Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Hansard source

I am pleased to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. One of the reasons I am very pleased to speak on these cognate bills is that I have had the opportunity to spend some time in Chile. Like others who have had the opportunity to represent the government in parts of the world, I have been very fortunate to have been in a number of the countries in South America over the last few years. Chile is probably one of the most impressive countries that I have visited in that region. In fact, the delegation that I was lucky enough to be involved in was led by the former Speaker, the member for Wannon, and, dare I say, the former member for Isaacs before she retired. In addition to those there was the member for Lyons, who was also one of the then opposition members of the delegation.

At the outset I say that I was very lucky to have met our ambassador to Chile, Mr Crispin Conroy. I put on record that Mr Crispin Conroy is an outstanding representative of Australia in the Latin American region. His ability to weave his way through the Latin American countries and to be accepted with such a welcoming embrace everywhere we went was testament not only to his ability but to the staff who represented him in Santiago. Besides the fact that he is fluent in Spanish and that his wife is a Colombian, he obviously has a great affection for the region, and I understand that he has now been deployed to a further role in that region. I just wanted to make sure that people understood what a great representative in opening up opportunities for us in South America we have in Mr Crispin Conroy.

I am sure that other speakers have gone into much of the detail of the bills, and I want to speak to some tangential issues associated with the bills. Realistically, of course, the coalition supports this Australia-Chile Free Trade Agreement, because it was on the drawing board and its implementation commenced while we were the government. I am sure ex-Minister Truss, the member for Wide Bay, would have said that in his contribution, and it is pleasing to see that the Labor Party, now in government, have finalised this free trade agreement with Chile.

The fact is that Chile in itself is an outstanding country in the region because it is a good strong democracy. Since the demise of the military rule of Augusto Pinochet it has been a beacon of democracy in the South American region and it has been a modernised economy which is an example to the rest of the economies in South America, probably second only to Brazil in terms of its ability to have modernised. Brazil is obviously a huge economy not only in size as a country but also in size and volume and GDP et cetera. But Chile has got its parliamentary infrastructure in place. I was also lucky enough to visit the parliament in Valparaiso and to meet in the chamber with many of its deputies, and we were made very welcome as Australians. From that point of view, we do have a very good relationship with Chile.

For example—and I know that it is not recorded everywhere in the documents that we were given—there is a huge and increasing education trade between Australia and Chile. I am sure that it will benefit from this free trade agreement because it takes away so many impediments. We met representatives who were organising the cross-pollination of our students, and largely their students, to Australian universities. This is a very big income earner for Australia. Australia is a very popular destination for Chileans to further their tertiary education in particular.

This is a milestone because it is the first Latin American country, as I am sure many others have outlined, to have a free trade agreement with Australia. When this was initially proffered the argument was—and we could go into it further—that it really was not a good opportunity in some respects because we are in the southern hemisphere and many of the goods and tradeable items with Chile are ones that mature in the southern hemisphere at the same time as ours. Whether grain crops or other agricultural produce, obviously it is beneficial to us if we can trade with somebody in the northern hemisphere in the opposite cycle of the seasons.

The other huge impediment is the distance. Anyone who has ever flown to Santiago from Australia will know what a long and arduous trip it is. Lan Chile is probably one of the better airlines around the world, and certainly in South America, but it is a long trip. You have to break your trip in Auckland and then spend a long time over the water across the Pacific. If it takes that long by air, imagine how long it takes by ship. It puts a huge impost on the cost of transporting goods because we are such a distant trading partner.

But, as I said, we do have a great relationship and it is growing all the time. The trade at the moment is relatively modest, something like $856 million in 2007, coming off a base of $574 million in 2006. We are the fourth largest investor in Chile, with over $3 billion invested from Australian companies. I believe that we are something like 29th in terms of our trading volumes with Chile and 27th in terms of their trade with us. Once this agreement is implemented, as I understand, in January 2009, it will take away the tariff barriers and this will make it far more acceptable and attractive to trade with Chile.

While I am on South America, I was also lucky enough recently to go to Colombia. We know that Colombia wished to have a free trade agreement with the United States. That might be somewhat circumvented by the election of the Obama government, not for any other reason than that the Obama government, according to some commentators, is predicted to be more an insular government than an expansionist government. There are a lot of outstanding issues. For those who want to continually say, ‘What a terrible country Colombia is because it is racked by drug lords and cocaine and all these sorts of things,’ I put on the record that we had something like a three-quarters of an hour meeting with their President, Dr Uribe Velez, who is an outstanding gentleman. That was the delegation led by Senator Steve Hutchins. President Uribe Velez is one of the outstanding leaders of the world at the moment in terms of what he has done for Colombia.

I know I am digressing from the debate but I am talking about the fact that Colombia would like to have a free trade agreement with us as well. They would be very keen to get that off the ground. In some respects, they would probably be highly attractive to us because of their location in South America. It is tropical and they have a whole range of different, attractive trading items that Australia would probably be interested in. The FARC has largely been driven back deep into the jungle in Colombia, and that is testament to President Uribe’s strong policy on narcoterrorism. Apparently he has a popularity rating with his people of 80 per cent; some of our political figures would certainly like to get even close to that. They are actually having to change the constitution to let him run for a third term to continue what he is doing in modernising Colombia.

People in Australia have little concept of what South America has to offer. Being born of the Commonwealth of nations and English speaking, we seldom venture into Latin American parts of the world, where there are opportunities to find new and other trading partners. I will try to stick to the reasons why we should have a free trade agreement with Chile!

One of the large trade items that Australia will likely be trading with Chile is coal. Chile is very deficient in energy resources. It is such a beautiful country, starting way in the north at the bottom of Bolivia and going right down to Tierra del Fuego in the south, as far as you can go in terms of landmass. It has a huge range and we know that it is, at its widest, hundreds of kilometres wide, backing up onto the Andes mountain range. It is very diverse in what it offers, but what it does not have is energy resources. From that point of view, Australia is playing a very interesting role in Chile, because the Australian based company Pacific Hydro has a number of sites in what they call run-of-river hydroschemes: you do not dam the river but divert some of the river through the hydroelectric station. It is very environmentally friendly because the river barely gets disturbed. You have these very fast-flowing rivers out of the Andes, and they generate an enormous amount of electricity. As a result, they provide great, clean, green energy to not only the inhabitants of Chile but the industries. For example, at the Coya power plant on the Cachapoal River, where they have a run-of-river project, they produce a huge amount of electricity for the copper mines in that region, which we know are very energy intensive—so a great big tick to the Pacific Hydro company. Pacific Hydro, as we know, has a whole range of wind farms in Australia. We are very proud of Pacific Hydro and the contribution it is making in Chile.

Chile had a problem in that it was getting most of its gas from Argentina. Argentina’s economy—and I had better not say too much, because I am supposed to be going to the Argentinean embassy tonight—has been in a bit of disarray and, as a result, it cut off the gas, and this nearly caused a war. Chile did not want the gas to be suddenly cut off, due to its energy requirements. There was a pipeline across the Andes to Chile providing large amounts of natural gas, which was highly desirable. But, without much notice, it got cut off. For those who do not know, Chile is a very strong country militarily. It is well armed and it has seldom lost any wars that it has gone into. They tell me that Bolivia would like to pick a fight with Chile but, as it has never won one, it cannot bring itself to do it. Bolivia is the same as Argentina: it has a large amount of gas and it is not allowing it to go into Chile.

Australia has some very good interests in Chile. BHP, for example, is the largest owner of the Escondida copper mine, which we visited, in the Atacama Desert. For those who know their high school geography, the Atacama Desert has barely had a drop of rain ever. When you drive across it, it is just like driving across a moonscape. There is not one blade of grass. We drove across the Atacama Desert and finally got to the mine, which is located at a high altitude, which the member for Lyons found a little challenging. At this high altitude they mine the world’s largest reserves of copper at the Escondida mine. Escondida means something to the effect of ‘hidden’. The story is that a geologist begged and pleaded with his company for one more drill hole—a regular theme in all of the mining stories of the world—and they finally hit pay dirt when they hit a good copper reserve. There are copper mines all around Escondida now. Escondida itself is expanding and even now, with a huge hole in the ground, the mine has something like a 40-year life, so BHP is certainly in there.

When you hop on a plane, the number of Australian engineers and mining engineers who are off to Chile is amazing. We flew from Santiago to a place called Antofagasta, which is a staging point to the Escondida mine. You would think you were home in Australia because of the amount of Australian expertise that is going into the mining industry in Chile. So Australia has certainly a great interest there, and we very much appreciate the opportunity to share our expertise with the Chileans. As we know, major international companies swap executives and they end up in places like Alcoa in Western Australia, which has the same sort of makeup as these nationally owned mining companies.

What Chile can offer us is obviously copper, as well as non-ferrous based metals, pig iron, pulp waste and, as I said, a range of agricultural products. Interestingly—and I know most people have covered the detail of this bill, but I think it is interesting to put some of these things on the record—Chile has a huge and unique wine industry.

See this speech in context