Katie Allen (Higgins, Liberal Party) Share this | Link to this | Hansard source

Yesterday, the Joint Standing Committee on Trade and Investment Growth, of which I am a member, handed down the inquiry report Trade transformation: supporting Australia's export and investment opportunities. I want to acknowledge and thank the chair, George Christensen, the committee secretariat and the rest of the committee for the excellent work that went into this report.

The inquiry heard from witnesses across the full range of Australia's export industries. It reiterated that Australia is an export nation. In 2018-19 exports reached almost $470 billion, or 24 per cent of our GDP. It noted that while our resource exports remain strong, we have a growing opportunity to build on our service exports. Currently, these account for one-fifth of Australia's exports. We heard of Australia's strength in the higher education sector, which is our fourth-biggest export. We also heard of our emerging strengths in other services including health; professional and financial services, often called 'fintech'; and travel. However, it also identified a need for diversification.

The Export Council's submission described Australia's exports as 'too small' and 'too concentrated'. We export from a small number of businesses, sell a small number of commodities, and those sales are disproportionately geared for one market. The COVID-19 pandemic has brought home this issue. We need to rapidly open up export opportunities for a post-COVID global economy. In particular, the report recommended the government investigate ways of encouraging the growth of our non-resource sector. This was noted in recommendation No. 20, which recommends that health as an export, and in particular telehealth and clinical trials, presents a real opportunity for Australia. Recommendation No. 1 recommends the attractive construct of the Biomedical Translation Fund, and suggests this model for updating our trade and investment strategy.

The committee heard that international health is where education was 20 to 30 years ago. We are on the cusp of an exciting opportunity to take our health expertise to international markets through services such as telehealth, clinical trials, and medical education and training. In particular, recommendation No. 3 of the report identified significant bureaucratic barriers to increasing our clinical trials capability due to our federated healthcare system, and requirement to get state by state regulatory approval for multicentre trials. There is an urgency to deal with this issue so that Australia can take advantage of our low COVID environment.

There have been many pivots to grasp from the COVID crisis. One of the great developments to arise from the COVID pandemic has been the rapid expansion of telehealth services here in Australia. The expanded use of telehealth will undoubtedly be a feature of post-COVID health care here in Australia. It also has the potential to form part of a more diversified and digitally based post-COVID economy.

Telehealth was used to deliver convenient, cost-effective and real-time health care to people across the country, particularly for those located in regional, rural and remote areas. It guarantees that a patient from Tallangatta has the same access to quality health care as a patient from Toorak. Likewise, it means the metropolitan based patient doesn't have to wrestle with traffic congestion to get to a quick check-up across town. It has been critical to patient and doctor safety during the pandemic, and has helped protect our critical PPE supply. At its core, telehealth is about driving greater efficiency in healthcare delivery, which delivers on consumer productivity. Who wants to take off half a day to get a health check when you can now dial into your doctor from your desk at work?

Members of the government, including myself, have long been of the view that increasing our telehealth services is a valuable investment. The COVID-19 pandemic has streamlined this. The expansion of telehealth services that would have otherwise taken 10 years was, instead, achieved in just 10 days. The government introduced a $669 million whole-of-population telehealth primary healthcare program. This involved opening up telehealth and telephone Medicare Benefits Schedule items to all Australians, and doubling the bulk-billing incentive for GPs. More than nine million services have been provided to date.

Geographically, we are ideally placed to seize this opportunity. The cultural diversity of our medical profession is also well suited to the challenge of implementing international health. It is critical that in the post-COVID world that we look to ahead we should modernise our economy and play to our strengths. The rapid expansion of telehealth services has been a valuable asset for Australia, and could also be mutually beneficial for our friends in the Asia-Pacific region. Our health sector provides unique training opportunities. Australia is well positioned to become a world leader in health services export built on an excellent reputation and internationally recognised outcomes for health.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

Free trade is under fire. We've seen a massive increase in the number of protectionist measures around the world and significant pressure being placed on the global trading system. It's critical to realise the value that openness has played in building the modern Australian economy. Australia's trade barriers were brought down largely by successive Labor governments: the 25 per cent tariff cut by Gough Whitlam in 1973, and the significant tariff cuts in 1988 and 1991 by the Hawke government. The process of trade liberalisation delivered significant competitiveness into the Australian economy and ensured that we created many more jobs. It improved living standards for many Australian households. As the ANU's Adam Triggs has already pointed out, compared with a decade ago—

Hon. Members:

Honourable members interjecting—

Rick Wilson (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Order! Can we just keep it down a little bit. It's distracting the member who is speaking.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

audio-visual and computing equipment is 72 per cent cheaper, cars are 12 per cent cheaper, toys and games are 18 per cent cheaper and clothes are 14 per cent cheaper. Trade has stretched household budgets further for low- and middle-income Australian households, but the rise in protectionist measures does threaten many of these gains. The Smoot-Hawley Tariff might not have caused the Great Depression, but it certainly acted to exacerbate the duration of the crisis. There is, again, a risk that rising protectionism around the world will do the same. We're already seeing significant trade tensions between the United States and China, but that's just one context in which trade conflicts are becoming worse in the current environment. Trade, along with immigration and foreign investment, has been critical to Australia's prosperity. Australia is a country that has chosen openness. It's been a deliberate policy choice, largely supported by both sides of this House, and one which has improved Australia's growth rate. But all of that could easily come to an end if we are to succumb to the siren song of protectionism and to close off trade. As Adam Triggs has pointed out, some have suggested that a national 'Buy Australian' campaign could fully compensate for our trade. He calls this a 'laughable' proposition, pointing out that more than 70 per cent of our agricultural production is exported. More than 25 per cent of our tourism industry relies on international tourists, to say nothing, as he points out, of universities and mining.

The same effect is seen in foreign investment. As we well know, Australia has traditionally had one of the highest current account deficits in the world—the fifth-largest current account deficit in the world recently—and still we receive significant amounts of foreign investment, although the increase in our existing superannuation pool means that we're now both an outbound foreign investor, in order to manage risks for Australian investors, whilst still accepting significant amounts of inbound foreign investment. Inbound foreign investment accounts for about one dollar in nine of total investment, so a complete shut-off of foreign investment would mean a one-ninth decrease of total investment in Australia. That would have massively adverse implications for investment in the manufacturing industry, in roads, bridges, ports. Light rail projects have been backed by foreign investment, and they have benefited Australians, raising living standards and increasing jobs.

There's also a national security benefit to this. When foreign investors, be they American, Chinese or Japanese, invest in our Australian economy, they have a stake in our success. They have a stronger interest in the Australian economy doing well when they're a part of it. As Adam Triggs pointed out in a piece in The Canberra Times recently, for many years Indonesia imposed restrictions on Australia's beef exports, but after Indonesian companies invested in Australia's beef industry the Indonesian government's incentive to restrict imports was significantly reduced. As he put it, suddenly, Indonesia had 'skin in the game'. Suddenly, they had an interest in the Australian beef export sector doing well.

We can understand the concerns over openness. This is, after all, a pandemic which came from overseas. But simply to take the view that when we're faced with a pandemic from overseas we should immediately roll up the drawbridges and shut off our engagement with the world would be to learn the wrong lessons. Past pandemics have shown that often the solutions will come from overseas. I agree with the previous speaker, who spoke about the importance of clinical trials. Labor took a policy on improving clinical trials to the last election. It is absolutely vital we do more of them. The major clinical trials now aren't occurring in a single country. The typical major clinical trial is an international trial. We have massive globalisation of this sector, and it's in our interests to be part of that globalisation.

Our universities are engaged with the rest of the world. Nobel laureate and now ANU Vice-Chancellor Brian Schmidt said that perhaps nowhere else could he have done his path-breaking research which earnt him a Nobel Prize, because his research group was so internationally connected. Temporary migration plays an important part in our universities, not just with students but also faculty. Flowing to and from our universities, that exchange of ideas makes our universities significantly more productive.

We're already seeing challenges to equity through both trade and technology, but too often the impact of technology is blamed on trade. As Tim Harcourt mentioned recently, artificial intelligence and robotics have already been changing the nature of work in manufacturing, and he points out that that effect is only likely to continue. But we need to be cautious of not blaming the impact on employment that occurs as a result of technological shifts on our openness to trade. Yes, trade has an impact, but technology is the larger factor.

How are we going to be affected in terms of our exports by the current crisis? We've seen a massive hit to tourism and a massive hit to the university sector. Rocks and crops have remained steady, and overseas steel production has held up, meaning that our iron ore has maintained. But there's certainly a risk in the future that we might see further protectionist measures that would adversely affect Australia.

Jeffrey Wilson from the Perth USAsia Centre has pointed out the importance of maintaining foreign investment in the current context. He's pointed out that a shutdown of foreign investment would particularly affect our resources, manufacturing and real estate sectors. He's highlighted the fact that in 2018 there was $3.5 trillion of accumulated foreign investment in Australia, and that Australian firms held $2.5 trillion of assets abroad. So foreign investment flows go both ways. We benefit as superannuation investors from foreign investment, but we can hardly expect that, if we turn off foreign investment for overseas investors, it will continue to be possible for Australian superannuation funds to get the benefit of diversification that comes through foreign investment.

Finally, it would be remiss of me to end a speech on trade without referring to the extraordinary export rorts revelations that have been reported by David Crowe in the Nine Fairfax papers today. We have seen fully 97 per cent of the money go to coalition electorates. That is, in round 1 of the program, some $4.3 million went to coalition electorates, compared to $140,000 to Labor electorates. Now what the government is saying is: 'Well, that's okay! Sure, we pork barrelled 97 per cent before the election, but after the election we ran another program, and that program was broadly 50-50, so it's okay.' This is a bit like saying, 'Well, you did an illegal tackle on the field, but after the final bell rang, you went and gave the bloke a hug.' I mean, the fact is that this was a rort during the election campaign, and no second round after the election makes up for the malfeasance that occurred in this program. It deserves a thorough inquiry. Australians have a right to know why this export grants program was used for partisan pork barrelling. (Time expired)

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I'd like to thank to member for Fenner for his contribution and for reminding me of our rocks and crops. There's plenty of mining up in the Territory, and we want to do more and more agriculture, as you're well aware, Mr Deputy Speaker. We all know that it was on the proverbial sheep's back that Australia's wealth was made, as well as on the back-breaking work of the tough men and women who made that industry. But it was also on the back of cows and cattle farmers, agriculture, wine, wine growers, iron ore, coal and natural gas, the miners, the engineers, the truckies, LNG carrier workers, and the many more professionals that have made these industries so productive and enriching for Australia. That's only when we think of goods that are being dug up, farmed, cultivated and exported to the world, competing with economic giants half a nation away. We're often dominating markets by the quality of our goods and our professional people.

Thanks to Australia's economic opening—mainly by Labor governments, it must be said—this trade transformation contributed massively to the decades of uninterrupted growth that we've enjoyed. It was these macroeconomic settings put in place by visionary economic decision-making and nation building that allowed what became known as the terms of trade boom between roughly 2005 and 2011, on the back of those high commodity prices.

Another transformation in the Australian economy has been our transition to a very large services exporter, not least of which is our export of education and training in our university and TAFE systems. I reflect on conversations being had about this with experts around Monash University that'll be starting up in Indonesia in the near future. But thanks to this transformation and to the technological revolutions that have allowed it, many of our unis have managed to transition rapidly to online learning environments during the COVID-19 crisis to avoid the worst-case scenario. Of course, not all were so lucky, and the reliance of certain Group of Eight universities on international students has raised legitimate questions, I think, within the sector itself about the resilience against external shocks like we've seen with COVID-19.

Higher education is just another example of how important international trade has become to the Australian economy. The university sector supports about 240,000 Australian jobs, and a big whack of jobs in my electorate, in Darwin. It's actually now our fourth-largest export earner, and we're talking about around $40 billion a year. It's absolutely massive. At a time when our universities are in crisis, it has beggared belief that the Australian government has turned its back on the thousands of Australian jobs that are likely to be lost if this sector continues on the path that it's on. I'm sure honourable members are aware that university employees haven't been able to access JobKeeper, for example. We are talking about 21,000 jobs in the sector being cut if we keep on this track, and a $19 billion drop in overseas student revenue. That money the overseas students bring to Australia is spent on research in our universities and on teaching for all the students, including the Aussie students; not just those overseas students.

It is fair to say that international trade, in all its shapes and sizes, has made a large and even dominant contribution to Australian economic growth in past decades. This is thanks, as we have seen, to Australia's economic opening. Of course, this opening hasn't always been perfectly successful. We can, and should, regret that key manufacturing and industrial capabilities have been lost, often sacrificed by federal governments that tended to drink too much Kool Aid and believe economic globalisation had no costs or losers. I think it's fair to say that in the middle of the national COVID crisis we woke up to the painful reality, decades too late, that we had traded off key assets of our sovereignty and self-reliance in an unthinking search for economic efficiencies and a balanced budget.

There's been a lot of soul searching about how much self-sufficiency we want to have, how much heavy manufacturing we want to have here. We obviously need to be making our own PPE. We still want to attract foreign investment, tourists and students, which we need, but we shouldn't look at it only on our terms, because the result of that would be, predictably, disastrous. We can't have it our own way every day. Our economy benefits disproportionately from trading rules which we helped to build and whose observance continues to be in our national interest. As the member for Fenner said, we need to avoid the push to become more and more protectionist. We must find a balance, what's smart for our economy.

COVID-19 laid bare the excesses of Australia's deindustrialisation, which traded off self-reliance and resilience in vital sectors like fuel security, the production of pharmaceuticals, manufacturing and emergency stockpiling. The point about fuel security is an important one. We've had some positive discussions in recent times about the need to diversify our storage and, more importantly, to have our storage on Australian soil. Because of COVID-19, surely now we have a national consensus that these just-in-time supply lines, though they are incredibly efficient and do drive down prices—at Woolies, for example—come with built-in risks that we have to manage, not just worsen by shutting ourselves off from the world? A very much justified call for greater self-reliance can't give way to a populist attempt to shut us off from the currents of global economic growth and investment. That's what's protectionism would do. In short, we'd be cutting off our nose to spite our face.

This is the kind of trade-off that we'll need to manage intelligently in the coming months and years. Getting the dial right between the extremes of total reliance on the world and total self-reliance will be an ongoing national project. This project goes far beyond politics. It's important. It's not just about what we find in the IGA aisle but whether we want to be the sort of country that feeds the world but has no food security. Do we want to be a country that has a world-leading medical system but not enough face masks to protect us from deadly smoke, and sneezes and coughs? We don't want to be a country that fuels global economic growth but whose own tanks—fuel storage, as I said—are empty in peacetime. And it would be disastrous if they were empty in wartime. We don't want to be a country that educates South-East Asia's elites while our own literacy, numeracy, university rankings and Asia literacy slide.

As we balance diverse needs and make measured judgements on trade, trade itself can, and will, be our economic saviour. As the shadow trade minister, Madeleine King, has written:

There have always been good reasons for Australia to pursue sovereign industrial capabilities. Labor has long argued the case for lifting local manufacturing capacity that complements and builds on our comparative advantages.

Debate adjourned.

Federation Chamber adjourned at 16:28