Monday, 3 June 2013
It is an interesting time in my city, the city of Newcastle, a time of ongoing economic diversification and transition. With another regional city, Geelong, facing a significant threat to their local economy with the recent announcement by Ford, it is worth comparing our two cities and revisiting the way Newcastle responded to the closure of its then major employer, the BHP steelworks, in 1999. Just like the car industry, the steel industry received considerable investment and subsidies from the federal government over many years, and, just like the car industry, those subsidies sustained the operation of our steel industry for some time. But, while governments can invest, it is companies that make the commercial decisions about how these subsidies are applied, and it is my view that in both these industries too little was done too late. Innovating, driving new markets and supply chain integration are key outcomes of business decisions, and in both cases these companies could have done more earlier to avoid the final closures.
Just like the future closure of Ford's operation in three years time, we in Newcastle had prior knowledge of the intended closure of BHP. With government, we had time to plan for this major event, an event many commentators said would be a catastrophe for our region, but we used that time wisely. We planned for the reskilling of our workforce and ensured that support services were provided to the BHP workforce facing termination, just as the Gillard government is doing now. And, as the Gillard government and the Victorian government have announced assistance funds, we at the time received structural adjustment funding of $20 million each from the state and federal governments.
While the federal allocation under Howard went to individual enterprises, the New South Wales contribution under Bob Carr was directed at the relocation and establishment of the CSIRO Energy Centre in Newcastle. Of the individual enterprise approach, two stand out: the development of the marina in Newcastle and the development of the Stuart piano. The former was a key example of low-risk, long-term diversification. It complemented well the activities of the Port of Newcastle and the activities of the Honeysuckle Development Corporation, which, under federal Labor's Building Better Cities program, was redeveloping former industrial harbourside lands. The marina has added great vibrancy to our city and continues today to sustain employment and leisure related activities, particularly tourism.
The piano was a somewhat high-risk enterprise but highly innovative. The Stuart piano is now world renowned and continues its niche manufacturing—just. The global downturn and the high Australian dollar have had an impact, but the Stuart piano has achieved well-deserved acclaim and hopefully will receive the commercial support it deserves in future.
But investment into the CSIRO Energy Centre is where the real diversification and economic future success came for Newcastle. Last week, CSIRO Newcastle announced a $13 million Future Grid Cluster research collaboration with four universities, including the University of Newcastle. That will provide a framework to assist the electricity sector to make an estimated $240 million worth of decisions in the next two decades, decisions that CSIRO predicts could involve 20 different energy sources and technologies and require sector capacity across the nation to plan and design the most efficient low-emissions electricity grid for Australia. Add that to the work of Ausgrid, federal Labor's Smart Grid Smart City program, and add to that too under the federal government's ARENA the work of CSIRO to improve the best possible solar forecasting for the electricity system to boost levels of solar power on the grid and you are starting to understand the potential this has developed for our city. Add to that the bid by local industry in partnership with local research institutes for Newcastle to be an energy industry innovation precinct and the real long-term value of that $20 million by Bob Carr's Labor government makes amazing economic sense.
I note the Prime Minister today announced the location of the administration headquarters for DisabilityCare Australia would be located in Geelong. This decision by the Gillard Labor government provides for the city of Geelong and its people an embedded federal function to anchor services and to grow the disability service sector, related expertise and research and product development and innovation.
Key to our region's success has been the ability of Newcastle to collaborate and pursue innovation in manufacturing and research. Forging strong partnerships is central. In that way the role of the University of Newcastle and the Hunter Institute of TAFE cannot be underestimated. I note it was a New South Wales Labor government that granted autonomy to our regional university back in 1965 and our current Labor government has invested $22 million to provide new facilities to our TAFE. I have no doubt that the highly regarded Deakin University and the Gordon Institute of TAFE in Geelong will be key partners in Geelong's future prosperity, especially if Labor governments are there to keep investing.
We had another weapon in our structural adjustment armoury and that was the Hunter Valley Research Foundation, founded in 1956 after the devastating Maitland floods of 1955. The Hunter Valley Research Foundation, originally funded by community donations and given major annual sponsorship from the then NSW Labor government, has been integral to informing decisions regarding the regional economy. The economic and social research findings of this foundation have guided the development of the Hunter region for decades. The foundation has become the standard bearer for regional research, playing an indispensable role in data collection and research relevant to our unique regional needs. It has also produced a wellbeing survey—the first in this nation. For regions such as the Hunter, an understanding of our local economy, our population, our health, our manufacturing, our education and our wellbeing is pivotal to achieving growth and prosperity. They therefore play an important part in guiding future investments and strategies. No other institute, including the ABS, provides this information or resource. To the people of Geelong, I encourage them to consider how they might set up an equivalent organisation for their region.
Another key factor to our resilience was industrial harmony. That industrial harmony can be attributed to the leadership of our unions and the leadership provided by the NSW Industrial Relations Commission in Newcastle post the Hawke-Keating accord, a harmony which has continued under Fair Work Australia, which has an office in Newcastle thanks to Julia Gillard and a federal Labor government. This industrial harmony and regional approach has underpinned the resilience of our manufacturers, particularly the coal mining industry, adding further insulation to our economy.
The port of Newcastle is indeed the largest exporter of coal in the world, reaching 121.9 million tonnes last year—a record which it will eclipse this year. But the port now handles more than 40 commodities, including alumina, wheat, steel, cement and fertiliser. That sort of diversification has been part of our success story. Imports of mining related heavy equipment, fuels and other bulk liquids have increased with the port of Newcastle now handling over $20 billion in trade annually and still growing.
So what have these factors had in common? Great leaders is a big part of the answer in many cases. While I will always be grateful for the leadership provided by the previous Vice-Chancellor of the University of Newcastle Professor Nick Saunders and for his contribution to our region's success and to the incumbent Vice-Chancellor Caroline McMillen for the way she too has embraced the potential and aspirations of our region, I also acknowledge the contribution and vision of TAFE Directors Gaye Hart and Phil Cox. Also, tonight I pay particular tribute to three wonderful leaders who are all retiring in 2013—Gary Webb, CEO of the Port of Newcastle; Dr Wej Paradise, CEO of Hunter Valley Research Foundation; and, Deputy President of Fair Work Australia, Rod Harrison. Each of you leaves a marvellous legacy to the people of Newcastle and the Hunter region. For the past 12 years I have had the great pleasure of working with all three of you. Your professionalism and dedication, your absolute commitment to Newcastle and your deep understanding of the part your organisation played in the growth of the local economy and the future welfare of the people was in each case exceptional. Gentlemen, I salute you, and I wish you all great personal satisfaction and happiness in your retirement. You each made Newcastle a better place. Thank you.
Finally, the other common denominator in the ongoing resilience and diversification of our regional economy was the timely and enduring support extended to Newcastle and the Hunter by both federal and state Labor governments. In fact, the greatest threats to our ongoing prosperity are Liberal governments. In New South Wales, the Liberal government has denied the Port of Newcastle the opportunity to further diversify through the development of a container terminal. This decision is a slap in the face to Newcastle and to our future economic growth. It also denies the people of New South Wales the development of new markets and new supply chains, particularly in the agriculture and food production sectors, and the economic and employment growth that this would produce. At the federal level, the continuation of industrial harmony in my region is threatened by any prospect that a Tony Abbott-led government would gain power in the September elections. And if a climate-change denier—as Mr Abbott is—became PM, our clean energy future would be severely hampered too. Under the Howard government, investment into regional Australia meant the regional rorts that saw obscene pork barrelling while seats like mine were missed out entirely. So my message to the good people of Geelong from the Newcastle experience is: put your faith in Labor governments, who genuinely put their faith in you and in your economic success. And be very afraid of a future in your region under a Liberal government, particularly one led by Tony Abbott.
I rise tonight to talk about our agricultural industries and to ask the trade minister to ensure that any decisions he makes between now and election time are very much in the national interest and especially in the interests of our agriculture producers. Our agricultural producers are doing it tough. There are a number of things—adverse weather conditions, the dollar, the carbon tax, the re-regulation of the workplace—which are working against producers at this time. I will give you a couple of examples of the types of issues that they are confronting. We have dairy farmers in the south-west of Victoria in my electorate who, due to late rainfall, are now facing having to feed their dairy herds for the next three or four months, paying feed bills of $15,000 to $20,000 a month additional to what they would be normally paying at this time of year and putting extra costs on their business. And obviously with the dollar where it is, demand for our agricultural commodities is soft and prices are soft, making it harder and harder for farmers to operate in the current climate. On top of this they are facing additional costs of anywhere between $5,000 and $10,000 because of the carbon tax. There is also a carbon tax cost on the processors they are selling their milk to—for instance, Murray Goulburn is facing a carbon tax bill of up to $15 million. When you look at what has happened in Europe under the emissions trading scheme there, the dairy processors in Europe have been given access to free permits: they are allocated free permits for up to 93 per cent of their emissions. So not only do the European farmers get subsidies, but their ETS is also subsidised in their favour—whereas our farmers at home get no subsidies and face a carbon tax which gives them no relief whatsoever. The carbon tax is also having a significant impact on our beef industry. One of the abattoirs in my electorate, Midfield Meats, is now sending carcases by air to the Middle East to have them processed over there because the carbon tax has added additional costs to doing that business here in Australia. So they are now airfreighting the carcases to the Middle East because it is cheaper to process them over there. When you combine that with what has happened in the north of Australia as a result of the live export ban and the fact that that is still washing through Australia's beef industry, prices are obviously down and the dollar has impacted on that and we have seen a real decline in the profitability of our beef farmers.
Why do I mention this and also refer to the trade minister having to act in the national interest? I do this because there is a chance that we could see a free trade agreement concluded with Japan before the election on 14 September and there is a remote, outside chance that we could see one concluded with South Korea. If the Japan one is concluded, the trade minister has to make sure that it is not one that is done for the sake of expediency. Japan is our largest dairy market. We have to ensure that, if we are to conclude a free trade agreement with Japan, our dairy farmers and our dairy processors get proper access into that market. It has to be proper access that reduces tariffs and means that we get into that market at a lower cost than what we are now.
I call on the government to make sure that they liaise closely with the Australian dairy industry in finalising any deal when it comes to dairy in that Japan free trade agreement. I would ask that they do the same with our beef sector. Obviously when it comes to our beef sector, the free trade agreement that the government should look at is the one that South Korea has negotiated with the US. That has given improved access to US beef producers into the South Korean market and, over time, the tariffs reduce down to zero per cent. We have to ensure that, when it comes to Japan and, in the future, when it comes to South Korea, we get access to those markets similar to what the US has into the South Korean market.
We cannot say, 'Sorry, we are not prepared to negotiate on auto,' or 'Sorry, we are not prepared to give any ground on investor-state dispute resolution,' as we will give up seeking proper access to those markets for our farmers. We absolutely have to ensure that when we negotiate on behalf of our farmers with Japan and with South Korean, we do what is in the national interest, that we do not do what might be the case and think, 'Wouldn't it be good to get a signature on an agreement before an election,' because this would make the government look good but it would not be in the interest of the country as a whole. So I call on the trade minister to ensure that he does negotiate in good faith.
There are real outcomes that can be achieved. If you look at, for instance, what New Zealand has achieved in their negotiations with China—and this is another agreement that we need to get on the table—you see that the New Zealand dairy industry now has a tariff advantage over Australia of over eight per cent when it comes to getting access for their dairy product into the Chinese market. We have to put the China free trade agreement back on the table as well and we have to make sure that we can get access there. But that is something that will have to wait until after the election.
The one which might occur—and there is a real chance that it could occur before the election—is with Japan. What we have to ensure there is that the trade minister does the right thing by the nation. I would like to put the trade minister on notice: we will be watching if you do look to conclude an agreement before the election and we will be making sure that you are liaising properly with the NFF, with the beef industry and with the dairy industry and ensuring that they are comfortable with any agreement that is finalised. If they are not comfortable with that and if they are excluded in an endgame, which is all about getting a political outcome, then we will make sure that the Australian people know what that agreement is about—it is about political expediency and it is not about what is in the best interests of our nation.
At a time like this, our dairy producers, our beef producers and all of our agricultural sector need a government which is fully committed to reducing the cost of exporting just as they need a government which is fully committed to reducing the cost of production domestically.
Sadly, I think what are going to need is a change of government to see that occur domestically and what we have to make sure of between now and election day is that we do not have a government which comes and makes the cost of exporting remain the same because they think it is in their political interest to get an outcome on a deal.
In summary, what we have to make sure of is that this government between now and the election day does not do anything, because once a deal is signed, they cannot be unravelled and it is almost impossible to go back to the table and push for extra access to push for new sectors to be put on the table. That will all have to be postponed until the Trans-Pacific partnership negotiations take place seriously. Once you have set a precedent in bilateral FTAs in the region, it is going to make it harder for us to negotiate meaningful access through that regional process, so, Mr Trade Minister, be careful; we are watching.