Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Trade. At a time of global financial uncertainty, why does improving our trade performance matter and what is the government doing to achieve that?

Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Link to this | Hansard source

I thank the honourable member for his question, and I know that he is a person who is absolutely committed to improving our trade performance.

In the context of the financial uncertainty that surrounds us, it is timely that the government provide Australian business and the broader community with certainty and confidence on the way forward. That is why improving our trade performance has become even more important. There are two contexts for this. The first is that world trade grows much faster than world output—in fact, by a multiple of three—so improving our trade performance increases our options. The second context is what we inherited from the previous government. Not only did they bequeath us high inflation but they also bequeathed us a woeful trade performance—72 consecutive monthly trade deficits, record high trade deficits, record high current account deficits and record high foreign debt. In fact, during their 11 years of office, net exports only had a positive contribution to GDP in two of those years. Contrast that to when Labor were in office. We achieved that positive contribution to GDP from net exports on 10 occasions. That is why we do need to turn our trade performance around. Net exports must once again make a positive contribution to economic growth.

In the time that we have been in office we have embarked upon a two-pronged approach to trade: trade liberalisation and structural reforms to make us more competitive. On the trade liberalisation front, we recalibrated our trade negotiation priorities to make Doha and a conclusion to that round central to our approach. In fact, this is a government that played itself back into relevance in the Doha Round. The fact is that we are 80 per cent of the way to a successful conclusion to the Doha Round. If successful, it will see tariffs on goods come down, agricultural tariffs come down by up to 70 per cent, domestic agricultural subsidies in the US cut to $14½ billion, tariff quotas increased and agricultural export subsidies eliminated. It is significant because it provides greater certainty to the business community and it is also an important platform for further liberalisation.

On the question of free trade agreements, let me make this observation: the previous government said that that was its priority. In 11 years of office those opposite succeeded in achieving outcomes in only three FTAs. In the nine months that we have been in office not only have we concluded two FTAs but we have unfrozen the stalled talks that they got into with China and brought forward the free trade agreement with India feasibility study. Given the importance of both India and China and the strong domestic demand that they still generate, these are important developments. As for the ASEAN free trade agreement that we concluded, let me make this point: this is the fastest growing region of the world. It collectively has $71 billion in two-way trade and it is bigger than the US, bigger than China and bigger than Japan. It is a Labor government that brought conclusion to those negotiations. That is a demonstration of our commitment to turning around the trade performance.

Our response to Mortimer will address those structural reforms, and I will have more to say about that at a later stage. But the Rudd government, after some very terrible years on the trade performance front from the other side, is providing greater certainty for Australian businesses, greater certainty for our exporters and greater confidence to our community. The government has a lot to repair from the mismanagement and sclerotic shape that those opposite left our trade performance in.