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Wednesday, 9 February 2005
Page: 134

Senator TROETH (Parliamentary Secretary to the Minister for Industry, Tourism and Resources) (6:22 PM) —I too am very pleased to be part of this address-in-reply to the Governor-General’s opening speech. I will take up the tone that Senator Ferguson used in speaking about the electorate in which he was so successful a contributor—

Senator Ferguson interjecting—

Senator TROETH —I am about to speak about that. Firstly, I should echo Senator Ferguson’s words and say how proud I am to be part of the Howard government, which has now been re-elected for the fourth time. I was delighted on my own behalf to be re-elected for a third term in the Senate as part of the coalition Senate team in Victoria.

Like Senator Ferguson, I was responsible for an electorate in Victoria—the electorate of McMillan. McMillan has been won again by Mr Russell Broadbent, the member in the other place. Mr Broadbent has had a distinguished career as a member of parliament at the federal level. He was previously the member for McMillan between 1996 and 1998, and before that he was the member for Corinella between 1990 and 1993, before that seat was abolished. As Senator Ferguson said, not only has Mr Broadbent given total devotion to the Liberal Party over the 20 years or more that I have known him; he has also pursued a very successful career in small business. He and his wife, Bronwyn, ran a Mensland store in Pakenham, which was an extremely successful business enterprise. If I am not mistaken, he and Bronwyn were the second generation of his family to run that store before it closed a little over 12 months ago.

McMillan is a fascinating and diverse electorate. It takes in what can now be termed the outer suburbs of Melbourne on the eastern side. Formerly, the area of Pakenham and Cranbourne were part of the countryside. Indeed, the Pakenham Racing Club is now on the edge of suburbia. In that area very large housing estates are being established, full of young, aspiring, hardworking young couples—usually with young families—who are looking forward to making a better life for themselves far away from the city centre of Melbourne but in an area where they and their families can grow and prosper. Included in the new boundaries of McMillan, which were drawn up between the election just past and the election of 2001, is the rolling, rural landscape of South Gippsland, which encompasses some of the richest beef and dairy country that you would ever want to see. The farmers in that district are very successful small business men and, together with the tourism and residential developments along the coast, that area is geared for development that is, I hope, not too fast but certainly well planned and that will integrate tourism and the local economy to a great extent.

I worked with Mr Broadbent intensively for the year in which he was preselected, and I was absolutely delighted when he was elected with a substantial majority at the last election. I congratulate him and I am delighted to have been a part of that.

I would like to move to a wider consideration of the Governor-General’s remarks, particularly with regard to trade. Trade liberalisation has always been a goal of Australian governments, and we have tried to work through multilateral trade agreements, through bilateral trade agreements, through free trade agreements, through our membership in the World Trade Organisation and through our membership in regional trading blocs. As everyone would know, the US free trade agreement was successfully brought to a conclusion at the end of last year, and the timely conclusion of that was of the highest priority for Australia—for reasons that I will go into in a moment. As well, in June 2004 the Minister for Trade was successful in signing the Australia-Thailand free trade agreement, which will also bring us some benefits which I will detail. We will also continue to consider possible free trade agreements with China, Malaysia and the ASEAN nations—the latter in conjunction with New Zealand.

I am delighted that we will be investing an extra $30 million over three years in the Export Market Development Grants program. Since coming to government, the Howard government has scaled that program far more towards small and medium exporters. From what I have seen of Austrade offices around the world, all of those offices use the resources available to make sure that Australian exports have the freest possible entry into the country in which they are located. Far from being a mere bureaucracy, the Austrade offices that I have seen are very entrepreneurial and proactive in discussing Australian exports with likely importers and then seeing that it is brought to fruition. That has been a great success story. The government will also appoint 30 new export facilitators to maximise our export opportunities to the United States market, which I will detail in a moment, and we are also going to create export hubs in regional Australia through the co-location of the services of Austrade and AusIndustry.

I will move to a more particular examination of some of the benefits that the US agreement has brought to our country and especially to my home state of Victoria. The major Victorian merchandise exports to the United States are: beef, $A260 million; motor vehicle parts, $218 million; wine, $134 million; and lamb, $128 million. As I detailed in my remarks about McMillan, I am sure that beef and lamb from that district will play a particular role in those exports to the US. Going in the other direction, from Melbourne towards the western part of Victoria, no doubt the Pyrenees-Grampians wine region will also have a particular part to play in that, as will areas further to the west.

The United States is the world’s largest market. It has a population of nearly 300 million and a gross domestic product of almost $US11 trillion. It is the world’s largest importer, the world’s largest investor and the world’s largest purchaser of goods and services. Victoria, my home state, has trade with the US. The United States is Victoria’s largest two-way trading partner and its second largest destination for exports. In 2003, Victoria’s total merchandise exports to the United States were worth $1.8 billion. Three of the state’s top exports to the US—beef, lamb and automotive parts—will receive an immediate boost from the US free trade agreement, as will our very important dairy industry and our growing wine sector. The emerging biotechnology sector in Victoria will also benefit over the longer term from Australia’s increased attractiveness to United States investment, as will the financial sector.

When the US free trade agreement was first mooted, there were many, many doomsayers who said that this would never work. Right throughout the process, there were hurdles thrown up, particularly here in Australia, by those people who said that it would not work, that we were simply casting ourselves into the cauldron, as it were, to be eaten up by the fire of the US furnace and that our industries and our investments would vanish into the US, never to be seen again. The fact remains that, owing to the careful crafting of the agreement, we will be able to provide professional, business, education, environmental, financial and transport services. A framework to promote mutual recognition of professional services has been developed. This is a big gain for Australian professionals doing business in the United States. Our financial sector will undoubtedly reap the benefits associated with financing the increased trade in goods and services flowing from the agreement. So future access for Australia’s financial services to the world’s largest financial market is assured. In addition, the agreement guarantees that any future US liberalisation in this sector cannot be reversed. Australia and the US have agreed to closely and jointly consider a number of issues regarding the closer integration of our two financial sectors and report within two years of the agreement entering into force.

We will also be able to enter the vast market of government procurement. There is a $A200 billion market in US federal and most state government purchases of goods and services, and that will now be open to Australia. Australia will have a waiver from US programs favouring US firms and products, and all US federal government contracts over $US58,550 and construction contracts over $US6,725,000 will be open to Australian firms. Obviously, Australian preferences for small business and Indigenous people will remain.

One of the other major sources of debate or discussion was the Pharmaceutical Benefits Scheme. Access by Australians to affordable medicines under the PBS will be maintained under the free trade agreement. It reinforces our existing framework for intellectual property protection of pharmaceuticals. There are many other ways in which our national interests have been protected by this agreement—unfortunately I do not have time to detail them—and it is undoubtedly an agreement which will keep our national interests alive and provide an enormous boost to our primary and manufacturing industries as well as to the intellectual property market and intellectual technology as well. It is a personal delight to me to see that happen. As I said, I am particularly pleased with the developments in my own state of Victoria.

I noticed that a journalist reported in an article in the Australian newspaper today that there is a move to cut US farm subsidies. As we know, our agricultural industries suffer a great deal from the fact that the United States pays domestic subsidies to its producers in a way which then means that it is very difficult not only for our products to enter America but also for our agricultural products to be sold to other countries within the trading framework. So we suffer both ways. In fact, Cotton Australia’s Chief Executive Officer, Philip Russell, says that US subsidies are estimated to cost the Australian cotton industry $65 million a year, or between $5,000 and $6,000 per farm, because US production subsidies encourage overproduction, which depresses prices and reduces export demand for the Australian product. That reduced demand translates into reduced farm incomes.

However, there have been some encouraging signs on the horizon of farm subsidies. For instance, Brazil, supported by Australia, recently took the United States to the World Trade Organisation disputes panel. The panel found in favour of Brazil—that is, that the United States programs were distorting world markets and were illegal under World Trade Organisation rules. The US government has appealed that decision, but this is a slight opening of the door. President Bush has apparently announced that there will be a degree of review of existing farm subsidies.

To give you an idea of the price disparity between what US growers get and what Australian growers get, US cotton growers are guaranteed US72c a pound whereas Australian growers have to take the market price of about US40c. We are out there in the open market. The US growers, in some industries, have their prices guaranteed by the government. Again, US sugar producers get US20.4c a pound while the equivalent price for Australian producers is about US8.7c a pound.

Our trade minister, Mark Vaile, has welcomed the move towards reducing farm subsidies, saying:

If implemented, these subsidies will go some way to reducing the disadvantages faced by Australian farmers and others, mainly from developing countries, in competing for markets around the world.

We have seen this scenario before. In 1995 there was a move to reduce subsidies and make cuts to payments to farmers in the United States through the Farm Bill. In the intervening time, subsidies and payments to farmers simply went up to more than they had been before. With the decision by the World Trade Organisation that it can find against America, I hope that these systems can ultimately be dismantled and then our farmers will face a fairer market not only in America but also around the world.

I will move on very briefly to the Australia-Thailand Free Trade Agreement, which was signed in July 2004. Again, Australia will receive great advantages from being part of this. I would particularly like to concentrate on the area of tertiary education institutions because the export education market has been one of our successes in South-East Asia. In January, I was fortunate enough to take a study trip to visit Vietnam, Thailand, Cambodia and Malaysia. The standard of education that Australia has and the quality of the education services it can provide for Asian students here in Australia and also on the ground in that region is something we can be very proud of.

I understand that Swinburne University, Monash University and the University of Melbourne, all from my state of Victoria, are represented in Malaysia. Also, in Vietnam we have an extremely successful Royal Melbourne Institute of Technology set-up on two campuses, one in Hanoi and one in Ho Chi Minh City. The reason Australia is seen as a key destination in terms of both the export of Australian services and the facilities that we provide to Asian students here is that many parents—of a particular vintage—may have studied in Australia under the Colombo Plan. They see us as an ideal place for their children to study, given that we have a stable political regime, and they see us as an ideal place to invest in for property. Also, Australia is accessible in terms of distance if they wish to visit their children or wish for their children to come home for school term vacations. In that study trip I made, I was extremely proud to learn about what is being provided by Australia in some of those countries.

For those people who are nervous about free trade agreements, I will give you a few examples from the Australia-Thailand Free Trade Agreement, which, as I said, was signed in July 2004. Thailand will permit majority Australian ownership of mining operations, up to 60 per cent. The previous limit was 49.9 per cent. Thailand will permit 100 per cent Australian ownership of companies providing management consulting services through a regional operation headquarters or associated company or branch. The previous limit was 49.9 per cent. Thailand will permit majority Australian ownership of major restaurants or hotels, up to 60 per cent—the previous limit was 49.9 per cent—and it will permit majority Australian ownership of companies providing certain maritime cargo services, up to 60 per cent.

There are many more examples that I could give, but I am limited by time. I would like to impress upon the Senate the way in which the free trade agreements are carefully entered into by negotiating teams and the way in which the whole process is carefully overseen so that Australia obtains the maximum benefit from them, which can only benefit our industries. I am personally delighted with the progress that we have made since entering government in 1996 and I can only hope that this progress will continue—and I know it will—given our very stable regime of low unemployment, low inflation and national prosperity. (Time expired)