Neither A Mine Nor A Beach; Services Are Our Big Trade-off

The Age

Thursday February 1, 2007

WARREN TRUSS

Labor is in the process of playing catch-up politics on trade, writes Warren Truss.

LABOR'S new trade spokesman, Simon Crean, claimed in The Age ("Resources boom disguises dismal growth in exports", 20/1) that had Australia's trade performance under Labor continued, we would today have a trade surplus of $14 billion rather than a deficit.

Using the same illogical extrapolations as Crean, I could argue that if Labor had not lost the 1996 election, government debt would today be nudging $1 trillion - not zero, as it is under the Coalition Government.

If Labor had governed for the past 11 years, government fuel excise would now top 80? a litre and pump prices would easily exceed $1.50 a litre. But this is playing with numbers in a way that would make any student of economics blanch.

Crean could have used recent very positive figures to talk about Australia's trade performances, but he reaches back to pluck figures from certain periods to make his sham case.

For example, Crean says that exports are detracting from overall growth. They are not. Exports rose by 16 per cent in the first five months of 2006-07 compared with the same period in the preceding financial year. Exports of manufactures increased at roughly the same rate as resources, blunting one of Labor's key claims.

Overall, our exports in the 12 months to November were at record levels, comfortably exceeding $200 billion.

Crean also fails to mention some pertinent reasons why our trading performance has not been even better: the drought, a high currency, slow global growth earlier this decade, the economic impact of the September 11 terrorist attacks, SARS, the rundown in state government infrastructure and performance.

In recent weeks, Crean and his leader, Kevin Rudd, have been saying that Australia can no longer be just "a mine or a beach". This is catch-up politics - the Australian Government has long championed a diversified economy and, in fact, services currently make up 80 per cent of the economy.

On the trade negotiation front, Labor has hopelessly confused itself in recent months. Everyone accepts that the Doha Round of the World Trade Organisation trade liberalisation talks is the critical forum to make trade fairer and freer - not just for Australia but for the world.

When those discussions broke down in July last year - primarily because the US and Europe could not agree on reducing tariffs and other unfair barriers to trade in agriculture - the Australian Government knuckled down to the task of finding new proposals and getting talks started again. Australia was the first country to put something new and substantial on the table with our "five and five" proposal.

What did Labor do last July when the talks collapsed? Rudd was Opposition trade spokesman at the time, and his first words were that Doha was "as dead as a dodo".

By January, Rudd had changed tack and was saying 100 per cent of our resources should be devoted to reviving Doha. Crean took a different view, saying we needed to be working on an Asia Pacific Economic Co-operation free trade area. He was slapped down by Rudd for his trouble.

Then we read of the extraordinary new proposal by Labor's industry spokesman, Kim Carr, to impose a special tariff of up to 25 per cent on foreign companies bidding for tenders through the Federal Government's $30 billion a year procurement market.

Carr's idea is a recipe for disaster. International suppliers would stop competing for government tenders and, no doubt, Australia would be denied access to their markets in turn. Australian manufacturing competitiveness would deteriorate, forcing up costs to the Government and requiring higher taxes. Such a proposal would be completely at odds with Australia's efforts to revive Doha and could see other countries imposing trading sanctions on us through WTO dispute processes.

Where do free trade "champions" like Rudd and Crean stand on Carr's proposal? Does Labor support Doha or a retreat to Fortress Australia? If Doha fails, what would Labor actually do when its leader is cold on the idea of free trade agreements with individual countries? FTAs can be useful as building blocks for multilateral trade reform.

Improving the position of Australia's exporters are and have always been a high priority for the Liberal-National Government. We will continue to negotiate hard to deliver real commercial outcomes for Australian exporters. Labor has no coherent position of its own.

Warren Truss is the National Party member for Wide Bay and is the federal Minister for Trade.

© 2007 The Age

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