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Parliament House, Canberra: transcript of doorstop: trade figures.

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CRAIG EMERSON Member for Rankin


31 January 2003

Transcript of Doorstop Craig Emerson, Shadow Minister for Innovation, Industry and Trade 31 January 2003, Parliament House, Canberra.

Trade figures

Emerson: I’m here to talk about the trade figures, but first I want to express my sorrow about the train crash. Our hearts go out to all those that have been affected, to the relatives and friends of the victims.

Today’s trade deficit of $3 billion is the worst in Australia’s history. It is a shocking number and it’s a number that the Government hopes no one will notice as it continues its ‘wag the dog’ strategy of diverting attention away from a deteriorating economy. The figures for the last year reveal that exports have actually fallen, which is an unusual event. The Government will blame the drought, but the effects of the drought are only just starting to kick in. That means that we are headed for worse monthly deficits in the coming year as the full effects of the drought bite. Let me point this out, non-rural exports also have fallen. The drought does not affect non-rural exports, but they have fallen despite the Treasurer’s claims of his ‘super-competitive’ exchange rate. This means that the Government has failed to diversify the Australian export base away from a reliance on primary commodities. In fact, the growth in manufactured exports under this government has slumped by 60 per cent compared with the Labor years. Labor set out to diversify that export base to include in our exports more sophisticated manufactured goods and this Government has dropped the ball. Why? Because it doesn’t have an industry policy at all. It doesn’t have a policy of creating new and vibrant industries for this country so that we can diversify our export base. The Government is returning Australia to a farm and a quarry. The problem with that is it makes Australia vulnerable to bad seasonal

Contact: Craig Emerson 0418 781 386 or Brendan Shaw 0413 013 501

conditions and fluctuations in commodity prices. I’d also point out that Australia’s exports to East Asia have fallen sharply in the last year and have fallen by more than our exports to the rest of the world. It’s time this Government repaired the damage to our reputation with Asia and re-engaged Asia as a major trading partner of this country. The Government’s ‘wag the dog’ strategy of diverting attention away from a deteriorating economy may have enjoyed some success to date, but they won’t get away with it because this is one bad figure after another. Last month’s figures revealed the worst export performance in 40 years for this nation. This month’s, a $3 billion deficit, is a shocking figure and a figure that the Government must attend to instead of seeking to divert attention away from the deteriorating economy.

Journalist: It was inflated by the $1.3 billion in aircraft imports. A one-off …

Emerson: Of course, the Government will say it’s the drought, it’ll say it’s a slowing world economy and now it’ll say: oh, it’s planes. Well, I’ve got news for the Government, this is not the first time Australia has bought planes. To say that it’s the planes and everything else is all right would be utterly ridiculous. In fact, if you take the planes out we still have one of the worst trade deficits in Australia’s history.

Journalist: It is a significant purchase, though. Mr Vaile argues that’s actually a sign of confidence in the economy.

Emerson: Isn’t it remarkable that when a trade deficit hits and is the worst in Australia’s history, the Government welcomes it as good news? Now, this is the challenge. Will the Government continue to divert attention away from the deteriorating economy or will it face up to its responsibilities in diversifying Australia’s export base? That’s the challenge for the Government. It hasn’t done it, despite it’s so-called ‘super-competitive exchange rate’ and that is shown up in the fact that the growth in exports of sophisticated manufactured goods under this Government has slumped 60 per cent compared with the Labor years.

Journalist: When you say ‘wag the dog’ are you referring to the movie of the same name?

Emerson: Obviously, it’s a reference to the movie, not the entire script …

Journalist: Are you seriously suggesting that the Government’s foreign policy and its stance on the war with Iraq is actually a deliberate strategy to hide the economic problems of Australia?

Emerson: I’m suggesting that the Government is diverting attention away from a deteriorating economy.

Journalist: It’s a fairly flippant comment, isn’t it?



Emerson: It’s a factual comment.

Journalist: How do you suggest the Government increases manufactured exports in a slowing global economy?

Emerson: Well, I had a look at the assertion that it’s all because of a slowing global economy and had a look at our exports to East Asia, in particular, which is growing. Most countries in East Asia are growing at faster than 5 per cent, yet our market share in East Asia is falling. How is the Government going to explain that? Firstly, it says it’s the drought. It’s not the drought, although that is now starting to kick in and will mean that future deficits will be large. Then it says it’s a slowing economy. So I’ve had a look at the argument that it’s a slowing economy and most of our trading partners are growing at faster than five per cent. So that doesn’t hold up either.

Journalist: The US is a significant trading partner.

Emerson: The US is growing at slower than that rate but many countries in East Asia are, in fact, growing faster than 5 per cent. They’re our major customers. East Asia accounts for 55 per cent of Australia’s merchandise exports and most countries of East Asia are growing at, or above, 5 per cent - and yet, our share of East Asian imports under this Government has fallen. So the countries of East Asia are looking to other sources for their imports, sources other than Australia. So the Government will seek to blame anything and everything but itself. When exports were rising, the Government took all the credit. When there were good seasonal conditions, the Government didn’t say ‘oh well, we do need to take into account the fact that there are good seasonal conditions’. It said ‘we are just so good, we’ve got such a great export strategy’. The complete deficiencies in its export strategy are exposed today. It’s been a complacent government because it has relied on Australia’s primary commodity exports, it has returned Australia to a farm and a quarry and that makes the Australian economy vulnerable to a downturn in seasonal conditions, that is now occurring, and to any downturn in commodity prices.

Journalist: Do you think Kim Beazley should return to the front bench?

Emerson: I’m not involved in any discussions about the front bench, nor should I, so I have nothing in relation to that.