Joe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

I rise to speak on the Energy Efficiency Opportunities (Repeal) Bill 2014. The Energy Efficiency Opportunities Act gave rise to a program which was designed to address market failure relating to the availability and use of energy efficient information.

More broadly, this bill leads me into a discussion on where we sit in the world at large. Recently, Australia signed a Korean free trade agreement. Energy features large in that particular agreement; energy and mineral products account for approximately 80 per cent of the value of Australia's merchandise exports to Korea. While many Australian minerals and energy exports to Korea enter duty free, Korea has applied tariffs of up to eight per cent on a range of priority resource products and tariffs of up to 13 per cent on manufactured products. This tells me where in the globe the energy efficiency opportunities are. Even Korea itself has passed legislation setting up a national emissions trading scheme.

The Labor Party is the party of jobs, investment and growth. We have consistently been the party that has supported economic growth underpinned by a responsible social safety net. We believe in growth combined with fairness; we have been champions of free and open trade that serves the national interest. As a party, we have perused deals for the benefit of Australian industry that suit the current and future economic times. We have delivered outcomes for Australia that fully recognise our strengths and positions in the world. We are the party of APEC, the party of the G20 and the party of gaining a seat at the UN Security Council. We have a strong track record over the last 30 years of advocating for trade liberalisation. That record has delivered economic growth, created more competitive industries and benefited Australia's consumers and workers. We are committed to an open global trading system because reducing global trading barriers and expanding trade is a pathway to a high skills, high wage future for Australians.

What concerns me most about this legislation and the position that those opposite have adopted is that they are not the party of those things. We saw that in the recent report of Joint Standing Committee on Treaties, which reviewed the free trade agreement between the government of Australia and the government of the Republic of Korea. As that report stated, the Republic of Korea is Australia's third-largest export market, our fourth-largest trading partner and a growing investment partner. In agriculture, resources and services, Korea is a significant export market for Australian industry. Our two-way trade is valued at over $30.5 billion in the last financial year. That free trade agreement covers beef, sugar, dairy, wheat, wine and horticulture. Combined, those sectors employ 20,000 workers.

We have a government that does not want to support opportunities in energy; it does not want to support programs designed to address market failures relating to the availability and use of energy efficiency information. On the other hand, we have former Labor governments that commenced negotiations with Korea for a free trade agreement. The Abbott government finalised those negotiations earlier this year. The role of the committee is to assess free trade agreements against the national interest. Further, its role is to scrutinise and assess the quality of any agreement signed in Australia's name, and that is what the committee's report did. The current state of play in relation to Australian-Korean trade is a story of tariff walls and increased competitive disadvantage. However, they have moved on an emissions trading scheme. The regulation impact tabled with the FTA shows current average Korean tariffs on agricultural goods of 53.6 per cent. Australian exporters to Korea are facing stiff competition with other countries. The European Union, the United States, the ASEAN group and Chile all have preferential arrangements in place with the Republic of Korea. New Zealand and Canada are close to concluding their own arrangements. The Centre for International Economics puts Australia's potential disadvantage without an FTA at a reduction of five per cent in exports by 2030. Under this agreement, tariffs will be zeroed on 84 per cent of the imports from Australia to Korea immediately. In 10 years, tariffs will be zeroed on 95.7 per cent of Australia's imports.

The Korean FTA is an important vehicle for Australia's beef producers—both farmers and meat-processing companies. The United States already has an FTA with Korea which gives American beef producers significant tariff cuts in the Korean market. Those tariff cuts will grow over the coming years. This means Australian beef producers risk being placed at a competitive disadvantage against their American counterparts in Korea. The government has failed to recognise that that is a problem which can occur in other areas, such as here where energy is so important. The Korea-Australia FTA will address this problem but not the root cause of this government not addressing energy efficiency. It will help improve Australia's industry-competitive position in the Korean market through significant reductions in Korean tariffs on Australian beef. The challenge, of course, for Australia is to decide whether to accept higher tariffs and less market access and disadvantage to other trading partners or to strike a deal in the national interest. Whilst forming the view that it is in the national interest to have a Korean FTA, there is a legitimate role for criticism as there are real concerns with the treaty. It is appropriate for these concerns to be ventilated and weighed against national interest.

Labor does have concerns about the quality of the Korea-Australia free trade agreement delivered by the Abbott government. There are two areas of concern to note: intellectual property rights and the inclusion of investor-state dispute settlement provisions. Rightfully, the committee report highlights the ongoing concern of the inclusion of intellectual property rights in the FTA. The Productivity Commission has raised this issue as well, noting:

… any IP provisions that are proposed for a particular agreement should only be included after an economic assessment of the impacts, including on consumers, in Australia and partner countries.

This is sound advice, and the majority report notes this concern. I want to credit the work of Mr Tim Watts in this area of the inquiry in highlighting the importance of the issue in that report.

The most significant and contentious issue raised by this free trade agreement is the inclusion of the investor-state dispute settlement mechanism, known as an ISDS clause. I acknowledge that there are legitimate concerns with ISDS provisions, and at the outset these need to be taken in context. In short, the ISDS is not new. As a nation we have had 28 such provisions with other economies. More than 3,000 international investment agreements include ISDS provisions. Safeguards unique to the Korean FTA are in the agreement, and I welcome them. For its part, Labor does not believe the ISDS provision should be included in Australia's free trade agreement. That was our position in government. However, the government's position is that ISDS clauses should be considered on a case-by-case basis. This agreement, as the report noted, includes carve-outs for public welfare, health, culture and the environment. I understand that the agricultural sector are positive or at least neutral in relation to the addition of such clauses. The report detailed correctly the argument for concern on ISDS clauses.

The European Parliamentary Research Service has examined this issue in some detail. I note that the highest level of treaty based dispute were registered in 2012, in a growing trend of increased disputes. The European parliamentary paper further highlights ISDS concerns of transparency, independence and impartiality, costs and the chilling effect on state regulatory powers.

Of course, in the alternative, the United Nations has drafted models reform that include boosting transparency measures, establishing powers within the international investment court to handle matters, and instituting appeal mechanisms. The United Nations Conference on Trade and Development has stated:

Challenges posed by today’s investor-State dispute settlement (ISDS) regime create momentum for its reform.

Further, it states:

The proliferation of ISDS under international investment agreements (IIAs) shows the importance this mechanism has gained. But it also increasingly reveals that there are a number of problems.

It is stated fact that the Korean government would not sign the agreement without an ISDS mechanism and so it appears here. But noting all the legitimate and real concerns, the question still stands as to whether the agreement is in the national interest. The majority report recommendation demonstrates where the committee landed on that question.

When this government looks across the world, it looks with blinkers on—shocking blinkers. It looks at specific areas that do not have emissions trading schemes and that do not have energy efficiency programs and highlights those as being the places where we should all look. If you look across our major trading partners, you do find important work being done in Korea on an emissions trading scheme and in the US on an emissions trading scheme. You find important work being done across the globe for programs which require large amounts of energy efficiency. And where there is market failure we should assist. We should talk about how to drive down emissions, which can save industry significant amounts of money per year in power expenses.

The independent ACIL Tasman review of the Energy Efficiency Opportunities Program found it has delivered benefits to participants well in excess of the costs. All of that tells us why Labor should allow the passage of the legislation on the basis that it was a Howard government policy implemented before there were any credible and long-term clean energy initiatives.

This government have not been up-front with the Australian people about what they are going to do under Direct Action. How are they going to manage that program to ensure transparency, to ensure that it drives down emissions? The Korean government have implemented an emissions trading scheme that is transparent, open and accountable; whereas this government has not even provided the design of what Direct Action is going to look like. With those few short words, I will leave the debate at that, recognising that it is a noncontroversial opportunity to speak and that I should not incite the coalition too greatly on this issue.