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Wednesday, 4 August 2004
Page: 25692


Senator STEPHENS (6:29 PM) —I, too, wish to make a contribution to this debate on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004. The consideration of the free trade agreement is probably the most significant debate for Australia as a nation that we have had in quite some time. While Labor are supporting the FTA we make no secret of the fact that the way the government went about negotiating the agreement was not the way we would have chosen. We will now be paying close attention to the monitoring mechanisms built into this agreement to ensure that it is in fact in our national interest.

I would like to remind senators that the economic gains claimed by the government are exaggerated. Professor Ross Garnaut, a professor of economics at the ANU, Dr Philippa Dee from the Productivity Commission and the ANU, and Dr Peter Brain from the National Institute of Economic and Industry Research all studied the agreement closely and found that there will be minimal gains or slight losses. One of the important points that these experts make is that the economic gains are limited by the restricted access to US agricultural markets. The FTA does not cover all agricultural products, as we know, and, of course, sugar was excluded from the FTA, despite Minister Anderson's loud claim that it would be un-Australian to exclude it. It is therefore essential that the government's compensation package for the sugar industry achieves significant, long-term reforms in the cane farming and milling sectors of the sugar industry. Labor will be monitoring this package to ensure that it achieves those aims and has greater substance than the government's current sugar industry assistance.

Senators will also recall that our government led us all to believe that the agreement would deliver free trade in agriculture, as indeed did the US government, so it is disappointing that the myth of Australia flooding the US markets with agricultural products was allowed to flourish, with the result that the agreement on beef and dairy products is far from what we had all hoped. The fact is that our agricultural exports are not frightening to the US. We have not got the productive capacity to threaten them. Australia operates a beef production system that is one-sixth the size of that in the US. To give senators a picture of the threat we pose, Australia supplies the US with the equivalent of four hamburgers out of every 100 consumed. Our beef industry is not so much a threat as a complement to the US beef industry, so it is a pity our access to their market is so limited.

However, under the terms of the agreement, an additional 70,000 tonnes of quota access will be granted to Australian beef, accruing over an 18-year period until 2022, when a permanent safeguard will apply. In the meantime, we will do what we can to look after the interests of our beef industry. The annual ministerial meetings will provide an opportunity for Australia to pursue our agricultural interests. Labor are determined to use those arrangements to seek a most favoured position for Australia. This means that we, too, will have access to the most favourable deal the US makes with any other country.

Similarly, our dairy industry has a limited capacity and the US had no need to fear it. We currently produce approximately 22 billion pounds of milk, a mere 12 per cent of the US production volume. Of this 22 billion pounds of milk, we consume half ourselves. The other 11 billion pounds are exported to 100 different countries. The US would not agree to giving our dairy industry free trade but the agreement will triple the quota access to the US and allow access to grow at five per cent per year. Financially, this will result in the farm gate returns of a million-litre farm going up by $2,000 to $3,000 a year. That is a modest gain but not the huge financial benefit the government is touting. As Labor have repeatedly pointed out, where on balance the free trade agreement is in the national interest, we support it.

Senator Lees spoke earlier today about her concerns about the quarantine provisions in the free trade agreement, and there are many people who are concerned about the extent to which we will lose the quality protection that our products enjoy. Both qualitative and quantitative science based risk assessment processes must be used in developing import risk assessments. As Senator O'Brien pointed out yesterday, this is particularly important in enshrining the Import Risk Analysis Process Handbook in regulations and requiring the consent of both houses before that process could be varied. This means that, under Labor, no process of the FTA could be imported into our current import risk assessment process without the support of the House of Representatives and the Senate.

Another thing that Labor considers very important and one that we have heard a lot about is the issue of maintaining the fine balance between users and owners of copyright. Any alteration in our copyright legislation could result in significant costs, especially for educational institutions. The Joint Standing Committee on Treaties, of which I am a member, unanimously recommended that the government replace the Australian doctrine of fair dealing with one that resembles the US open-ended defence of fair use and that the Attorney-General's Department and the Department of Communications, Information Technology and the Arts review the standard of originality applied to copyright material with a view to adopting a higher standard, such as that in the US. Labor will keep a close eye on this matter and will require the Attorney-General to report annually to parliament on changes to the Copyright Act affecting universities, libraries and educational and public research institutions, particularly with regard to any increased costs they may bear. I am very pleased that the government is considering favourably Labor's amendment that will protect local content at 55 per cent and that will ensure that, if any government in the future wants to reduce the number of Australian voices on television or Australian content, it will have to be brought to the House of Representatives and the Senate.

Labor's line in the sand, however, as we have all heard today, comes with the terms outlined in chapter 17 relating to the Therapeutic Goods Act and the PBS. As it stands, the US FTA gives US drug companies the right to seek reviews of listings and other decisions made by our Pharmaceutical Benefits Advisory Committee. Let us be very clear about this: the Howard government has succumbed to US pressure to guarantee drug lobbies priority in access to the deliberations of the Pharmaceutical Benefits Advisory Committee. We have heard the argument that large pharmaceutical companies need to charge high prices in order to subsidise their research into new drugs that can improve the current treatment of serious diseases and conditions. The truth is that these big pharmaceutical companies are extremely lucrative. Their promotional budget—touting their brands to doctors—costs many more times than the amount they spend on actually researching significantly new drugs. Much of their research money is spent on slightly changing an existing drug and trying to find a minor advantage over an existing brand so that they can patent their own version and sell it at a profit.

So the story that the incentive for this control over how drugs are listed on our PBS is to provide money for significant breakthroughs is just that—a story, a fabrication. The real motivation is money: more profits for the companies, more costs for the patients. Let me quote Professor David Henry, former chair of the government's Pharmaceutical Benefits Advisory Committee, on this subject. He says:

Every single provision in the text of the agreement as it applies to drugs is to favour the US companies, to increase the prices, to ultimately reduce access to cheap, affordable drugs in Australia. There's no question about it.

Commitment to the principle of universal access to affordable medicines currently underpins the PBS. Labor values that commitment very highly on its list of priorities, and we cannot stand by and allow wealthy drug companies to play games with our access to fairly priced medications. It is plain good sense to amend the agreement in the way that Labor proposes: to prevent a drug company from lodging a patent claim as a delaying tactic in keeping cheaper generic drugs off the market for as long as they can spin out the litigation. Our amendments would protect the PBS by preventing and penalising drug companies that try to stop cheaper generic drugs coming onto the market by lodging spurious patent claims. The validity of these claims would be determined by a court, not by the TGA or by the government.

The government argues—and we have heard several government senators speak in this way today—that it does not want evergreening of drugs to take place and that it does not believe there is anything in the FTA that will increase the possibility of evergreening taking place. In question time today Senator Patterson quoted with approval one of the government's advisors stating that the FTA `neither encourages nor prevents evergreening'. This agreement, as it stands, does not prevent evergreening, which is why the Labor Party is insisting on the amendment that will make sure that those extremely wealthy American drug companies which champion George Bush's position do not engage in that practice in this country.

Much as Senator Brandis may have used his legal expertise in the previous debate to pour scorn on Labor's commitment to protect the PBS, the government must be aware that even the generic medicines industry are very concerned that there be no delay to the entry of generic medications. I am sure that they will be particularly intrigued by Senator Brandis's argument that the legislation as it stands could in fact facilitate the earlier entry of generic medications.

The issue is not a threat to the genuine use of patents; it is important that patents be protected, and we appreciate that. Labor's amendment to the enabling legislation says that, if a generic drug company files an incorrect or spurious patent application, the TGA is entitled to fine that generic drug company for submitting an incorrect application. If it is acceptable to fine a generic company for filing a false document, it should also be acceptable to fine a drug company that puts together a patent claim that is not about the science or the chemical product but is about its commercial interests. Let us prevent companies from using the courts to drag out the proceedings and to slow down the introduction of a cheaper generic drug.

To allow even the possibility of such unnecessarily expensive medications would surely be a retrograde step for all of us. The Prime Minister has called this stand by Labor `an unnecessary stunt'. It is necessary to protect our PBS, and I cannot understand why the Prime Minister insists otherwise. I have received over a thousand letters and phone calls from impassioned Australians who also see this necessity. Why does the government have such a blind spot on this important issue? The only place the word `unnecessary' has in this debate is in the plain fact that it is unnecessary for these price hikes to take place. Our PBS must be protected as it is.

Calling Labor's insistence on this amendment a stunt is an insult to the many people who justifiably object to the inevitable and unnecessary hike in the price at the pharmacy if we allow the agreement to go through without this amendment. I would like to remind the Senate that Labor studied the details of the US free trade agreement very carefully before coming up with these amendments, and I commend the Senate select committee and the Labor senators who participated in those deliberations, which were very complex and very difficult. We also considered other complex and difficult issues, including investment in services such as water and the introduction of GM food crops in Australia. These are also issues that are worrying the Australian people. Labor pursued the information we needed to enable us to make a decision that, overall, the FTA is in the national interest. It is a regrettable fact that the government failed to negotiate the best possible deal for Australia. There are serious flaws in the agreement in the areas of local content and the PBS. The government can join with Labor to protect both our local content and our PBS. I call on them to do so.