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Wednesday, 9 February 2005
Page: 79

Senator COOK (2:58 PM) —My question is addressed to Senator Hill as the Minister representing the Minister for Trade. Can the minister confirm that last financial year Australia recorded a trade deficit with the United States of $10.5 billion, a trade deficit with China of $5.4 billion and a trade deficit with Thailand of $1.2 billion? Can the minister confirm that the government’s own economic study shows that the FTA with the United States will significantly increase our trade deficit with that country over the next 20 years? Minister, why are you claiming that FTAs your government has either negotiated or is considering, such as a possible FTA with China, will fix our trade deficit when, in fact, your own report shows that the FTA with the US will increase our trade deficit and the current account deficit for the next two decades?

Senator HILL (Minister for Defence) —I am surprised at the gall of Senator Cook to ask a question on this subject, because Senator Cook, as a senior economics minister in the Keating government, claimed that the budget was in surplus when it was $10.4 billion in deficit—which is a demonstration, I think, of the economic credibility of that government that left Australia in such a disastrous economic position. What was worse was what it did to ordinary Australians. It pushed a million Australians out of work and destroyed many Australian small businesses. That was the economic recipe of the Labor Party. That is the credibility that they claim to be the basis of the policies they are going to put forward in the future. They ask us to look back to the times of Keating as a basis for when they did things properly. I gather from the question that has been asked today by Senator Cook that he is still on the same wavelength.

This government has had a different approach. This government has built prosperity through, firstly, strengthening the domestic economy. It has tackled areas of weakness such as industrial relations, which this government has significantly improved. It has tackled the need for taxation reform, in which it ultimately succeeded, and it has tackled the need to get expenditure back under control—something that the Labor Party were never prepared to do. What did they do when they were in trouble? They taxed more or borrowed more, or did both. This government knew that you could not have a prosperous economy if you continued down that path. So this government is the proud proponent of reform in these areas, and the outcome has been one of the most successful economies in the world.

We have also said that, to succeed as a relatively small nation in a globalised trading world, it is necessary to open up market opportunities, because only then can you take full advantage of the strength of the domestic economy. That is why we have moved away from the failed Labor formula on free trade to look to open up new markets. We believe that we have done that very successfully in agreements with Singapore, Thailand and the United States. We are now negotiating with the United Arab Emirates, and others are in the pipeline. That will give successful, efficient Australian businesses the opportunity to enter export markets that they have not had in the past.

In relation to the United States, which was referred to by Senator Cook, it gives an opportunity to get into that massive government procurement market that we have never really had access to in the past. We will still have to have efficient business in Australia to take that advantage. We therefore still have to have governments in this country that are prepared to take hard decisions, and hopefully we will have parliaments in this country that are prepared to support such governments in doing so—although we have never seen it from the Australian Labor Party.

That gives an opportunity for success in our export market as well as in the domestic market. As I have said, our exports are growing strongly. We are succeeding in that regard. At the same time, our imports have grown. That is as a result of the prosperity of many Australians who, under the Australian Labor Party, could not afford the purchases they are making now. There are two ways to go: you go back to the Keating recipe and you say, ‘There’s a current account deficit; push interest rates up again and force businesses out,’ or you go down our path. (Time expired)

Senator COOK —Mr President, I ask a supplementary question. I note that the Minister for Defence has never answered any of the questions I have put to him before. Is the minister aware that the average annual growth in exports under Labor was 8.1 per cent and that the average annual growth has been more than halved to just 3.6 per cent under the coalition? Given that Australia’s terms of trade are at a 30-year high, why has the government dropped the ball in this key area of economic management?

Senator HILL (Minister for Defence) —I will tell you the story. Under Labor, when there was an economic collapse in Asia the Australian economy would have collapsed. Under the Howard government, because we got the domestic fundamentals right, the Australian economy was able to continue to flourish. But it did so largely on domestic growth. As we have got past the drought, as we are getting past the economic problems within Asia, as we have got past SARS and as we have opened up export markets, the opportunity is there for growth again. As I have said, in the last year growth was 8.3 per cent. Even on Senator Cook’s figures that is higher than the Labor Party average. So that is heading in the right direction, but it is going to require continued domestic reform to ensure that our producers remain competitive and take full advantage of the new opportunities. (Time expired)

Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper.