all, Australia is in its 16th consecutive year of uninterrupted economic growth. That is the longest period of growth since Federation. This growth has been underpinned by the economic reforms of the past 10 to 15 years and trade liberalisation over the past two decades. So the Australian economy is in a remarkably strong position and the Labor Party, to the government’s credit, struggles to find fault with its performance and management.

Our trade figures are hardly all doom and gloom. Australia achieved its highest ever export revenue of $210 billion in 2006. That is up 16 per cent in one year and more than double the level in 1996, when we came to office. This strong export performance has been driving job creation, boosting incomes in our local communities and increasing the standard of living right across the country. Our exports are sitting at approximately 20 per cent of GDP and one in five Australian jobs is now export related. Of course, this is even higher in regional parts of the country, where 25 per cent of jobs rely on exports. So the government is well aware of the importance of export growth to our continued economic prosperity. Our export volumes grew three per cent in 2006, with growth across all major sectors. Of course there is room to improve our export volumes, and there are various measures that the government has implemented to work towards those ends. We have made commitments in the areas of infrastructure, expanding our skills base and pursuing trade reform.

However, addressing export volumes requires significant investment in infrastructure by the states. Today’s edition of the Sydney Morning Herald contains a report showing that inadequate transport infrastructure is losing us export revenue. It states:

On the nation’s ports, for example, hundreds of millions of dollars in export revenue are being lost as inadequate rail and port systems clog up with cargo.

It is ironic to hear the member for Hotham complaining about falling export volumes while, coast to coast, Labor state governments are failing to provide adequate investment in our ports. If 71 coal ships are waiting at anchor outside Newcastle, as this story in today’s Sydney Morning Herald maintains, then it is the fault of the New South Wales Labor government. Port management systems are a state government responsibility. I am especially aware of the situation in New South Wales, where the state government has chronically neglected transport infrastructure for years. In doing so, it has badly damaged the state economy and hampered the state’s ability to attract business investment. So perhaps the member for Hotham ought to be speaking to his colleagues in state Labor governments around the country and asking them to take more seriously their responsibilities to Australia’s economic capacity. It is fairly simple logic that if there is not enough port capacity for ships to pick up their cargo in a timely fashion then export volumes will be affected. Through its industry statement this government is providing $1.4 billion over 10 years—

Christopher Pyne (Sturt, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

How much?

Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

$1.4 billion.

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

The minister is warned.

Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

to improve the international competitiveness of Australian businesses. We are pursuing opportunities to negotiate better conditions for Australian exporters through APEC bilaterally and by other means. We are investing $14 billion in Australia’s rail network through Auslink.

We are also experiencing the worst drought on record, and this is naturally affecting rural exports. Despite this, rural exports rose by six per cent to $26 billion in 2006. It is also interesting to note that education services exports—that is, our intake of international students—rose by 12 per cent in 2006 to be worth $10.7 billion to the Australian economy. It is Australia’s fourth largest export, and one that Labor has been quite happy to criticise. The member for Hotham seems to have a manic focus on volume numbers. Volume numbers really have very little significance here. The value of our exports is what matters. Volume numbers do not measure the value of exports to the Australian economy. Our exports, in dollar terms, have doubled since 1996. This is despite the 1997 Asian financial crisis. (Time expired)

Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I rise with pleasure to speak in this debate on the motion moved by the member for Hotham. It is interesting that the previous speaker, the member for Cook, spoke about some data from the Department of Foreign Affairs and Trade. Interestingly, in DFAT’s ‘Plain facts about Australia’s trade’, it says:

Trade gives Australians more consumer choice and spending power. If Australia hadn’t started opening its markets to trade in the late 1980s, we would now pay over 30 per cent more for a new car and some 18 per cent more for clothes and shoes.

That is a very good acknowledgement of the Labor Party policy in deregulating the markets in the 1990s—a policy which we are never given credit for in this place, but the government is obviously happy to take the benefits of it.

It is interesting to look at further DFAT information regarding the export market share in the years 2003, 2004 and 2005. For example, if we look at resources as an export market share in 2003, we see that it comprised 26 per cent and that manufactures comprised 25 per cent. In 2004, resources as an export market share comprised 26 per cent compared to 22 per cent for manufactures. If we look at Australian exports in 2005, the resources boom meant that the figure for resources was 33 per cent, while manufactures comprised 21 per cent. So in the space of two, three or four years, the manufacturing share has fallen by something like four per cent.

What is happening to manufacturing in this country? We are not the only ones talking about the state of manufacturing in this country. Let us look at the City of Greater Dandenong and some of the great enterprises that are based around it. The City of Greater Dandenong encompasses an area of about 130 square kilometres and it is home to more than 8,000 companies, producing a total output worth in excess of $9 billion. The local manufacturing region provides employment for 70,000 people of 140 different nationalities. This region produces 40 per cent of the total Victorian output of manufactured goods and is renowned as a centre for innovative manufacturing, with many companies possessing world-leading technology within their specialist fields. The region has more than 300 exporters, and hosts four of the top 10 Victorian exporters, all of whom are SMEs who predominantly export their total production into international markets. So we have companies of excellence in that region. Even with the river of prosperity that appears to be running through Dandenong, these people have grave concerns about the federal government and its export policy—or its lack of export policy.

Let us look at the organisation that helps to coordinate those particular export bodies. It is called the South East Melbourne Manufacturers Alliance, a City of Greater Dandenong alliance. Having talked to the chief executive officer about this alliance—an alliance that coordinates and deals with these companies and helps with access to overseas markets—you would think that he would give a glowing endorsement to the federal government. Tragically, that is not the case. In fact, let me tell the House what he thinks about the federal government. He says:

Like local industry, SEMMA membership, currently at 130 companies, continues to grow. Whilst we recognise ongoing challenges for local manufacturers we are optimistic that the sector will continue to prosper.

SEMMA strongly believes that at the centre of manufacturing sustainability is the need for manufacturers to work together and with government to strategically plan their future direction. As a consequence our organisation has been heavily involved in a wide range of initiatives addressing this issue.

However SEMMA is disappointed with the Federal Government’s lack of a national strategy for manufacturing, their non participation at key organised industry forums and their perceived indifference towards SME manufacturers in Melbourne’s south-east.

What a glowing reference! He continues:

I believe that Australia has the worst export performance of any OECD country with only 4% of Australian companies exporting compared to the next lowest country of Canada at 13%.

The issue of Australia’s poor manufacturing export performance centres around one issue being:-

“Australia’s continued inability to formalise a long term national export strategy that incorporates a model that can engage SME’s”.

In regards to SME’s Melbourne’s south east has in excess of 90% of companies in this category—many have innovative products—most do not export.

Why is this so? They say it is because of a lack of knowledge, that SMEs believe export is only for larger companies, because of a lack of real, practical support by the government, and the belief among SMEs that exporting is all too hard. SEMMA continues:

The current export infrastructure, namely Austrade, has been developed as a Government cost centre, focusing on overall—

(Time expired)

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, they can talk about the economy as much as they wish; we will be quite prepared to respond to every question, and in great detail.

The member for Hotham gave a detailed tirade on the performance of Labor in the 1990s, and I appreciate that that was a time of boom and bust and that it was not always a time when governments acquitted themselves well. At that time, it is true that there was productivity growth, but it was a very different period then. I do not recall a drought, as there is today, back in the 1990s. I do not recall a SARS crisis. I do not recall an Asian meltdown. I do not recall a tech bubble or anything like that. What I do recall is an economy that, since 1996, has performed extraordinarily well through some of the greatest external shocks that the world has seen, and in that time Australia has acquitted itself well.

There is no greater evidence of that than when we compare OECD economic performance and productivity against the benchmark, which at the moment is the United States. Comparisons through the OECD can be very harsh, and the opposition knows that well. Often, very tiny differences in economic performance can make it look like you are a long way down the list, and Australia sits proudly with wonderful economies like Japan, Sweden, Finland, Belgium, the Netherlands, Canada and the UK—almost inseparable in our percentage gap of GDP below that of the United States. In front of us are only Denmark, Austria, Iceland, Switzerland, Ireland and Norway. These northern European economies are obviously very different from Australia. They are small, homogeneous and have a completely different economic provision base. In fact, most of them have very different welfare economies as well. So that handful of economies are the only ones that show a significantly greater productivity output per worker.

Of course, labour productivity is measured by subtracting the growth in your employment from the growth in your output. I think the mistake that is so frequently made by those on the other side of politics is to say that it is all about what the government does; it is all about how much the government is putting in. Obviously, the member for Hotham makes a compelling case for correlation—that at the time when productivity was growing very well, Labor just happened to be in power. But I have yet to be convinced that some of their policies actually had very much to do with it. I will agree that they made some important legislative decisions, but I also remind them that we supported the great majority of them.

That stands in stark contrast to what has happened in the last 10 years, where these smaller and smaller reforms that have built upon a base have not been supported by the other side. It has been a battle to get through the tiniest reforms, let alone the major ones, like workplace reform and the ports. These have been huge struggles. Support on bilateral agreements on trade has not been forthcoming, and that stands in great contrast to what happened when support was required from this side of the House while we were in opposition. That is frequently forgotten, given that it was 10 or 11 years ago, but an important point to make nonetheless.

I would like to reiterate the words of the previous speaker from this side, who pointed out just how strong our export performance is. Tempting as it is to simply subtract away imports and say there is a massive problem, I do not see a problem with small trade deficits, and many do not. Many do not see a problem with them if they are adequately serviced and it is not the government that goes into debt to fund them.

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

Mr Crean interjecting

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

The member for Hotham is on very thin ice.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

There have been plenty of times in history when we have had a series of trade deficits—

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

It’s not that cold!

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

I do not need any stupid comments from the member for Lingiari.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

but the essence is that our export sector is performing well. I know that manufacturing was pointed out as an example, but today manufacturing is actually as profitable as it has ever been. There may well be frictional moves with the workforce moving from one sector to another, and manufacturing by number of people employed may have fallen, but the productivity and the performance of that sector have not.

The other claim from the other side is that mining and the terms of trade are the only reasons that we are still afloat. You cannot put all of this down to mining. There simply are not enough people employed in mining; mining is not a large enough portion of our economy to claim that everything rests on it. That has been echoed by a number of speakers.

Our rural performance is exceptional, given the drought conditions. Our exports of medications, of service goods and of education, which is now our fourth largest export, are unquestionably impressive. Of course, demand for capital and demand for consumer goods will always be strong while our economy runs well. That is one of the main reasons why our imports are also high. But I will tell you one thing: there is enormous confidence in the Australian government at the moment internationally. You only need to pick up an OECD report to see that. I tell you what: every time an OECD report examines the Australian economy and our performance, it speaks of Australia in glowing terms. That can never be forgotten. It is not forgotten by the ordinary family, who see it every day in rising wages and opportunities for their children, and it is seen right here in parliament in this debate. (Time expired)

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to support and participate in this private member’s motion moved by the member for Hotham. The blow-out in the trade deficit to $1.6 billion in March represented our 60th consecutive monthly trade deficit and was a sad reflection on the performance of this government and its ministers. Australia has been importing more than it has exported for five years, despite the biggest resources boom in 50 years.

The statistics speak for themselves: a record annual trade deficit in 2004 of $24 billion, a record annual current account deficit of $54 billion in 2006 and a record foreign debt of $520 billion. Each trade deficit adds to our current account deficit, which in turn adds to our foreign debt, which has grown from $193 billion to $520 billion over the past 11 years. Australia’s higher debt places upward pressure on interest rates as the perceived risk of lending to Australia increases. Australia has the second highest interest rates in the OECD.

Manufactured exports have recorded growth of 0.4 per cent a year compared to 16 per cent a year under the previous Labor governments; services exports have grown by five per cent a year, compared to an average growth of 14 per cent a year under the previous Labor administrations; and the volume of resource exports has averaged growth of just 1.5 per cent a year over the past five years. If Australia had maintained the rate of export growth recorded under Labor, we would have had a trade surplus of $23 billion in 2006 rather than the deficit of $12 billion actually recorded.

The resources boom is an opportunity squandered for Australia because of this government’s policy failure. Labor had consistently stronger export growth because we were prepared to invest in the drivers of economic growth—infrastructure, skills and innovation—and because we developed integrated trade and industry policies. Labor was also prepared to drive harder for new markets to be opened up through multilateral free trade rather than the mess of failed bilateral agreements pursued by this government.

ABS data released recently also showed that Australia’s services deficit with each of our FTA partners has deteriorated. The free trade agreement with the US is so far less than successful. I understand there is to be a review later this year. The Howard government is always reluctant to push hard with our friends across the Pacific, especially in the area of defence manufacturing. Australia punches far above its weight in the specialised area of niche defence manufacturing.

An outstanding example of our capability in this area is the Bushmaster armoured personnel carrier, designed and built by the former Australian Defence Industries—now Thales—in Bendigo, my electorate. Earlier this month one of these vehicles came under attack from a roadside explosive device, or IED, in the southern provinces of Iraq. The vehicle was damaged and later recovered, but most importantly the two ADF occupants were not injured because of the superb design and construction of the vehicle. Bushmaster offers a far superior level of protection than any other vehicle of its type throughout world, including the American designed and built Humvee armoured personnel carrier.

I understand the American Marine Corps is very interested in Bushmaster but is restricted by the protectionist nature of the American defence manufacturing industry, which uses various instruments to block any chance of success in the US market by non-US-manufactured defence products. I know our officials from DFAT and Austrade do a great job in lobbying hard for our defence manufactures in the United States but are constantly being stymied by the US defence manufacturing sector. Australia currently has commitments for over $23 billion in US manufactured defence equipment, including $500 million for Abrams battle tanks, $6.6 billion for the Super Hornet interim fighter and a massive $16 billion for the Joint Strike Fighter project. Yet there is little chance of any reasonably sized volumes of Australian manufactured defence equipment like the Bushmaster gaining access to the US defence market. So much for so-called free and fair trade!

Our American friends and allies are more than happy to have Australia and our flag along on their various foreign policy adventures and more than happy to have us as partners in the coalition of the willing, but they are totally unwilling to allow our Australian built, vastly superior and life-saving defence manufacturing products like Bushmaster access to the US market. It is time the Prime Minister and the trade minister intervened and demanded that our US allies, in the spirit of the so-called free trade agreement, used any forthcoming review to insist on access to the US market for some of our superior defence products, like the Bushmaster.

John Forrest (Mallee, National Party) Share this | Link to this | Hansard source

I am reminded of the Victorian members of the Australian cricket team. The member for Hotham comes in here as Shane Warne—the master of spin—and with a myopia about volume and not value, and the member for Holt follows through with a Glenn McGrath style of spin ball. The member for Bendigo focused on his electorate, and I suppose he should speak proudly of those manufacturing activities down there in Bendigo. But all the speakers have failed to address the fact that there has been an incredible, massive increase in GDP since those terrible years prior to 1996. From November 1996 GDP has increased by a massive 44.5 per cent. That means that the economy has grown so much that, in the nature of conducting business, our imports have also increased.

It is worth while speaking in GDP terms, and I will read into the record the value basis of our export activity. In 1996 the percentage share of GDP was 19 per cent. Other speakers have acknowledged that. In 1997 it was 20.2 per cent, in 1998 it was 19.6 per cent and in 1999 it was 18.7 per cent. It is worth observing several things that have been happening with these movements. One is the value of the dollar—and the consistency with some of the massive crises that the member for Bowman has mentioned—and there have also been sales crises with the collapse in the Asian economy. Latterly, particularly over the last five years, we have had the worst drought on record.

I will continue. The share grew then in 2000 to 21.6 per cent of GDP. In 2002 it was 20.4 per cent; in 2003 it was 19.9 per cent of GDP; in 2004, 18.1 per cent; in 2005, 19.5 per cent; and in 2006, last year, 20.9 per cent of GDP. So our export activity is not as grim a picture as the members of the opposition have painted it. The member for Holt complained that the Australian Labor Party have not had any credit for the activity they engaged in, in the early nineties, with respect to economic reform. He failed to tell the Australian people that those measures were supported by the coalition parties, who then, unlike the opposition of today, recognised good policy and supported it in this chamber. That needs to be stated to the Australian people when the Australian Labor Party claim credit for their so-called activity.

I think our performance is a great credit to the current Australian government. We have a strong economy. Yes, there has been huge activity in the resources sector, but it should never be overlooked that we have endured crisis after crisis. This not an excuse; it is just accepting what is practical reality. There was the Asian financial crisis in 1997, not long after we came into government, and a downturn in the whole world economy in 2001, which was impacted by the terrorist attacks of September 11. That affected global travel, and travel is a very important, sizeable sector in the Australian export economy. We had the outbreak of the SARS epidemic in 2002-03, and from 2003 onwards we have had the drought. People older than me say that it is the worst they can remember.

I think the Australian people are wise to the spin being delivered to us here this morning by the Victorian members of the Australian Labor Party. They are switched on out there. They know they are benefiting from the economy—even those constituents in my own electorate of Mallee, on whom we rely so heavily because they are such great exporters. Despite what they have been contending with—drought and water shortages for irrigators—the Mallee economies continue to grow, following the same sort of activity that I have talked about here. They are not going to be conned by the presentation that has been made to us here this morning. They are grateful for a strong government that has given them a good economy.

The government is trying to take the lead and show the rest of the economy that we are the only nation in the world that is in savings. We are saving now and putting away for the future. (Time expired)

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

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.