Topics: New Support for Exporters; Free Trade Agreements; Trade Negotiations with The UK & EU; Australia Made Logo; Mathias Cormann.
03/07/20
09:18AM
Matthew Pantelis: Good news if you’re a producer in South Australia if you’re coming up with some of the great food and drink and everything else that we produce here on the land or offshore as well, with fishing lobster, et cetera. The Federal Government looking to boost the economy during this pandemic by creating some extra flights to help the export market. A lot of the food we produce, in fact, I think we grow something like – and maybe my next guest, the Trade Minister, will have this answer at his fingertips – but I reckon we grow something like three times the amount of food we need in Australia. And so a lot of it goes off for export, which is certainly good news for those producers. It helps keep them viable and the dollars ticking around.
But Senator Simon Birmingham, Federal Trade Minister, good morning to you, Simon.
Simon Birmingham: Great to be with you again.
Matthew Pantelis: Now this- how will this work? What are you doing here – are you just paying for flights essentially?
Simon Birmingham: Well we’re underwriting elements across the cost of flights. More than 90 per cent of Australia’s airfreight usually leaves the country in the belly of the cargo hold, the passenger aircraft. But as listeners would all well appreciate at present, we don’t have any international passenger aircraft flying or hardly any out of the country. That’s left our exporters in a real crisis point, and so we stepped in to provide some short-term support with this freight mechanism, where Austrade, our Federal Government agency, is working to essentially contract airlines and freight coordinators to aggregate up enough freight to make sure that it’s viable to run the air service. We’re underwriting some of the costs of those air services – not giving exporters a free ride. They’re paying their usual freight costs plus a premium, but we want to make sure it’s still viable for them and we’ve now committed to do this right through the rest of this year, with some $240 million of support to make sure that $3 billion worth of exports can get out of the country.
Matthew Pantelis: Do we need new trade deals to allow that to happen at the current time, or is it sort of business as usual with what we would normally export?
Simon Birmingham: I mean, this is business as usual as you can make. You don’t need new trade deals to access the markets. Although something that’s really exciting for our exporters is that we have a new trade deal on Sunday that commences with Indonesia. This is something that Australian governments have worked towards, dreamt about, talked about for decades and finally now, got to the point where it is going to come into reality on Sunday. Which is going to give much better access to our farmers and our exporters in the Indonesia market – 260 million people, where they won’t face the same degree of taxes or tariffs or the like. 500,000 tonnes of our grain that can head there, tax free, in the first year and this is just big, big opportunities, and as you rightly said, we grow in Australia enough food for more than 70 million people, so around three times our population. So, it’s so crucial that we have these effective export strategies.
Matthew Pantelis: Well that’s really good news with Indonesia because it comes, as I see, China has also, along with barley a few weeks ago, a couple of months ago now, has now increased the tariff on beef from four to 12 per cent, which is not the best news for our beef producers. I mean, it’s not a terrible amount but it’s still not good. Does that fly in the face of the agreements we have with them?
Simon Birmingham: Look, the decision that China made on barley is one we’ve been highly critical of and I don’t think that was based on sound evidence. What’s happened with beef though, was that under China-Australia Free Trade Agreement, we get a certain volume of tonnes – I think, off the top of my head, it’s around 180,000 tonnes but I stand to be corrected there – each year, that we can send in at the low tariff rate. Then, once we hit that volume, it then reverts to a higher tariff rate. What’s happened this year, which is actually a sign of just how resilient our exporters are given all the challenges of COVID-19 and how in demand our quality produce is, is that we actually hit that tonnage cap with China at a much earlier point than we had in the preceding year. So in 2018, we hit it around about December, so pretty much it lasted the whole year. In 2019, we hit it in August and here we are in 2020 hitting it around the June, July mark. In a sense, it’s good news. Yes, it does mean that a higher tariff or tax applies to beef going into China for the rest of this calendar year, but it shows that we’ve been selling more, faster, through the year to date.
Matthew Pantelis: How far advanced are we with trade talks with the UK now that they’re no longer in the British- or in the EU?
Simon Birmingham: We launched our trade negotiations officially last month and just this week, our negotiators have been having their first intensive session, obviously doing it virtually online, with their UK counterparts, and we’re working to try to secure that deal as quickly as we can. We’re also negotiating to try to get a new trade agreement with the European Union, which is incredibly important for us as well. But we see big opportunities in the UK now that they have a separate trade policy, even if you just take our winemakers, for example, it’s so important to our state of South Australia. One in five bottles of wine sold in the UK is already Australian wine, but it faces a tax or tariff that Spanish or Italian or French winemakers don’t face. So a key part of our trade negotiation there is to try to get that tax on Australian wine eliminated, hopefully ensuring that the many South Australian winemakers who operate in the UK will be able to sell their product in the future without that tax applying, making them either more profitable or more price-competitive.
Matthew Pantelis: When you think of everything we do here – I mean, you mentioned wine for instance and obviously grain and vegetables, lobsters, seafood, all the- the whole gamut across the board of South Australia. When we fire off again, when the world recovers to whatever extent normality returns, we would be, you would think, so primed to capitalise, wouldn’t you? I mean, where we’re placed and with what we have, we should be rocking it?
Simon Birmingham: Australia is a country where our reputation for safety, for quality, for reliability has always served us in good stead, but we come out of this crisis with that even more enhanced. So, if you’re anywhere across the world, but particularly in our region, and you’re looking for high quality, safe, reliable premium food produce, you can’t look past Australia.
Just yesterday I was up in the Adelaide Hills at Eastbrook Farm, a Brussels sprouts grower and producer here. Today they’ve got around 20 per cent of their production and they are producing many millions of Brussels sprouts each year – but 20 per cent of that is now heading out of Australia into our region, generating export dollars for our country. They’ve got new interest in markets like Vietnam, they were telling me yesterday which is seeing strong growth, and again, where one of our recent trade deals, the Trans-Pacific Partnership, gets us better access into Vietnam than we’ve had before.
All of this is adding up, because I think it’d surprised many listeners to know that for the last 29 months in a row, Australia has exported more than we’ve imported. So we’re now routinely running trade surpluses as a country, and that’s the result of the type of deals that our Government’s been able to strike and the hard work and quality of our farmers and exporters.
Matthew Pantelis: The only thing you’ll have to do though, Minister, is keep the kangaroo as the logo and not the new logo. Have you changed your mind since our chat on Wednesday about that, given the opposition that this thing has?
Simon Birmingham: Again, I want to reassure everybody, the Australian Made kangaroo logo on Australian produce and goods is here to stay. It’s not going anywhere at all. There are different environments where a splash of wattle will be being used in different ways, but I assure people, won’t look anything like COVID. We’ve heard some of the concerns, feedback, and I’ve made sure that those in Austrade will act on that.
But, as I said to you earlier in the week, and we’ve been reinforcing time and time again, it’s never been the intention to replace the Australian Made kangaroo; it has its place as that stamp on those sorts of goods and produce that leave the country. But for other types of marketing purposes for our universities and for our technology sector, for our researchers, our defence industry, they sometimes need to present a different look, and so we’re giving them the tools to do that. But if it’s the tourism industry, if it’s Australian produce, it’s still going to have a kangaroo proud and front and centre.
Matthew Pantelis: Well, Glenn Cooper was very diplomatic as the Chair of Australian Made yesterday, he- I think he, you know, he knows how to play that game. Rob Gerard didn’t hold back though as the patron; he’s very disappointed in you.
Simon Birmingham: Well, I think Rob should listen to the facts there. The fact is, the Australian Made logo is getting $5 million of extra support from the Morrison Government, for its promotion, and that’s how committed we are to making sure we keep using that, keep promoting that. Glenn Cooper, as Chair of the Australian Made campaign, was part of the business committee that came up with the wattle as an approach which is actually replacing, not the kangaroo, but instead some other logo that I guarantee most listeners – that comes with a slogan – Australia Unlimited, that most other listeners would have never seen or heard of. So, no change to the kangaroo, give that guarantee to reassure Rob or anybody else of that. Glenn was part of the process that came up with the alternate approach that won’t be replacing the roo in any way.
Matthew Pantelis: Just finally, while I have you, as you’d probably be aware by now, Fin Review published an article this morning, we had Phil Coorey on Breakfast today talking about Mathias Cormann looking set to leave the Parliament after the budget comes down. As Deputy Leader, I would imagine that would be a career move for you in an upwards direction in the Senate?
Simon Birmingham: Oh look, I’ve been around politics long enough to know that reshuffle speculation is something the media likes to engage in. But we all serve, at the gift of the Prime Minister, and I can assure everybody that Mathias is 100 per cent focused on his job right now as Finance Minister, facing the most challenging peacetime economic and budgetary circumstances we’ve ever seen. And as we’ve just been discussing, I’ve got plenty on my plate as Trade Minister that’s got me focused 100 per cent on my current job too.
Matthew Pantelis: Simon Birmingham, thank you for your time this morning.
Simon Birmingham: Thank you Matthew, my pleasure.
Matthew Pantelis: That is South Australian Senator Simon Birmingham, also the Minister for Trade, Tourism and Investment, and currently the Deputy Leader of the Government in the Senate.