Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Mr Speaker has received a letter from the honourable member for Groom proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The failure of the government to develop a comprehensive trade policy agenda that provides Australian exporters with certainty in decision-making and support.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Ten months after the federal election was concluded the people of Australia have found, in the most crushing of ways, that the Rudd Labor government they were promised prior to last year’s election is not the Rudd Labor government that has been delivered. Despite its grand promises this government has been a comprehensive failure—a dud. It has failed to deliver across all facets of the economy: on health, on education, on roads, on infrastructure, on petrol prices, on grocery prices and on the cost of living. Another of the most striking elements of the way this government has let down people in Australia is its comprehensive and continuing failure on trade policy. Almost a year after the election of the government, trade policy remains mired in hypocrisy and confusion. The only constant that exporters and investors have is the repeated evidence that the government is out of its depth. The government’s confusion on trade reaches into the very heart of its policy and has cast a net of confusion right across the Australian exporting community. I use the term ‘trade policy’ very loosely, as it has been more a haphazard collection of passing thoughts and ideological biases that are repeatedly undermining the opportunities of Australian exporters and investors.

The Rudd government came into office with a lengthy history of deriding the value of bilateral free trade agreements. In a series of statements the Minister for Trade has repeatedly made it clear that, as far as he is concerned, bilateral free trade agreements are poor second cousins to multilateral regional arrangements. These were the trade minister’s own words and, true to those words, the trade minister has spent most of his time in office talking down bilateral agreements and, in the process, undermining Australian jobs and opportunities. This has been despite the clear evidence of the success of the coalition government’s negotiated FTAs with the United States, Singapore and Thailand. Instead, the Rudd government has taken a one-eyed approach and focused all its attention on the Doha Round of free trade talks at the expense of alternatives.

While the previous government was a strong supporter of Doha, we believed that it was essential to have a balanced and wide-ranging trade policy incorporating both bilateral and multilateral agreements. That is clearly not a view that this government subscribes to. Along with the minister’s own words we have the evidence from DFAT officials, who conceded during Senate estimates that they had not been instructed to work on a backup plan should the Doha talks break down. This is, of course, despite the Prime Minister’s infamous statement, when he was the shadow minister for foreign affairs and trade, that Doha was as dead as a dodo.

In the chopping and changing of words and policies, exporters and investors have seemingly become an afterthought for this government. Now, in the post-Doha fallout, the Rudd government has been sent scrambling for an alternative policy, because the collapse of the Doha Round of world trade talks has exposed the weakness of the Rudd government’s chaotic approach to trade. After promising the world, this government has delivered nothing. Near enough is nowhere good enough for the exporting businesses across Australia who have been subject to a haphazard, politically motivated trade policy from this government. Exporters are now paying the price for a policy based on Labor Party ideology rather than a practical understanding of the reality of world trade and the need for a commercial understanding of how exporters operate.

But, lo and behold, the Rudd government now claims it has become a fully-fledged supporter of bilateral free-trade agreements. But they are empty words, and an eleventh hour conversion is a poor substitute for a substantive policy. The Rudd government’s change of heart does nothing to make up for the nine months of lost opportunities for exporters that were a direct result of the government’s myopic approach on trade that has marginalised bilateral free trade agreements. It will take more than just riding on the coattails of the hard work completed by the previous coalition government to deliver for Australian exporters. Labor must end the policy chaos and replace its narrow trade policy with a comprehensive approach that delivers for all of Australia’s exporters.

While the trade minister may stand up and expect us to believe that he is a forthright advocate of bilateral free-trade agreements as a way to enhance the opportunities for Australia’s exporters, the evidence sends another message. To date, the only commitment this government has made to FTAs was to ensure they were included in the work of the Labor Party’s razor gang as it went about cutting expenditure in key areas. What we have seen as a result of that is the cutting of the negotiation budgets for the FTAs with China and Japan, our two largest trading partners. This government must explain how the best interests of Australian exporters are being served by slashing budgets at a crucial time in negotiations, because, while the government might be interested in face-saving measures, Australian exporters and investors are still being denied the certainty they require.

I now move to the EMDGS, the Export Market Development Grants Scheme. The failings of this government on bilateral and multilateral trade negotiations have been grave, but unfortunately they are not the only occasion on which Australian exporters have felt the sharp edge of the Rudd government’s inability to articulate a coherent and effective trade policy. This government has also chosen to play politics with the future of Australian exporters by refusing to address the funding shortfall in the EMDG Scheme, a most important and successful program that has provided a valuable incentive for Australia’s exporters to extend their reach into new markets.

Labor acknowledged the popularity of the EMDG Scheme under the coalition government but, despite its promises, despite its musing, despite the illusion that it created that it would fund extra money into the EMDG Scheme, it has refused to allocate funding to a sufficient level in 2007-08, 2008-09, 2010-11 and 2011-12. This has left Australian exporters, who went about their business in good faith, tens of thousands of dollars short. We have already seen the first payments under the current payment year cut from $70,000 to $40,000, and the trade minister knew of the potential shortfalls in the EMDG Scheme for more than six months. Rather than standing up for exporters, he allowed himself to get rolled by the razor gang and have no extra money for this current year. He prefers instead to pass the buck, to involve himself in the blame game and to fail to acknowledge that he is actually in government now and that he can actually address this. It is the usual all talk and no action; it is the usual change from brainstorming to ‘blame-storming’, where those opposite who are in a position to change what is happening sit there and blame those who have gone before them. They are the ones—the Labor Party—who are in a position to provide the funding that is so required for the EMDG Scheme.

The Rudd Labor government has played a cruel hoax on Australia’s exporters by claiming to extend the EMDG Scheme, by broadening the parameters and by making the scheme wider while at the same time not addressing the shortfalls in three of the four forward years. Labor’s one-off allocation of $50 million for grants in 2009-10, which will relate to expenses incurred by exporting businesses in 2008-09, is leaving exporters out in the cold. Of greater concern is Labor’s attempted deception of exporters by failing to allocate extra money for the scheme after this initial $50 million in next year’s funding. Having expanded the expectations, expanded the guidelines and put in what it knows it has to put in every year but only for one year, it then falls back to no extra allocations, as I said, in 2010-11 or 2011-12. This failure is on top of the cuts from merging the functions of Invest Australia into Austrade. Those cuts are significant, and those functions are both essential parts to support the infrastructure for Australian exporters.

It is not just in the area of policy and it is not just in the area of funding export market development grants where this government is falling down; it is with regard to our trade relationships with important and key developing trade partners. In recent days we have seen the Rudd government bogged down again, displaying the greatest degree of breathtaking hypocrisy on trade with its refusal to sell uranium to India. This untenable position has seen the government support a decision by the Nuclear Suppliers Group to overturn the longstanding ban on nuclear trade with India and then, in the next breath, not sell the Indians the uranium they need—under the strictest export standards in the world that Australia can enforce and inspected by the IAEA.

This double standard is undermining Australia’s relationship with India and undermining the position of Australian exporters and investors. It is also thwarting the opportunities to supply the thriving global market for uranium and at the same time compromising our entire trade relationship with India. India is going to need clean energy not only to lift its standard of living but to meet the energy demands of a rapidly growing population. It needs energy to lift its standard of living without increasing global emissions to the point where the rest of the world is affected. There is no logic at all in the Labor Party sitting there and saying they want to lower greenhouse gas emissions and then failing to sell uranium to India on the same terms and conditions and under the IAEA inspection regime that they are prepared to sell uranium to China for. It is illogical. It is a refusal that shows up the hypocrisy and the ideology of those who sit opposite. It is small by comparison, though, to the ideology that drives a government like Anna Bligh’s that supports a uranium export program and does not allow the mining of that uranium in Queensland—the last bastion of substantial uranium deposits still stands. The Prime Minister stands here and claims to be a Queenslander and claims to be a friend of Anna Bligh’s, but he is yet to make any impact on that illogical ban.

The evidence is clear and the failure of this government to deliver a consistent trade policy across trade negotiations, EMDG and uranium exports has clearly shown it to be inept, and then exporters have to contend with the fact that it could all change again. If and when the trade minister finally decides to release the outcome of his trade review, exporters could find themselves with a whole new set of rules. We know that those on the other side are very good on reviews. They have about 160 of them; they have released but a few of them. But we need to see this particular review on trade to ensure we have the consistency that the minister for energy spoke about, the consistency that gives certainty to business to ensure they have the confidence to attack export markets, to grow jobs in Australia and to ensure Australians have confidence in their export future.

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

I thank the House and appreciate the opportunity to debate this subject. I congratulate the shadow trade minister for finally initiating something on trade in this House. He has not asked me one question. He has not put one question on notice on trade. Here we are, the day that the leadership of the Liberal Party has changed, and he brings forward an MPI on trade. This is not an issue of trade; this is a job resume from the shadow minister opposite saying: ‘Please. I’ve been around for the last nine months. I’ve not done anything. Don’t take me off the front bench. I’m worthwhile. I want to stay.’ But I do welcome the opportunity for this debate.

I remind the House what we are debating here:

The failure of the government to develop a comprehensive trade policy agenda …

I will tell the House what the failure was. The failure was the former government’s ineptitude over the previous 12 years.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

Blame someone else.

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

That is where the blame needs to be sheeted home. The member for Fadden is a boisterous man with little time for proper reflection, I have noticed, in this place. But I ask him to reflect on this. Despite the resources boom and the best terms of trade for decades, Australia has underperformed on the trade front for the past five to six years. Total export revenues grew at an annual average rate of only 5.8 per cent in those five to six years compared to almost 11 per cent in the 18 years following the float of the dollar in 1983. For goods exports, it was 6.4 per cent under the Liberal coalition and 10.3 per cent when we were in office. Services exports grew at about a third of their long-term average under the previous government and manufacturing export growth collapsed, growing at only three per cent compared to 13 per cent when Labor were in office. What is the rest of the coalition’s record? They had a trade deficit for more than five consecutive years. They had 72 consecutive months of goods and services trade deficits before the surpluses we finally recorded in April and again in June. Nearly two-thirds of Australia’s cumulative trade deficit over the last 20 years has been incurred in the last five years. The current account deficit is now at a record level of $67 billion—around seven per cent of GDP—and, in addition, there is soaring foreign debt of $607 billion.

I remember the former government, when it was the opposition, railing against us and the debt truck. It said it was going to reduce foreign debt; it doubled it. In fact, it turned the debt truck into a B-double. Yes, there has been failure on the trade front but it is all sheeted home to that government. That sounds like failure to me, shadow minister, and I think you ought to be honest about where the failings have occurred.

The other point I would make, by way of comparison, is this: in the 12 years that your party was in office, net exports contributed to economic growth in only two of those years; yet, when Labor was in office for the 13 years previously, net exports contributed to economic growth in 10 of those 13 years. That is why we have to ensure that our trading sector again becomes a net positive contributor to economic growth. We have to ensure that the Australian economy sustains itself beyond the resources boom. That is why we not only campaigned for but also have proceeded to implement what we have referred to as the twin pillars approach—a new approach to trade policy to turn around the sclerotic, appalling performance by the previous government. They did not just bequeath us a high-inflation economy to deal with; they bequeathed us a pathetic trade-performing economy. Thank you very much. That is the extent of their failure. As for the twin pillars, I will take the minister through where we have redirected and recalibrated trade policy to start turning it around: trade liberalisation at the border complemented by economic trade reform behind the border. Why is that? Because there is not much point opening up markets if the economy is not competitive enough or productive enough to take advantage of those openings. That is why we have persisted in the market access opportunities.

Let us go to some of these trade questions. The shadow minister says we have not paid any attention to bilateral trade agreements. That is just plain wrong. His was a government that in 12 years produced three free trade agreements. We have produced two in nine months: the one from Chile, one of the most comprehensive—

Opposition Members:

Opposition members interjecting—

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

Do not listen to their argument that they would have done it had they been there. This is a government that did not have the will or the wit to negotiate the basis upon which this proceeded. I tell you this, Mr Deputy Speaker: the AANZFTA involved really hard negotiations and political will.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

We were lucky you were there!

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

You were lucky I was there. This country was fortunate that we did not have the trade minister from the other side there. The trade ministers from the other side, up until the present shadow minister, had always come from the National Party—a declining party, a party that the electorate is turning against, a party whose preoccupation is with agriculture, and broad agriculture at that. We say that the trade interests of this country require a diversified approach to trade policy, one that recognises the importance of agriculture, of resources, of manufactures, of services and of investment flows. That is what we will do; it is what they never did. As I was saying, in nine months we have concluded two free trade agreements. We have unfrozen the stalled talks with China after the previous geniuses went into the negotiations with China and gave them what they wanted without getting anything in return. They gave China market economy status and got nothing in return. They were inept negotiators. We have unfrozen those talks. There still has to be some hard bargaining, but the commitment that we have made to these negotiations with China has produced far more significant results than anything the previous government delivered. Likewise, we have an agreement to bring forward the conclusion of the feasibility study with India.

It is true that theirs was a government that started a lot of things, but it could never successfully complete many of them. Doha is a classic example. This government had carriage of Doha from beginning to end and was never able to get anywhere. Again, in the nine months that we have been in office, we have kick-started those talks and we have got Doha to the position of being 80 per cent agreed on. The problem with Doha is that 80 per cent, not being 100 per cent, will not conclude it at this point, but the fact is that there are significant gains already on the table, including for agriculture. If you do not believe me, speak to the NFF. Talk to them about how we were instrumental in the negotiations in Geneva in the middle of the year. Why? Because we were prepared to put the hard yards in. We were not prepared to just make speeches about these things. We were prepared to roll up our sleeves, to get involved in the negotiations and, most importantly, to understand what negotiation is about.

I have not given up on Doha even though the other side had. I believe that the other side had given up a long time ago. I remember a very senior member of the National Party—I will not name that person in this House—said to me, ‘You will never get Doha up,’ when we were walking through this building on the day we were sworn in. That was the attitude of the previous government, the political party that had carriage of our trade negotiations—they had given up on Doha. This government will not give up on Doha. This government will persist because, by far, the biggest opportunity for this country will come from a successful conclusion to the Doha Round.

It is not only Doha that we are engaged in. Doha is not as ambitious as we would like, even if we succeed. If we do get an outcome, it will provide a very important platform for the regional trade negotiations and for our ongoing bilateral trade negotiations. We never gave up on the importance of regional or bilateral negotiations. We simply said you had to recalibrate the focus—you had to start from the top down with the multilateral approach and keep building the platforms to argue for greater liberalisation and greater implementation, and that is what we have done with AANZFTA.

AANZFTA, the ASEAN free trade agreement, is the most comprehensive free trade agreement that ASEAN has ever entered into and the largest free trade agreement that this country has ever entered into, with $71 billion in two-way trade and a bigger market than China, Japan and the US. We have brought the previous timetable for trade liberalisation forward significantly. We will also do it with PACER, the Pacific Agreement on Closer Economic Relations—we are embarking on a strategy to develop that—and the ASEAN+6 set of negotiations, as well as APEC. And those opposite say we have not got a trade strategy. I will tell you what we got—we got left with a terrible mess. We have set about, in a short space of time, putting this in the right direction. In my view, if we persist with this approach, we will make significant gains.

As for the question of the Mortimer report, we will release it—of course we will release it. I always intended to release it. But I will tell you what we commissioned Mortimer for. It was to ask this fundamental question: why was it that Labor was able to get the trade performance right in this country during its term of office and the coalition were not, and what do we need to do in terms of the detail and the changing nature of trade to get it right? One of the things I already know the previous government failed to do was to understand the single most important development in terms of services as a basis for growing our export base. Services in this economy are 80 per cent of our economic base and yet they are only 23 per cent of our exports. When I talk services I also mean services that relate to our traditional industries, like agriculture and resources. I am not arguing that we move away from them; I am arguing that we do more with them, that we do not just value-add them but understand the intrinsic opportunity there is, with the strength we have in those sectors, to sell the services and the value-added products—not just the bulk commodities. I argued that and implemented it when I was previously primary industries minister. I believe in it and I want to do it again. But that is something the previous government never did.

The other thing that it failed to do was understand the difference of approach now in terms of the significance of capital flows and the importance of investment and ensuring that our trade policy picks up the very significant realisation that a lot of our exports are based on investment in other countries. We need the coordination of that mechanism. That is why Invest Australia’s global opportunities programs have been properly coordinated for the first time and put into the one portfolio.

As for the opposition’s argument about the EMDGS, we have put $50 million extra into it. This is something that they were never prepared to do. They changed the guidelines by saying that they recognised that they needed to support exporters more, but they did not put one red cent into it. They were the ones that deceived the exporters of this country and now they want us to pay for their mess. Well I tell you what, Mr Deputy Speaker: we will ensure that the EMDG Scheme is properly funded into the future. What we will not do is pay for their ineptitude and their sclerotic performance. We are about correcting it but we should not have to pay for their past sins. (Time expired)

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Trade) Share this | Link to this | Hansard source

This matter of public importance has been raised in order to focus on the need to create certainty for Australian exporters, which is where the Minister for Trade finished off in his discussion about investment and capital flows. Taking risks in the ruthless export arena requires considerable courage by exporters and a long-term strategy. Often forward investment is actually years ahead of the final outcome and exporters need the confidence that they have a government that is thinking strategically in the long term of their interests.

The minister’s cynical contribution about the need for this MPI is very unfair to exporters. I would remind the minister that it was his Prime Minister in opposition who said Doha was as dead as a dodo. I have never believed that, like the exporting horticulturalists that I represent. We must ultimately get an outcome. No-one has underestimated the difficulty of doing that, particularly in a US election year, with the need to get the US and the EU over the line in respect of those distorting subsidies they have, for agriculture in particular.

Exporters need to believe there is a long-term commitment to decision making that will support them in the future. From my discussion with exporters, I know they are not confident that they are getting that from this government. Let’s start with the May budget, which saw the slashing of $100 million from DFAT in the resourcing of trade negotiators. This has resulted in the axing of important negotiator posts. There are probably about 100 positions so affected, which will in particular be a setback for important negotiations on proposed FTAs with China and Japan.

Then there has been the deliberate policy decision by the new government to merge the functions of Invest Australia into Austrade, presumably because the minister failed against the razor gangs. This is because of short-sighted budget considerations rather than strategic ones. The end result of this will be to put back progress in establishing strong networks for export investment and to force such progress as could have been achieved back to the slow snail’s pace we see in the diplomatic sector, rather than having a commercial focus. Exporters need an entity which has a commercial focus rather than a bureaucratic one. This decision is typical of the Australian Labor Party, who are not able to think in a commercial sense because they do not have a background in it.

Then there was the failure of the Minister for Trade, the member for Hotham, to stand up to that razor gang in those important budget funding considerations. Exporters out there see all this. Their confidence is faltering, and that will have long-term implications for our export effort. We have heard the minister boast lyrically—and he has done it again today—about the one-off allocation of $50 million for EMDG in the 2009-10 year. On behalf of exporters, thank you for that. Presumably this whole boast is to distract from his long-term failure to provide that certainty that exporters need. He fails to explain that this one-off increase in EMDG applies only to expenses incurred in the 2008-09 financial year. It begs the question about the expenses incurred this financial year. The member for Groom has pointed out the implications of that. That needed a reaction as this program continued to grow.

The government has failed to deliver long-term certainty. There are no forward estimates in the budget for 2010-11 or 2011-12, so where is the opportunity for exporters to have some certainty that they will get some help with the important investments they have to make? Hopefully, when this report from Mortimer is tabled—I hope it is soon, Minister—we will get some indication of the advice the government is receiving.

In addition to all this, the government has told India we do not trust them with the use of our uranium for power generation, despite an agreement on that matter being well progressed. As well as further reducing Australia’s capacity to enhance its trade position in a significant commodity, it also reduces India’s capacity to contribute to its emission reductions in the global interest. To digress slightly, it is worth noting that this initiative—this one deal—on its own would satisfy Australia’s entire carbon emission abatement requirement in a global context. The government has truncated that opportunity.

To go back to the issue of trade certainty: of alarming proportions has been the swaying reed-in-the-wind position that the minister has had on the primacy of pursuing multilateral, as opposed to bilateral, approaches to trade. In the early part of his management of this portfolio, we heard a lot about multilaterals being the be-all and end-all, which we were not surprised at because we know about the Australian Labor Party’s philosophy on that matter. They argue that that is in the best interests of everybody, particularly poorer countries, but with no progress multilaterals are worth nothing to exporters. That brings me to the point that the coalition government adopted of not giving up on Doha, as the minister alleged, but recognising the difficulties and, in the interests particularly of agriculturalists and horticulturalists, which I represent, creating an opportunity for progress on their behalf, continuing to work in the global arena to get an outcome and removing those unfair export distortion subsidies by the EU and the US in particular.

Australian agriculturalists are absolutely impatient for that elusive breakthrough, but it has been pretty hard to get a bead on the minister on this issue. To listen to him wax lyrically about the free trade agreement with Chile—which, as a government member, I took a very specific interest in because it involved trading in seasonal fresh fruit and involved an enormous amount of work which could not be negotiated in the short space of nine months—the way he took credit, and the way he boasted about the progress the government has achieved and their new recognition of the need for bilaterals, beggars belief.

The minister made much of the fact that the previous government had not made progress on this matter. There were trade agreements with the US, Thailand, Singapore and—almost—Chile. Prior to that, the coalition government delivered on the deal that the government from before 1996 had with New Zealand. We delivered on that and did not complain about it. I must check the record—we probably gave the Keating government some recognition for the work they did on the trans-Tasman arrangements. The previous government had long-term negotiations with China, Japan, Malaysia—Malaysia alone is worth $1.9 billion to this country—and the Gulf states in the Gulf Cooperation Council, which are a very important market opportunity for Australian-built motor vehicles.

It is interesting that, of all the 151 countries of the WTO—which has been growing dramatically, particularly in the last decade—the only country not negotiating FTAs is Mongolia. Everybody else has recognised the need to make those bilateral arrangements. A lot of them wait impatiently for progress, particularly through Doha. I complete my contribution by reminding the minister of the absolute need for certainty for investors. These are long-term capital flows that they have to plan for. If they falter because the government is in itself faltering and not progressing matters, then I think the long-term implications for Australian exporters will be dire and will have a negative impact on our overall effort to improve our trade performance, particularly in exports. Let us see what Mortimer has to say, Minister. Get it out in the public arena as quick as you can; but, more important than that, show some progress on whatever Professor Mortimer recommends.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

This is certainly a difficult debate to argue for the members for Groom and Mallee, given the Howard government’s export performance. I feel for them. I thought while the Minister for Trade was speaking earlier that I have known him for 23 years. Given his breadth of experience, commitment, skills and knowledge of industry, it is difficult to conceive of someone better positioned to serve as Minister for Trade in this government and for this country.

The minister has already correctly identified the hypocrisy that underpins the matter of public importance proposed by the member for Groom. He has also discussed the two pillars that are driving the Rudd government’s approach to trade policy. As he identified, the first pillar is trade reform at the border by multilateral and bilateral mechanisms to increase market access. The second pillar is promoting reform within our own economy to improve infrastructure, to boost productivity, to lift innovation and to drive national competitiveness. The challenges that we face in boosting our exports demand that we lift competitiveness across our economy. I am adopting these two pillars in my own portfolio responsibilities in defence procurement, with a strong focus on improving defence export performance, but I will come to that issue in due course.

This government has a two-pillar policy underpinning our export strategy—to improve competitiveness and to improve our performance in negotiating on a multilateral and bilateral basis. That is fundamental to improving our export and trade performance. The previous government failed in that task. What did the last government do? What was its performance? How did the member for Groom perform as the industry minister in the Howard government over the past 12 years? That government certainly was not serious about ‘behind the border’ reform. I will highlight its performance in that regard in a moment. Suffice to say, the Howard government failed to address export performance by improving national competitiveness.

What about the other pillar, which we have heard a bit more about in this debate today? That is the policy of negotiating multilateral and bilateral mechanisms. The last government completely abandoned multilateral trade negotiations. That is in fact what it did. It paid lip-service to the World Trade Organisation trade rounds but did not perform. As the Minister for Trade identified, on bilateral trade reform over 12 years it managed to negotiate only three free trade agreements. The last government, of which the member for Groom was a senior member, did not adequately address the other leg of our approach—that is, the competitiveness of export performance—nor did it pursue multilateral negotiations. Members need only to look at bilateral FTAs and the fact that the last government managed to negotiate only three in 12 years to see the evidence of that.

In fact, its approach to some of those FTAs disclosed a deficiency in negotiating skills. We should never forget the FTA negotiated with the United States. I am sure that, if he were to be frank, the member for Groom would admit that he was disappointed with some of those negotiations. The exclusion of sugar from the FTA with the US is one example. It also included an 18-year phase-in period for a reduction in beef tariffs and for a full phase-in of dairy quota increases. They demonstrate deficiencies in the last government’s track record of negotiating on a bilateral basis. That was the foundation of its approach to trade policy.

The previous government presided over 70 consecutive months of goods and services trade deficits. No other government in our history has presided over such a poor export and trade performance. That happened in the last six years of the Howard government, despite the resources boom and a massive improvement, it has to be said, in our terms of trade, which improved by 50 per cent from 1999 to 2007 off the back of the resources boom and improvements in commodity prices. In that context, one would think our trade and export performance would be pretty solid. However, total export revenues grew at an average annual rate of only 5.8 per cent in the last six years of the Howard government compared to the 10.7 per cent average growth in the previous 18 years following the 1983 float of the dollar.

The trade deficit for the final quarter of the Howard government reached a massive $7 billion, which was the worst on record. In the area of elaborately transformed manufactured goods—which involve high-value, high-wage industries at the heart of world trade—the last government also failed. In the 18 years from 1983 to 2001—which were predominantly Hawke government years—elaborately transformed manufacture exports grew at an average annual rate of around 11 per cent. Since 2001, the growth rate has been only four per cent. The competition for these goods involves knowledge and skill and that is where Australia must improve its performance. The previous government’s performance was declining. On the broader economic front, that can have a significant impact on trade performance.

The last government’s performance was woeful. On whatever level one wants to base it—productivity, innovation, skills, investment or infrastructure development—the last government failed. On innovation, the last government experienced growth in business research and development at a rate less than half that of the Hawke and Keating governments. Australia’s labour productivity growth rate this decade is almost 40 per cent below the average productivity growth for all OECD countries. From 1991 to 1999, Australia’s productivity growth was almost 50 per cent above the OECD average. That is a shocking and appalling performance and turnaround in that area.

By contrast, the Rudd Labor government is committed to lifting our national competitiveness. We must do much better on all of those indicators if we are going to improve the country’s trade and export performance. This government is committed to serious investment in infrastructure. Of course, we have announced the $20 billion Building Australia Fund. We are also committed to improving productivity; for example, we have established a $200 million Enterprise Connect and Manufacturing Centre network, which will help businesses to improve their export performance by finding and adapting the latest research and technology and getting help in solving identified problems and cutting through red tape to identify sources of government support for their innovation activities.

The government also committed $19.3 billion to education and training in the last budget. That is the basis for having a more highly skilled workforce and therefore a more competitive economy and improved trade performance. All of these measures will lift competitiveness and will allow us to take advantage of the improved market access that will come courtesy of the pillars of our trade policy.

The government is committed to pursuing multilateral mechanisms to open up trade. The minister’s commitment to pursuing the Doha Round is unflagging. At the same time, we have also been successful in using bilateral mechanisms to improve market access, as the Minister for Trade indicated. It is the fact, and you cannot escape the fact, that in the last nine months agreement has been reached on two FTAs: one with ASEAN and one with Chile—two in nine months versus three in 12 years.

In my own portfolio area of defence procurement, we are applying the twin pillars to lift defence exports. This was an area completely neglected by the previous government. No-one in the previous government had any responsibility in relation to defence exports. One of the first actions I took in my role was to launch the Defence Export Unit. This unit is providing important assistance to the defence industry to boost exports and find market opportunities. In fact, I had a session this morning on planning some export marketing strategies with the leader of the Defence Export Unit. I also met with the National Executive of the Australian Industry Group Defence Council at lunchtime today to discuss our approach to improving defence exports.

In the first nine months of the government, we have not only established the Defence Export Unit but implemented the Australian capability industry plan. This plan requires defence prime contractors to show how they will ensure opportunities for Australian SMEs in their supply chains should they win large contracts. This is directly aimed at leveraging Australian companies into the global supply chains of the defence industry and boosting defence industry exports. For example, we are encouraging prime contractors such as Thales to continue manufacturing their Bushmaster in Bendigo for export to other nations—(Time expired)

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

I am very pleased to speak on this MPI on behalf of the opposition and on behalf of the Ryan electorate, which I represent, in the western suburbs of Brisbane. I am pleased to do so because trade is absolutely critical to our country. Trade is about jobs; it is about growth; it is about prosperity; it is about higher wages; and it is about higher living standards for our exporters and for the rest of the community, who benefit from our exporters doing well on the world stage. Of course, we saw in the decade of the Howard government all areas of the economic index improve. People were able to get jobs. We had economic growth, economic prosperity, higher living standards and certainly higher wages.

Exporters, whether small, medium or large, had the support of the Howard government—and they should be getting the support of this government. They should be getting support from any government of any political colour. But I am not sure that that is happening under this new government. Governments need to help our exporters in every way possible to compete on the world stage. We all know that we live in a globalised world, we all know that we live in a very competitive global economy, and so every Australian exporter must have the help of their state and federal governments.

What is the Rudd Labor government doing about trade policy? I suspect that if you go down the streets in my electorate or in Brisbane or, indeed, any street in this country and ask major office or business houses what they know of the Rudd Labor government’s trade policy, they would not be able to articulate it, because, quite frankly, the government does not have a trade policy. That is the short answer. Australian people and businesses would not know what the Rudd Labor government’s trade policy is. I suspect that, in large measure, that is because the Labor Party is not really comfortable with trade. I suspect that it is not really part of the DNA of the Labor Party. I suspect that they have other preferences in the area of policy, and trade is just an aside. It is something that has to be dealt with, so they try their best but fail miserably.

I also suspect that many businesspeople in this country would not even know who the Minister for Trade—Mr Invisible—is. Yet he is the federal trade minister. When I have asked many of the exporters in my electorate of Ryan who certain ministers of the Rudd government are, including the trade minister, they have very blank looks on their faces. We are talking about an individual with enormous responsibility, an enormous capacity to make a difference, yet people in the business of exporting would not have a clue who the trade minister is. That is an absolutely disgraceful state to be in.

I am not sure whether the Rudd government itself really knows where it is on the trade policy front. I am not sure whether they believe in bilaterals. I am not sure whether they want to focus exclusively on bilaterals. Do they believe in FTAs? I am not sure how they would care to respond to the Howard government’s very successful free trade agreements.

Let me take the parliament through a couple of speeches that the current trade minister has given on the important topic of comparing FTAs and bilaterals. It is very interesting to note how the language changes depending on the audience that the minister is talking to and the context in which he is giving the talk. When the trade minister was in opposition, he talked about trade agreements being ‘political trophies’. That is just despicable. How can important trade agreements concluded between this country and others be described as ‘political trophies’? I think those in the business of export would not take too kindly to that. On 8 August 2008 in Beijing, the government’s trade minister was speaking at a Business Club Australia luncheon. What did he say about trade? He said that we are pursuing everything we can to complete a bilateral agreement with China. This was an agreement negotiated under the Howard government. On the one hand, when in opposition, such agreements were political trophies but, on the other hand, when in government, the minister talks about doing everything he can to conclude the bilateral agreement with China—a very significant country for Australia’s future prosperity and growth. In May last year, the trade minister also criticised FTAs with Singapore and Thailand—(Time expired)

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

The humbug and the hypocrisy of the opposition in putting forward, through the honourable member for Groom, such a matter and in talking about ‘the failure’ of the government just astounds me. The failure is on the part of the previous government and the now opposition—failure not only in trade but on all policy counts. They abdicated the field in trade. They had no trade policy. So to sit here and listen to the humbug that I have to listen to is a bit surprising.

One of Labor’s election commitments was a comprehensive review of all existing trade programs—I cannot say ‘policies’, because there were no policies—and that was welcomed. That is what we have done. The Mortimer review has been completed. Who better to lead such a review than David Mortimer, in concert with Dr John Edwards? I know that all my colleagues in this place would agree with me on that point—maybe not on much else, but on this one I am sure.

Under Minister Simon Crean, the Rudd Labor government has instituted an approach to trade policy that is premised on twin pillars of trade liberalisation at the borders and domestic economic reforms behind the borders that are aimed at improving our international competitiveness. That is where the failure of the previous government is so evident.

I remind those members opposite of the trade figures under their stewardship in the previous government—and of not just the trade figures but the interest rates, where we had to endure 10 interest rates rises while the 20 RBA warnings on inflation were ignored. It is worth reiterating some of those figures. Under the last six years of the Howard government, despite the resources boom—which we all welcome and benefit from—the total export revenues grew at an annual average rate of only 5.8 per cent compared with 10.7 per cent in the 18 years following the floating of the dollar in 1983. Goods exports grew at an annual average rate of 6.4 per cent compared with an average growth of 10.3 per cent since 1983. Service exports grew at about a third of the long-term average. And manufacturing exports collapsed in the last six years of the Howard government, growing only three per cent compared with 13 per cent since 1983.

What did all this result in? It resulted in a trade deficit for five consecutive years. Their parting gift as they went out of office last December was a trade deficit of $6.9 billion, which was the worst quarterly trade deficit on record—the worst on record! We talk about failures. That is where the failures were: completely on your side.

I have just had to sit here and listen to the honourable members for Mallee and Ryan. They talked about the Labor Party. They were saying that we could not possibly comprehend commercial and economic matters. That is complete humbug. I will take you through what we are doing now in terms of economic management and commercial matters. Our current policy of responsible economic management is a five-point plan which includes fighting inflation and protecting the surplus from those who want to raid it. It does not matter what leader the Liberal Party has. It is a different leader but the same clothes, the same policy approach: raid the surplus. We have to protect the surplus to cushion us during these times. We have also not embarked on the reckless spending that the previous government did in its last years in office, trying to stay in there. It did not work.

And it is worth going back and talking about the previous Labor administration. The Labor Party in government at that time opened up the economy, floated the Australian dollar, cut tariffs, deregulated the financial sector and achieved wage restraint via the accords with the trade union movement to lock in low inflation. Low inflation is not something that those on the other side seem to know or care about. It also instituted—(Time expired)

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The discussion is now concluded.