Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 8 February 2007
Page: 8


Mr HATTON (11:06 AM) —I am very glad to follow the opposition members in this debate on the Export Finance and Insurance Corporation Amendment Bill 2006. All we have had from the government on this very simple, non-controversial bill is a bit of a second reading speech in here, a bit of a touch-up on the way through from Senator Sandy Macdonald in the Senate and at least a considered speech from Senator Grant Chapman, where he actually tried to make more out of this bill in a positive sense than one otherwise might do. Senator Chapman made a considered speech based on his experience, arguing the case of the central tenet of what is proposed here by a fellow South Australian, Mr Uhrig, who was given the task in 2005 to look at corporate governance across Australia’s statutory bodies. Finally, the Uhrig report is to be put into play in this bill after consideration by a Senate committee which Senator Chapman was involved in.

This bill is wonderfully indicative of what this government are about. When they were elected to office, they put in the National Commission of Audit. They told the National Commission of Audit what they wanted to be found in that audit, they told them what they wanted the outcomes to be and then they produced a tome, canary yellow in colour, that was probably about an inch or so thick. But the foundation stone of that report was the protestation that the Commonwealth government of Australia should not deliver one single service to anyone in Australia. The recommendation was that the sole work of the federal government of Australia was to benchmark and audit. Well, what have we got in this bill? Yet another demonstration that the horizon of the coalition is an auditor’s horizon, a benchmarking horizon. When they look at export finance and insurance, they do not look at the key thing that they should be fundamentally concerned with, and that is Australian exports and ensuring that we have a vibrant export culture and that everything we do should be bent towards ensuring that, in good times and in bad, that culture is supported and extended. What is most important here? Running government departments and agencies as if they were just normal businesses in the corporate area.

It is very instructive to closely listen to what EFIC are supposed to do under this bill. The act charges EFIC with undertaking four key functions. The first function is to facilitate and encourage Australian export trade by providing insurance and financial services and products to persons involved directly or indirectly in such trade—hardly earth-shattering. It is something that has been done throughout and something that is important to India and China and to some of our other markets. What else should this organisation do?

The second function is to encourage banks and other financial institutions in Australia to finance or assist in financing exports. I would like a report card on that over the past 10 years. Have we seen this corporation or a government minister or any government spokesman in the past 10 years cajoling Australia’s banks to get in and export Australian goods? There has not been the mentality, on the part of this lazy government, to convince, cajole and actively go out and sell Australia’s exports. Instead, what do we have? Mr Deputy Speaker Adams, as you well know, from your experience as a committee member, we have got bilateral treaties and agreements. That is the big go. What did this mob do in opposition? They spent ages talking about the fact that they needed a committee to look at the treaties we were signing up to because they were fearful of the broad, wide world and what might happen to Australia if we signed up to multilateral pacts.

This is a government that thinks of export and trade only as two-sided bilateral agreements. You can make one with Singapore. They are not a bad bunch of people. They actually know how to trade in Singapore, I can tell you that. They know how to export in Singapore. They know how to be an entrepreneur. They know how to actively put together government enterprises. They know how to do public-private partnerships for the good of the Singaporean people. They are outstandingly good at making themselves an integral part of the growth in China. If you go to Guangdong province you can see what Singapore is doing and what it is exporting into China, with its explosive growth. They are at the very core, the very bed, of what China is doing.

Are Australian corporations involved in developing Chinese assets from the ground up—building them, designing them, providing the fundamental infrastructure, providing the photonics and the communications? Singapore has got all of that wrapped up. They not only speak the language but they actually understand that they can build wealth for their country by exporting their expertise and putting their money where their mouth is. These are people who deserve to succeed. We should follow their example closely.

What do we do instead? Encourage the banks, do a bit here, do a bit there, and say, ‘Won’t you help these people?’ This is a government that is afraid of multilateral pacts. This is a government that has tut-tutted about the problems in the Doha Round. The Europeans have put the Americans up against the wall and said: ‘We’re going to do 20 per cent of renewables. If you people would come in to the show we’d up that to 30. We’re actively trying to fix the problems that we’re causing in regard to climate change. What about you clowns?’ The Americans finally are being forced to make some response. There will be greater problems now, having regard to the impact of the election of a Democratic-controlled congress. I refer to the reservations of the Democrats and the US government, and of the President, Republican or Democrat, who will be elected. Those reservations will be very deep. They will make multilateral pacts, agreements and an understanding more difficult. They will make it harder for the Cairns Group to drive home the lesson that those countries that have things to export should get a decent price for what they export to the richer world.

You will not win against the United States and Europe by being their little friends and buddies. The United States are the best marketeers in the world. They are also privateers. They will cut you to pieces in any export market that you can find. They are renowned for being savage and difficult. A one-on-one deal with them, as we did in the bilateral treaty, will get you somewhere. Australia, as a primary producer, is still a commodity dependent nation, despite the vast reforms introduced during the Hawke-Keating period which provided a foundation stone for a new kind of productivity—a greater productivity. We have seen a fall in the export area, as indicated by the member for Hotham, from the 85 per cent figure that we took it to down to 79 per cent. It is a flatlining performance from a lazy government that does not really understand activism. I do not like the word ‘proactive’ but certainly you could never apply it to this government. Reactive, yes, but activist in these areas? These are the auditors, the benchmarkers, the onlookers, the journalistic government that want to comment on what everyone else does and float along on the back of the fundamental work that we did while we were in government, and on the backs of Australian exporters who are doing it much harder than they should be because this finance corporation is not being driven in the way it was driven under Labor.

The third function of EFIC is to manage the Australian government’s aid-supported mixed credit program—they will not be managing it for all that long, will they, because it has been given the flick; it has been destroyed—a facility which is now discontinued, although loans are still outstanding under it. This government does not believe that you can continue to drive our programs by providing such things as a mixed credit program. This mob does not understand the conjunction between aid and trade. It does not understand that we should be exporting not only goods—it has always been easy to flog minerals, wool and coal—but also services. We should be exporting Australian trade services and Australian building services in the region. Instead, the government says, ‘We’ll facilitate that, we’ll encourage that, we’ll manage this and we’ll provide information and advice regarding insurance and financial arrangements to support Australian exports.’ Whacko. This is emblematic of a government that has a narrow, flattened horizon. That is why this bill sits with and fits this government extremely well—because the government does not see the necessity beyond it.

Why is it important for me and others on our side to support the amendment moved by the member for Hotham? It is because the world is bigger, tougher and more difficult than this government could ever envisage. When you look at the last 10-year period, you find that the fundamental failing in any organisation has been in projecting the circumstances of the time into the future. It is a common human failing. It is a failing in statutory bodies, in countries, in companies, in governments and in the broad populace. During a period of low interest rates or high interest rates, or whatever, people tend to take those factors and project them. That has certainly been the case during the mineral boom. I do not know how long this mineral boom is going to continue or how long these prices can be sustained.

It is witchery or necromancy to try to forecast what will happen. You can take a few good runs at it. My experience on the Standing Committee on Industry and Resources has given me a bit of background on it. My interest in this area tells me that there are a couple of fundamentals involved here. When you look at our export performance you find that, again, we have been the recipients of dumb luck in this area. I know that the government did not take up the recommendations of the industry and resources group. Despite the fact that we made recommendations in the last parliament and have made further recommendations now in relation to uranium, they still have not looked at flowthrough shares. They have not looked at the impact of this on the Canadian mineral sector. They have not looked at the hard things we really need to pursue in minerals exploration and minerals export. It has just been easy because the demand has gone up. Why has the demand gone up? It is because our governments have not adequately explored our resources. They have not encouraged them in the manner they should have.

Mr Deputy Speaker Adams, you will remember that when you were Deputy Chair of the House of Representatives Standing Committee on Industry and Resources we produced a report on Australia’s fundamental problems in exploration. The much lower mineral prices we were getting had left us in a situation where there was a fundamental change in Australia’s mineral sector. That change was simply this: Australian ownership went out and largely British and South African ownership came in. They were only interested in brownfields development—taking the existing resources, getting as much out of them as possible, and as effectively as possible, and pouring the money back into London, Cape Town and Pretoria, and not putting the money where we really needed it in Australia—that is, into the exploration of new resources.

When was the last time we opened a zinc mine in Australia? Why are zinc and other minerals in such demand worldwide? We know that China is expanding dramatically. We know how much demand there is. We saw last night’s report that Hu Jintao is spending $10-plus billion in Africa doling out money in order to secure resources. Because this government overplayed its hand trying to be deputy sheriff to the United States, it then had to pay obeisance to China and run to them cap in hand and take a 30 per cent cut on our gas exports to Guangdong province. This government does not understand that China is imperial and hegemonic, and it always acts in the way it has historically acted. It will protect not only its markets but also itself by ensuring that it has the widest spread of provision of raw materials that it can have. It will make you bend at the knee in order to get them, but it will sew up those resources in the whole of Africa. It will sew up whatever resources it can in South America. It will sew them up from Canada and elsewhere, and the privileged position we have been in so far will not exist in the future. That is part of the reason why prices will be driven down.

The recrudescence of India—a very strong country which is moving forward in population terms; they have 200 million to 300 million people in their middle class—poses fundamental problems for us. Our area of safety in export was going to be—in the eighties we knew what it was, but how long has it been since any member in this House heard of this?—elaborately transformed manufactures. It has been a while, hasn’t it? I can remember PJ Keating, the former member for Blaxland, talking about elaborately transformed manufactures. Do you know why he did that? Because Australia’s manufacturing capacity in clever products that people wanted to buy rocketed under the Labor government. The reason it rocketed was that there was a Labor government determined to export and help our people here. After the cataclysm of 1985-86, in a few single months we had a half a per cent to one per cent reduction in our terms of trade. We lost 25 per cent straight off the top of the terms of trade. You will remember the banana republic bit, but the fundamental reason for that was the crash in the terms of trade. The response to that has shaped the growth of the Australian economy ever since.

We are no longer just dependent on those commodities. Thank heavens for that, because, when you go out of a commodity boom, you need a much broader, wider and deeper economy. Circumstances forced us into that. The lucky country under Menzies—that dumb luck that Australia had; they would not put in the work and the thought and would not be clever about what they did and just flogged whatever they could for whatever price they got—still persists under this government. Where are the efforts to support the export of smarter products—products that will return much more to Australia? There are some, of course. There is a new sports utility vehicle that has just come into Australia called Captiva. It has a six-cylinder Australian engine produced by Holden, but most of it is made in Korea. There is one version, the MaXX—the top of the range—which is produced in Europe. That is part of the global economy. We drove part of that and played our part to ensure the survival of Australia’s motor industry. In my electorate of Blaxland in particular, the components industry is such an important part of that, but you have to drive out into the world in order to secure that. The car component industry is part of the elaborately transformed manufactures, but unless you support it and drive it, it will not be successful.

We are just having a look at doing deals with Mexico. Mexico is part of NAFTA and has done extremely well there. It is an integral part of the car manufacturing industry of North America, along with Canada and the United States. The only thing the Mexicans would get out of doing that would be exporting their products into Australia. We would have some access to theirs. It is likely at this time they would say they would not want to be part of it, but there are vibrant parts of other countries where they are renovating what they have and are driving it forward. They are signing up to broader pacts. It was an initiative of Mr Clinton, a Democrat, to form NAFTA. We saw that as a significant problem for us, but we responded. What was the response of the Australian Labor Party and of Treasurer and then Prime Minister Keating? The response was to boost along and radically transform APEC.

As my colleagues have indicated, we have a massive chance this year. In large part it will no doubt be squandered, but it should not be if this government really was an activist in the export area. The very first meetings in relation to APEC are currently taking place, and the Commonwealth drivers are taking off for Perth tomorrow because the first exploratory stuff is being done.

The government do not fundamentally believe in activism on a multilateral front, and that is why they have not driven this process for 10 years. That is why they have only lately become converts: because it suits them. They have no real belief in the fundamentals of multilateral activity. They are the ideologues of the bilateral path, which is a short, narrow path that leads only one way. It is not the fundamental that the future of a commodity-dependent country, as Australia still is, is determined by. I fully support our second reading amendment. It goes to the substance of what the problem is, and this bill indicates the narrowness of the view of this government. (Time expired)