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Monday, 10 September 1984
Page: 946

Mr LIONEL BOWEN (Minister for Trade)(9.30) —I thank honourable members for their contributions. Let me briefly advert to those matters which were addressed to me; my colleague the Minister for Science and Technology (Mr Barry Jones) will reply in respect of other matters. I particularly thank the honourable member for Gippsland (Mr McGauran) for his thoughtful contribution because he addressed his mind to the fact that our trade situation has been serious for a long period. The significant point is that last year was the first year in five years that we have had a trade surplus. It is interesting to look at how that surplus was achieved. We had a 12 per cent growth rate. The Government is not claiming credit for it just because it happened. However, it does require a fair bit of effort in trade promotion and ascertaining new markets. Honourable members will see that the 12 per cent growth rate was evenly divided. There was a rural growth of 12 per cent; minerals, 10 per cent; manufactures, 13 per cent; and what is called elaborately transformed manufacturers, 14 per cent.

The significant point is that the fastest growing area of world trade is in elaborately transformed manufactures. That is no indictment of our primary producers or our mineral producers. But the difficulty they face is the subsidies that are given to producers in other countries. I thank the honourable member for recognising that we are efficient producers but at the same time we are up against government subsidies in other nations. For example, at present we still have not sold all of last year's record wheat crop and will have available about 16 million tonnes; we are now having to sell on three-year terms, no deposit. I mentioned this today. The taxpayer, naturally, will give national interest cover for about 85 per cent of that. That runs into about $900m over and above what we already have to cover. We will do it, but it is worth recognising how the world currency scene has changed.

Government to government trade, about which at times the honourable member was critical of me, has reached 30 per cent. From the cables which come across my desk, I see that all nations are talking about trade in terms of: 'I will buy from you but what will you buy from us?'. For example, one of the things the Chinese are talking about at present-China is a burgeoning new market-is why cannot we take its oil as that would improve its ability to trade with Australia .

I emphasise that the scene has changed in terms of where the market opportunities are. For example, last year our trade to Hong Kong increased by 75 per cent; to the Federal Republic of Germany, 31 per cent; to Singapore, 30 per cent; and to the United States of America, 21 per cent. I pay tribute to my Department for the efforts that it makes in trade promotion and to the Trade Commissioner Service for identifying markets where we can get an opportunity to trade.

I am very sympathetic with our rural producers because they are the best in the world but they are up against the toughest competition. I make the point that whether one talks about sugar or wheat one has this problem. The world, despite the General Agreement on Tariffs and Trade, has got away from the real issue. Agricultural products are excluded from GATT. In the 1950s the United States got a waiver on the basis that it would be only temporary. I am about to go to a conference in Brazil where world trade Ministers will sit around the table to discuss what is wrong with world trade. Every one of them must say: 'Yes, I am interested in bilateral trade. I must have a protective device because of the political consequences that I would face if I lowered the level of protection'.

It is a bit counterproductive for a number of people in this country all the time to be berating fellow Australians that they are too protective. They ought to look at the rest of the world and see whether they could penetrate the Japanese market, the United States market or the European Economic Community market-markets where one will not be let in. We do not get that chance. I think the contribution of the honourable member was first class from that point of view, but he then talked about an issue which is obviously very close to his heart. He blames the situation on a centralised wage fixing authority which I do not think is the issue. If we did not have a centralised wage fixing authority we would have all sorts of disparities. As honourable members will see from the brief period we have been in government we have stabilised wages; we have reduced the rate of inflation; we have reduced interest rates. All of these things have helped the economy and those who are dealing with the escalation of costs. It is not the escalation of costs that is causing us some difficulties; it is the fact that we are up against unfair competition. I make that point to the honourable member and I would like him to understand that in our view whilst we can make some progress in the areas of agricultural production and commodity trade we are up against a lot of unfair competition. From the point of view of our society, with its higher education and its ability to get into manufactures, we have also to concentrate in that area.

New technology is an area in which, as my colleague the Minister for Science and Technology is very well aware, the opportunities are. We are a small market of 15 million people and one cannot run one's manufacturing base on such a low population. One must have export potential, and that again is very hard to come by.

My colleague the honourable member for Macarthur (Mr Hollis) quite fairly raised the issue of the coal industry. He and others thought that perhaps we should have been aware of the competition. We open coal mines on the express understanding that an undertaking is given by the Japanese that they will need that coal for their power supply. They have postponed their power operating development and accordingly mines are now in production and we have no markets. As a matter of interest, and to show honourable members the capacity of the Japanese, they are now paying the same price for our iron ore and coal as they did in the 1960s. So they are not suffering, but we are in dire trouble because new mines particularly in Queensland have come into operation to meet that market. We find that the competition between the open cut mines in Queensland and the underground mines in New South Wales will result in many miners in New South Wales facing the sack for no reasons at all. Coal production in this country increased by 20 per cent last year. We sold that extra 20 per cent. Looking at it from the point of the employers, they produced more than ever; we sold more than ever. Yet we got less in market prices.

The obligation is on us to get out and find new markets for coal which basically are there if we can stop the subsidies against us in Europe, for example. We can produce coal and sell it in Europe for about a third of the cost that those countries pay. But if one talks to the West Germans about that they will clearly indicate that it is a political situation. The German miners will not be out of a job and if they were out of a job the Government would be out of office. One sees the subsidy situation going right through. I can understand that in political terms, but often we berate ourselves as Australians as to what is wrong with us. We ought to look at how tough it is from the point of view of how effective we are as producers. I make those points to the honourable member because I think he understands them and it is important that that message is conveyed.

The honourable member for Richmond (Mr Blunt), who is a new member, came here full of enthusiasm. He said 'What is wrong with this Government?' and forgot to talk about the Government which had been in office for a long time before he became a member. Let me make it very clear. He seemed to think that we were responsible for the extraordinary debt that we inherited. He should look at page 8 of the Government Securities on Issue pamphlet, which is Budget Paper No. 8. Australia's public interest debt in the main is not payable overseas. Of the total public debt interest of $5.1 billion only $612m is payable overseas. It also ought to be made very clear that most of Australia's foreign debt is private debt, not government debt. I leave that comment with him. He can address his mind to it.

I refer to a matter which is dear to the heart of the honourable member for Gwydir (Mr Hunt), that is, the beef trade with Japan. I will not go over an issue that was raised previously, but we have faced the fact that the Japanese outmanoeuvred the previous Government when they had inserted into their beef agreement that they could have an escalation of what is called high quality beef quota from 14,000 to 30,000 tonnes. They took that escalation figure out of the global quota. Therefore Australia's beef exports to Japan kept going down. I make the point that in 1979 we were able to export 106,000 tonnes of beef and in 1982, 90,000 tonnes.

The Japanese are very shrewd about diaphragm beef, which is beef imports outside the quota. In 1976, Australia had 42 per cent of that market and the United States of America had 35 per cent; in 1982 we had 11 per cent of the market and the Americans had 78.3 per cent. The Americans won a four-year contract, while Australia won a three-year contract. We have been hanging on to that contract and have objected on the basis that we wanted to get into the high quality beef market because that was deemed to be a global market. It is very clear that when the Japanese call something 'global' they make arrangements with the United States to make the high quality beef market bilateral. We face the mathematical result that although we expect to improve our export tonnage, we cannot improve our market share while the United States is increasing its share of the high quality beef market. I do not think that a cattle producer is interested in the mathematics of production as much as in the tonnage that he would like to export.

We have put pressure on the Japanese to return to the agreement and look at our position. It was made clear to Mr Anthony that the Japanese would give the United States a high quality beef quota of 30,000 tonnes. In fairness to Mr Anthony, I must point out that it is a matter of record that he immediately tried to get an additional quota of 30,000 tonnes in the manufacturing beef market, and he did not succeed.

I can understand that it is good politics to tell the cattle producers that the Government is not trying very hard, but I can think of no government that has tried harder. We face a set of rules that we should not have accepted. We say that those rules are discriminatory. That is the reason why we are still arguing with the Japanese. I am not confident about the present position. Questions have been asked in the House about why we have not entered into the agreement. The Japanese would be delighted to know that that is what the Liberal Party is now saying.

We have never at any stage given ground on this issue. We face the fact that the precedent that was set gives us no room to move. It is wrong and unfair to suggest that the Government has let down the beef producers. There are problems in the beef market, including the fact that the cattle herd has decreased to about five million. There is not a great deal of beef coming into production. Any beef that is coming into the market is perhaps at a price higher than the market can stand, and that is another significant factor. Abattoirs are closing, probably because beef producers are building up their herds. This year we did not meet our quota in many places, particularly in the United States, because we could not produce sufficient beef.

Let us get rid of the politic and talk about what we can do. That means that we must use the skills of the people in the Trade Commissioner Service to develop new ideas and concepts, particularly with trade promotion. One of the most effective ways of promoting trade would be by having the physical presence of what we want to sell. I am anxious for the Australian private sector to invest in that market. I should dearly like Australia to have trade centres in Singapore, Hong Kong, Los Angeles and Saudi Arabia. The buyers could then see what we have to offer, and that would be very helpful. I hope we can do much in that regard.

I thank honourable members for their contributions. I refer to the export market development grants, which I omitted to refer to earlier. That issue is under review. Development grants are given under legislation that talks only of expenditure and not performance. That is not a fair test of the use of taxpayers ' money. People, who are not exporting anything, could be given substantial sums of money. Such people have a three-year dream run and only in the fourth year do they have to export $20,000. I do not think we are about exporting live eels and things of that nature; we are about promoting small people in the export market. We have a committee which will look at that legislation. I believe that we should relate the grants to performance and that anybody who performs is entitled to the export incentive. The system is counterproductive. It is understandable that when making budgetary bids people will say: 'Where is the performance?' It is ridiculous in some cases to give hundreds of thousands of dollars to people who have never made a profit. The taxpayer is entitled to say: 'Listen, you are a trustee for my money, and you have wasted it in that instance '. We are examining that problem, which will not be solved until next year. Those grants will continue, and I leave the matter at that.