Topics: Business SA modelling, Free Trade Agreement with Indonesia.

Transcript, E&OE

18 October 2019

David Penberthy: Australia’s previously struck free trade agreements with Hong Kong, Indonesia and Peru. They’re on the cusp of now coming into effect. There’s a political debate going on about, inside the Labor Party and the Labor movement, about whether the Labor Party federally should have supported these particular agreements. The unions have come out particularly strongly criticising them. The Labor Party will see them through. These things are going to come into effect.

Now, we think the far more interesting side of it is what the economic impacts will be for South Australian businesses. Business SA has released a modelling saying there’ll be $1 billion worth of benefit year on year for exporters in South Australia by the end of the decade. The Trade Minister, Simon Birmingham, is a South Australian Senator and a Liberal MP and joins us on the line now. Minister, good morning to you.

Simon Birmingham: G’day guys. It’s great to be with you.

David Penberthy: Does that measure up with your calculations? About a billion dollars year on year for South Australian exporters?

Simon Birmingham: Well look, they’re Business SA figures but there are huge opportunities in Indonesia because [inaudible]…

Will Goodings: We’ve got a dud line there Minister.

David Penberthy: We don’t have a good line, we might try and just get you back in just a moment because the phone line is dropping out there. Maybe, being a Trade Minister, we don’t actually know where he is.

Will Goodings: No.

David Penberthy: He could be overseas somewhere, brokering another deal.

Will Goodings: If it’s anything like the agreements that were struck with other Asian countries though, the scope of this, the opportunities that arise from this are only limited by your imagination. You look at- one really interesting little pointer to this I thought was Chinese New Year earlier this year in Gouger Street. Half of the street was taken up with signs in Mandarin and English from local wineries.

David Penberthy: Well you just look at the development that happens when you go to the Hills, Mclaren Vale, Barossa Valley — all brand new cellar doors and huge investments being made. It’s a really clear cut sign of the benefit of these sorts of deals. So Minister, you were just saying your figures are independent obviously of what Business SA have released. Do they- is there some sort of- do they measure up at all?

Simon Birmingham: Well we still see huge opportunity in Indonesia, it is growing at around 5 per cent per annum as an economy, they’ve got ambition to lift that to 7 per cent and it is forecast to be one of the top few economies in the world in the years to come, and of course it’s right on our doorstep. So yes, we think that what we’ve negotiated here for our farmers and our small businesses is absolutely going to give them access to a high growth trajectory over the next few years.

David Penberthy: One of the great things that’s happened in Indonesia since the Suharto era is the growth, the exponential growth of the Indonesian middle class, in a country with a population of about 280 million, there’s people that have lifted themselves out of poverty. A lot of their dining habits changed and when you look at the — a lot of the products that are listed that are locally made, that’s for farmers and for people at the Beerenberg Factory and so on; that’s where a lot of the opportunities are going to come with that sort of stuff, aren’t they Birmo?

Simon Birmingham: Absolutely. So you think about the trajectory, we’ve seen China over the last few years with hundreds of millions of people coming out of poverty and from that their taste lifts and they spend more on different consumer goods and particularly on high quality safe foods. And that’s why Australia is able to provide in spades; high quality safe foods. And under the Indonesian agreement, we’ve got better access for citrus products; so cracking news for the Riverland region in SA in terms of new opportunities there. For red meat, so companies like Thomas Foods, it’s a huge opportunity for them and other great SA companies and for our grain growers, 500,000 tonnes of tariff-free access able to get into the Indonesian market.

And what we’ve seen through the deals with Japan, Korea, China, is that Australia is now in a position where each and every month consistently, we’re exporting more than we’re importing. We’ve turned around our trade deficit into a trade surplus and these deals with Indonesia will hopefully keep that trend going into the future.

David Penberthy: I think the economics of free trade agreements are clear that they do provide a broad economic benefit. But one of the criticisms always is that while the benefits are national, the costs are often regional and it’s interesting looking at this through a South Australian lens as we look at some of the objections that the union has to this suite of free trade agreements where, you know, we’ve just had unemployment figures out yesterday. They point to the fact that there’ll be an expansion in the number of temporary workers now that come into Australia. We here in South Australia having debate about the merits of privatising the rail services. The union concerned that this in fact will encourage further privatisation in Australia. Those two specific concerns, can you address them? Are they founded?

Simon Birmingham: I can address them quite clearly. There’s nothing in these agreements that drives privatisation or that requires governments to privatise; they are decisions entirely of governments to be made themselves and they are certainly not forced or required by these trade agreements. In terms of workers, the one thing that we’ve done is we’ve said that there can be more working holidaymakers from Indonesia into Australia.

Now, these are the same as the type of trips that young Australians take to work overseas. It is defined and limited to young people. So you have to be under 30 to get one of these working holidaymaker visas; you can only be in Australia for a short period of time and there are strong incentives that steer people towards working more in the seasonal sectors of agriculture and tourism and that’s where we see the vast bulk of those jobs taken up.

So this is just about recognising that as many of us would think of the old working holidaymaker pilgrimage between Australia and the UK over the years, that now happens in a more diverse range of countries but there’s certainly not ongoing permanent jobs and there’s certainly not open slather; it’s a very limited number of under 30-year-olds able to sort of travel the country. And overwhelmingly, all the analysis says they spend every dollar that they earn plus what they bring here.

David Penberthy: Minister, speaking of deal making, the UK has struck a new deal with European Union for- over Brexit. Do you think it’s a good deal? Do you think it will get through? And how quickly can we get an agreement with the UK then on a free trade deal?

Simon Birmingham: Well it’s a- there’s certainly amazing times we keep seeing in the UK as you can’t predict what will happen from one day to the next and this is an opportunity to provide stability and certainty through to the end of next year while future trade arrangements between the UK and Europe and the UK and the rest of the world are negotiated. So if it can get through the Parliament and that’s a matter for their system to work out, then we will work as hard as we can to ensure that by the time Brexit is essentially formalised with the UK leaving the EU Customs Union at the end of next year as it would be, we’ll be working hard to try and get in place trade agreements for Australia with the EU and the UK separately that would come into place as soon as possible thereafter.

David Penberthy: Trade Minister and Liberal Senator for SA Simon Birmingham, thank you for joining us this morning.

Simon Birmingham: Thanks so much guys.