Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

Senator Hanson-Young made reference to an alleged sense of imbalance. I ask the minister to clarify for the chamber. There will be only modest economic and commercial benefits to Australia. Can the minister elaborate on why the trade agreement will assist Pacific island countries more than Australian businesses?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

Contrary to the assertion by the Greens senators in this place, all 11 countries have entered into this agreement as equals, because they realise that there are benefits to their own nations. They have done so in close consultation with our trade officials at minister-to-minister level. A number of countries have been very clear, and we've consulted with them, on the development support they need so they can engage as equal partners in international trade relationships.

PACER Plus is a landmark agreement that covers goods, services and investment. It removes barriers to trade, including tariffs, increasing the flow of goods and investment in the region, generating growth and jobs, and raising living standards in all of its signatory countries. Ultimately what's in it for the nations who have already come on board is the fact that they realise that this is a pathway to greater industry, greater exposure to international markets and greater job opportunities and income for their families, which, as I said previously, is at the heart of the Australian government white paper's proposal for the Pacific, which I know you are fully aware of, Senator Fierravanti-Wells.

PACER Plus is unique. It is both a trade and a development assistance agreement. Australia and New Zealand have committed $33 million in development assistance to help Pacific island countries implement their commitments and strengthen their capacity to trade. That, as all of us in this place except the Greens realise, is a good thing for all the nations involved. There are a number of specific proposals. It provides a vehicle for Pacific island nations to liberalise and reform their economies, a number of which are very small, and also to reverse their economic marginalisation at a pace they are comfortable with. As Senator Fierravanti-Wells noted earlier on, this process takes us through to the 2050s, so it is up to the nations involved as to the time frame and how we do that. Each of the nations has to be comfortable with a range of flexibilities that recognise their own special challenges.

The PACER Plus will also help to facilitate trade in the Pacific island countries. That means it will enhance transparency and harmonisation and reduce the cost of trading and doing business for each one of these Pacific island nations. It also establishes in the development corporation chapter a framework for mutually agreeing with Australia and New Zealand the appropriate support to assist the Pacific island countries develop their capacity to trade. It also provides a modern template for engaging in international trade. This is important for Pacific island countries, as it is for every other country in the world that is not a member of the World Trade Organization, and it is also very important for the Pacific island countries as they move forward and have a greater capacity to negotiate other free trade agreements elsewhere. Probably the fifth major benefit is that, under labour mobility arrangements, it actually expands the opportunity for labour mobility opportunities amongst Pacific island countries, and that includes Australia.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

One of the wrong assertions, I think, which has been made in relation to PACER Plus is that Pacific island countries would suffer revenue loss as a result of their PACER Plus commitments. Minister, can you just elaborate on that?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

Thank you very much for your question. This issue was raised again in this debate by the Greens senators. Revenue loss will occur under this agreement, but it will be very modest and very small in comparison to the benefits that will flow from these agreements. Reliance on custom duties has been, in the long term, in decline across the Pacific already. Kiribati abolished all of its ordinary customs duty on imports in 2014, while the Cook Islands and Niue apply tariffs on relatively few tariff lines. Most Pacific island countries generally have low tariffs and all Pacific island countries have been negotiating tariff reductions under their existing free trade agreements and with the WTO.

The Office of the Chief Trade Adviser estimated that, when PACER Plus tariff reductions are fully implemented, reductions in tariff revenue for most countries will equate to between one and three per cent of current government revenue. Australia will, of course, continue to assist Pacific island countries undertaking revenue reform through the Pacific Financial Technical Assistance Centre under the auspices of the International Monetary Fund. Target assistance is also available to Pacific island countries under the PACER Plus Readiness Package. Yes, there will be some very modest, one to three per cent, initial impacts in some nations, but the benefits that this arrangement will bring will far outweigh that. We are also providing many other opportunities to assist these nations as they move through that transition period.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

Can the minister update the Senate on the progress of negotiations with Fiji and Papua New Guinea?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

As I pointed out in my speech—and I thank the senator for the question—PACER Plus is a truly regional agreement, and the first 11 nations are just the start. Discussions continue with a number of other nations—in particular, with Fiji and Papua New Guinea. Australia would very much like to see Papua New Guinea and Fiji join because they have much to contribute to and, I think, would also gain from PACER Plus but, ultimately, as with all nations, their participation is a sovereign matter for their respective governments. PACER Plus will remain open for others to join, including Fiji and Papua New Guinea, even after it comes into force.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

One of the things that obviously has been a feature of discussions in the Pacific is very much the concept of 'talanoa'—the sitting down, the understanding and the talking through. That has really been the spirit with which this agreement has been under consideration and under discussion. Perhaps at times there have been issues pertinent to whether this is in the public interest of a particular country. Can you elaborate on the ability of Pacific island nations to regulate and to ensure that what they are doing is in the public interest and to put those public interest issues to bed?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

That is another very good question that goes to the heart of some of the matters that have been raised here in this chamber. Pacific Islands countries don't lose their ability to regulate as a result of PACER Plus. One of the most important points here is that this is still respectful of all nations' sovereignty. PACER Plus does not compel parties to give up their regulatory powers and parties are able to introduce new regulations or amend existing regulations.

The commitment of PACER Plus to preserve the right of parties to regulate is highlighted clearly in the preamble to the agreement, which I'll share with the chamber. The preamble says this:

Recognising their right to regulate and their resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment—

I'm sure the Greens would like to know that it does respect their sovereignty in relation to the environment—

the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals;

So that clearly does indicate that the nations do not lose their ability to regulate as a result of this agreement.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

One of the issues that certainly arose was in relation to alcohol and sugar based products. Is this going to in any way impede the ability of countries to regulate in relation to those? I'm talking more about kava and other issues that are important to Pacific Islands countries.

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

In short, the answer is: no, it will not impact in any way their ability to do that.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

Could you give us some details in relation to the estimated benefits to Australia, especially in terms of export volume and whether there has been any analysis done? I know work was being done in relation to that. Can you tell us where that work is at and what the outcome of that analysis is?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

Yes, I can. According to the National Interest Analysis, once PACER Plus is fully implemented Australian exporters will gain tariff-free access to PACER Plus markets for nearly 92 per cent of all tariff lines carrying 88 per cent of Australian exports to the region. There are clearly significant benefits to Australian exporters and many different commodities right across our nation.

Economic modelling of trade agreements is only one tool to assess whether an agreement is in the national interest. DFAT commissions economic modelling of trade agreements on a case-by-case basis. I've been advised that statistical and methodological limitations mean that current models are unable to estimate the total impact of a free trade agreement on the economy. For example, it is difficult to model accurately the changes to non-tariff barriers, trade facilitation, increased regulatory certainty and other aspects of a free trade agreement such as the rules that are imposed. Also, statistical data on international trade and services, and investment flows into the Pacific, are incomplete.

Two qualitative assessments were undertaken of PACER Plus as a whole. The first one was by the Institute for International Trade at the University of Adelaide, who prepared a report called the Research study on the benefits, challenges and ways forward for PACER Plus, and they did this in June 2008. It did provide an early assessment of issues for consideration in the negotiations. The second one was by the Office of the Chief Trade Adviser, who undertook and published the PACER Plus impact and sustainability assessment in 2016. It was prepared independently by the organisation with input from consultants. It presented an assessment of the potential economic, social and environmental impacts of trade liberalisation under PACER Plus for the Pacific Islands nations themselves.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

Earlier this year the opposition joined then Foreign Minister Bishop and me on a trip to the North Pacific. Obviously, one of the issues under discussion was the North Pacific countries of the Federated States of Micronesia, Palau and the Republic of the Marshall Islands. They have concluded negotiations on PACER Plus, but they haven't yet signed. There was also an issue there in relation to the compact because they are compact countries with the United States. Minister, can you elaborate on where we're at with the North Pacific countries? In particular, can the North Pacific still join PACER Plus if they don't sign the agreement before it enters into force? How does that work vis-a-vis the compact with the United States?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

The short answer is yes. Should the Federated States of Micronesia, Palau and the Republic of the Marshall Islands not sign PACER Plus before it enters into force, they will be able to accede to the agreement as per provision 9 of article 15, which covers accession. The Federated States of Micronesia, Palau and the Republic of Marshall Islands already have full suites of market access schedules in the PACER Plus legal text. This would significantly expedite their accession to PACER Plus should they decide to do so, but we would very much prefer the Federated States of Micronesia, Palau and the Republic of Marshall Islands to sign PACER Plus as soon as possible so they can start to benefit from the agreement as soon as possible and also access the readiness package that is being made available as part of this agreement.

In relation to French Polynesia and New Caledonia, they joined the Pacific Islands Forum as full members last year. As such, we would also welcome their accession to PACER Plus should they so decide. We would be pleased to see them both join PACER Plus because both nations have much to offer the other nations in that agreement. But also I believe they have much on offer from the agreement with greater economic engagement with other nations in their region. But, as with other new parties, their participation would require French Polynesia and New Caledonia to take an initial market access offer to actually commence the negotiations. We will continue to engage with both countries, should they so desire, on the PACER Plus arrangements.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

I have one other area which I'd like to cover. We do have other trade agreements that include Pacific island countries, including the South Pacific Regional Trade and Economic Co-operation Agreement. Minister, can you outline how PACER Plus is going to work in that framework and, in particular, how it will interact with other frameworks of which Pacific island countries are members?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

In short, again, the answer is yes. There are a number of forums and arrangements. The first one is with the World Trade Organization, and some Pacific island nations are already members of the World Trade Organization, as Australia is. WTO members already include Fiji, Papua New Guinea, Samoa, Tonga, the Solomon Islands and Vanuatu. Other Pacific island countries do not have the resources needed to participate yet in the WTO, but that is exactly one of the reasons why this PACER Plus program, and its assistance program, is so important. It allows and facilitates these nations to enter the WTO.

Regional economic integration between PACER Plus parties will lead to the deeper and broadened economic integration that is possible between WTO members and it will do so close to home. PACER Plus will cover investment, establish modern rules of origin and also facilitate regulatory cooperation. PACER Plus will actually bring some benefits to WTO membership for Pacific island countries that do not yet have the resources to do so, and that is absolutely a great thing for these nations. It is providing them with development assistance so that they can fully participate in the World Trade Organization arrangements, as well as in other agreements. PACER is a treaty, but it doesn't contain any trade provisions. PACER itself is not a trade agreement, but PACER does have a closed membership.

Another organisation, the South Pacific Regional Trade and Economic Co-operation Agreement, is not itself a regional economic integration agreement and it does not provide for the liberalisation of all of Australia's tariffs, so it is nonreciprocal from Australia's perspective. These rules of origin are antiquated, because they don't cover services, investment, transparency, cooperation or development assistance. Another benefit of the new agreement, PACER Plus, is that it provides greater sovereign capabilities for partners to PACER Plus.

Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

Senator Carr earlier made a wrong assertion, I think, that we had the $11 billion. Perhaps, Senator Carr, I can correct you on the issue of your allegation of cuts of $11 billion from the foreign aid budget. This all started when Tanya Plibersek, some years ago, started spreading fictitious and misleading information about your record on foreign aid. Tanya Plibersek repeatedly made claims that the coalition had cut $11.3 billion from the foreign aid budget. This is wrong. It stems from misinformation—lies—and projected forecasts under your own inflated fiscal mismanagement. Only those opposite can spread lies about trying to spend money that they didn't have beyond the forward estimates.

Let me take you through the history, because I keep hearing those opposite going on and on about this $11 billion. ABC's Fact Check found Tanya Plibersek's claim on Labor's own foreign aid budget, that Labor doubled the aid budget whilst in government, was overblown. Looking at real foreign aid spending, Labor's last budget showed that foreign aid, based on 2011-12 prices, increased from $3.5 billion in 2007-08 to a forecast $5.5 billion in 2013-14, which was an increase of only 55 per cent, not the doubling that Tanya Plibersek keeps harping on about. The reason I go back to this is that this is a lie upon a lie that goes back to 2015. Those opposite keep harping on about this when they know it is not right. Indeed, in an op-ed penned in 2006, Tanya Plibersek wrote, 'Our aid efforts should be focused on the alleviation of extreme poverty, not on short-term political gain, such as funding the Pacific Solution.'

I have to say to those opposite that this is hypocrisy writ large, because for a short time when you were in government you actually diverted money from the aid budget for onshore processing costs for asylum seekers. Indeed, you became one of the highest recipients of your own aid budget. The countries that suffered most as a consequence of that act were the very Pacific island countries that you are now coming in here and bleating about. I really wanted to put that on the record because, Senator Carr, you should go back and check your facts. When the ABC's Fact Check tells you that you have your figures wrong, perhaps you ought to heed those comments.

I have a final question for the minister. On balance, assertions have been made that this is not a framework that is actually going to benefit Pacific island countries. We have heard this peddled by those opposite. Can you, in your summing up comments, outline for us the actual economic gain that this is going to give to Pacific island countries?

Linda Reynolds (WA, Liberal Party, Assistant Minister for Home Affairs) Share this | Link to this | Hansard source

Yes, I can. There are a number of elements to that support. One of the points I'd make is that the Pacific region continues to experience significant social, economic and environmental challenges. We all in this place acknowledge that. Distance and weak infrastructure make international trade expensive, and small domestic markets and narrow production bases mean that countries rely on their internal economies for growth and for consumption. While PACER Plus provides the framework for regional trade and economic integration, dedicated assistance is absolutely critical to addressing barriers in signatory countries and to unlocking the Pacific's ability to partake in a global market.

The PACER Plus Readiness Package—which I think the Greens senators who spoke earlier clearly hadn't even read, or understood what was there—is absolutely vital to providing those benefits. The readiness package is that Australia and New Zealand will provide joint funding packages of $8 million for readiness activities. This is to assist signatories from other nations to ratify their PACER Plus agreements and also, as we've said, other agreements—for example, through the WTO framework.

The support that we're providing in this bill is for things like, firstly, legislative drafting to assist signatories to review and update relevant laws and regulations in their own countries. Secondly, there is Customs modernisation and harmonisation, implementation of up-to-date tariff codes and transposition of schedules. Those sound a little bureaucratic but are vitally important for small nations to be able to do. Each signatory will be able to implement the latest version of the internationally recognised systems known as the Harmonized Commodity Description and Coding Systems. Again, it sounds very bureaucratic and technical, but for these nations to engage fully in the World Trade Organisation and also in other FTAs this has to be done.

We're also providing support to those nations as they require. There is training on notification requirements, including helping governments and private sectors to meet PACER Plus obligations around transparency. We're providing funding support for public outreach and stakeholder engagement, and also for revenue planning and mitigation to help signatories manage any impact on their government revenue associated with tariff reduction, as discussed earlier.

As part of PACER Plus, Australia's commitment to an aid-for-trade funding target is for 20 per cent of its official ODA budget in the Pacific. This target complements the party's own trade related initiatives to increase economic growth, to generate jobs and to increase living standards in each and every one of these Pacific nations. As I said, they're challenged by distance, by size and also by having very small agencies which need to be able to deal with those issues.

I will leave you with two examples. The first one is agricultural export development. The Pacific Horticultural and Agricultural Market Access Program helps Pacific exporters meet the quarantine standards and other market access requirements of their trading partners. Again, it is very practical and very development focused assistance to enable these countries to engage in the international trading market. The second example is trade facilitation export and promotion and investment. Australia has increased funding to the Oceania Customs Organisation to help to strengthen Pacific Customs administrations, and will continue our longstanding support for Pacific trade and investment. It provides high-quality export facilitation investment and tourism promotion services across the region.

My final comment to this chamber is that I wholeheartedly endorse PACER Plus and the enabling legislation. This is a good thing. I'd conclude by, again, thanking the Labor Party for their engagement and their support for this very important bill to enable the PACER Plus program. Thank you.

Bills agreed to.

Bills reported without amendments; report adopted.