Monday, 21 October 2019
Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019, Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019; Second Reading
The bills before us, the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and the Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019, give effect to the Peru-Australia free-trade agreement, the free-trade agreement between Australia, Hong Kong and China, and the Indonesia-Australia Comprehensive Economic Partnership Agreement. There are three agreements but, in my comments in the contribution that I will make to this debate, I want to focus my comments on the Indonesia-Australia Comprehensive Economic Partnership Agreement. I want to express my strong support for the agreement and to set out the reasons why.
When I first came to this parliament I was concerned that I personally and Australians in general lacked a deep knowledge and understanding of Indonesia—our nearest neighbour and a significant partner in the region. I set out on my own personal journey to try to close that gap not only by learning the Indonesian language and by working on person-to-person ties but also by looking for opportunities, in my role as a parliamentarian, to establish links and relationships with parliamentarians from Indonesia. My job has been imperfect, but I think standing here and strongly advocating for this agreement is another step in the right direction. Indonesia, as has been said by others in this debate, is Australia's largest near-neighbour. It's the seventh-largest economy in the world and has a population of more than 260 million people. Almost by dint of that population—but also because of some proactive decisions being made by the Indonesian government—it will move from the 11th largest economy in the world to the fourth largest economy in the world by 2050.
As Paul Keating set out when he was Prime Minister, the relationship between Australia and Indonesia is absolutely critical to both of our nations' futures. Defence ties are very, very good. There is regular contact, regular exchange, regular cooperation between the Australian and the Indonesian defence forces, as there is with the other security agencies of both of our countries. From time to time there are bumps in the political relationship, but overall I would rate it as very, very good indeed.
One of the areas where we are significantly underdone is in our people-to-people relationship and in our economic relationship. In terms of our bilateral trade relations, our relationship with Indonesia sits at No. 13 in the ranking of trading partners, at around $16.8 billion. If you drill down into that, you can see where the gaps really are. The level of mutual direct foreign investment between the two countries sits just under $22 billion, which sounds like a lot of money but, when you look at the direct foreign investment that we have with other near-neighbours, whether that be New Zealand, Thailand, Malaysia or Singapore, we're way off the pace when you look at the importance and the size of our respective economies. We have more bilateral trade with New Zealand, a country of 4.8 million people, and Singapore, a country of 5.6 million people, than we do with the seventh-largest economy in the world. I'm not being critical of the fact that we have excellent trading relationships with these countries. They are important. But I am critical—and I think we have a collective responsibility of doing something about this—of the fact that for far too long Australians and Australian businesses have flown over Jakarta to do business in Singapore and in Hong Kong and to do business more latterly in Shanghai and southern China. We have been flying over the opportunities to do business and to strengthen those person-to-person and business-to-business relationships with Indonesia. The direct effect of trade agreements can be overdone, but I think it is true to say that they are a part of a number of steps that governments can take to improve those relationships.
Talking about comparisons of our trade relationships, we export more goods and services at the moment to the United Kingdom. If you stand on the tip of Cape York—avoid the crocodiles!—and I've done this, you can almost, on a good day, see the territories of Indonesia, which are less than 200 kilometres away, yet we export more goods and services to the United Kingdom, which is more than 15,000 kilometres away, than we do to our largest near-neighbour. Much more can and should be done. There are opportunities, and this partnership agreement spells out a pathway to developing those opportunities. Indonesia, for its part, has an ambitious infrastructure investment agenda which will drive demand for steel and other Australian exports, including the construction of an entirely new capital for their country. What an exciting opportunity it is for the Indonesians on the island of Borneo in the province of East Kalimantan to be building a new capital from scratch.
Indonesia's economy is growing at more than five per cent per year. Indonesia imports, at the moment, enormous quantities of wheat, sugar and cotton from Australia, and we'd like the opportunity to be able to expand the exportation in these product lines, but we can do more as well. It's interesting to note that Indonesia imports nearly $3 billion worth of wheat every year but only one-third of that wheat comes from one of the biggest wheat producers in the world, and that is Australia. So much of that is grown in Western Australia, which is so very, very close to the markets of Java and beyond. Demand in Indonesia for Australian services is strong and could be stronger—services such as education, health care and tourism; of course, there wouldn't be many Australians of my age who haven't been Bali several times—but we need to extend it beyond that. Our engineering services sector is just one area of services where we could be expanding our trade opportunities. It's already one of the largest markets for our significant mining technology equipment as well. Again, more can be done in that area.
I want to say something about trade agreements at large. It has been the instinctive response of many within the centre left of politics in this country to have an opposition to free trade agreements. I understand fully the history to that: protection of jobs in industries that have grown up around tariff protection; provision of good jobs, good incomes, and good security for the workers and their families. That cannot be dismissed lightly. While the benefits of trade and free trade are distributed thinly but widely throughout the country, the impact of reducing tariff protection is felt very deeply and is concentrated in those communities which have been home to manufacturing and manufacturing production. So I do understand the concerns.
But the majority of the work, if you like—the majority of reform—occurred in the 1990s. When your level of general tariff is at two per cent and you just consider the weekly and monthly fluctuation of the Australian dollar, you've virtually got no tariff barrier at two per cent. Any trade agreement that Australia has will have much more to do with facilitating access to a market with greater trade barriers than Australia has. We're not giving up very much at all, because we're virtually at zero tariffs at the moment. In just about any trade agreement that Australia has at the moment, there is almost more to be gained than there is to be lost. There are some exceptions to that. Before people grab their keyboards and start sending emails, yes, of course there are exceptions to that, but the point remains: when your general tariff is at two per cent and a lot of the other trading partners have tariffs in the eight, nine and 10 per cent ranges, any market access that you can get that enables them to reduce their background tariffs is an advantage to Australians—to Australian producers and to workers in the businesses that are exporting to Indonesia. That is particularly the case for businesses within my electorate. I argue that this is good for the economy and good for the country as a whole. It is strategically important, but it's actually economically important for the people that I represent. I want to pick a few sectors. One of Australia's most significant steel manufacturers, BlueScope, is centred in Port Kembla and employs approximately 3½ thousand direct employees and an additional 4½ thousand to 5,000 employees indirectly. Most of them live in either my electorate or the electorate of the member for Cunningham. It's incredibly important. They represent approximately 10 per cent of all jobs throughout the Illawarra region and 11 per cent of gross regional product. Twenty-four per cent of the region's total output comes through those factory gates.
On this basis, exporting around 700,000 tonnes of steel every year is incredibly important for the Port Kembla steelworks, because when you're making steel, particularly from the blast furnace method, it's all about volume. You've got to pump as much steel through that blast furnace and through the slab caster as you can every day—producing the slabs, rolling it into hot rolled coil and getting it out of the gates to the markets of Australia and the world. More markets mean more throughput, which means you can improve the profitability of that plant and the returns to the profitability of the plant, securing the jobs of the workers.
BlueScope also has a fabricating and a processing plant in Indonesia. Hopefully, it will benefit from the massive infrastructure build that's underway there. This agreement will improve the ability of BlueScope to export hot rolled and cold rolled coil into Indonesia. It will be a significant boost to that factory and to the workers within that factory. So it is in the interests of steelworkers and those who represent them in the Illawarra.
It's not just Port Kembla, although, as a town that's built around a port—as is the electorate—our livelihoods are built on the back of selling things to other countries and bringing things in and out of that port. We get the importance of trade. The agreement is also important in the area of education services. When I was growing up, the steelworks was the most important institution. I think it now shares that prize with the University of Wollongong. It's a world-class university, one of the best in Australia for its teaching quality, and it will substantially benefit from this agreement—because one of the areas where, again, we're underdone economically, is in direct student exchange and in the university area. So there is great potential there as well.
I've got about a minute and a half left in this debate and I wanted to say one final thing on this. When Paul Keating said that we needed to do more as a nation to strengthen our relationship with Indonesia, one of the things he said was that it's got to start in the classroom. We've got to have students learning the Indonesian language and learning about Indonesian culture. It is a matter of great shame that there were more students learning Indonesian in the 1990s than there are today. If you look at the percentages for all year 12 students who are enrolled in a tertiary recognised language in Australia, there are 20 per cent doing Japanese, another 21 per cent doing French, seven per cent doing German, 19 per cent doing Chinese and nine per cent doing Italian. Do you know what percentage are doing Indonesian? Four per cent. Four per cent. We've actually gone backwards. So, if we're going to the something about the business relationships and something about the people-to-people-relationships, we need more people studying the language of Indonesia, Bahasa Indonesia, and it has to start in the classroom.
I commend the bill to the House.