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Thursday, 13 September 2018
Page: 82


Senator BROCKMAN (Western Australia) (17:15): I rise to speak on notice of motion No. 1052 relating to free trade agreements. In doing so, I'll start by pointing out that I feel I should probably just move for an extension of time for Senator Patrick while he whacks Labor around the ears a bit more. Even though I was enjoying that aspect of Senator Patrick's presentation, I think there is a very important point to make here in that there is a move internationally to a more populist view of trade. I think that is something that needs to be countered. It is something that needs to be argued against very strongly because I think one of the things that has been very clear over the last 400 years of economic history is that trade is of undoubted benefit. Trade is of undoubted benefit to nations, to individuals and to the globe in enabling nations to speak more freely to one another and to avoid conflict.

Trade is a universal good. Trade is what makes us who we are as humanity. It drives our economy in a very fundamental way as Australians who are at the end of the line. We are a very remote country. We are a long way from major markets. Trade is absolutely our lifeblood, and the move towards a more protectionist, more antitrade world will only do one thing and that is hurt Australia. It will hurt the Australian economy, hurt individual Australians, destroy jobs and potentially destroy whole industries that are fundamental to our economy. The move to protectionism internationally is reflected in some elements in Australia and it is something that we do have to challenge and fight against.

I just want to address a few of the things that Senator Patrick raised about the TPP-11, in particular this idea that the FTA in some way opens up opportunity for unskilled foreign workers to take the jobs of skilled Australians. The foreign worker fear campaign has been used in the past. We've all seen it before and it's something that hasn't eventuated. Agreements such as the TPP-11 do not remove the skills and experience requirements that need to be met by foreign workers applying for temporary skilled visas to work in Australia. This means that workers from TPP-11 signatory countries remain subject to and must satisfy any skills assessment required for the visa process. Workers from TPP-11 signatory countries also remain subject to and must satisfy licensing and registration processes as required by state and territory governments.

One of the other issues I'd like to deal with is labour market testing. We've got a long history of free trade agreements. In fact, the previous Labor government did actually manage to sign a few, and, of course, this government has concluded a large number of free trade agreements: with Korea, Japan and China, obviously; more recently, with Peru; an agreement with Indonesia; the PACER agreement, which was talked about a fair bit today; of course, the TPP-11; and, before that, the US free trade agreement and a few other things. We have a fair bit of experience in this area, so we've got some history. We can actually look at what happened on the ground, and this issue of labour market testing is purely a furphy. It's an unjustified concern. There hasn't been an influx of workers from the countries we've concluded trade agreements with. We haven't seen an influx of workers into Australia following entry into force of free trade agreements with the major North Asian economies—economies, particularly those of China, Korea and Japan, which you would have thought would have been potential sources of workers.

It is also important to remember that we made temporary commitments in order to get better access for our service suppliers in return. There is a quid pro quo involved. It was part of the deal which would result in $15 billion in additional annual income by 2030. That was actually verified information provided by the Minerals Council. Australia, New Zealand and the Pacific Island signatories to PACER Plus have signed a separate non-binding arrangement on labour mobility. So this is not about taking Australian jobs. In fact, I would contend that, when you look at the benefits of trade, this is actually about creating Australian jobs.

The latest jobs figures were released today by Minister O'Dwyer: 44,000 jobs were created last month. Under this government, 1,144,500 jobs were created, and the vast majority of those jobs were created by a vibrant private sector, by companies employing people, selling services, selling things overseas. We are a trading economy. Those jobs are in very significant part based around industries that rely for their future on their ability to sell goods and services into foreign markets, into overseas markets.

Our entire economy, our entire capitalist system, is predicated on the fact that individuals and businesses can engage in mutually beneficial trade. This system has generated vast wealth—something that seems to be forgotten when we talk about trade in this context. We are very lucky to live in a country and an economy that is based on our ability to trade into the international markets in a relatively free fashion. I wish it were freer, but we can trade into international markets in a relatively free fashion. Free trade carries with it many benefits. Notably, it allows countries and individuals to exploit their comparative advantages while making the most—and this is the quid pro quo of trade—of cheaper imports where other countries can produce those goods and services more cost-effectively. That is clearly the case.

For Australia, our export economy is geared towards the primary industries: agriculture—we do it very, very well; advanced manufacturing—we do it very, very well. What we don't do well these days is produce low-value goods. We simply don't have that as one of our skill sets and, personally, I don't see that as being a negative. We just understand that the economy evolves in such a way as to take us towards those things which we are best able to do—obviously, minerals. We have an abundance of natural resources, which we have been able to exploit. Free trade is particularly important to my home state of Western Australia. We are an export based economy. We want access to those world markets. We want trade barriers to be as low as possible so that our iron ore, so that our other mineral resources and so that our oil, our gas, our agricultural produce can get into as many markets as possible, because we know that our Western Australian businesses produce those resources, those assets, in the most cost-effective way they can and are highly competitive with the rest of the world. That is our competitive advantage.

Not only does international trade generate wealth for those directly involved in the production of exported goods but strong export industries, like the mining industry and like the agricultural industry in Western Australia, stimulate domestic economic activity. Every welder at Austal ships in Henderson, every grain grower in Three Springs in WA, every miner in Paraburdoo and every sheep farmer in Wagin who is exporting their wool relies on those export markets to make a quid, to feed their family, to employ services from the businesses down the road, to buy their stockfeed, to buy the steel and the aluminium they need to make those ships and to buy the mining equipment they need to dig the dirt. These people go on to spend their hard-earned cash on goods and services right here in Australia. They employ people. They create those one million-plus jobs that we have seen over the past five years that, again, allow families to support themselves.

We can't expect to have free access to foreign markets without reciprocating. If we believe in trade then we have to believe in two-way trade. It has to be an exchange. It can't ever be a one-way street. We can't delude ourselves into thinking—as some in the world seem to be thinking; this view seems to becoming more prominent, sadly—that if we put up trade barriers, if we try to restrict our markets and if we try to act in any way to stop trade then that won't trigger a response from our trading partners. The last thing Australia wants is a return to a more protectionist world. That is something that is a risk. It is something that I certainly fear very much.

I just want to talk briefly about the Indonesia-Australia Comprehensive Economic Partnership Agreement. This will see more than 99 per cent of Australian goods exported by value to Indonesia to enter duty free or under significantly improved or preferential arrangements by 2020. This will have direct benefits to producers and businesses in my home state of Western Australia. For example, with live cattle from the north of WA, we get duty-free access for almost 600,000 cattle in the first year, growing to 700,000 head of cattle by year 6. This is a significant improvement on the current situation for cattle producers, who suffered a very big shock not that many years ago. I won't remind the chamber what that shock was or who originated it, as I am sure we all know. The cattle industry, particularly in the north of WA, is very happy about that part of the arrangement.

With frozen beef and sheepmeat, there is a tariff cut of 2.5 per cent immediately and that will be zero per cent in five years time. Again, people in this chamber, particularly those opposite, have talked a lot about the need to improve the sale of chilled and frozen product into overseas markets. Well, here we go. There are tariff cuts of 2.5 per cent immediately and that will be zero per cent in five years. That is going to improve that trade and improve the opportunities for local processors. That is great news. We don't have to ban any other parts of the industry to achieve it.

On feed grains, there is duty-free access for 500,000 tonnes in year 1, with volumes growing at five per cent per annum. Again, that is another great opportunity for Western Australian grain growers. We already have a very strong presence in that market, but it is an opportunity for that market to grow. For the returns of that lower duty, they are to be passed on either to growers or, through the supply chain, to consumers. There are potential benefits all around. Sugar is not so much an issue for Western Australia, I do admit. But, again, it is locked in as an early outcome to reduce the tariff to five per cent. In dairy, there is immediate and progressive elimination of the remaining tariffs on dairy product lines.

In citrus, there is the progressive tariff elimination on mandarins and duty-free access for oranges and lemons. For vegetables, there is the progressive elimination of tariffs on carrots and reduced tariffs on potatoes, which the growers in my hometown and surrounding areas—like Pemberton and Manjimup in the south-west of WA—will be very happy to hear about as they seek to take their very high-quality produce into more foreign markets. For hot and cold rolled steel coil, there is the elimination of tariffs for 250,000 tonnes in year 1, with volume growing at five per cent per annum. Again, this is an industry where Australia has had it ups and downs. But we see, with the elimination of those tariffs, more opportunities to continue with production in Australia and continue building export markets overseas.

These are major wins for Australia, there is no doubt about that. And it's a fantastic outcome for Australian exporters. But it's not only Australia that stands to benefit from this agreement. The Indonesian people themselves will be big winners from the removal of barriers under this agreement. They will have cheaper access to high-quality Australian produce. The reduction of tariff barriers is a win.

Obviously, it's not only true for those who import Australian goods that when Australia imposes tariffs on imported goods it does not protect Australians. In fact, it punishes them. This is the perverse reality of protectionist trade policies. They take choice away from consumers and force them either to pay higher prices or to make do with lower-quality goods. Who does that protect in reality? Certainly not Australians—certainly not average Australians.

This government does have a very strong track record on bilateral free trade agreements. In fact, I think it's fair to say that this government has delivered the most ambitious trade agenda in Australia's history. We've negotiated a number of free trade agreements to support Australian exports and Australian jobs, and that is why we've seen those outstanding job figures. That's why we've created those million-plus jobs over the last five years, because we've given businesses opportunities. There is the China-Australia Free Trade Agreement: 98½ per cent of all our goods are eligible to enter our largest trading partner duty free or at preferential rates. As a result, imports to China were 34 per cent higher in 2017 than in 2015. That creates jobs.

Then there is the Peru-Australia Free Trade Agreement: Peru will eliminate tariffs on 93½ per cent of Australian goods on entry into force of the agreement, and on 99.4 per cent of Australian goods within five years. That's going to be of particular benefit to our agricultural industries, and will give unprecedented access to Australian sugar and beef. Obviously, Queensland will be a big winner there, but, hopefully, the beef producers in the north of WA will also get a win out of that.

I've already touched on Indonesia, so I won't go back there. Under the Japanese-Australia Economic Partnership Agreement, Japan remains Australia's second-largest trading and export partner, with two-way trade valued at just under $72 billion, and Australian exports were valued at $47 billion in 2017. Now, 97 per cent of Australian goods exported to Japan enter duty free or under preferential rates. And there is the Korea-Australia Free Trade Agreement. Korea is Australia's fourth-largest trading partner and third-largest export market. Korea provides duty-free access on 83 per cent of Australian exports by value, and this will increase to 99.7 per cent on full implementation of the agreement from 2033. Of course, we wish that were sooner; we wish that were 2020 or 2025, but these are negotiations. These are agreements that have to be struck with another nation, based on their desires. But the move towards a generally freer market benefits us all.

We remain committed to future free trade agreements and, obviously, there are still ongoing discussions with Europe and the United Kingdom, post Brexit. This does offer us a unique opportunity to re-establish strong bilateral relations with our oldest international trading partner. I certainly hope that we can see that deal concluded. And I've already run over the Trans-Pacific Partnership, to some degree. It's a very important agreement to the future of Australian businesses and to the future of the Australian economy.

These are all agreements worth supporting, and I certainly do think that we need to be very careful about moving down a more protectionist route at any time in the near future. I certainly hope that we don't see Australia ever following some other parts of the world in starting to move back to an era where tariffs and trade barriers are things that are seen as a legitimate tool of the political classes. They are only destructive: they are destructive to jobs, they are destructive to the economy, they are destructive to wages and they will lead to a poorer world which is less able to provide the goods and services that all Australians want. Thank you.