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Wednesday, 16 June 2004
Page: 23917

Senator RIDGEWAY (2:56 PM) —My question is to the Minister representing the Minister for Trade, Senator Hill. I ask the minister whether or not he is aware that the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America has commissioned Dr Philippa Dee of the Australian National University to do an independent economic study into the potential costs and benefits of the agreement. The results of her analysis have been reported in the media. Is he aware that the report has criticised the government commissioned CIE study, saying that it grossly inflated the gains Australia is likely to achieve? Given that Dr Dee has pointed out that the study does not include costs such as additional royalty payments resulting from copyright term extension and the long-term cost of the sugar package, will the government get the CIE to do another analysis taking into account these concerns?

Senator HILL (Minister for Defence) —The position of the government, obviously, is that the free trade agreement will deliver enormous gains to Australia. The Centre for International Economics report estimates an increase in GDP of $6 billion per annum after 10 years, or about a 0.7 per cent per annum boost to GDP.

Opposition senators interjecting

Senator HILL —I hear an interjection in relation to Senator Cook, the former trade minister of the Labor government. He was opposed to this agreement from the start because he does not believe in bilateral agreements. He does not believe that it is legitimate for a country such as Australia to negotiate a bilateral agreement with the largest economy in the world to bring economic gains to our country through offering new investment and trade opportunities. Senator Cook said it is only legitimate if it is done on a multilateral basis.

Senator Cook —I've never said that.

Senator HILL —Oh, Senator Cook! I presume that is the Labor Party's position—I am not sure. We have two shadow trade ministers these days—the de facto shadow and the frontbench shadow. If you go down the Labor Party path you lose enormous opportunities. The alternative can be seen in the agreement the Howard government has negotiated with the government of Singapore, the agreement that has been negotiated with the government of Thailand, the agreement that has been negotiated with the United States of America and the new opportunities—not quite bilateral, but it still does not fit within Senator Cook's ideal—to negotiate with ASEAN. The benefits to Australia can be new opportunities to invest and to trade, with all the economic benefits that I outlined in answer to an earlier question today.

They are there; you can see the benefits. Record low unemployment, solid and continuing economic growth, low inflation—all the benefits that Labor would have dreamt of in office but were never able to deliver because of such policies as Senator Cook used to argue. The advice to the government is that this agreement will deliver $6 billion per annum after 10 years or about a 0.7 per annum boost to GDP. Over the first 20 years, aggregate GDP increase is expected to total almost $60 billion—

Senator Carr —No-one believes that!

Senator HILL —The Labor Party does not want to believe it. Whatever the facts, it is irrelevant because it does not suit the Labor Party's political purposes. The total is $60 billion in today's dollars. That is the advice that is given to government. We believe it is the correct advice. It offers enormous opportunities to the Australian economy. Through those opportunities, all Australians will benefit. The question now is of course: will the Labor Party vote for the bills? Will the Labor Party allow the Howard government to take advantage of this wonderful trade opportunity that has been negotiated so astutely? It is about time the Labor Party stood up on this and on so many different issues.

Senator Carr —This is the giggle test!

Senator HILL —Well, where is the Labor Party's economic policy? Eight years in opposition—where is its economic policy? Where is its trade policy? There is no alternative. (Time expired)

Senator RIDGEWAY —Mr President, I ask a supplementary question. I thank the minister for his answer. I refer more particularly to his pronouncements about the $6 billion over 10 years being the realised gains in respect of the CIE report. Is the minister aware that Dr Dee's alternative assessment assesses the gains as being a mere $53 million? I ask the question again: will the government consider getting the CIE to do another analysis in relation to the long-term costs of the sugar package and royalty payments? In particular, is the minister aware that Dr Dee's report also argues that trade diversion is a significant problem? She cites a recent study by the Productivity Commission which showed that among 18 recent bilateral trade agreements, 12 diverted more trade from nonmembers than they created amongst the parties to the agreement. Will the government concede that the free trade agreement will have nowhere near the number of benefits the government is claiming and, in fact, probably will do more harm than good to Australia's national interest?

Senator HILL (Minister for Defence) —My advice from the trade minister is that the modelling by CIE remains the best guide to the magnitude of the benefits likely to flow from the Australian-US free trade agreement. Whilst it is always possible to contract another economic modeller and then, if you like, another economic modeller after that, it is the view of the government that the agreement should be brought into effect and Australians should start to get the benefit of the $6 billion per annum after 10 years. Because, through that, all Australians can benefit, it is now time for the Labor Party to stand up and be asked: will they support this huge economic benefit to Australia or will they, in their traditional way, carp and whine and vote it down and cause Australians to lose this wonderful economic opportunity? Mr President, I ask that further questions be placed on the Notice Paper.