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Thursday, 3 February 1994
Page: 341

Senator SPINDLER —My question is directed to the Minister for Trade. Following the suggestion in the Australian Financial Review yesterday that we might not need a minister for industry, I hasten to assure the minister that, in the view of the Democrats, we do. Not only that, but also we need a Minister for Trade with `high quality new ideas'. I ask the minister: Firstly, does he agree that yesterday's trade deficit of $1.76 billion shows a continuing trend of imports rising faster than exports? Secondly, does he agree that the rising dollar will hit our exports, and that imports are likely to rise even faster as we come out of the recession? Thirdly, does he agree that on the figures for the last six months the much publicised increase in manufactured exports is unlikely to slow down the rising trade deficit? Finally, can he offer any thoughts on how he intends to tackle that imbalance?

Senator McMULLAN —All that, and in only four minutes, too! It is the time equivalent of the Prime Minister's `around the world for sixpence', but I will do what I can in the four minutes which I have available to me. I certainly do not accept that the trade deficit figures show a continuing trend of imports rising faster than exports. It depends on the time period, but whichever time period we take, it does not show those results. In the long run, over the last five years, if those are the sorts of trend figures Senator Spindler is looking at, merchandise exports have recorded an average trend growth of about twice that of imports—7.9 per cent, whereas the figure for growth in imports has been 4.8 per cent.

  A similar picture is evident when we look at trade in services. Exports of services have recorded an average growth rate of 8.7 per cent, which is, as I say, close to double that of services imports. If we look at it over the medium term of five years, the statistics do not bear out Senator Spindler's particular indication. However, if we take a more immediate look at it, for the six months ended December 1993, Australian exports of goods and services grew by about eight per cent while imports grew by a little over 7 1/2 per cent.

  Nobody who has a trade deficit can say that the trend is exactly as he would wish, but my advice is that, with regard to the six months ended December 1993, the current account deficit is slightly down from last year's, in accordance with expectations, and that exports of goods and services grew by about eight per cent and imports by a little over 7 1/2 per cent.

  So, firstly, those figures—either in the medium-term perspective or in the shorter term—do not bear out those concerns. I do not want to get into anything that could even remotely constitute speculating about the dollar, but there are, of course, trade and other impacts of the rising dollar. It has an impact on the Australian dollar value of our debts, on our payment of those debts, on interest payments and on competitiveness. But if going beyond that would create even a remote possibility of its being interpreted as speculating about the dollar, I will not do that.

  The honourable senator referred to the much publicised increase in manufactured exports. Although it may not have sounded like it, I know that the honourable senator would have welcomed that great increase, as I do—that continuing and very successful product of the policies of the government, not just in the trade area, led by Senator Cook in the past, but also in the area of industry policy and other economic policies.

  I suspect the honourable senator is aware—but perhaps not everyone in the chamber is, and it is very important to know—that a recent comparison of 32 major trading nations showed that Australia had the fastest trend growth in elaborately transformed manufactured exports of any OECD country since the mid-1980s and the eighth fastest growth overall. This sector is growing quickly and is now becoming, as the honourable senator knows, a very substantial part of our exports.

  The implication of the honourable senator's question was: will manufactured exports by themselves close the trade deficit? No, they will not; they are making an important and welcome contribution but they will not by themselves be sufficient. That is why the forecasts coming out of the Outlook conference from the Bureau of Agricultural and Resource Economics have been so encouraging for the future in the whole balance of trade.

Senator SPINDLER —Mr President, I ask a supplementary question. The ABS publication released at 11.30 a.m. on 2 February—yesterday—stated that merchandise exports for the last six months rose at the rate of six per cent, and merchandise imports rose at the rate of 10 per cent. That is the reality that we live with now and that is the reality that the minister has to cope with. In view of the fact that the minister did not seem to contemplate any direct action, I am asking him whether he is willing to institute changes in Australia's anti-dumping laws which are currently skewed against Australia's producers and manufacturers. Secondly, would he favour a more intensive use of the exemption clauses in GATT when that becomes necessary if this trend continues?

Senator McMULLAN —I do not think that traversing extreme options like that is in any way warranted by the data. Australia's export performance in a range of areas has been very successful. It has been successful, as I said, in relation to the manufactured goods area, it is booming in the services area, and the prospects look encouraging on the commodities front as projected at the recent Outlook conference.

  One can get very excited about immediate or monthly figures because of their volatility, or even about very short-term trends. But it seems, on the basis of the last six months, particularly if we take services into account—which the honourable senator excluded from the figures which he mentioned—that we are on track to have the sort of trade deficit numbers that the Treasurer alluded to in his most recent forecast, and certainly not worse figures than those which we foresaw in the budget. I think the signs indicate that trade performance can and will continue to succeed. In the more open economy that we have now, there will be a higher proportion of exports and imports in the overall balance of our economy. That is actually a good thing, but it is important that we continue to focus on the export effort. I will not be taking those two steps to which the honourable senator referred in his question, but I will be taking steps to encourage the export efforts of Australians.