John McVeigh (Groom, Liberal Party) Share this | Hansard source

I'm very pleased to speak on the report into the trade relationship between Australia and Indonesia by the Joint Standing Committee on Trade and Investment Growth. It is an important report into this trade relationship between our two countries and very timely, given the Australian and Indonesian governments' efforts to finalise the Indonesia-Australia Comprehensive Economic Partnership Agreement by the end of this year. As the report highlights, while the Australia-Indonesia bilateral relationship is quite broad, our trade and investment is one area where there is significant potential for expansion to the benefit of both of our countries. Our trade relationship is relatively small—lower than that of New Zealand or Thailand, which have comparatively smaller economies. This is despite the fact that Indonesia's economy comprises more than one-third of total ASEAN GDP and is now approaching US$1 trillion.

There is tremendous potential for Australian businesses to participate in Indonesia's rapidly growing economy, which is expected to continue to grow at over five per cent per year in the near term. But it is a market not without its challenges. So I think there is real work to be done to update the Australian mindset to recognise the opportunities that our nearest Asian neighbour provides us. If current trends continue, Indonesia will move into the top 10 economies in the world by 2030 and is expected to be the fourth largest by 2050. The growth and evolution of Indonesia's economy will see expanding opportunities, such as those in health care, tourism, education and agricultural products—all of which are prime examples of where Australia is well placed to get more engaged in a trade relationship with Indonesia.

I am very passionate about our country's relationship with Indonesia, and that's partly based on my own background. Well before politics, I was involved in trade relationships in my own business in the area of farming, particularly cotton exports out of Australia and reciprocal imports of knitted and woven product based on Australian cotton. I've also had the great honour of being involved in beef trade and, certainly, in the live cattle trade resurrection as the former Queensland minister for agriculture following federal Labor's well-known trade and economic debacle in that regard.

Alongside other Queensland ministers I was well informed, holding side discussions with President Widodo, at the G20 world leaders forum in Brisbane in 2014. Therefore, based on that experience and my knowledge of Indonesian business and trade relationships, I very much welcome business community submissions to this inquiry, as reflected in the report, which highlighted the need to improve the trade relationship in a way that recognises our shared trade goals and leverages our individual strengths so that when we work together we become a joint regional powerhouse.

In terms of the recommendations of this particular report, I note a number of things. To help business achieve its objectives as suggested in the report, it recommends:

… the Australian government develop a campaign to actively promote the business opportunities presented by this partnership.

As I've outlined, that is something that I very strongly support.

The report's second recommendation is that the government prioritise the development of infrastructure in northern Australia that strengthens maritime, education and tourism services partnerships with Indonesia. Many of us know that the lack of infrastructure in northern Australia is an impediment to trade, as was noted in many submissions to this report, and that is something we do need to recognise. These are concerns very much shared by the Australian government, which recognises the need for greater investment in northern infrastructure to capitalise on our proximity to Asia—hence our government's efforts, together with Queensland, the Northern Territory and Western Australia, that are currently underway. I saw those firsthand as a member of the former Northern Australia Ministerial Forum in considering the long-term need for investment and development across the north of our country.

The committee's third recommendation, that the partnership focus on the reduction of non-tariff barriers to trade, is an important one also. It is not only tariffs that limit the opportunities of Australian manufacturers and agricultural producers to send their products overseas, including to Indonesia. The committee heard that non-tariff barriers, including variable customs procedures, red tape and import licensing arrangements continue to limit the ability and the appetite of Australian exporters to engage with the Indonesian market. We need to take a comprehensive look at those barriers to trade that we should address, and we should look at how we address them and in which fora we do that. We need to maintain our own standards, whether they relate to quarantine or product safety, for instance, most definitely, and we recognise that our trading partners, including, in this case, Indonesia, pursue their own legitimate public policy objectives at the same time. But it is in Australia's interests and the interests of our trading partners that measures to support those legitimate policy objectives don't hamper trade. The government have heard calls from industry to tackle such blockages, and the government are doing what we can, using the full range of options that we have, whether in the World Trade Organization, bilaterally or through the mechanisms that our trade agreements establish.

The report's fourth recommendation, unfortunately, appears to be what I consider a grab bag of ideas that look pretty abstract when applied to the real world, and I would caution against supporting those. The committee recommends not waiving labour market testing in the economic partnership agreement. Australia has longstanding existing commitments to waive labour market testing for certain categories of Indonesian professionals, including under the 1995 WTO agreement on services and in the ASEAN-Australia-New Zealand Free Trade Agreement concluded in 2009 and signed by Labor when in government. Australia will continue to honour its international obligations, as should others. At the end of the day, negotiations with Indonesia are about expanding opportunities for Australian workers by growing the trade between us, not by taking away Australian jobs.

The committee also recommends not including investor-state dispute settlement in the economic partnership agreement. It is completely appropriate that the Australian government consider investor-state dispute settlement provisions in free trade agreements on a case-by-case basis, with a focus on our national interest. Australia has previously agreed to investor-state dispute settlement with Indonesia, including our bilateral investment treaty and the ASEAN-Australia-New Zealand FTA, to which I have referred, both of which Australia and New Zealand are parties to.

Investor-state dispute settlement can be an important mechanism to protect the interests of Australian investors when investing overseas. The suggestion to apply economic modelling on all agreements, I fear, is also more theoretical than real. To begin, the government undertakes extensive prenegotiation analysis of all FTA proposals. This process is undertaken by drawing on the multifaceted expertise within the government and elsewhere covering trade negotiations, policy and economic expertise. Our trade agreements are negotiated on a case-by-case basis to open new markets for Australian exporters that will drive economic growth and create new Australian jobs. They have done just that to date. That is why parliament has voted them into law. Whilst significant negotiations, stakeholder consultation, economic analysis and modelling have been underway and will continue in order to finalise the Indonesia Australian comprehensive economic partnership, I am confident that if this agreement is presented to the Australian parliament, we will have ample opportunity to assess its contribution to our important relationship and partnership with Indonesia.

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