Julian Hill (Bruce, Australian Labor Party) Share this | Hansard source

I rise to make a few remarks on this report both as a member of the committee and as someone who has a longstanding interest in our relationship with Indonesia in all dimensions but, in particular here, the economic trade and investment dimension. Before I entered the parliament, I spent some years as a senior executive in the Victorian economic development department and had staff in Indonesia, and I looked at trade matters and so on.

This report, I would say in summary, is okay, but it's not deep or comprehensive and doesn't really do the topic justice, I think it's fair to say. I have just a couple of preliminary words as to why I would say that. The choice of topic and also the timing are quite odd, or curious. The committee—without breaching privilege, of course—had many ideas, as you would imagine, for work we could've done, but the minister wrote to us and said, 'This is what we want you to do.' We're a committee; we take references from ministers. But a few of us, at least on this side of the House, did think that it was curious timing for such an inquiry into our trade relationship with Indonesia, because the government are currently trying to negotiate a trade agreement with Indonesia, which they say will be out by the end of 2017.

As it turned out, it was curious timing, because at some point someone realised they were negotiating a trade agreement with Indonesia, and there was a bit of a panic and pressure to wrap it all up quickly and say, 'That's enough of that.' People were a bit freaked out. We were doing this work in public while the government was negotiating a trade agreement. It is another example, I would say, of the incompetence of the government. Nevertheless, the secretariat did as good a job as you could expect in the time, given that hearings and analysis of submissions were somewhat curtailed, and did draw on desktop material that had been submitted by business and others to the Indonesia trade agreement inquiry. Whilst I don't think any member of the committee would claim this is a stunning contribution to public policy, to the work of the parliament or to our trade and investment relationship, it does say a few useful and important things.

I'd say at the outset that Indonesia is our largest neighbour, yet the potential of our trade and investment relationship is not fully realised. We have many complementary goods and services, and sectors—agriculture, obviously; mining; education; infrastructure; and other services. We are, respectively, the 13th and 16th largest countries in the world by GDP, yet we rank quite low in terms of our trade relationship. It's particularly important, of course, for Australian businesses, at a time when they are facing declining market share in other markets, to develop new markets and grow existing markets like Indonesia. Indonesia has a growing economy and an expanding middle class, yet in some areas I think it's fair to say our performance is stagnating, as we heard in the inquiry.

I'd use the example of international education, which we spent quite some time on in the hearing. The department at first was glowing: 'Everything's good here; we've had a four per cent growth.' I said, 'That's very nice. What's been the overall growth of the market?' 'Well, that's 15 per cent.' But then, when we drill into the raw numbers, from 2002 to 2015 they showed massive growth in onshore students in Australia, yet Indonesia basically dipped over that period and has slowly struggled back to its overall numbers being where it was 14 years ago. So enrolments dropped from about 21,000 in 2002, and climbed back to 19,000 last year. So those numbers aren't even back to where we were in 2002. If you have a deeper look at the numbers, so much of that growth has been in vocational education and training, which, to be frank, is a lower economic value when compared to higher education students, where we're struggling. Others could tell stories about goods, agriculture, mining and so on.

I will make a couple of comments on the trade agreement that, curiously, was being negotiated while this inquiry was sputtering along. Strong support for a forward-thinking innovative agreement was shown by submitters and indeed by Labor. The shadow minister is here and will make some remarks in a moment. But we must acknowledge that it's not a blank sheet. We're not wandering into some magical new land where a trade agreement will fix everything. As the inquiry showed, we already have—and have had for a long time—the ASEAN-Australia-New Zealand Free Trade Agreement, which provides for tariff reduction and economic integration. Negotiations are underway for, dare I say, a much better, more comprehensive and potentially multilateral trade agreement—the Regional Comprehensive Economic Partnership—with 10 ASEAN and FTA partners. It's a very careful task, then, to try to negotiate another bilateral agreement to meet the Prime Minister's arbitrary deadline, where there's relatively little to do in tariffs—all the work is in non-tariff barriers, which are complex—while we actually have these two multilateral agreements.

Jobs and growth, as we all know, is a slogan that consists of company tax cuts to big companies and a few bilateral trade agreements, so it's politically important for the government to land something—anything, really—but care is needed because trade theory does make clear, as we also heard, that multilateral agreements are generally much better than bilateral agreements. Indeed—and this is heresy for some, who just rush like lemmings to sign up to any agreement the Prime Minister pulls out of the bottom draw in desperation—not every trade agreement is a good trade agreement. Trade theory would also say that, because of diversionary effects, some bilateral agreements can hurt economic growth. I won't go into the complexity for business here, for reasons of time, but the spaghetti bowl effect often means the more trade agreements you have with the same country the more confusing it can be for business to figure out. So we need to tread carefully.

In saying that not all trade agreements are good, unambiguously trade liberalisation has made Australia much wealthier. There's no doubt about that. But this goes to an important recommendation I'd like to turn in the report—recommendation 4. Let's have a little look at it. It says:

The Committee recommends that the text of the IA-CEPA should not include provisions which waive labour market testing, or which include ISDS provisions, and the final text of the agreement should be accompanied by independent analysis conducted by either the Productivity Commission or equivalent organisation.

This is important but somewhat surprising to those opposite, because yet again a government controlled committee has recommended adopting Labor policy. Even the dark lord, as I call him—Senator Abetz—was on board. He was on the committee and signed up to this. The Treaties Committee made a similar recommendation, which my friend the member for Fremantle will no doubt talk about: 'Sign up to Labor policy, Minister.' Labor at the last election made a range of commitments, but we made clear that we don't support agreements that allow exemptions from labour market testing or willy-nilly loopholes for foreign workers. We heard a bit about that from the Minister for Immigration and Border Protection with his trumpeted skilled visa reforms, which have turned out to be a scam, because there is no labour market testing, and they provide never-ending loopholes for trade agreements to jump through. So, unless the government is prepared to rule this out, we'll see more foreign workers come in through these loopholes, displacing Australian jobs with no labour market testing.

The hearing was interesting, because I directly asked a senior trade official from the department: has the government instructed you in these negotiations not to negotiate away labour market testing in this agreement? It was a yes or no question. Eventually we got the answer, which was no. Then I asked, 'Business have identified a range of things in their submissions; what have they been saying about labour market testing and their particular types?' We were told by the senior official, 'Business aren't talking to us about labour market testing; they're talking to us about being able to help Indonesia upskill its workforce, and we can do that in Indonesia.' I'm not sure what the government's ongoing reluctance to rule this out and adopt Labor's sensible policy is about—probably blind ideology.

The other important aspect of that recommendation that I will touch on in my closing remarks is that Labor believes trade agreements should be subject to a transparent, independent assessment of costs and benefits before signing. This is not socialist, leftie, radical stuff from this side. Recommendation 4, signed up to by government MPs, says this—although the government's view remains unclear. But, of course, a 2015 Senate inquiry said the same thing—that there need to be national interest assessments—because not every trade agreement that the minister dreams up over there is a good agreement. It should be assessed independently from those who signed up to and developed the agreement by the Productivity Commission. The 2016 treaties inquiry said the same thing. Of course, there are concerns about investor-state dispute clauses. They are controversial. It needs to be acknowledged there are some such mechanisms in the existing ASEAN-Australia-New Zealand Free Trade Agreement. But there is, as the department official admitted, a question of coherence, and the government's review, of course, remains unclear.

In closing, I would say that there is enormous potential in this relationship. I particularly note the best contribution to the inquiry from the Australia Indonesia Business Council. They made a submission, but they took the time to turn up to the hearing, and you could feel the enormous optimism coupled with the realism of the challenges. We're very different countries. We have different histories, different cultures and different economies. But, particularly to advance this relationship, it's not all about government. Government can put in place the frameworks, but the market, businesses and people—human beings—can choose where they go. This requires personal relationships and a deep understanding of the culture of the people who you're doing business with. It is time to think about what government can do to help build these relationships with organisations like the business council chambers because trust in Asia is so critical. If you don't trust and if you don't know, you don't do business. So I particularly applaud Australia's Indonesian diaspora because they are so, so valuable to our efforts to grow our economic relationship with Indonesia.

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