Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

The primary aim of this bill that I have moved with my colleague, Senator John Madigan, is to require Australian flags flown, used or supplied by the Commonwealth to be manufactured in Australia from Australian materials. At the outset, I would like to foreshadow that Senator Madigan and I will be moving amendments to require only that the flags be only Australian made, consistent with the requirement set out in the Australian Consumer Law, and that has arisen out of a very useful Senate inquiry process. I will be moving those amendments should this bill go past the second reading stage in committee.

In essence, this would mean that the flags would have to meet the following requirements: the goods have been substantially transformed in Australia and 50 per cent or more of the total cost of producing or manufacturing the goods is attributable to production or manufacturing processes in Australia. This amendment is in line with concerns raised by industry—flag makers in this country—during the committee inquiry into the bill and, in particular, the cost of manufacturing all elements of a flag in Australia. It is a pragmatic and sensible amendment. It is an amendment that should remove any concerns that the government or the opposition have in relation to this. At the outset, I would like to acknowledge the role of Senator Kim Carr. He has been a passionate advocate for manufacturing in this country, and I am grateful for the conversations I have had with Senator Carr in respect of this bill.

While I acknowledge the concerns of flag makers in relation to these costs—and I believe they are real concerns—I do want to take the opportunity to point out just how far we have failed in supporting our manufacturing and associated industries when it is too expensive to even make material for our own flags. In recent years, we have seen our manufacturing sector face challenge after challenge, with little effective support from governments of either persuasion. Without support and with the added burden of the closure of Ford, Holden and Toyota as automotive manufacturers in Australia, we are at real risk of causing a huge chasm in Australian manufacturing. And we also know that our dumping laws are not strong enough. We know that the coalition made a promise at the last election that they would reverse the onus of proof in dumping cases, something that Senator Madigan and I are passionately in favour of. In fact, I have moved amendments co-sponsored by Senator Madigan in relation to that. I know that Senator Whish-Wilson from the Australia Greens is also passionately concerned about manufacturing and the way that these free trade agreements operate. It is very important that the commitment of the government at the last election is something that is honoured in order to save Australian manufacturing jobs.

The former Prime Minister's Taskforce on Manufacturing in its August 2012 report estimated that 950,000 people were employed in the sector and that it contributed eight per cent of gross domestic product directly. That did not include the significant amount it contributes indirectly through flow-on effects to other businesses. It also contributed 29 per cent of Australia's exports despite the high dollar. But the report also stated that over the four years prior, over 100,000 jobs had disappeared from manufacturing. The report also estimated that another 85,600 jobs, at a minimum, would be lost in the five years following the publication of the report. Sadly, that is coming true with the demise of original auto manufacturers in this country. That figure could well be significantly higher now given that Ford, Holden and Toyota are planning to exit Australia by no later than the end of 2017—in Ford's case, it is in 2016. If we lose our manufacturing sector, we will be at a global disadvantage. We will lose not only tens of thousands of jobs but also our self-sufficiency. I also find that it beggars belief that the Australian government would not even allow Australian manufacturers, shipbuilders, to tender for those two supply ships. Absolutely staggering. They were not even given the opportunity to be part of that process which would have meant thousands of jobs in a number of states including my home state of South Australia.

I do believe flag makers when they tell us that they simply could not source Australian material to make flags that would satisfy the bill as it stands. It is, quite frankly, an embarrassment to have allowed our manufacturing sector to have reached this stage, to be on its knees, but, in support of the manufacturers and flag makers we still have, we will seek to amend this bill because we want to be sensible and pragmatic and we want to save as many Australian jobs as possible. Who knows—if this bill gets through, if this gives a shot in the arm to Australian flag makers, maybe in the not-too-distant future they will be able to make flags that are 100 per cent Australian made using Australian materials.

This bill was prompted by the concerns of Senator Madigan and me regarding government procurement—in particular, relating to procurement for Parliament House. I commend Senator Madigan for having initiative in the procurement inquiry. Both the government and the opposition will be familiar with our push to have the Department of Parliamentary Services accept an Australian-made dinner set, a crockery set, for use in the members' dining room because the current set is made in England, China or the United Arab Emirates. Despite spending over $10,000 of our own money to commission the 750-piece set, DPS has so far refused to use it. Senator Madigan and I are now considering which charities would benefit most from the donation of Australian made, high-quality China.

Our ongoing interactions with DPS prompted us to move for a Senate committee inquiry into procurement processes generally, which Senator Madigan led the charge on. I believe that government procurement should make the best use of taxpayer money possible. In my view, this should include consideration of the benefits of using Australian products, not just the cost. It also needs to include reliability, quality and other factors. There are the flow-on effects of having something made here in Australia. The flow-on effects to our economy mean stronger businesses and that means more jobs. Focusing on Australian products also means more support for our manufacturing sector and, therefore, jobs beyond the business retailing the products.

In my view, it is all about value-adding. A business importing office paper, for instance, might be able to give departments a lower up-front cost than an Australian company, but ordering through an Australian company means that jobs in the retailer are supported and so are jobs in the paper mill and forestry sector. We also know that it meets high environmental standards and that workers are employed under fair and safe conditions. These guarantees are priceless. A particularly painful reminder of this occurred in Bangladesh in April last year when 1,129 people lost their lives and another 2,515 were injured when the Rana Plaza building collapsed. Many of the victims were garment workers who were forced to continue working even after the lower floors of the building was closed due to structural concerns. Any decent person would be repelled at the idea of financially supporting this sort of human rights abuse. Our government procurement procedures should actively reject any shadow of such practices relating to the manufacture of procured goods.

In my view, the procurement of Australian flags is symbolic of all the problems with government procurement at federal and state government level. The Australian flag is one of the most powerful and evocative symbols of our nation. It is also a particularly powerful symbol when used in conjunction with the parliament. I think most people, not just Australians, would feel uncomfortable about the idea that the flag flying over their parliament was made in another country. If you put this to the man or woman on the street in China, in the United States, in the UK or in any other country in the world, they would expect that the flag flying on top of their parliament or on top of their government buildings would be made in the country it represents. But in Australia we take such a black-and-white view of procurement rules and free trade arrangements that it could well happen. We are the 'free trade Taliban', as we are taunted overseas. We take this literalist, purest view of free trade like no other country in the world.

I see that Senator Gavin Marshall is in the chamber. He is well familiar with the free trade agreement with Thailand. We do a free trade agreement with Thailand and we get cheap cars from Thailand with no duty. There is meant to be no duty for our cars, but, after the agreement was signed, sealed and delivered, the Thai government changed the rules so that a Ford Territory, for instance, because of its engine size, pays a massive duty. It costs $57,000 to buy a top-of-the-line Ford Territory here and it costs $105,000-plus in Thailand. We have been taken as shmucks in relation to this. I do not say that disrespectfully to the Thai government, but I say that we have been sold a pup when it comes to some of these free trade agreements.

One of the main arguments raised against this bill in the Finance and Public Administration References Committee report is that the Commonwealth cannot put country-of-origin requirements into procurement rules because it would breach our free trade agreements. But not everyone follows the rules the way we do. The United States, for example, our partner in the Australia-United States Free Trade Agreement, has specific legal exemptions in place for the US Department of Defense, known as the Berry Amendment. The Congressional Research Service explains the amendment in the following terms:

The Berry Amendment … contains a number of domestic source restrictions that prohibit DOD—

that is, the Department of Defense—

from acquiring food, clothing (including military uniforms), fabrics (including ballistic fibers), stainless steel, and hand or measuring tools that are not grown or produced in the United States. The Berry Amendment applies to DOD purchases only.

According to the Department of Finance, this is consistent with exemptions allowed to the US under the free trade agreement we have with the United States, but any similar provisions for Australia, at least in the department's view, would be in breach. It seems that, when it comes to raising the white flag, the Department of Finance deserves a gold medal.

Dr Nick Seddon is Adjunct Professor at the College of Law in the Australian National University. He appeared before the committee's inquiry in a personal capacity to share his extensive knowledge of government procurement matters. Regarding the US exemptions, I asked him the following question:

There are two pieces of legislation in the US. There is the Buy American Act, that has been in place since President Hoover in 1933; there is also more recent legislation that requires flags on US government buildings and defence establishments to be made in the United States. How do you say that those key pieces of legislation in the US sit with the US's interpretation of the free trade agreement that we have with them?

Dr Seddon responded:

I have always been puzzled by that. I have never understood how America can enter into these agreements and have legislation like that at home. It baffles me.

So why do we not take advantage of the same exemptions the US does?

Commonwealth procurement is currently guided by the Commonwealth Procurement Rules, or CPRs. As an aside, I suggest that the CPRs need a case of CPR because they are not working. They set out the following areas to be addressed: 1) value for money; 2) encouraging competition; 3) efficient, effective, economical and ethical procurement; 4) accountability and transparency; 5) risk management; 6) procurement method. Paragraph 5.3 of the CPRs reads:

The Australian Government’s procurement framework is non-discriminatory. All potential suppliers to government must, subject to these CPRs, be treated equitably based on their commercial, legal, technical and financial abilities and not be discriminated against due to their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services.

According to evidence from the Department of Finance:

These commitments provide access for Australian suppliers to the government procurement markets of other countries, whilst also placing obligations on the Commonwealth Government to open up access to our procurement market. These commitments limit the extent to which the Commonwealth Government can preference local suppliers.

Despite the existence of the US domestic product provisions, the department considered that because this bill aims to discriminate between suppliers it would not conform to the current CPRs. In my view, this ties in with Australia's absolutist, purist, fundamentalist and stupid approach to free trade, which has been reinforced by successive governments.

This has been particularly obvious in relation to anti-dumping policy, where Australia refuses to take the same opportunities that other nations do to protect their industries, on the basis that they are in breach of WTO rulings. These other nations, including the US, obviously do not believe this is the case, or, if they do, they are willing to take the risk to save their manufacturing jobs and stand up for their economy.

Our literalist, purist approach is disadvantaging Australian industry and killing Australian jobs. In effect, we are playing by Queensberry rules in the middle of a bar fight, and if we do not toughen up we will end up with more than a bloody nose.

It is also interesting to note that the National Australia Day Council, which is the co-ordinating body for Australia Day celebrations and the Australia Day awards, takes a different view. During the last Senate estimates session, I had the following exchange with representatives of the council, including Mr Jeremy Lasek, the CEO, and Mr Adrian Watts, Corporate Direction.

Mr Watts: … for the last seven years that I am aware of, all flag purchases that are flown on flagpoles that we have purchased have been Australian made. That has been my choice for the organisation.

Senator XENOPHON: You might be in breach of WTO obligations, according to the Department of Finance.

Mr Watts: That has been our choice of procurement over the last seven years. There have been reputable suppliers in Australia for that.

So it is clear that it has been the preference of the Australia Day Council, due to a quality control preference, and they are not going to change that position. I congratulate them for it. It is a relief to see that the council understands the importance of insisting on Australian made flags. Interestingly, they do not seem to have come up against any accusations of breaching FTAs.

One question the Department of Finance should ask itself is this: how do we define 'value for money' under the CPRs? Does it include consideration of the flow-on effect of using Australian companies? Does it consider the value of returning taxpayers money back to the Australian economy? My colleague Senator Madigan will no doubt elaborate on this. Or, does it just consider the list price? My instinct suggests it is the latter, and evidence provided to the committee by Australian flag makers backs that up. Carroll & Richardson Flagworld Pty Ltd, in their submission to the committee, stated:

In recent times we have seen a shift in purchasing emphasis by the Australian Government that places at risk the ability of companies such as ours the opportunity to compete fairly with overseas sourced flags. Local importers can easily bring in container loads of flags and swamp our market with cheap and inferior products. The manufacturing plants they source these imported products do not have the meet the stringent conditions placed on local companies to meet a host of legislative and regulatory requirements.

They continued:

… we have seen the most difficult customer to convince of the need to support and buy Australian Made Flags is the Commonwealth Government itself through its departments. The reason offered by public servants is that their hands are tied because of the requirement they have under the present Commonwealth Procurement Procedures and our WTO obligations. I cannot think of any other country in the world that would allow its National Flags to be made in another country and then imported to the detriment of local companies who are willing and capable of making the flag.

Common sense tells us that government departments and agencies should be supporting Australian companies, not making them jump through more hoops than their competitors.

The aim of this bill is straightforward. Senator Madigan and I will be proposing an amendment to the bill to address concerns raised by flag manufacturers about the cost of production. Also, there has been no conclusive argument made by the Department of Finance or any other body as to how this bill would breach Australia's free trade obligations.

The Australian flag is the symbol of our nation. We should protect and honour that symbol, and treat it with the respect it deserves. Government procurement is about much more than ordering cheap office stationery. It should reflect the values we hold as a nation, and seek to create the greatest return for Australian industry and jobs, and, in turn, our society. Free trade agreements are vital to Australia's prosperity, but if we continue to elevate these agreements over our own national interest we will be risking even more than our flags.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Madam Acting Deputy President Boyce, I congratulate you on your last day in the chair. I also compliment Senators Madigan and Xenophon for the spirit behind the Flags Amendment Bill 2014, and the need and desire they have expressed to try to encourage more Australian manufacturing, and I am a hugely optimistic person when we consider this question. Whilst they have mentioned the flag, Senator Xenophon has quite correctly widened the discussion well beyond the flag, and I intend to do so in a few moments time.

As a member of the Defence family I obviously have a very keen interest in the flag, the integrity of the flag and everything that stands behind it, as I know the vast majority of other Australians do. This morning, in considering what I would contribute to this debate, I made email contact with one of my sons, who was a combat officer in Iraq, in 2003, and was awarded the Distinguished Service Medal—the first lieutenant since the Vietnam War to be awarded a Distinguished Service Medal—and followed that up again with a distinguished deployment as a combat officer in Afghanistan, in 2006. Indeed, he led American, Dutch and Australian troops. He now resides in the United States. I was very interested to get his take on this. I will quote a couple of his comments. You never know of your success as parents until you actually ask them a question and get the feedback and then have the opportunity to consider the maturity of the feedback. Justin commented on the fact that our flag displays two symbols, and this, of course, is relevant to this debate. He said:

Our flag itself displays two symbols, the Southern Cross, which is widely regarded as a symbol of our region, our history, and our foreign relations. Australians, New Zealanders and others in our region use the Southern Cross for a wide variety of regional identity purposes.

He said it typifies our unity with and reliance on our friends and theirs on us. Of course, the other part of the flag is the Union Jack, and these were his comments representing the British Commonwealth:

Having begun as a British colony, we have grown as a significant Commonwealth member and as a leader in many multinational pacts, treaties and organisations. Again, this demonstrates our outward focus as an energetic, involved partner on the global scene.

He also goes on to make some comments about overseas trade, that I will come back to. I thought he might have picked up on the military heritage and the pride of fighting under our flag, but he did not. He actually focused on Australia's role in the world and Australia's role in the region, and for that I certainly was very proud.

I, like everybody else, want to see the encouragement of more Australian trade, more Australian manufacturing and more opportunities as the world changes. I know Senator Xenophon and Senator Madigan—I know Senator Xenophon more than I know Senator Madigan—and I respect them both very highly. But they, too, both understand that we are an exporting nation. We export more than 65 per cent of what we produce and our wealth depends largely on two areas. One has been the supply of cheap energy, which has attracted so much business and manufacturing and other industries to Australia. The other is the strength of our relationships with our trading partners.

I want to reflect on some examples of where this is helping, has helped and will go on helping our relationships and our Australian jobs into the future. The first is a company of which I had the pleasure of being chief executive officer from 2000 to 2007. It is a Western Australian based company. Why do I make the point? Because that company provides very high-level hardware and, particularly, software to protect the integrity of the supply chain in the fuel industry. It is a company that provided services—and still does—to organisations such as Shell, BP, Esso and Conoco Phillips in Singapore, Malaysia and Thailand. For better or worse—and I think it was worse—I took the company into India with the Indian government owned fuel companies and also into the Middle East, where it is still very active.

The point I want to make here is that, because of the trade relationships between us and Singapore, this relatively small Western Australian company was successful in winning a contract with the Singapore Armed Forces to provide the hardware and the software that control the supply chain for their entire fuelling from their underground tanks right through to their military vehicles. That is not a bad effort for a company that is not a Singaporean company. I make this point because it speaks to the strength of the opportunity that results from our trading relationships with other countries. We did not have a free trade agreement at that time with Singapore, but I can assure the chamber that that led to an increase in employment both here in Australia and of Australians having the opportunity to then go and work in these countries as we transferred technology that was Australian owned and Australian designed and of excellence. That is the sort of issue I want to put before the chamber today in terms of this debate over the flag and the symbolism of what goes beyond it.

The second illustration is that excellent company Cochlear which, as we know, produces implants for different medical situations associated with hearing. These days Cochlear does manufacture in Australia. It is also manufacturing, I understand, in Sweden in Scandinavia. But their products were developed in this country, providing manufacturing opportunities, providing skills, providing training and providing employment. This is the type of area which I believe Australia needs to get itself into very much more actively and strongly. With the deepest respect to the movers of the amendment bill, I say that these opportunities exist because of Australia's relationship with its trading partners around the world, and I think there is enormous opportunity into the future for that to happen even further.

A third example is another Australian company in the health related areas. That is the product ResMed, which is an Australian designed product now globally available and manufactured here. It is a product for the treatment of sleep disorders. Acting Deputy President, I do not know if you suffer those problems—I probably should consult with your spouse—but sleep apnoea, as we know, is a very dangerous condition. Why do I say 'spouse'? Because it is generally the spouses who grumble most and who drive their partners towards the sort of technology that this company develops. When I was residing in Tasmania—through you, Acting Deputy President, to Senator Urquhart—there was that terrible circumstance of a school principal, I think, who drove off the road between Launceston and Hobart back in the 1990s. I believe that particular accident did lead to some fatalities. It was then discovered that the person suffered sleep apnoea—am I not correct? I think I am, but I stand to be corrected. ResMed is the sort of technology, again, that is Australian designed and Australian developed, and it is creating employment opportunities and, more to the point, creating training opportunities for new skills development as the world evolves.

The fourth example is CSL Limited, once known as the Commonwealth Serum Laboratories. As a mark of confidence in the expansion of that industry and its products and its services, only last month the new CSL Behring Biotechnology Manufacturing Facility was opened in Broadmeadows in Melbourne by the Hon. Ian Macfarlane, Minister for Industry, along with the Premier of Victoria, the Hon. Denis Napthine MP, and the Minister for Technology, the Hon. Gordon Rich-Phillips.

We all know the value of CSL in the world of vaccines, with Fluvax, for example, and the pioneering work they have done in the provision of blood products over the years. CSL provide plasma and vaccines both for human use and for use in my area of background, the veterinary world. The excellence of that company is there to see. As the CEO of CSL observed on the occasion of the opening:

This world-class facility is key to the ongoing success of our global R&D strategy and reflects our commitment to providing better treatment options for people who are managing certain bleeding disorders and other life-threatening conditions.

What pride do we in Australia have that our country is producing and has produced products and services that are so vitally important in the area of haemophilia?

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. There is a relevance issue. It is all very well and good to hear about cochlear implants and Australian manufacturing technology, but what relevance does this have to the subject of the bill, that Australian flags flown on top of Australian Commonwealth buildings, government buildings, be made in Australia?

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

You have made your point. The point of order is on relevance, and Senator Back is very clearly explaining the proud tradition of Australian manufacturing and innovation. There is typically a free range and quite wide latitude. I am sure that Senator Back will be directly referencing the flags very shortly.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I actually took my lead from Senator Xenophon when he widened the discussion, during his contribution, to matters well beyond the flag, where we were discussing the levels of protectionism versus the opportunities of free trade. If I recall correctly, Senator Xenophon spoke of free trade widely in his contribution. The points I have been making go to the value to Australia, and I am giving an illustration of the number of companies, products and services which are benefiting and have benefited from the wide trade distribution in our region and around the world.

I will conclude my comments on CSL with the observation that this particular factory, opened by the Hon. Ian Macfarlane, will be doing a lot of work in the development of blood-clotting factors—

Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

How much money came from the Labor government for that?

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Order, Senator Carr!

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

and the treatment of haemophilia. And I am absolutely delighted that my colleague Senator Carr has joined me in agreeing with the position that I am taking, about the excellence of it. Who would not recall the book by Bryce Courtenay April Fool's Day, where he wrote so eloquently about his haemophiliac son? At the opening of that laboratory in Broadmeadows, Mr Alain Weill, the President of the World Federation of Hemophilia, took part in the ceremony and made the observation:

The ongoing development of new and improved therapies for haemophilia couldn't be more important to the bleeding disorder community. It's very heartening to see CSL working with governments in Australia to invest in new technologies and facilities that may benefit people with haemophilia all around the world.

I think that is the important point that needs to be made in this debate.

I respect the fact that Senators Xenophon and Madigan have made the point about the use of Australian materials and Australian manufacturing in producing our flag, but, if the information that was given to me is correct, it is only contracts over $80,000 that have got to go to tender outside Australia. I learnt a lot as I read the transcript. Senator Madigan made the point, in response to answers given, that the existence of an ABN, an Australian business number, is not necessarily evidence that that is an Australian company. That is quite correct. I do not know how many contracts there are—maybe there are a lot—that exceed $80,000 and go onto the open market. I would have thought they would have been relatively limited in their scope, but I stand to be corrected.

Naturally, one would always encourage that, where possible, Australian icons such as the Australian flag should be produced by Australian manufacturers using Australian materials, but, as I think I heard Senator Xenophon say, if those materials are not available, what do we want? Do we not want the products to be produced at all? I for one would always say very proudly that Australia and Australians should not be disadvantaged and should have the opportunity—and I believe they do have that opportunity—but I do not want to see restrictions limiting it to Australians, particularly if retaliatory action by companies in other countries means that we are then denied access to markets in our region and beyond our region.

In the few minutes left available to me, I want to go to the issue of free trade agreements. For those who had the opportunity to join with representatives of the dairying industry this morning in the Mural Hall, it was a particularly interesting exercise. Dairying has been down in this country for some time, and we are now seeing a resurgence. I met with a milk production family in Manjimup in Western Australia's South-West on the weekend, and they told me that they are exporting directly now to the Singapore market. What is produced this morning is in the market in Singapore tomorrow. I just thought to myself, 'What a wonderful opportunity.' I was talking to a gentleman from Murray Goulburn about this question, and he made the observation to me that, as a result of the free trade agreement between New Zealand and China that was signed in 2008, the New Zealand company Fonterra now has 40 per cent of the fresh milk market in China. Think of the excellence of the marketers of New Zealand. Imagine a country that could take a product called Chinese gooseberries, rename them kiwifruit, produce them in New Zealand and then, under a free trade agreement, sell them back into the Chinese market. I think we have a lot to learn from that country.

I go again now to a Western Australian cooperative, Co-operative Bulk Handling, which is the large grain handling organisation with the biggest supply chain in Australia for grain. More importantly, because of our relationships with our trading partners, they now have grain mills, flour mills, in Vietnam, in Malaysia and in Indonesia. In fact, the mill in Indonesia is a fourth largest, I understand, in the world. That is an example of where we do not want protectionism, we want to be able to compete, in my view, out there on the world stage. We want Australian manufacturing to be excellent. We want participation. We want the opportunities for young people to be optimistic about these industries, to provide them with the skill sets, provide them with the employment prospects, so that they can participate. To the extent that if our Australian flag manufacturers can compete and can produce a product that we want, all well and good. But if it is going to mean that Australian skills development and jobs are denied because of retaliatory action then I for one have deep concern about that and would obviously like to discuss it further with my colleagues.

Finally, by way of examining the world ahead of us, Senator Xenophon made reference to Toyota, Holden and Ford. As a Western Australian, with Senator Whish-Wilson in the room I will make my contribution to my observations as a Western Australian about the GST and the contribution of the states. You and I had a very interesting discussion between Darwin and Katherine just recently and I do not want this morning in the limited time left to me to comment on trade protectionism in the southern states, particularly Victoria and New South Wales, vis-a-vis Western Australia, but I do want to draw the attention of the chamber to the demonstrations given to us yesterday by the 3D company in which they were giving us examples of products being printed. They were telling me that in September this year at the car show in New York over the four days, using this technology, they are going to print a motor car and drive it away. They were telling me that experimentally they are already taking kidney tissue of people who are on dialysis and need kidney transplants, they are growing that tissue out and they will be printing new kidneys to go back into that same patient. It is their own tissue with no rejection, no drugs, no immunosuppressant drugs et cetera. They were telling me of the instance in space where astronauts will not take tools, they will manufacture and print them in space. That is the world of the future for me. That is the world into which Australia and young Australians must go. That is where they must be trained. That is where their skills must be developed. Anything at all in my view that limits or puts a foot on the hose of that development in the future is not to our advantage.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

This is a private senators' bill which deals with questions of symbolism. I suppose in some senses the question of the Australian flag is one of those great icons that are used to highlight a much broader symbol about the whole question of buying Australian. I would not want necessarily to suggest that in itself the Australian flag should not be subject to questions of debate as to what it should look like in the future, and that has been a substantial question in this country. But I think the issue is that the Australian flag itself as it stands represents a very important symbol for this country. The fact is that the flag flying over this building is currently an Australian made flag and I am firmly of the view should be an Australian made flag, and that is a decision that is made by government through public servants. The Joint House Committee has made that decision at some point and that is why we have an Australian made flag flying over this building, and that is exactly as it should be.

The issue of symbols is quite important in politics. We can say without doubt that this is a government that does enjoy, as my colleague Senator Cameron has pointed out, wrapping itself in the flag but does not seem to care whether or not that flag is made in China. It strikes me that it goes to a much broader issue about whether or not we should pursue the question of made in Australia. I have long been a strong advocate for buying Australian. I have long worn the Buy Australian badge and participated in the campaign for Buy Australian. I have done so out of conviction that that is a very important issue for the future of this country. When I go into a store to buy a product, I ask where is the Australian product, and I have urged other Australians to do the same, because part of this question is about people demanding Australian made. It is all too easy for people to say, 'Look, it is cheaper to buy something from overseas,' rather than thinking through the implications of not buying Australian. When it comes to government, it seems to me that this is a basic issue.

Senator Xenophon has done me the credit of acknowledging my commitment to this issue and I appreciate his remarks. However, I would disagree with him when he goes to the point that the previous Labor government was tardy in this regard. I will defend strenuously the Labor government's record in terms of pursuing the issues of buying Australian and particularly around the issue of procurement. Procurement is not something that only governments do, and so when we discuss the issue of procurement we also have to discuss how the private sector operates and in terms of procurement policy understand the intrinsic links between procurement policy and industry policy. I put it in a more nuanced way and say that innovation is industry policy in the 21st century, so innovation policy and industry policies are very closely linked. That is all about building capabilities in this country. The whole point of industry policy is to ensure that we are able to develop those capabilities in this country so as to secure the high-wage, high-skilled jobs for Australians in this country. It is about intelligent purchasing policies that stimulate investment, that sustain industries and that actually nurture innovative small- and medium-sized enterprises in particular and also foster a competitive economy. These are not incompatible objectives.

Government procurement has a critical role to play in advancing Australian industry. If we take, for instance, the figures that I have here from 2012, the government was spending over $40 billion in acquiring goods and services through various tendering processes, and $18.6 billion of that was for non-defence arrangements. It highlights just how significant government purchases are in terms of the market for goods and services in this country. I take the view that policy has to be directed at the issue of how procurement is undertaken, not just in the government, but also in the private sector.

Senator Xenophon made the point that the Thai free trade agreement had been a disaster. I hope I have not misrepresented him. In terms of the automotive industry, he is absolutely right. Labor opposed that agreement. When I was in office I asked the department to tell me exactly what had been the trade implications of that free trade agreement. I was advised, in 2010 when I asked them to do the figures, that there had in fact been a growth in the value of exports from Thailand to Australia of a 287 per cent increase, which had started at virtually nothing. In regard to exports from Australia to Thailand, they fell by 25 per cent. We had a situation where the Thai free trade agreement had a profound significance on the Australian automotive industry insofar as it did not deal with the issues of non-tariff barriers and allowed discriminatory policies to be pursued which had devastating consequences for Australian workers in this country.

Free trade theorists will tell us that Aussie firms have to compete in a open market and, of course, that is true. But it is also true that the government purchasing and using its powers has a leading role to play in the development of capabilities. This is not inconsistent with trade agreements. The free trade zealots, often populated on the other side of the chamber, will suggest, as we have just heard from Senator Back, that there will somehow be retaliation if we actually pursue a Buy Australian policy. They misunderstand the fundamental principles of the provisions of the Australian procurement guidelines and our commitments under free trade agreements.

Free trade agreements, which we are currently entered into, do not prescribe assistance to small- and medium-sized enterprises. Free trade agreements, which Australia is a party to, also allow for principles to be undertaken to actually assist with particular interest in Australia—for instance, the purchase of motor vehicles. We all buy Australian-made motor cars, as members of this parliament, through our procurement principles. We also have opportunities to acknowledge that, when you enter into these agreements, the international trading environment is not performed on a level playing field. It is a fundamental principle that you have to appreciate. Of course, quite contrary to what the theorists would have us believe, you have to acknowledge that governments around the world pursue a different approach to these agreements than what is pursued in Australia. I say that the international procurement policies, for instance in the United States, cannot be overlooked when it comes to the question of procurement policy in our country.

Senator Xenophon, let me remind you that in terms of Labor's record we understood and appreciated, because it was not a level playing field, that we had to introduce—and we mandated this—Australian Industry Participation Plans for the private sector for projects over $500 million. We undertook to ensure that domestic projects worth $500 million or more had to demonstrate what commitments were being made to the Australian supply chains. If they did not, they were not able to get access to tariff concessions that were in operation. Large projects worth $2 million also had this provision applied with the Enhanced Project By-law Scheme to ensure that the global supply chains were also recognised. We implemented mandatory Australian Industry Participation Plans, not just for the private sector, but also for the government sector for purchases in excess of $20 million. We introduced projects which led to the additional investment, in terms of economic activity, of somewhere between $1.6 billion and $6.4 billion worth of additional work for Australian firms. Labor also ensured that the Australian Industry Participation Authority oversaw these changes, raised the profile of these activities and coordinated opportunities, on top of what we did for the ICN, to ensure that people were aware of the industrial capabilities that were available. We established the Buy Australian at Home and Abroad program within the Department of Industry.

We established suppliers advocates within the Department of Industry. We ensured that advocates in the steel industry, in rail, in water, in clean technology, in resources, in ITT and in the TCF sectors were appointed to actually promote Australian industry capabilities and to provide that liaison between Australian firms and the procurement officers within major projects. The steel industry was one where there was substantial work undertaken. Of course, we had to ensure that the procurement principles for our resources projects were able to be pursued. I acknowledge that this was a substantial area of market failure, and that is why governments have to intervene. You have to acknowledge that the market has to be there to serve people—and not people there to serve the market. This was a classic case of market failure but we did so on the basis of making economic sense and applying principles so that supply chains could ensure that there was value for money while developing capabilities.

The truth of the matter is that none of these schemes is perfect. None was without criticism and none could not have been improved further. But it is unfair and wrong to say that nothing was done about these matters to deal with international trading pressures in terms of advanced industrial countries such as ours and the pressures that are being placed on our manufacturing sector. It would be helpful, I would have thought, for those in this parliament to actually acknowledge that other countries, like the United States, have a very different attitude to these procurement questions from what has been experienced amongst the financial press in this country and from the Liberal Party itself.

When we talked about the steel industry I at no point supported the issues of mandating of pricing or mandating of particular firms that had to be used, because we had to ensure that the supply chain development was not based on the principle that we could allow for price gouging or featherbedding of the industry itself. That is why the $300 million Steel Transformation Plan introduced measures to encourage investment and to help the industry transform so that it could compete more effectively and deal with the in-built biases against Australian firms.

When it comes to industry and procurement policy, we have to ensure that we do strike that balance. We have to ensure that the balance that allows Australian firms to be able to compete, to be given the opportunity to compete, is protected. I make the assumption that this is based on a fundamental principle about what sort of society we want to be. What sort of country are we seeking to achieve? If you think this is going to be a country of cappuccino makers and burger flippers, or that we live a life on the beach or in a quarry, then you are making a fundamental mistake about what this country is capable of and a fundamental mistake about the economic opportunities that you are opening up for this country—or, more importantly, closing off. That is the issue that strikes me as so important when it comes to the question of industry policy and innovation policy.

I am particularly concerned to ensure that we are able to secure programs which, I might add, the current government is in the process of systematically destroying. The Abbott government has ripped $82 million out of the Australian industry participation measures. This is a government that is systematically destroying the buy Australian campaign, the Buy Australian at Home and Abroad campaign. This is a government that is walking away from tens of thousands of jobs in the automotive industry, the textile industry and the steel industry. This is a government that is doing all it can to gut the programs through the industry department. For instance, we have seen the destruction of ARENA, the dismantling of Commercialisation Australia, the destruction of the commercialisation committee, the innovation precincts, the venture capital programs and the TCF programs, and we have seen $620 million cuts to the R&D program. These are all measures that build capability and allow Australian firms the opportunity to compete, to attract new investment and to attract the high skill, high wage jobs. In the vocational sector we have seen the same pattern of mindless destruction being pursued by this government to destroy people's capacity to be skilled up to compete in a 21st century world.

It strikes me as pretty clear that when it comes to industry policy, supporting Australian jobs and backing Australian firms, this government is incredibly short-sighted. It is driven by an ideological obsession because of its domination by North Shore Sydney and the merchant bankers' view that this is a country that should allow our manufacturing industry to be someone else's problem—because it is really in the business of exporting jobs. That is what we are really good at under this government: exporting jobs.

This bill is an opportunity for us to pursue this question. I have long worn the 'Australian made' badge with pride. I firmly believe that Australian purchasing policy has to be about making sure that we develop products, develop Australian capabilities, encourage Australian investment and secure high-wage, high-skill jobs for this country. The government must not be interested in just a narrow view of what these principles mean. I am firmly of the view that we must be interested in price. We must be interested in the question of value for money. We cannot dismiss these principles. They are fundamental to procurement policies. But the question of price goes much, much beyond just the value for money argument as it is narrowly seen. It is about encouraging competitiveness; encouraging non-discriminatory processes against Australian firms; using Australian Commonwealth resources in an efficient, effective, economical and ethical manner; transparency and accountability; and building the Australian economy. In short, value for money goes much, more further than just the lowest price. It goes to the fundamental long-term price of a product, the replacement value.

The case of the slouch hat is an example that I want to draw to the attention of the Senate. Under the Commonwealth procurement guidelines—I am very proud to be able to say this—I was able to work with Jason Clare back in 2012, the then minister for defence materiel, and to announce that Akubra hats and Mountcastle had been selected to supply hats to the Australian Army and the Australian Air Force for the next five years under an offer of a $2 million contract. There are provisions within the existing guidelines to ensure that measures such as these are able to secure the production of iconic items such as the slouch hat. We have the capacity to do these things within the existing guidelines if we have the political will to ensure that we actually move to defend Australian jobs and defend industrial capabilities in this country to allow us to effectively compete in the international market.

The question of procurement within free trade agreements has to be faced up to squarely. It has to be looked at in the same way as the Americans understand it—we have to be able to find a way to ensure that procurement policy serves the interests of Australia and serves the interests of both the public and private sectors by securing industrial capabilities in this country. Labor is very much in the business of fighting for Australian jobs, and we have a very strong preference for backing Australian firms. Our record is crystal clear. For these reasons we think we have the capacity to secure the future of manufacturing, despite the international pressures and despite the enormous difficulties we face, if the government is committed to work in partnership with Australian industry to secure the future of jobs in this country.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

Three little words: 'made in Australia.' In many ways they go to the heart of our economy and the wellbeing of our country. Those words impact directly on jobs, on our families and on our communities. They are the key to this country's economic health. In the not too distant past, those words were a badge of honour—we would speak them with pride. It is extraordinary that we are here today to fight for these three words in relation to one of our most potent symbols. The Flags Amendment Bill 2014 is legislation that is simple and logical. I would hope that most parliamentarians would be embarrassed to vote against it. The bill comprises seven pages, and the amendment circulated by Senator Xenophon states:

The Commonwealth must only fly, use or supply a designated flag if the flag was made in Australia.

Pretty simple? Pretty agreeable? We will see what happens. In the past, the Department of Parliamentary Services has been constrained to procure flags in accordance with the Commonwealth Procurement Rules. The rules are value for money; encouraging competition; efficient, effective, economical and ethical procurement; accountability and transparency; risk management; and procurement method. I would now like to take the opportunity to address some of these rules. I will outline why this bill promotes the spirit of these rules and why, therefore, it should pass.

'Value for money' is an elusive phrase open to interpretation. However, it need not be. Value for money is knowing when you buy an Australian-made product it is of good quality. Value for money is knowing that almost every dollar spent on that product will find its way into our economy and will not simply be spent overseas. Value for money is knowing the employees who made that product have superannuation, pay income tax, and receive sick leave and annual leave. These are all the rights of workers enshrined in this country that we continue to fight so hard for. Value for money is knowing that the product you buy provides those within your own community with a job, through which they are able to share the tax burden with you. So value for money is hardly just a cost or price. It is a much more intrinsic concept than that. Requiring the Commonwealth to purchase Australian-made flags is very good value for money.

On the topic of encouraging competition, in Australia we have a number of flag manufacturers who are capable and competent at what they do. The flags they make are of the highest standard. These flag manufacturers compete with each other every day on a level playing field to win new tenders. When the Commonwealth buys flags from overseas, we are not encouraging competition—we are simply encouraging annihilation. As good as our companies are, the fact remains that Australia has good standards for our workers which we want to maintain.

Efficient, effective, economical and ethical procurement is the next point. I spend a lot of time visiting factory floors across the country. It is my passion. I can say that almost 100 per cent of the manufacturers I see are efficient, effective, economical and ethical. If they were not, they would not still be in business. This bill is about taking pride in our nation, taking pride in our nation's workers and their abilities, and, ultimately, taking pride in our flag. It is about being fair. Mr Wayne Gregory of Carroll & Richardson Flagworld said during the committee process:

… while the Commonwealth procurement rules seek to be non-discriminatory, in reality they offer a free kick to many importers. We do not compete with overseas suppliers who want to sell here; they sell through local importers. Obviously, the manufacturer overseas does not have to comply, so it is not a level playing field with regard to legislative requirements, regulations, standards, fair work, income tax, payroll tax, superannuation, and occupational health and safety. Clearly the local importer has to, but the local importer may well be two people and a little factory out the back.

I could not have said it better. It is astonishing that, while the government tender documents refer in black and white to employees' rights in relation to freedom of association and the right to representation at work, including that the tenderer allows its employees to be able to make free and informed choice about whether to join a union and be represented at work, those provisions do not apply to overseas-based suppliers. But it gets worse. Carroll & Richardson told the committee that the Commonwealth government was its most difficult customer on the issue of Australian-made flags. Everyday Australians understand the benefit of buying Australian made. They do not need purchasing guidelines, fancy graphs and statistics to know that, if you buy local, you are making Australia a greater place. But for those in government, this concept seems too difficult to grasp. This bill with the amendments, which has been circulated by Senator Xenophon, is what Australian industry needs right now. This bill is a turning of the tide in practical recognition of the importance of the Australian manufacturing sector. This bill is a pivotal opportunity for all senators who believe in the importance of the Australian manufacturing industry—for all senators who often talk about how they believe in the Australian manufacturing industry—to vote in favour of it, and not to just talk about it.

Of course, there is one final aspect to this issue, and that is the power and the purpose and meaning of the Australian flag. This is our symbol under which Australians have fought and died. It adorns the coffins of those who have made the ultimate sacrifice, and it flies above the parliament as an enduring symbol of the Australian values of freedom, democracy and a fair go. Actions speak louder than words, and I challenge the senators in this place to vote in favour of this bill with our amendments.

Earlier in the debate Senator Back spoke about how we sold our gas in free trade agreements. Currently, our manufacturers and our domestic consumers—mums and dads and pensioners—are facing ever-increasing gas prices because when a previous government, the Howard government, negotiated these forward contracts on our natural gas, we did not keep a domestic gas reserve for our industry here in Australia or for domestic consumption by our people. Now we have a gas crisis on the eastern seaboard, as well as a crisis with people who are very concerned about coal seam gas and fracking. Yet we have our own Australian gas that was not brought about by those means, and that is now all going offshore. But we do have a crisis: companies like Viridian Glass in Dandenong South are paying ever-increasing prices for gas, which is one of their major inputs into the manufacture of glass. They are under enormous pressure; they employ hundreds of Australians to make glass ethically in this country to Australian standards. One does not have to go too far from this place to see glass that is brought in from China, where they do not pay WorkCover or superannuation. They do not provide a safe workplace; they consume people to make a product. Some people in this place talk about level playing fields, but that is an absolute fallacy. And all the while, Australians are losing their jobs, their homes, their ability to look after their family and their friends. Communities around this country are being devastated while successive governments of all persuasions have sat on their hands. Go out and tell it to the people in Western Sydney and to the people in Broadmeadows. Go out and tell it to the people in Spotswood and Geelong, where their lives have been turned upside down. These people want to contribute. They want to pay tax. They want to contribute to our nation's future. As I said in my maiden speech to this parliament, the great economies of the world manufacture. A country is what a country makes. The great economies have strong manufacturing sectors. They do not survive by simply digging holes in the ground or turning their country into a nation of drink waiters, or educating their competitors on how to bury them.

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

I too rise today to speak on the bills from Senators Xenophon and Madigan in relation to the National Flag Act 1953, requiring that Australian flags flown, used or supplied by the Commonwealth be manufactured in Australia from Australian materials. Like the two senators, I am a very proud Australian and I certainly believe that the responsibility of government is to support Australian businesses and manufacturers to ensure we have the best possible opportunity for the future of our country.

Before I go on to discussing the bill specifically, I will share some research I did before speaking this morning. I thought the best thing for me to do was to look at a little of the history of the Australian flag and, regretfully, I must admit that I was quite ignorant about its development. Apparently in 1900 the Melbourne Herald offered £25—which is about $3,000 in today's terms—for the design of a national flag for Australia. They stipulated that all entries had to include the Union Jack and the Southern Cross on the flags. At a similar time another publication, the Review of Reviews of Australasia, also held a competition that did not require inclusion of the Union Jack and Southern Cross—it was an open competition. Following Federation, the British government requested that the Australian government design a new flag, and so an official competition—separate from the other two—was held, and received more than 32,000 entries. The really extraordinary thing was that from all of the competitions, the five entries that were eventually selected were almost identical, with only very minor differences. The winners included, amongst others, a 14-year-old Melbourne schoolboy by the name of Ivor Evans; Lesley Hawkins, a teenage optician's apprentice from Sydney; and William Stevens, a ship's officer from New Zealand.

There was quite an interesting comment in The Bulletin at that the time. I hope the chamber will indulge me in relating their fairly strong words. About the winning flags, The Bulletin commented:

… no artistic value, no national significance … Australia is still Britain's little boy … that bastard flag is a true symbol of the bastard state of Australian opinion …

I thought that was quite extraordinary, given that it was published back at the turn of the 19th century—not the 20th, the 19th.

The design was basically seen as the Victorian flag with a star added. The New South Wales government immediately objected to that of course. They said, 'We are not having a national flag that looks like the Victorian flag.' On 3 September 1901, however, the flag was unfurled for the first time at the Royal Exhibition Building in Melbourne. That date, 3 September, is apparently now Australian National Flag Day, not that we necessarily celebrate it.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

We do.

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Brandis has just advised that we do celebrate it.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Mr Allan Pidgeon ensures that we do.

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

Mr Allan Pidgeon, I am being advised, is responsible for it—so there you go.

King Edward VII approved a slightly altered design in 1903. This included the seven-pointed stars of the Southern Cross—except the smallest—and the six-pointed Commonwealth Star, also called the Federation Star. Soon after, in 1909, the Commonwealth Star was changed to a seven-pointed star to represent not only the six states but also the territories. That was a little bit of history about our flag which I thought was tremendously interesting.

Returning to the bill—I too believe that the Australian flag has tremendous significance and importance for Australia. As Senator Madigan points out, soldiers who lose their lives in battle representing this country are returned to Australia with their coffins draped in the Australian flag. We fly a huge Australian flag above this building to represent the significance and importance of this parliament, as do the parliaments of the states and territories around Australia. It is interesting to note that the designs of the state flags are all derived from the national flag, but the flags of the territories are not. They do not have the Union Jack on their flags.

One of the things that popped into my mind when I was looking at these issues relates to the fact that the Australian flag has the Union Jack. The Union Jack comprises the crosses of Scotland, Ireland and England. In September this year, a referendum on Scotland's independence is being held. Should the vote be in favour of independence, it will create an interesting issue for all the countries around the world that include the Union Jack on their flag. All of a sudden the Union Jack may lose the Cross of St Andrew, which is the white cross on the Union Jack. What will happen to the flags of the world should the referendum be successful? All the research suggests that there is every chance that the referendum will be successful.

Senator Cameron interjecting—

Senator Cameron is here. Perhaps he will wax lyrical some more about the Scottish referendum in a minute.

Returning to the issue of the purchase of Australian flags—I think everybody in this place would be delighted if it were possible for everything to be purchased within Australia. But the cold hard facts of the matter are that, whilst the Australian government has a level of discretion in its spending, the taxpayers of Australia elect governments, first and foremost, to spend taxpayers' money in the most efficient and cost-effective way possible—to obtain value for money for those taxpayers. In some instances, that will require procurement of items and goods that are not manufactured in Australia. Reducing the costs of doing business in Australia is one way of dealing with that, but we also need to be very careful that we do not provide artificial protection for Australian companies. We want them to become competitive in the international marketplace.

I am sure this has been said before this morning, but Australian suppliers are very well represented in Commonwealth procurement. My understanding is that, in the 2012-13 year, Australian suppliers were contracted to provide 82 per cent—by value—of the goods and services purchased by the Commonwealth. That equates to $32 billion of the overall $39.3 billion spent by government on procurement. So it is obvious that the Commonwealth government is a very big consumer of Australian manufactured goods.

We also need to remember that we operate in a global marketplace and that we are signatory to a number of international agreements with provisions relating to procurement. The international procurement framework under which the Australian government has agreed to operate has certain requirements relating to fairness of trade—in both directions. Failure on our part to meet these international obligations could entail significant risks for Australian exporters.

As you well know, Mr Acting Deputy President Sterle, from our work in the Rural and Regional Affairs and Transport Committee meetings, there is constantly debate on the issue of protection versus free trade. I know we discuss it, more often than not, from the biosecurity perspective. I think you and are as one in that we believe that biosecurity should trump free trade every time. We can justify that on the basis that a biosecurity incursion would destroy the industry.

But the reality for Australian manufacturing, production, trade, primary producers and, as Senator Madigan points out, mining is that it is a two-way thing. If we start putting up barriers to trade for imported products into Australia, we can almost immediately expect that we will have retaliations from those countries to which we export. The wisest words I heard recently in relation to the free trade space is that Australia will not get rich selling to itself; Australia is only going to get rich by selling to the rest of the world.

We need to undertake this debate today in the context of what is in the holistic best interests of Australia. I do have a level sympathy for the argument put forward by my colleagues Senator Xenophon and Senator Madigan. We have a very emotional connection to our flag. But I think the most important thing that we can do for Australia and Australians is make sure we have a strong and vibrant economy. I fundamentally believe that the way we will have a strong and vibrant economy in Australia is by creating export opportunities.

The cold, hard reality is that, with the size of our country and the things that we do so well being agriculture, mining and advanced technologies, we can only survive in that space by exporting. Our population is way too small not to. Resources, particularly water, prevent us from having populations like that of the United States, Europe and Asia, and we do not want to end up with all the issues that come with expanded populations. We are by our very nature an exporting nation. All that putting up potential barriers that are not able to be justified by biosecurity would serve to do is put at risk the millions and billions of dollars that we receive from our trading partners.

I am not able to support the idea that we should be forcing people to buy Australian in the same way that I do not believe we should be artificially propping up industries in Australia, because propping them up does have the potential to weaken them. The fact that Australia's procurement framework is nondiscriminatory is well supported by the argument that as an exporting nation we have no choice whatsoever but to accept that the net result has to be what we are looking at, not necessarily picking off bits and pieces along the way because of emotional attachment.

Before I conclude, I would like to put on the record the fantastic opportunities that the new free trade agreements that have been signed with Japan and South Korea provide for Australia, particularly my home state and the home state of Senator Xenophon, South Australia. We are a state that have not been doing quite so well in recent times. I am not even sure that we are not below Tasmania on some of the economic indicators. We are doing it pretty tough at the moment in South Australia. We have an economy that has largely been dependent on agricultural exports and mining exports. These have not been faring so well, particularly because of the barriers to trade with certain trading nations. The opportunities are huge if we can get rid of these barriers.

I draw your attention to an example. The gross tariff for Australian wine into China at the moment is 43 per cent and yet one of our competitors coming out of South America, Chile, have already established a free trade agreement with China which means that they can send their wine in with no tariff whatsoever. The minute we put a pallet of wine on a ship to send to China we are already 43 per cent behind Chile, who have a number of advantages over Australia because their costs of production are very low in comparison to ours. But because we make great wine and are very efficient wine producers we remain an aspirational wine-producing country, particularly when it comes to exporting into Asia. If we could get rid of that 43 per cent barrier to our wine the opportunity for Australia and particularly for my home state of South Australia would be huge.

The agreements we have in place with Japan and South Korea have started. We are seeing a sliding scale of tariff reduction for our horticultural products into both of those markets. I also note, once again, that Japan is currently the largest export market for citrus from Australia. It has overtaken the USA as our biggest trading partner in the citrus space. But the opportunities for us to go into China are absolutely massive.

You will be well aware, Acting Deputy President Sterle, that one of the barriers that has prevented us from exporting into China is our fruit fly situation. Certainly investing in eradicating fruit fly in Australia would provide us with one of the most massive opportunities for our horticultural industry in China. I for one am certainly looking forward to seeing the progression of other trade arrangements around the world because I fear that, unless South Australia can get some increased market access into these countries, our economy will be in a very perilous state.

I say that in the context of the bill that has been put forward by Senators Xenophon and Madigan. I know that it is a very small component of trade arrangements for Australia to request that flags that are flown by the Commonwealth be supplied and manufactured in Australia. But I think we need to realise the bigger picture and the consequences if we ever had a situation, as small as it might be, with one of our big trading partners saying, 'Hang on a minute, we are not going to remove a trade restriction or barrier to Australia simply because you have done this.'

Wherever possible it would be fantastic to be able to purchase our Australian flags from Australian manufacturers, and I am sure many of us seek to do so. But if that one decision, or another decision of a similar size, prevented the furtherance of trade arrangements or gave one of our trading partners an excuse to actually apply some trade restrictions to Australia, that could have absolutely devastating effects for Australia. There is no doubt that I am absolute advocate for free trade, because I believe it is in the best interests of Australia.

I would respectfully suggest to those who are putting this forward that the best thing and most productive thing that we can do to look after the people who Senator Madigan was so passionately advocating on behalf of—those from Western Sydney, those working in Australian manufacturing—is to make sure that we have a robust economy that that is growing and prospering. Whilst I am sure others in the chamber will not necessarily agree with the way that this side of the chamber is proposing to achieve that robust economic growth and to look after our economy, I think we all have to agree that the best thing for Australia is an economy that is growing, so that we are a prosperous nation and that we maintain the economic powerhouse that this country can and should be into the future.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Acting Deputy President Stephens, can I just indicate to you publicly that I want to thank you for all your time in the chair that you have had over the years. You have conducted yourself extremely well as a senator over many years. This is may be one of the last times that you are in the chair. On behalf of myself, could I add to the very good views that were taken of your contribution to this place over many years. Thank you very much for the work that you have done.

If I could come to the bill: I thought Senator Ruston started off pretty well in her contribution, but it rapidly deteriorated towards the end of her contribution. Twenty minutes is a long contribution, Senator Ruston. You valiantly battled your way through the 20 minutes, but I think some of your conclusions at the end of the 20 minutes go to the issues I think that Senator Madigan, Senator Xenophon and many on this side would absolutely oppose in terms of the advocacy that you are putting up.

Let me say that I understand the symbolism of having an Australian-made flag and I understand the symbolism of having crockery in the dining room that is Australian made, but these are symbols. What I had been doing personally—as the national secretary and also the assistant national secretary of the AMWU over many years—was to try and ensure that we were not about symbolism; we were about creating jobs in the manufacturing industry of this country. I think one I look back at my career, I will say that is one of the big failures of my career. That is because jobs in the manufacturing industry—in the textile, clothing and footwear industry and in the car industry—are all now disappearing. I think we will be a poorer country for it. Not being able to make an Australian-made car in this country and not being able to have the goods to produce the crockery or the flag will always be an issue.

One thing I do not agree with, Senator Ruston, is this apocalyptic view that if we actually say that we are going to make our flag in Australia and it is going to be an Australian-made flag, then there is going to be a catastrophic response from our trading partners and the issue of trade will become a huge international problem for Australia. That is patent nonsense. Let me tell you, we have big issues for the agricultural sector are not with what this bill would do; the big problem is the statements made by the Attorney-General in relation to the occupied territories in East Jerusalem. They are the big issues for us in trade at the moment, not what is happening if we make a flag in Australia. It is the ill-thought-through approach of the coalition and the ignorant approach of the coalition in trying to deal with the huge issue of Palestine and the effects that would have on our agriculture and farming community being able to continue exporting to many countries in the Middle East and elsewhere. That is the big problem, not whether this bill would have a cataclysmic response from the United States or anyone else in terms of our trade position.

Senator Xenophon describes our approach as being the free-trade Taliban. We are not quite the Taliban, but we are free-traders is of some ideological purity. We do seem to say in this country that we must set an example on trade, so we will unilaterally disarm our industries' capacity to procure within Australia, to service Australian industry. This is because of an ideological purity, more so on the coalition side. We heard it from Senator Ruston, who was lauding the so-called free trade agreements that the government has just signed. We have not got one free trade agreement in this country—and this is the issue. We talk about free trade but what we are negotiating are bilateral preferential trade agreements. This means it is an agreement between us, as a country, and another country, and we preference our goods between each other. They are not free trade agreements, and I have argued this within the Labor Party.

I have argued on the conference floor of the Labor Party that bilateral agreements will not work in the long term. If you want the benefits of so-called free trade, they have to be multilateral trade agreements and everyone has to be playing by the same rules. We are not playing by the same rules. I agree with Senator Madigan: there is no fairness in this free trade approach. These bilateral preferential trade agreements simply mean that you are dismantling some impediments to trade with an individual country. And there is another theory out there that I think is being seen in practice called displacement. When you do that, you simply displace another country from activating their trade with that country and, at best, you simply increase the trade between the two countries that sign the agreement, but trade diminishes in a third country. There are all of these arguments going on about trade.

I think it is proper that Senator Xenophon and Senator Madigan raise these issues. I have been raising these issues in the public arena in this country since, I think, 1998. I have been raising concerns about manufacturing jobs and the problems with the so-called free trade agenda in this country. In 1999, I was the only representative of a non-government organisation to attend the WTO in Seattle. I was the national secretary of the AMWU at the time, and I argued to my council that this was a big issue and that we had to understand what was happening in the rest of the world with WTO agreements and the implications they would have for manufacturing jobs. The Seattle WTO is renowned for the violence that took place in the streets there and the focus it placed on some of the smaller countries who felt that their individual economies were being opened up to big multinational, mainly agribusiness, companies coming in and demolishing some of the smaller agrarian economies that had been built within developing countries. They were not agreeing to just opening themselves up to the free trade approach that was being promoted. Ever since then, it has been almost impossible to get a proper approach on a multilateral trade agreement anywhere in the world, and that is because small countries are disadvantaged.

When I was in Seattle, the complaint being made by some of the small country representatives there was that they were coming to these multilateral agreements in Seattle, which were being held at the peak level of diplomatic and economic negotiations, and they did not have an economist, an adviser or anyone who could help them get a decent deal. One of the issues that has been made clear from trade negotiations is that the big country always has the power. The big country has the negotiating tools, the negotiating muscle, the negotiating competence to do over the smaller countries. In Seattle, the small countries said: 'We are not going to be in this anymore. We do not want agribusiness coming in here and demolishing our capacity to feed the country, to build our agricultural industries within our country, to the best that we possibly can.' It is 2014 and we are still running around signing crook so-called free trade deals with other countries and coming in here and lauding those agreements as being so fantastic that you just cannot walk away from them.

I know that Senator Xenophon wants to focus on the bill, but I think this bill is about symbolism. I think the bill is about opening up the broader debate on these issues, and I congratulate Senator Xenophon and Senator Madigan for doing that. As I said, I have been doing it since 1998 and maybe a bit before then, because we were concerned about it. I went back to a 2004 document that epitomises the issues that we are trying to deal with here. This 2004 document is from the Centre for International Economics, the CIE, who did the econometric modelling and the analysis for the AUSFTA—the Australia-US Free Trade Agreement. When you look at what is in this document, you think: what happened? This analysis was done just after the agreement was negotiated. They said, 'Here's our analysis on the basis of what this agreement says and what it is going to mean for Australia.' They stated:

A decade from now the most probable effect of the Agreement on Australia's real gross domestic product is an increase of $6.1 billion per year, or nearly 0.7 per cent above what it might otherwise be

Absolute rubbish—never happened, never likely to happen. Yet that is what the public was sold in 2003 and 2004 when the former Howard government was negotiating a US bilateral agreement. We could not even get sugar in at that time. We could not even get an agreement. We were the minnows up against the sharks and we were gobbled up in that agreement. The US manufacturing industry were calling it the manufacturing trade agreement, because they knew that the US manufacturing industry would make significant gains out of that US free trade agreement.

We were being told at the time, 'Look, you might lose a little bit here, but you will gain much elsewhere. One of the big issues that you will gain from is your capacity to access the US procurement program, one of the biggest procurement programs in the world. Once you get access to that procurement program, you watch your manufacturing industry take off. You watch all the benefits that you are going to get.' These were all modelled, with different types of models, and the modellers that were being paid by the department, by the government, were all saying, 'This is what's going to happen.' Well, it was all rubbish. All these years down the track, nearly 10 years down the track, it has not happened.

The CIE report said that this was 'the most probable effect'. 'The most probable effect' means that they did not really know. They thought it was a probability that this would happen. They talked about the usual caveats being put into the model. Those usual caveats are that if you put rubbish into the model, you will get rubbish out of the model. They went on to say in their report that we would be so well off under this agreement that there would be immediate benefits, but there would be immediate costs. Well, there were the immediate adjustment costs, as they are described, and jobs were lost. The US manufacturing industry actually gained jobs. We got negligible access to the US procurement program. I had been warned that this would happen. The Canadian Auto Workers union, who had a close relationship with the AMWU at the time, and still has—

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Of course!

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Of course we have a good relationship with workers around the world, Senator Macdonald—that is a good thing. Some of their experts had a look at the NAFTA agreement in the US. Their economists had analysed all the arguments that had been put forward for NAFTA to see the benefits that would apply in Canada. They concluded that it was just a con job; it was not going to happen. They told us that the Canadian manufacturing industry—which was on the doorstep of the United States—could not access the US procurement program. At the national secretary of the union, when I raised this with departmental officers in Australia and with the minister, I was told: 'You're wrong. It's all going to happen. It's going to be so good. It's going to be great agreement. It's going to lift everything in terms of economic activity in Australia.' Nine years down the track, we know that that is a crock. We know it has never ever happened.

The CIE analysis went on to say that there would be large gains in New South Wales and Victoria. The report stated:

The only significant limitation on the benefits of the Agreement flowing from the rules of origin—

I will not go into rules of origin here, because it is so complex that you would need 20 minutes to even touch the base—

is that it may preclude over 90 per cent of textile and wearing apparel products from Australia receiving preferential tariff treatment on entry into the US.

What we are trying to protect now is the textile and clothing industry. Back at the time of this 2004 agreement, even the government's analysis said that the textile and clothing area would not get any preferential treatment through this agreement with the US.

The CIE also went on to talk about the dollar and what the dollar would do. They were arguing that there would be benefits for Australia because of our relative lack of strength against the US dollar. It would help us export. But what happened in reality? Our dollar went through the roof. Every analysis that was made by CIE has been clearly proved to be wrong. It is not only me and other people saying that. Back in 2004, the New York Timesstated:

The deal with Australia is a huge setback in the process of liberalising global agricultural trade. …

The agreement since a chilling message to the rest of the world.

Even then New York Times thought it was a crock at the time.

A study undertaken by the IMF:

… found that a free-trade agreement with the United States would shrink the Australian economy by 0.03 per cent per year and increase the bilateral trade deficit.

So when I hear people like Senator Ruston come in here with all her good intent, it is quite clear that the arguments that are being put up a false; the arguments are wrong. I have argued this for many years. We have got a very comprehensive trade policy in the Labor Party. We take the view that there should be checks and balances, that you should not simply run in and do these deals that do not deliver for the Australian public, that do not deliver for agriculture, that do not deliver for manufacturing and that cost jobs. That is ideology, not the reality.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to follow Senator Cameron in any debate. This one is no different. We are talking about our relationships with other countries, and I should say to the chamber that you are all lucky that Senator Cameron and I are both here today taking part in this debate after last night's Scottish dinner, which was a wonderful success. I have to say to the chamber that I wronged Senator Cameron in a speech that I made yesterday when I was praising him and his predecessor, Senator George Campbell, as being Scottish-born Australians who have graced this chamber. My further research has suggested that Senator Campbell, whilst a great senator, was not actually Scottish-born but—heaven forbid—Irish-born! With that correction on the record, I want to turn—

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Of Scots' descent!

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Well, all from Gaelic origins, Senator, you are right. Talking about other countries brings me back to the subject of the debate before us this morning. I congratulate both Senator Xenophon and Senator Madigan for raising this issue. I know it is an issue they both feel very strongly about.

As well as that, I muse to myself—with no disrespect to Senator Xenophon—and understand why he does so well electorally in South Australia. This idea of having Australian flags only made in Australia is—I will not use the term 'populist', because that has connotations—one that most Australians would like to think happens. If you go around the streets and say, 'Here's an Australian flag that's made in another country. What do you think of that?' Most Australians would say, 'Isn't that awful.' I can understand that Senator Xenophon captures the spirit of what many of his electors in South Australia would say—and I think most would if that was the only question that was asked of them.

If you said to my sugarcane farmers or my cattle producers in northern Australia, 'Look, fellas, I know you sell most of your produce overseas, but the people we buy from overseas are going to put a ban on our cattle and sugar coming into their country because they want beef and sugar in their countries only to come from their own country.' Australia would lose the sugar and beef industries, if we were not able to export. So the whole issue, when you talk about trade matters, is not what Australia misses out on but what we achieve by the freest possible trade. I have even cane farmers coming to me saying, 'We should only be buying Australian tractors.' I say, 'Well, that's great, but who's going to buy your sugar? If we import our tractors from the United States, Japan, Korea or China, say, and we suddenly say to them, "Sorry, no more of your tractors, because we only want to buy Australian tractors." What are they going to say? They are going to turn around to us and say, "Well, thanks, fellas, we've enjoyed your sugar and meat, but, sorry, no longer are we going to take your sugar and meat, because we want to do what you're doing. We only want to buy things that are made in our own country."' That is a simplistic way of addressing the issue here.

We would all like to see a significant, vibrant Australian manufacturing industry, but we have to trade as a nation to exist. We will always grow more sugar and beef than we can ever consume. Unless we have the freest possible trade around the world, then our sugar and beef industries—and consequently most of northern Australia—would fold. The same applies to many of our agricultural products in Australia. We exist because we are able to trade. Unless we can trade, many of our primary industries would wither and die. That does not mean to say that we cannot have an Australian manufacturing industry that succeeds on its own merits, but the first thing we have to do to get a decent and profitable Australian manufacturing industry is to get off the Australian industry some of the imposts that Australian governments have put on our industry.

I sit here day after day in here with Senator Kim Carr, a former industry minister, complaining about industry leaving Australia. One of the greatest reasons for industry leaving Australia in the last few years is the impost put on our industries in Australia—in particular, the carbon tax, which has decimated Australian industry. The cost of power and energy—which, once upon a time, Australia had a very competitive advantage in—has been almost banned by the Labor Party and the Greens. One of the great competitive advantages Australia had was unlimited supplies of relatively cheap black coal, which gave Australia one of the cheapest forms of power and electricity in the world, and that cost of energy encouraged manufacturing in Australia. Since the Labor Party and the Greens got into the act, power has gone through the roof and Australian industries have been quite uncompetitive.

I am the first to say that we can never, or we never would want to, emulate the work practices and work relationships of a developing country like China, but, by the same token, we have to ensure that in Australia those working in manufacturing industries are productive in the purer sense of the world. Senator Abetz raised in question time yesterday some of the outrageous demands of the unions which just mean that Australia cannot compete. So let's not worry about trade barriers or protective tariffs or things like that; let's look at what is really impacting on the cost of Australian manufacture. That is what these debates really need to be about.

We should not be looking at buying flags from overseas. I know Australian manufacturers can produce a better product and, given the right economic settings, they could probably do it at a price that, taking freight into account, would be cheaper than anywhere else—but they are not given that opportunity because of the regulation that we have placed upon ourselves.

As came out in a debate I was involved in recently with the Minister for Finance, we do have high corporate rates of tax in Australia. We would all love to see corporate tax go down—you get more investment and more production that way—but we keep adding taxes to our corporate structure. We keep adding mining taxes, we keep adding carbon taxes, and it just prices Australia out of the market. Any first-year undergraduate economics student could tell you that you cannot keep imposing taxes on your own industries and expect them to compete with the world.

We have other significant exports from Australia that we need to find markets for elsewhere in the world. We are increasingly exporting medical health and technology. Indeed, we are exporting our people who work in education and health, and I am delighted to say that northern Australia is playing a big part in that. Northern Australia, as you know, is part of the tropic world—the circle around the globe between the Tropic of Cancer and the Tropic of Capricorn—which contains about 60 per cent of the world's population. We are one of the few sophisticated, developed countries in that tropic zone, and because of that we have a huge amount of expertise of the tropical world there to share with that huge mass of people in the tropic zone around the world. We also know that by 2030 there will be some three billion middle-class people living in that tropic zone. They will all want better food, better education and better health in a safe and secure environment. Of course, Australia, with expertise in that tropical living, tropical health, tropical architecture and tropical agriculture, can export our skills to the world, but to do that we have to have the freest possible trade. That is what makes Australia, and will make Australia into the future, the best place in the world for exporting the things we produce well. So we have to try and achieve the freest and fairest possible deals in trade.

I congratulate the Minister for Trade and Investment, Mr Robb, on the wonderful work he has done with the Japanese and Korean free trade agreements, and I see in the newspapers speculation that we may have a free trade agreement with China by the end of the year. I know the previous government laboured for the previous six years to try and get these agreements underway but never seemed to get anywhere. Fortunately, with the Abbott government and a minister of great capability and great energy on the job, within nine months we have achieved what had not been able to be achieved previously. I am the first to concede that we did not get absolutely everything we wanted—it was the same with the USA free trade agreement, which the Howard government negotiated. As Senator Cameron mentioned, as people from the sugar areas of the north we were not all that happy with the deal with the United States on sugar. Whilst there are some improvements with the Japanese free trade agreement on sugar, it is not anywhere near what we hoped and would have liked to expect, but I understand, when you are negotiating with another country, you can only agree on what you can get. In some other areas as well it was not as good as we would have liked, but across the board the new agreements with Japan and Korea in particular are a wonderful opportunity for Australian primary producers and manufacturers to increase their trade exposure to countries with whom we have always had very close personal relationships and good trade relationships, and the completion of those free trade agreements will mean that we now have even better trade arrangements.

As I say, it is always great to go around the country as I recall Pauline Hanson used to, saying, 'We should buy everything that is Australian made.' Yes, that is a great idea. It wins a lot of political support—until you start thinking of what the consequences of that are, until you ask what will happen to our sugar industry if imports are stopped from countries that we currently import goods from. What will those countries say when it comes to purchasing sugar?

They do not have to buy it from Australia even though, I might say, Australian sugar is the best and best presented of any in the world, and I would challenge anyone to correct me on that. We know it is the best, but it is not the only one. There are other sugars. There are many other countries around the world selling sugar. If we offend—'offend' in a trade sense—the people who are currently buying our sugar, they can easily look elsewhere.

It is similar with beef cattle, another huge industry in the north of Australia. The American free trade agreement was not all we wanted on beef cattle, but it was a start. As it goes further forward, as each year passes, it gets better. It is similar with the beef element of the trade with Japan and Korea. We did not immediately get all we would have loved to have but it is a start, and as each year goes by it will get better and better for Australia. Indeed, the arrangements we have with both of those countries in relation to the export of our beef are as good as if not better than those of any other beef supplier around the world.

So that is good news for that industry. But, as I say, you cannot expect these other countries to willingly accept our products if we are putting bans on the products that they make and want to export to us. It is a very complex argument. I have listened to the comments of both Senator Xenophon and Senator Madigan. I know their passion for this approach. I might say it is not a new approach. Both of them have been talking about these things for all of the time that they have been in the Senate. Much as I and every other Australian like the idea of what is being proposed, I think the reality of a harsh world, an unforgiving world, is such that it is mutual trade—bilateral trade, trade that has advantages to both parties involved—that we have to be seeking to achieve when we look at these issues.

I do not think I can take that much further. Much as I appreciate the sentiment behind the bill put forward, I think it is wrong. It is not one that I could support at the present time. I repeat: I do that not because I am particularly offside with the argument in relation to flags but because I understand the impact it will have on so many other Australian industries if we start curtailing trade, the way we can buy and sell different goods.

My colleagues in this debate have all gone through the issues of procurement, fairness and value for the Australian taxpayer's dollar. I would not want to repeat those arguments, which have all been put forward well already. But I think, as I say, we have to be very careful when looking at these things to make sure we do not make a tiny step forward in one area to the huge detriment of other parts of Australia that rely on the fairest and freest of trade.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Senator Marshall, you have until 11.52, when the debate will be interrupted.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I would have liked longer, but I understand I might be in continuation at some point in the future. But I do welcome the introduction of this bill by Senator Xenophon and Senator Madigan. I welcome the fact that they immediately expanded the debate to one around trade in general. I think that is very important.

In particular, Senator Xenophon talked about the Thai free trade agreement. It is a matter that we have had some personal discussions about. It is also an agreement that I was involved in at the time, when I was fairly new in the Senate. The Australian Labor Party took a position to oppose that agreement. It went through parliament anyway. This was under the Howard government.

It was quite concerning to us that such an agreement would be entered into by a government. When you started to look at the detail of the Thai free trade agreement in particular, it effectively opened our markets completely, without restriction, to Thailand, yet most of the provisions of access to the Thai market would not kick in for 30 or so years. They still have not kicked in. It was only done a decade ago and most of the provisions for access for Australians into Thailand still are not there yet. The thought of doing an agreement where benefits to the Australian economy would not happen in any meaningful way for a 30-year period, giving Thailand a 30-year head start, to me was just inexcusable.

I think it is partly to do with this notion of free trade. Whoever thought of calling them 'free trade agreements' was very clever, because it is quite seductive in many ways. Who doesn't want something for nothing? That is what it gives the appearance of giving us when we talk about free trade. But of course free trade agreements are anything but free. There is a significant cost to our economy every time we enter into a free trade agreement.

I acknowledge Senator Macdonald, who did not refer to these free trade agreements as 'free trade'; he talked about the freest possible trade being achieved through these, because they are not free trade agreements at all. The closest thing to a free trade agreement anywhere in the world is in fact the Closer Economic Relations agreement that this country has with New Zealand. That would be the only agreement anywhere that would really come under the heading of anything close to being a free trade agreement. All the others are in fact discriminatory by nature, because, when we enter into a set of arrangements with a single country, by nature of that we discriminate against other countries that we do not have such agreements with.

I have long been of the view that, if we want to get free trade throughout the world, the best approach is to do multilateral agreements. That is where the significant economic benefits to this country will be gained. I am disappointed that we spend far too much time trying to negotiate what I think are discriminatory so-called free trade agreements bilaterally instead of putting much more effort into a multilateral round of discussions. Senator Macdonald also acknowledged that these are complex matters, and I accept that. They are very complex matters and they are very difficult. We are a trading nation and trading is incredibly important to us.

Let us come back to the free trade agreement with Thailand. After that agreement was reached, as of about now as I understand it, there has been a 287 per cent increase in Thai exports into Australia. Over that same period of time Australian exports to Thailand have fallen by 25 per cent. Who could argue to me that that agreement was in the best interests of Australia? I find that incredibly disappointing. Roughly around the same time we also negotiated a free trade agreement with the United States of America. Senator Macdonald has acknowledged that we did not get all that we wanted in that agreement either. After a lot of consideration the Australian Labor Party opposed that agreement too. We opposed it because we thought it was not in our best interests. It was not in our economic interests as a nation. Strangely enough the argument used by the then government, who are now back in government, was that we were anti-American. They actually wrapped themselves in the Australian flag, which is the subject of this particular bill, to say that we were anti-American in opposing that agreement. Of course, they were potentially wrapping themselves in an Australian flag that was not made in Australia, unlike in the US where, if they were wrapping themselves in a US flag, it would be made in the US. The US have exemptions from the same free trade agreement that we entered into with them where they mandate that they can make their flags in the US, but the same agreement, for whatever reason and interpretation, means that we cannot do the same. I think that that is particularly disappointing.

We know that in the US agreement, which is supposedly a free trade agreement, there are several conditions put on it by the American congress. They have amendments, and Senator Xenophon referred to the Berry Amendment and to the Buy American Act. These, as we understand, are allowed under the free trade agreement. We slavishly apply the black-letter law to our interpretation of the same agreement whereas the Americans interpret it quite differently. The Americans also have the Jones Act where shipbuilding is absolutely protected in the United States. We are unable to do that it seems, yet it is the same free trade agreement, and one would assume that it is the same set of rules that apply to everybody. We as a nation, as Senator Xenophon said, seem to slavishly apply the black-letter law of free trade at any cost without actually understanding the concept of best price or best value. Best price and best value are often two very different things. When we talk about best value we must talk about the value-adding and the best value for our economy, which does not always necessarily translate to the best price.

According to research published by the Industry Capability Network in 2008, every $1 million of new or retained manufacturing business in Australia contributes $339,900 in tax revenue. It generates domestic value addition of $985,000, saves $95,000 in welfare payments and creates 10 full-time jobs. If you add all that up, that $1 million retained manufacturing investment in this country adds up to much more than $1 million in value to the Australian economy. That is value. If we buy Australian products we get better value even if the price is higher. I do not think you have to be a Rhodes Scholar to understand what is best for the Australian economy in these terms.

I understand the need for trade in general, but there are provisions in all of these agreements to protect small- and medium-sized enterprises. We simply do not seem to apply those rules or use those rules to this country's advantage. I do not know why. I do not know why we have to pretend, alone in the whole of the world, to be so purist about these issues. Why do we have to be the only ones who have to be so pure about these issues when many other countries put non-tariff barriers as obstacles to our trade? Thailand is a classic example. We do not do it to them, but they do it to us, and we simply say, 'That's okay.' Well, I do not think it is okay; I think it is incredibly disappointing. I think we should do much more work and make much more effort. As I said earlier, I do not support entering into bilateral agreements in this matter, as I would much rather have multilateral agreements, but we have entered into them and then we do not use those agreements to our advantage. The misunderstanding of price versus value is a fundamental flaw in the way we approach trade in this country.

I personally try, whenever I can, to buy Australian. I personally look for the Australian Made label. I do it with my suits and other clothing, and sometimes with clothing it is incredibly difficult to find anything made in Australia, but I do so because it is great quality and it is still at a competitive price. It is, maybe, not the cheapest you could purchase, but it is still a competitive price. If everyone simply did that you would make an enormous boost to the textile and clothing industry in this country, which still employs many, many people. The more trade agreements we enter into where our nation's economic interest is not put first, the more pressure there is on all of those industries, particularly manufacturing.

We saw a massive influx of vehicles coming into our country with the Thai free trade agreement, but there were non-trade barriers, as Senator Xenophon took us through, on our vehicles going to Thailand. Then we saw a government particularly disinterested in the manufacturing industry in this country, daring Toyota to leave. Of course, given that dare, they actually accepted that challenge by the government and walked away, as have Holden. I find it incredibly disappointing. I think there is much merit in what Senator Xenophon and Senator Madigan have said. I look forward at some point in this debate—

John Hogg (President) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired.