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Tuesday, 28 February 2012
Page: 2089

Mr KELVIN THOMSON (Wills) (18:04): I heard the member for Murray talking the talk in relation to support for local manufacturers and producers, but the fact is that she was a member of a government that was in office from 1996 to 2007 and therefore had 11 years in which to strengthen Australia's antidumping regime, but it took no action to do so. So it is one thing to talk the talk now but another altogether to walk the walk when the opportunity was there.

The Customs Amendment (Anti-Dumping Improvements) Bill (No. 2) 2011 represents the second tranche of legislative reforms implementing the government's policy of streamlining the antidumping system. I spoke in the parliament last year on the first tranche and I am speaking again on this tranche because I consider that this is an important issue at a time when manufacturing is under significant pressure in this country due to the high exchange rate caused by the mining boom. As I said back then, the fate of Australian workers in trade exposed industries rests with the creation and enforcement in Australia of a strong antidumping regime in order that nations do not take advantage of our generosity of spirit in trade matters.

Dumping occurs when an overseas supplier exports its product to Australia at a price below the price it charges in its home market or below the cost of production. Where dumping causes material injury to an Australian industry producing similar goods, action in the form of additional customs duty can be applied. The Howard government neglected Australia's antidumping system for its 12 years in office. A lot of right-wing politicians and economists who advocate globalisation and free trade do not actually believe in any rules or any government action at all. They want the market to sort everything out and they deride any measures which assist or safeguard or promote Australian manufacturing as protectionist. They do not actually believe there is anything wrong with dumping; they think it is just another manifestation of the free market at work. They think that the lower priced import will be good for consumers. But I believe we cannot have it both ways. We cannot allow our eyes to light up at the prospect of cheap imports yet at the same time bemoan the fact that we have over 600,000 people on unemployment benefits and over 800,000 people on disability support payments.

There is quite understandable dismay at the job losses which are occurring at the moment in our manufacturing industries. We need to understand why this is happening or else it will continue and could indeed get worse. It is not good enough to say that the job losses are a consequence of the high Australian dollar. Saying that is not untrue, but it is a recipe for passivity and inaction. The high Australian dollar in turn is a consequence of right-wing political and economic approaches which have dominated Australian policymaking for a long time. If we do not actively seek to have a manufacturing sector and manufacturing jobs, we will lose them. I agree with the economist Dani Rodrik, who says that countries ignore the health of their manufacturing industries at their peril. He says that high-tech services demand specialised skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. Manufacturing, on the other hand, can absorb large numbers of workers with moderate skills, providing them with stable jobs and good benefits. For most countries, therefore, it remains a potent source of high-wage employment. Indeed, the manufacturing sector is also where the world's middle classes take shape and grow. Without a vibrant manufacturing base, societies tend to divide between rich and poor—those who have access to steady, well-paying jobs and those whose jobs are less secure and whose lives are more precarious.

Dani Rodrik says that in the United States the fall of manufacturing's share of employment has been damaging to productivity because labour productivity is substantially higher in manufacturing than in the rest of the economy. The bulk of new employment in the United States has come in personal and social services, which is where the economy's less productive jobs are found. The migration of jobs down the productivity ladder has shaved 0.3 percentage points off US productivity growth every year since 1990. In Latin America, redundant workers have ended up in the worst performing activities, such as informal services, causing economy-wide productivity to stagnate.

I want to add my voice to the concerns being expressed about the offshoring of Australian manufacturing. I agree with that e economist Herman Daly, who says that offshoring production is not trade. No goods are traded. It is absurd that offshoring should be defended in the name of free trade. Offshoring increases imports, increases the trade deficit and lowers either employment or wages. The policy of free trade is based on the doctrine of comparative advantage and one of the premises on which the doctrine of comparative advantage rests is the international immobility of capital. But offshoring involves moving capital abroad—if we were fair dinkum about free trade as a policy we would restrict capital mobility and offshoring.

The idea that manufacturing jobs are degrading and that everyone is going to be re-educated to become a mining engineer or an investment banker is delusional. Manufacturing jobs are worthwhile jobs holding families together, holding communities together, and we should not let them slip away.

The Productivity Commission released a report making 20 recommendations to improve Australia's antidumping system. The Labor government has consulted with industry stakeholders widely about the improvements needed, and now the government is acting to strengthen our economy for the future by making it harder for dumping to occur in Australia. In June 2011 the government announced a package of reforms to Australia's antidumping regime. These reforms will result in better access to the antidumping system for industries, including for small to medium sized businesses; quicker and better dumping decisions; improved quality of decision making; greater consistency with other countries; and stronger compliance with antidumping measures. These are the most important improvements to Australia's antidumping system in more than a decade. These changes will improve the system's effectiveness. They will improve the way we administer global antidumping rules in Australia and better align our laws and practices with those of other countries.

Our suite of improvements will keep our economy strong and provide greater support and greater certainty for our local industries, workers, families and communities against unfair dumping practices. The changes will provide certainty and confidence for business while at the same time ensuring that we meet our World Trade Organisation obligations. Better support can be provided to our industries and workforce with a modern, rigorous and better resourced antidumping system. We will provide more certainty for local manufacturers and primary producers and therefore more confidence to invest in the future, because the rules against unfair dumping practices by foreign firms will be more effectively applied.

We want to maintain confidence in international trade and that means having confidence in the rules. All WTO member countries have the right to take action against unfair trading practices. Many governments, and in particular the Chinese government, intervene directly and extensively in their country to the benefit of their own industries. According to the WTO rules, however, WTO members, including China, can only do this in a manner which does not cause or threaten to cause injury to foreign suppliers of like goods. Of all the WTO members, China faces the most antidumping actions because of the dumping of product below what is regarded as normal value and because of their recourse to export subsidies. In recent months both the US and Canada have begun to adopt a more aggressive position on China's disregard for WTO rules. This could make Australia a greater target for the dumping of goods, further undermining Australian industries and jobs.

There are two main ways in which Australian manufacturers of like goods can be injured or threatened with injury by exporters assisted through government policies—first by dumping and second by industry subsidies. I have had concerns expressed to me by the company Advanced Cables Pty Ltd in relation to conclusions released by the Australian Customs and Border Protection Service following an investigation into the dumping of electric cables from China into Australia. Advanced Cables has requested that Customs examine actual sales transactions to determine whether dumping has occurred. The Australian cable making industry has suffered injury in the form of loss of profits, loss of profitability, staff retrenchments, loss of market share, underutilisation of plant capacity, an inability to raise capital, price suppression and price depression. Customs, in its visit report following its investigation of Advanced Cables, has found that the injury suffered was due to damage inflicted on the market by imports from the importer, Electra Cables Pty Ltd of New South Wales.

The Australian cable manufacturing industry has been attempting to compete with dumped imports from China for six to seven years. Figures provided to Customs confirm that the industry has lost millions of dollars in sales to imports from China, and Customs has confirmed that the industry has suffered on a number of fronts. So it is absolutely foreseeable that unless action is taken to force the Chinese to compete fairly with Australian manufacturers the industry will eventually succumb. All up, the cable making industry in Australia employs over 800 people and it is probable that the majority of these jobs, if not all, will be lost if these trading practices are allowed to continue. I have asked the government to re-examine this issue, and I repeat that request here. The ACTU has highlighted antidumping measures in their Union Action Plan for Jobs, which recognises that the commodities boom will not last forever and that 'a hands off, leave it all to market forces' approach to the issues in our economy would be a high-risk venture. We know from experience that taking a hands-off approach to the future of Australian jobs will mean that the number of workers in insecure work will continue to grow. They have recommended that we build on the establishment of the International Trade Remedies Forum to clarify the meaning and proper implementation of key WTO provisions and to commission a detailed examination of at-risk companies and communities to make recommendations that will help to maintain and expand manufacturing employment in those areas. We should provide unions with a statutory right to petition for dumping investigations and review and identify the anticompetitive barriers maintained by other countries in sectors such as meat processing with the aim of urgently negotiating their removal.

The Australian Workers Union should be acknowledged for its Don't Dump on Australia campaign, which has highlighted the issue of illegal dumping so as to give local manufacturers the chance to compete on a level playing field. The AWU has been working with the AMWU, the CFMEU and industry to put a spotlight on the threat to the economy and local jobs from illegal dumping. The AWU is very supportive of the government's reforms. It says:

Unions will be able to bring cases, where dumping is occurring, to the attention of the customs department and have the matter dealt with in a timely manner.

The changes will result in a more responsive and effective antidumping system, one that is easier for companies to access when bringing their cases forward. More staff and more market expertise in Customs will lend higher priority to antidumping cases, and it is clear that Australian manufacturers need more support in turning these cases around.

The changes are in line with Australia's World Trade Organisation obligations. They will also provide greater consistency with the antidumping systems of other jurisdictions, such as Canada, the EU and the United States, and deliver stronger compliance mechanisms. The AWU has been pushing for this reform for some time now. The fate of their members in manufacturing rests with the creation and enforcement of a strong antidumping regime in Australia.

The government's improvements to the antidumping system take account of the recommendations of the Productivity Commission report tabled in 2010, Senator Nick Xenophon's private senator's bill, the views of state and territory governments and submissions made to the government by stakeholders. The government has accepted, either in full or in part, 15 of 20 recommendations of the Productivity Commission's antidumping report. The reforms will reduce costs for Australian business seeking remedies against dumping and improve timeliness and transparency for all parties to antidumping investigations.

Local industry is worth defending. The Labor government is committed to a strong manufacturing industry. Australia-wide the industry employs around one million Australians. Manufacturing is central to a balanced economy. We need to be conscious of the structural pressures on manufacturing which flow from the mining boom, the high value of the Australian dollar and global economic conditions. We have seen these pressures manifest recently with job cuts in the car industry and with Alcoa announcing a review of its Point Henry operations. All countries have the right to take action against unfair trading practices and get a genuine level playing field. Dumping is not acceptable, and I commend the government for bringing this bill forward and I wish it a speedy passage.