Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 - Second Reading


 

Senator SESELJA(Australian Capital Territory) (10:42): Before I speak in support of the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, which I am very pleased to do, I will briefly respond to some of Senator Whish-Wilson's commentary. I take his comment that 'free trade deals are about spin' as almost summing up the Greens policy towards free trade, towards this free trade agreement and towards other free trade agreements. I think it is an interesting analysis. We heard Senator Whish-Wilson saying, 'There are winners and losers in these deals and one cancels out the other.' He did not of course acknowledge the great enabling potential of free trade to grow the world economy and to grow the Australian economy, as we have seen over decades. In fact over hundreds of years we have seen the prosperity of trading nations rise.

 

 

There seems to be this narrow focus where he suggests that it is almost a zero-sum game—that we give up a little bit and we gain a little bit and really nothing changes. But that ignores the realities of history and ignores how positive free trade and trade between nations has been. Given that the founder of the Greens talked about one-world government, you would think that they would be a little more open to relations with other countries and to trade with other countries. We should be supporting that trade. I think what Senator Whish-Wilson said represents a very small view of the world, when analysis shows that this is a historic agreement.

 

I am pleased to support these bills and to support the China-Australia Free Trade Agreement. These are landmark bills. I think that we should acknowledge the great work of Andrew Robb, on behalf of the Australian people and the Australian government, to get this deal done. We should acknowledge his hard work in helping bring about something which, I think, will have great positive effects for many decades on the Australian economy and our regional economy. I think that this free trade agreement sets us up for a future of prosperity. It opens up investment and gives Australian businesses the chance to break free of red tape and unnecessary restrictions on trade with one of our most significant trading partners. The two-way investments we have conducted over the years play to our strengths, and they are often complementary to our trading relationship.

 

Before I get into some of the key numbers, I want to take a step back and look at what this means for our relationship with China. We all know how much we rely on China buying our mineral resources. There is no doubt about that, and that will continue to be an important factor in our economy for many, many years to come. As we see other nations, such as India, growing, their increased demands will see those types of relationships emerging there as well. But as China moves away from the production phase of its economy into a greater consumption phase in its economy with a growing middle class, the demand for services and demand for high-end goods will be greater and greater—and this is what this agreement fundamentally does.

 

A massive Chinese middle class demanding the kinds of things that many of us in the West have been fortunate enough to experience for a long time, will present opportunities for not just high-end agriculture, food and other areas but also a wide variety of services exports—and that is the game changer here. We will continue to export minerals and resources, but services are something that Australia does very well. They are under-represented in our exports but, with a growing middle class who are demanding those services, these kinds of free trade agreements place Australia in a fantastic position. If you want to diversify our economy and move away from, perhaps, an over-reliance on mineral exports, this is one way to do it: by growing our services sector and our services exports. That is fundamentally what this deal represents.

 

When you look at Australia-China trade you see total exports of $107.5 billion, total imports of $52.1 billion—total two-way trade of $159.6 billion, which is a 23.8 per cent share of Australia's total trade. A quarter of our trade is in our relationship with China. The top five exports to China are: iron ore and concentrates, $57 billion; coal, $9.3 billion; gold, $8.1 billion; interestingly, education related travel services, $4.1 billion; and copper, $2.1 billion. The top five imports from China are: clothing, $5.1 billion; telecommunications equipment and parts, $4.9 billion; computers, $4.8 billion; furniture, mattresses and cushions, $2.2 billion; prams, toys, games and sporting goods, $1.8 billion.

 

The Australia-China investment scenario: Australia's investment stock in China is $29.6 billion. China was the 12th largest destination for Australian investment abroad in 2013—and, of course, this will grow. China's investment in Australia is $31.9 billion. China was the eighth largest source of investment in Australia in 2013. That is an important point to pause on. We have historically relied on foreign capital. As a low population, large-land-mass economy, we have needed a lot of foreign capital to help grow our economy and exploit our resources, and Chinese investment is an important part of that mix.

 

ChAFTA will unlock significant opportunities for Australia. China is Australia's largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment. Tariffs of up to 19 per cent on all dairy products, like infant formula, liquid milk and manufactured products, will be phased out completely. Tariffs of up to 25 per cent on beef and lamb will also be progressively eliminated. All vegetable, fruit and nut tariffs will be eliminated. Wine tariffs ranging from 14 to 30 per cent will also be phased out over four years. Australia's tourism sector is set to benefit from ChAFTA through encouraging investment in Australia, making it easier for Chinese students to study in Australia. A work-and-holiday arrangement concluded alongside ChAFTA will allow 5,000 Chinese work-and-holiday-makers into Australia annually, increasing demand for tourism services and supporting the development of the sector.

 

Importantly, these benefits flow both ways. As we invite investment, we will also have the opportunity to export into China without unnecessary red tape holding up the process and without unnecessary costs. As we see tariffs come down, there will be benefits for consumers as well. There are benefits for producers. There are benefits for jobs and for people seeking employment in Australia. But, of course, as we have seen with other free trade agreements that are being concluded we see benefits for consumers, and surely that is something we should be in the business of promoting.

 

Earlier this year I had the great pleasure of participating in a seminar with small business owners from the Canberra region to discuss and learn about the historic free trade agreements the coalition government has delivered in the last two years. Around 130 interested small business owners attended the event, which was hosted by the then Minister for Small Business, Bruce Billson. The economy of Canberra and the local region thrives on the success of these businesses, and that seminar helped create some additional tailwind for those businesses who are considering international markets. Those of you in this place who come from the far-flung corners of Australia may not realise just what a vibrant small business sector we have here in Canberra and in our region. We have wineries and gourmet food, tourism, retail as well as a strong focus on education, finance and other service industries. The China free trade agreement benefits all of these industries.

 

In particular, it is easy to look at the billions of dollars of value in our trade with China and think this is just the realm of big businesses. It is not. This is an agreement for small businesses and medium businesses as well. This is an agreement that helps small businesses enter new markets. They can look beyond our shores and find new buyers and new investments. When small businesses take these opportunities, build wealth and grow, everyone benefits. Trade promotes growth and raises incomes, gives consumers and business greater choice, makes products cheaper and encourages innovation. These agreements extend the open trading environment in which traders and investors operate. They make exporting a more attractive prospect by guaranteeing new levels of access to these markets. This is the case whether you are large or small, whether you have 10 or 10,000 staff.

 

As I was hearing the arguments put forward by the honourable Senator Whish-Wilson in relation to this, I cast my mind back to some of the great debates we have had in relation to free trade in the past. You cast your mind back to those arguing against abolishing tariffs or reducing tariffs. There is always a strong argument. There is always an argument you can make to say someone might be worse off. Would anyone want to go back? Would anyone want to go back to Australia being behind the tariff wall? Is anyone seriously arguing that that would be a better place for us to be as a nation? I certainly would not support that, I do not think many in this place would, and I do not think many in the community would, because they have seen the benefits. That high level of protectionism that we saw led to inefficient industries and it led to high costs for consumers. Both sides of politics have seen reductions in that tariff wall. I am always reminded of that when I hear some of the relatively small-minded criticisms of this free trade agreement and of free trade more broadly. Those arguments were made loud and clear during the 1980s and 1990s as we were seeing these kinds of reforms, but is anyone seriously going to come into this place and argue we should go back, that we should go and construct a tariff wall again?

 

During that small business seminar, one of the small business owners I had the pleasure of meeting was Michael Tear of WildBear Entertainment. WildBear are a great example of a modern, innovative 21st century small business taking advantage of globalised technology and, importantly, ready to reap the benefits of the China free trade agreement. WildBear is a factual entertainment company working in television, theatre, corporate, educational and government communications. WildBear was formed after the merger of two Australian production companies, WildFury and Bearcage.

 

Michael is a Canberra local who built Bearcage into a formidable production house producing award-winning television and commercial productions. His credits include Building Australia on the History Channel, The Digger, which won the Gold Dolphin at the Cannes film and television awards, as well as a number of other TV documentaries. With all of this success, Michael has been able to expand his productions, working with networks in the USA, the UK, Germany, France, Sweden and, importantly in relation to this bill, China. Michael produced a six-part documentary called The Story of Australia for Chinese TV in 2012. It earnt an audience of over 21 million people and was praised by President Xi, who cited it as an example of the close relations between China and Australia.

 

Michael told me that China's media market is, unsurprisingly, highly regulated and complex. He said it took his company a long time to navigate and understand how the media environment worked. Simplifying the regulations for travel, visas and business transactions will make this work a lot easier for WildBear's future productions. While there will always be intellectual property laws of two different countries to navigate, breaking down some of the barriers will create more opportunities not just for companies like WildBear but for so many others in the service and innovation sectors who will have the opportunity to thrive. It is important to remember that small businesses that are adaptable and innovative will have greater chances to grow under this agreement.

 

As many here would know, one of the Canberra region's key overseas export markets is the wine industry. We have a sensational wine industry, with around 30 wineries operating in and around the ACT. Many of these wineries have produced world-class, award-winning wines. Over the next four years, through the China free trade agreement, we will see the 14 to 20 per cent tariffs on wine progressively removed. This will give our world-class wineries even more opportunities to break into the booming Chinese wine market. More broadly, rural Australia will benefit from not only the removal of wine tariffs but also the progressive removal of tariffs on beef, sheep meat and wool. Each of these products carry tariffs ranging from 12 to 25 per cent. Over the next eight to nine years we will see the end of these tariffs and we will also see the removal of horticulture tariffs. Already our agriculture is moving into the Chinese market and creating more and more wealth, something that will, as a result of this agreement, only continue.

 

Having touched on some of those agricultural exports, I come back to the services industry—financial, legal, education and aged-care services. Australia is world class in these areas. This agreement is a major breakthrough and will provide the opportunity to export those high-class services to what will be the world's biggest economy and certainly the world's biggest middle class, who will increasingly have an appetite for our services and our high-quality goods.

 

We are pleased that we now have bipartisan support for this agreement. That is important. It is important, notwithstanding the contribution from the Greens, who are still singing from the union song sheet on this, that we have seen some progress from the Labor Party. We hope that that will continue. We hope that they will distance themselves from some of the union scare campaigns in relation to this free trade agreement. That will be an important test of leadership. We are pleased that they have come on board and that we have been able to negotiate a deal. I think it is a good thing. It is good to get agreement on such major issues between the two major parties of government. That is very important for confidence and for a range of other things. We are pleased with that. But the union scare campaign is dishonest and should be condemned, because it is painting a misleading picture of what this agreement means. We know that before federal Labor came on board there was support from Labor figures from across the board, including premiers like Daniel Andrews and Jay Weatherill, former Prime Minister Bob Hawke, former foreign minister Bob Carr, former leader Simon Crean, Martin Ferguson, former Premier John Brumby, former Premier Peter Beattie—there has been a chorus of voices on both sides of politics for this agreement. So it is important that we call out the scare campaigns for what they are. They are dishonest. This agreement has been thoughtfully and carefully negotiated over many years. It has been done with two fundamental goals in mind: to grow trade between our two nations whilst protecting Australia's vital interests. Andrew Robb has balanced that very well. He has done that in a way that is absolutely in the national interest.

 

In conclusion, this is an agreement we should be very proud of. It has been a long time coming. These agreements are not easy. I would again like to congratulate Andrew Robb and all those in the government who have been responsible for negotiating this deal. We cannot close ourselves off from the world. We cannot pretend that the world economy is not always evolving, and we need to respond to that. One of the ways we respond is by making sure that we break down some of the artificial barriers that nations put up between themselves that stifle trade.

 

There are always those who will say that any change is going to be negative and that we should argue against it, but we heard those same arguments put forward when we saw the debate about opening up Australia to the world and about lowering the tariff wall. Whilst the Greens might want to go back there, I do not want to go back there and I do not think the Australian people want to go back there. The Australian people do not want to go back to the 1970s, when we had an uncompetitive economy. We tried to close ourselves off from the world. We raised the barriers. We forced low- and middle-income earners to pay far more than they had to for goods because of a closed shop. It was not good for the economy, it was not good for consumers and, in the end, it was not good for workers—except for a select few who were being subsidised by everyone else. Those are the facts of the matter.

 

Senator McKim interjecting

 

Senator SESELJA:We are hearing this argument—and we are even getting it in interjections—from the Greens, who would like to take us back there. We disagree with that. We reject that. I hear Senator McKim, and he is saying, 'If we have free trade we don't have sovereignty. We are not protecting our sovereignty.'

 

Senator McKim:That is not what I said. I said we want to keep our sovereignty.

 

The ACTING DEPUTY PRESIDENT (Senator Sterle): Order! Senator McKim, I ask that you give Senator Seselja the opportunity to complete his remarks in silence.

 

Senator SESELJA:The same arguments that were made by those who are anti-free trade in the seventies and eighties are now being made by the Greens and the union movement in relation to this free trade agreement. Those arguments were false then and they are false now. They ignore the outstanding benefits—

 

Senator Heffernan:Mr Acting Deputy President, I rise on a point of order. I want to absolutely clarify something here. In the light of free trade agreements and international tax arrangements, there is a real risk of sovereignty being—

 

The ACTING DEPUTY PRESIDENT: What is your point of order, Senator?

 

Senator Heffernan:I am not going to let someone get away with bullshit.

 

The ACTING DEPUTY PRESIDENT: Thank you, Senator Heffernan. I will take that as a statement.

 

Senator SESELJA:I should have included Senator Heffernan with the Greens on this particular point.

 

Senator Heffernan:I will kill him in the detail stage, because has not got any detail.

 

The ACTING DEPUTY PRESIDENT: Senator Heffernan, order.

 

Senator SESELJA:I do not think that was a point of order, Mr Acting Deputy President.

 

The ACTING DEPUTY PRESIDENT: There is no point of order, but I did rule it as a statement.

 

Senator SESELJA:On this particular point, I lump Senator Heffernan and the Greens together. It ignores the reality of what free trade has achieved for the Australian economy and for the world economy over decades and centuries, and I therefore commend these bills to the Senate.