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Wednesday, 21 October 2015
Page: 12048


Mr FITZGIBBON (Hunter) (16:39): In the spirit of the agreement struck between the government and the opposition to facilitate the passage of the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and related legislation through the House tonight, I will keep my comments as brief as is possible. But of course no-one in this place is happier about this agreement now that it has been improved than me. It will be of great benefit to the agriculture sector. At the risk of repeating some of the comments made by others: for beef, for example, tariffs of between 12 and 25 per cent will go to zero over nine years; for dairy we will see the elimination of tariffs of between 10 and 15 per cent, depending on the product, over four to 11 years; and for sheep and goat meat we will see the elimination of tariffs of between 12 and 23 per cent within the next eight years. The list goes on and on; it stretches through wool, pork, wine and spirits, horticulture, barley, sorghum and other grains, seafood and even processed food. Sugar has not done all that well and appears not to be doing well under the TPP, which I know is a disappointment to our canegrowers, and the opposition stands ready to work with the government in any way it can to improve the circumstances for those growers.

Having said that it delivers substantial benefits to agriculture and of course many other sectors, I just want to point out that this is not a free trade agreement; it is best described as a preferential trade agreement. That means it allows Australia better access into China than some of our competitors. To say the same, it allows Australia to catch up with some of our competitors—those competitors who have been facing lower tariff regimes for some time. There is no better example than the dairy industry, in which our New Zealand competitors have had advantage for many years now. So, it is very, very important to the agriculture sector.

The changes the opposition sought are important ones. Again, it is a very beneficial deal to the Australian economy and many operators within that economy. But it is not necessarily such a great deal for those Australians who were not guaranteed the opportunity to take up the jobs that may be presented by the agreement with China. I thought our concerns were valid. It was quite obvious that they were shared by many in the broader community. I am thankful to the Prime Minister and Minister Robb for their willingness to come to the table and agree and in doing so to meet those concerns and indeed allay those concerns.

I want to pay tribute to my colleague Penny Wong, as the Prime Minister did today. She worked very hard and very smart and very cooperatively with Minister Robb to navigate these changes. They are difficult, because none of us wanted to do anything that would offend the agreement per se. That would be unacceptable. But we were determined that we could make changes extending those protections without offending the agreement. The government has now agreed to do so, and we appreciate it very much.

Of course, those agreements go mainly to ensuring that, first, Australians have the opportunity to secure those jobs through labour market testing and, second, that anyone coming into the country—for example, in a technical trade situation—has the necessary skills to do so in a safe manner, and to ensure that people coming in are not exploited. In addition to that, it is about making sure we are not giving over jobs to others at lower pay scales—in other words, entry-level type jobs rather than those that require far greater expertise and experience. So, that is a very good outcome.

I just want to make a couple of comments about agriculture and the so-called dining boom—the enormous demand now coming out of Asia for high-value food. These agreements, as I said, allow us to enter the market a little more cheaply, and that is a good thing—unequivocally. But Australia's real opportunity in Asia does not lie so much in volume—as important as that will be—as in value. Generally speaking, we therefore need an agriculture plan which helps the sector move up that value chain, tapping into niche markets, delivering a product for which people in the growing middle classes of Asia are prepared to pay a high price. So you can see that every reduction in our tariffs makes that task easier. But, in the scheme of things, it is not as important as it is in a commoditised market dealing with homogenous product, where each competitor is selling a product which is basically the same.

I believe we need to be cautious of complacency setting into the sector, the sort of complacency which might grow from an exaggeration of the benefits of this deal to agriculture. They are not infinite. They are substantial, but they are not infinite. I have heard many in the sector who might be doing it tough because of drought, for example, or other cost pressures, saying, 'We will be all okay now because we have signed the China free trade agreement and the world will be our oyster'—excuse the pun. That is simply not true. This bill will deliver substantial competitive opportunities and enhance our competitive advantage, but it is not the panacea for all of our challenges in the agriculture sector. I would be disappointed to see politicians promoting complacency in the sector by overstating the benefits of this deal. I read an article which extensively quoted a stock and station agent in a regional community. He was talking mainly about drought, but at the end of the conversation he said, 'But it will be all right now because we have signed the China free trade agreement.' That is a perfect example of what I am talking about. It is not a panacea; it is not going to overcome every challenge we face in the agriculture sector, and we as politicians should not in any way be indicating to people that that is the case.

It raises all sorts of questions about the current state of the beef sector and the size of the nation's herd. We do want to send more beef—boxed, frozen, chilled, live—to Asia. That is a good thing for the country. The reason beef prices are on the rise at the moment is a simple function of supply and demand. Drought and other factors are causing people to turn cattle off earlier, and the herd size in Australia is in decline. When the herd size is in decline, demand starts to outstrip supply and prices rise. That is good thing for the producer. I am not suggesting the producer should not be benefiting from that—that is good thing—but it is not necessarily a good thing for the consumer, because eventually those prices must be passed on. There might be delay as the processors or even the retailers take time to pass those prices on to the consumer, but it will happen. So there needs to be a broader approach, a broader strategy, from government to address those issues or take them seriously. Rather than have the minister, on a daily basis, attempting to take credit for higher beef prices—something he is in no position to do—he really should be looking further forward and asking himself what, if anything, government can do to work with the sector to address that shortage of cattle and what that is doing to the herd size and what that consequently is doing to prices.

As I was going through my ChAFTA file, I noticed an article which quoted Minister Joyce back in 2014:

… he said consumers should not pay higher prices, insisting ¬≠retailers and processors were res¬≠ponsible for any price inflation.

I do not really know what that means. If it means that processors and retailers who are paying more for their product are not going to pass that cost on to the consumer, then it demonstrates a fairly poor grasp of economics. Yes, I will be with everyone else in this place and say that it is for us, through our regulators, to make sure there is no gouging and they are not passing on more than their additional costs to the retailer. But the fact is that, if farmers are getting more at the farm gate, processors are paying more for the cattle and therefore they are more than likely charging retailers more. Knowing the retailers well, you can be pretty sure they are going to pass that cost on to consumers. So higher prices at the farm gate are a great thing for producers, but we need to be alert to the fact that higher prices, on average, are probably better for producers, processors and indeed retailers in the long run.

The opposition welcomes the Prime Minister's agreement to come to the party on our changes. This is a good day for Australia. It is certainly a good day for those who operate in our agriculture sector and of course many sectors beyond that, and I welcome that.