House debates

Wednesday, 17 March 2021

Committees

Joint Standing Committee on Trade and Investment Growth; Report

9:39 am

Photo of George ChristensenGeorge Christensen (Dawson, National Party) Share this | | Hansard source

() (): On behalf of the Joint Standing Committee on Trade and Investment Growth, I present the committee's report, incorporating a dissenting report, entitled Pivot: diversifying Australia's trade and investment profile.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—I move:

That the House take note of the report.

In presenting this report to the parliament, I want to highlight its title: Pivot. As trade and political tensions with the People's Republic of China escalate, one thing is clear: Australia needs to pivot. Good advice when investing in stocks and shares is to diversify your portfolio and make sure you don't have too much stock in any one industry or company, lest it fall over and you lose the bulk of your investments.

Unfortunately, Australia's portfolio has become less and less diverse over the years, and a big chunk of it is invested in a volatile stock, the People's Republic of China. It's been a no-brainer, though, for Australian businesses to go in that direction. China is a market we can sell to on an enormous scale and buy from at a cheap price. They've been a big buyer of Australian assets, too—agriculture land, property, resources, infrastructure—and there continues to be a great deal of interest in Australia from Chinese investors in Australia. Without intervention, it was inevitable that Australia would be so economically entangled with communist China.

The COVID-19 pandemic has exposed weaknesses, though, in our nation's approach to trade. China's boycotting of Australia's barley, coal, wine and beef exports during times of elevated political tensions has raised question marks over who we should choose to trade with and what the term 'partner' actually means. It seems as a nation we're all the more vulnerable when we put too many of our economic eggs into the one basket. That vulnerability is exacerbated when the basket is woven by a totalitarian communist state that uses trade as a political weapon.

It is in this context that the Joint Standing Committee on Trade and Investment Growth conducted its inquiry into diversifying Australia's trade and investment profile, and the conclusion the committee has drawn from this inquiry is clear: Australia needs to pivot. This inquiry began in February 2020, before the full impact of the COVID-19 pandemic on Australia's trade and the economy more generally was actually known and fully realised. But the writing was on the wall a long time before the pandemic. The China question has been on many people's lips for decades, but it's been considered a problem too big to deal with. Now, the COVID-19 pandemic has brought many of the background issues of our nation's trade and political relationships with China to the forefront. I have to say that it's gone from being too big of a problem to deal with to too big of a problem to ignore.

But there is life after China. The committee has considered opportunities for Australia to diversify its export markets. India, Vietnam and Indonesia in particular present value opportunities for Australian businesses. As such, ensuring that access to these markets is available and should continue and be fostered has got to be a high priority for the Australian government.

The committee has also made recommendations aimed at protecting Australia's national interest and national security, particularly in sensitive and critical sectors. Notably, there are recommendations in this report that go to serious concerns regarding state owned enterprises and state linked enterprises funding our universities and owning or leasing our strategic infrastructure, including the port of Darwin. Given the ongoing tensions with communist China, it is an unacceptable security risk to have Chinese state owned and state linked enterprises involved in our universities and involved in our strategic infrastructure. It's a question of trust: can we trust the Chinese Communist Party with our strategic infrastructure? Can we trust the Chinese Communist Party with our education institutions? I don't think that there would be many right-thinking Australians who'd say yes. In fact, I actually don't think there'd be many right-thinking Chinese people who would actually say yes.

In terms of foreign investment, the committee has put forward recommendations regarding the need for foreign investment to be acutely in the national interest. Any foreign investment must be of clear benefit to the Australian people. Much foreign investment into Australia merely displaces Australian capital, rather than growing the economy by creating new jobs and business opportunities for Australians. The committee is of the view that there needs to be a clear definition of 'national interest' for the purposes of the national interest test for foreign investment and that our foreign investment regime needs to be more in line with the interests of the Australian people.

Solutions to our trade diversification issue are available domestically as well. Australia must be more self-sufficient. We can diversify by selling more raw product to ourselves. To that end, the committee recommends greater support for future-focused, innovative industries and Australia's manufacturing capabilities in order to diversify the range of goods and services that we export, while also ensuring that we have the supply capabilities necessary in times of crisis. Domestic investment, aided by things such as a national development bank and incentivising domestic investment of Australians' superannuation savings—all of this will further insulate Australia from the impact of international trade tensions and disruptions. It will provide alternatives to international investment that may pose a risk to either national security or the national interest.

The committee's recommendations will aim to realign Australia to emerge from the COVID-19 pandemic with a stronger, more self-sufficient and more enterprising economy. These recommendations were informed by a range of stakeholders who provided evidence on the opportunities and challenges relating to diversification. Most of the recommendations in the report were recommendations that were bipartisan. To that end, I want to acknowledge all the members of the committee, including the deputy chair. On behalf of the committee, I want to thank all of the individuals, businesses, peak bodies, academics, expert witnesses and government agencies that submitted to our inquiry or presented to our inquiry. It very much assisted in the final outcome. I also want to thank my committee colleagues, again, for their contribution to the inquiry. I want to acknowledge their commitment, particularly during such a challenging and uncertain time, where we had to postpone certain hearings because of pandemic restrictions. The onus is now on the Australian government. The onus is now on this government to urgently consider each of these recommendations and to implement the necessary changes to secure our nation's future. In doing so, the government should be mindful of the consequences for both our national security and our national interest if we fail to pivot.

9:48 am

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | | Hansard source

I begin by acknowledging the work of my fellow committee members, as the chair has done, and I also acknowledge the presence in the chamber of the deputy chair. This was a report that was, almost in its entirety, signed up to right across the entire membership of the committee. As the chair just indicated, it received bipartisan support. I also acknowledge the extensive contributions provided to our committee by a whole range of submitters, in often very extensive and thorough written submissions but also in person, taking considerable time out of their busy schedules to come and give evidence. I would like to acknowledge that we were beneficiaries of extensive evidence from academic experts—some of the best trade experts in the world, I might say—and from experts in trade across a number of other professions, from peak industry groups and from a number of individual businesses and citizens. The work of our committee in coming up with this report was greatly assisted by all of that evidence and expertise. I also acknowledge the work of the secretariat, who, under often difficult circumstances, continued working on this very complex topic and assisted the committee in delivering what I think is a very sound report and a significant contribution to an important topic.

I begin by saying trade and investment have always been important underpinnings to Australia's economic prosperity and also to our national security and broader national interest, and that was something which this report reaffirmed. We have always been an open economy and, in being an open economy, we have specialised in a range of goods and services and used our world-class productivity in those goods and services in the export of those goods and services to be able to import a range of other goods and services that it would be difficult and, on occasion, impossible to produce domestically. So it is critically important to reaffirm the importance of being an open economy and using the opportunity of trade in goods and services and two-way flows in investment to benefit our economy.

There is an understandable focus on the need for diversification in relation to trade not only in the destination of goods and services to particular countries but also from particular sectors, but that has long been the case in Australia. We have gone through periods of time with a range of different countries and across a range of different sectors where there has been a degree of concentration of our trade in goods and services. That is part of being an open economy. That is part of the ebb and flow of supply and demand. It is a risk, though, and it is something which we need to be constantly alert to and manage appropriately. But in managing that risk we need to, I believe, always do so while reaffirming the importance of remaining an open economy.

So, first and foremost, in our response to managing that risk, we reaffirm that we want to continue to be an open economy and, indeed, to continue to be a global champion and global leader in reducing barriers. Labor has long been a champion of opening up Australia's economy, and many of the great reforms over the last three or four decades have been under Labor governments. Indeed, we support further reductions in tariffs and, in many sectors, non-tariff barriers. It is often non-tariff barriers that are the most material. We support this particularly through multilateral arrangements and, where appropriate, bilateral arrangements.

But, secondly, it is critical that trade diversification become more of a national priority. This is not about weakening our economic relationship with China. This is about a China-plus strategy. It is about building upon the strengths of the relationship with China by expanding our economic relationships with other major economies such as India and such as the major ASEAN economies, economies in South America and of course other major OECD economies. But what we need is a practical plan for implementing that diversification. The recommendations in this report do provide some useful guidance. It is important to note that this government has been in office for around eight years, and now is the time for action, not continuously mouthing the word 'diversification'. Now is the time for practical action. That requires building capacity in our business sector. That requires building practical links, effective links, with all of those economies that I just mentioned—India, ASEAN, other OECD countries and South America. That requires, for example, programs to boast Asia literacy, particularly in businesses. It requires the right training opportunities for the jobs of the future. It requires promoting outward-bound investment in Asia, noting that Australia currently invests more in New Zealand than all of ASEAN combined.

So the recommendations in this report in relation to diversification are fine, but now is the time for action, and we have had far too little action over recent years on these issues. If we just look at India as one example, there have been major recommendations from a very robust report about that particular relationship that have been on the table for far too long.

I want to conclude by making a couple of comments about leasing the port of Darwin. This is something which was identified in the report, and it's a matter of some concern that has arisen under this government. This was a transaction that occurred under the current Liberal-National government, which didn't recognise or understand or interrogate sufficiently the risks associated with the long-term lease of that port, which is a sensitive asset of national strategic importance. Neither the Northern Territory Country Liberal government nor the Liberal-National federal government identified or properly considered the strategic implications or the long-term consequences of this deal for Australia's national security or sovereignty, and the actions of the Northern Territory Country Liberal government in selling and leasing different parts of this critical infrastructure were not opposed at the time by the Turnbull coalition government. Indeed, the then minister for trade, Andrew Robb, welcomed the transaction.

We believe it is important that this transaction is reviewed, and we believe that, despite the fact that the Australia's Foreign Relations (State and Territory Arrangements) (Consequential Amendments) Bill 2020 has been passed, it's important that the government explain whether this lease, whether this transaction, is consistent with Australian foreign policy and that they must explain what actions they believe are appropriate.

In conclusion, returning to the report as a whole, it is a report that, as I said, makes a significant contribution to this broad issue. It is an important issue. We do need to diversify. I believe that we need to maintain the strength of our relationship with China, but we need to build upon that and build our links with India, with ASEAN, with the OECD and with other major economies, and we now need to see appropriate funding of practical strategies to that end.

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

The debate is adjourned and the resumption of the debate will be made an order of the day for the next day of sitting.