Wednesday, 7 October 2020
Statements by Senators
Last night the government handed down its budget, a budget which rains down money on Australia like a summer monsoon. Where did the money come from? It is going to be printed in Australia on the Reserve Bank printing presses. Many people will welcome the short-term financial assistance, but it will be a short-term benefit unless Australia becomes more productive. If we flood the country with billions in cash, printed here in Australia, without at the same time improving productivity, the Australian dollar will depreciate against other currencies. A less valuable Australian dollar means overseas goods will be more expensive, including medicines made overseas.
The government has talked about making essential goods in Australia, but there was little in the budget about how it would achieve this goal. I was disappointed there were no nation-building projects on the scale of the Snowy Hydro scheme, because the lack of water is limiting the growth of our primary industries and good jobs for Australians, particularly in regional Queensland and regional Australia. There was no money for a coal-fired power station in Queensland to lower electricity prices. In short, the budget was silent on how Australia will deliver globally competitive water and electricity prices, which are essential for a revival of manufacturing in Australia. Manufacturing jobs are important because they are better paid, tend to be full time and have a productivity factor of 1.6, which means that every job generates 0.6 of another job.
With money flowing like champagne from a shaken bottle, the government hopes that somehow Australian business will lead us to an economic recovery. Australian businesses need relief from unfair competition—from foreign companies that pay little or no tax in Australia. Many Australians would be unaware that rail freight companies are competing directly with foreign owned ships, and they are losing the fight. Time-sensitive freight is carried by road and rail, but the non-time-sensitive freight is now being carried by foreign ships. These foreign ships take jobs from Australians and pay a pitiful amount of tax. They do pay port charges—which end up as profits for the foreign owners of ports. This is called cabotage.
The Australian company SCT Logistics provides 1,500 Australians with jobs driving trains, loading containers and managing the arrival and pick-up of the freight. These jobs are now endangered because the government is deaf to the impact of cabotage—moving goods from port to port in Australia, employing foreign crew and paying little or no tax. Some members of the government may be aware of the impact of the go-slow at Australian ports, with containers not moving anywhere and businesses being badly affected. Many of these ports are foreign owned, including the Brisbane and Melbourne ports. How is the government going to stop price gouging by these foreign owned ports once freight increases on the taxpayer funded inland rail line proposed between Melbourne and Brisbane ports? If the government allows foreign shipping to drive rail companies out of business then that freight will be driven to foreign owned Australian ports.
The National Party has in the past two weeks circulated a discussion paper to encourage foreign shipping, to the horror of the rail industry. During the height of the COVID pandemic foreign ships stopped coming to Australia, and rail freight increased dramatically. What is the government's plan if there are no rail businesses to move the freight in and out of the ports?
I will now turn to the government's heavily marketed, gas led economic strategy. In the budget just $52.9 million is set aside to help unlock Australia's vast onshore gas reserves. We don't need any more gas. We have enough gas off the west coast of Australia for a thousand years, and we are currently exporting it to competitors in China, Japan and South Korea. The problem is that this gas is in the hands of foreign gas giants, who export the gas on long-term contracts. The Australian owned and listed Woodside offered to provide chilled gas to the east coast a while ago. It would have required the building of a $250 million regassing plant in each state, but the government did not take up that offer, because it wants to buy jobs at huge expense through fracking in Queensland. So here we are getting none of our gas from the west coast, where it's cheap. Instead, our west coast gas is earning a handful of foreign owned companies $50 billion a year through exports to our competitors. Exporting Australian gas is highly profitable for these foreign companies because they do not pay for the gas, nor do they pay income tax on the profits made from selling the gas. Government policy means we do not benefit from our west coast gas reserves but reward the foreign owned gas companies with $325 billion in tax credits. It is a stupid policy. The government needs to explain why Australia is the only large gas exporter in the world where the domestic price is higher than the international price.
Foreign investment in our oil and gas has made economic indicators like exports and GDP look good, but foreign ownership of our west coast gas reserves has done next to nothing for jobs, wages or corporate income tax collection. The Reserve Bank told me that if Australians want to benefit from trillions of dollars of natural gas off the coast of Western Australia they need to get a job in the sector or buy shares in oil and gas giants with names like Chevron, ExxonMobil, Shell, BP and ConocoPhillips.
What stops the government changing the law so that Australians benefit from the vast reserves of natural gas in Commonwealth waters off the coast of Western Australia? It is the fear of arbitration in foreign tribunals under provisions in free trade agreements, known as investor state dispute settlement provisions, or ISDS provisions. These fears are justified, because in 2011 Philip Morris took the government to a foreign tribunal claiming compensation in connection with the tobacco plain-packaging laws. The Productivity Commission told the government to avoid ISDS provisions because they give foreign investors greater rights than those enjoyed by Australian investors, but the government rejected the advice, accepting ISDS provisions in the Trans-Pacific Partnership, or TPP-11. New Zealand is a signatory to TPP-11, but it avoided ISDS provisions through side letters. Australia could have done the same—again, stupid.
In 2018, One Nation voted against the enabling legislation for TPP-11, but our votes made no difference because Labor voted with the government. Instead of fixing weak laws, the government finds itself pinned to the ground by multinationals whose knees are pressed on the government's neck. In this position of weakness, the government has decided not to take on the west coast gas cartel but has instead proposed a gas led strategy based on new gas production in Queensland. This strategy involves the government encouraging fracking of the gas on prime agricultural land; guaranteeing new production through 'take or pay' multiyear contracts; and lumping east coast gas users with high prices.
The government must stop picking winners and subsidising electricity generation—first solar, then wind and now gas. Government should get out of the way and let these market players compete against each other so we get the lowest electricity prices. Government interference in the markets always ends badly. In this case, it has left Australia with globally uncompetitive energy prices which will kill off the manufacturing strategy and jobs throughout the economy. If the government persists with guaranteeing the gas industry in Queensland then we are doomed to high gas prices and lower living standards. With gas demand falling since 2014, it is inevitable under multiyear 'take or pay' contracts that the taxpayers of the future will pay for gas which is not needed, just as the Northern Territory pays for gas it does not need from the Blacktip project.
Essential services like water, gas, electricity and telecommunications should be in the government's hands, because it is clear that the government is a hopeless regulator. The government must provide a level playing field if Australian businesses are to have a chance of growing the economy and providing prosperity to Australia. Being timid will not get us there.
We must reform the foreign investment regime if Australia is to remain free to determine its own future. As I've said, there was nothing in the budget to actually encourage Australian industries and manufacturing. We are competing on a world stage, and our free trade agreements are destroying, and have destroyed, our industries and manufacturing. It's a shame that the government, with COVID-19, got out there and said we need to change our industries and manufacturing productivity here in Australia but they showed nothing of it in the budget.