Topics: Major trade deal with China and 14 other nations, child care subsidy.
Laura Jayes: Meantime, there are fresh hopes of a renewed relationship with China after Australia signed a major trade pact following eight years of negotiations. Joining me now is the Trade Minister, Simon Birmingham. Thanks for your time, Minister. What exactly does this change with our trading relationship with China?
Simon Birmingham: Good morning, Laura. So this new agreement involves 15 nations – nine of those are Australia’s- amongst Australia’s top 10 trading partners, and of course that includes China – so China and Australia have both signed on to this agreement. At the centre of this agreement are the ten South East Asian nations, the ASEAN nations, as a bloc. And they’re incredibly crucial to us, and see huge potential growth in those markets.
With China, look, this agreement underpins and sits alongside, if you like, our existing agreement. It provides improvements in market access for a number of our services industries, and hopefully over time it also provides another pillar or basis for discussion and dialogue. It’s not a silver bullet to the current troubles, what we need there is for China to cease some of regulatory interventions that they’ve been undertaking during the course of this year, and to be willing to have dialogue about how can we directly solve those particular issues.
Laura Jayes: Of the 15 nations- 14 nations – Australia making up the 15th – we already have trade deals with all of the nations involved. So, what is this all about? Is this about really diversifying Australia’s customer base in order to stand up to China, which your colleague, [indistinct] described as a bully?
Simon Birmingham: So this deal will provide benefits on two real fronts. One is that it provides for our goods exporters a common set of rules, so you’re not having to essentially swap between different trade agreements to be able to get tariff access into different markets, you can use the one agreement with some commonality across it, whether you’re exporting to the Philippines, to Singapore, to Japan, or to China.
The other is for our services sectors where we do see real gains for aged care and health services, architectural or engineering services, professional and financial services – the range of sectors who are going to have real type of opportunities that our goods exporters have enjoyed in recent years to do more business in these sort of markets, to get growth from them. And what we know from the trade deals we’ve done is they have provided huge benefit with Australian exporters recording a trade surplus for some 33 consecutive months now, exporting more than we import as a nation.
Laura Jayes: Minister, I appreciate your optimism, but is it fair to say- well, do you appreciate that perhaps we might be a bit skeptical. We see these free trade deals from time to time, but China simply doesn’t play by the rules. Under your government the big China free trade deal was lauded – that also took 10 years to negotiate. But we’ve seen, in recent months, sanction after sanction on different Australian imports. Why do you have faith that China will play by the rules? It seems it never has.
Simon Birmingham: Look, the recent decisions this year are deeply troubling, and we’ve reserved all our rights to appeal them through the World Trade Organization and to absolutely defend …
Laura Jayes: But isn’t the damage already done?
Simon Birmingham: … all of Australia’s interests. But importantly, Laura, well also many of the benefits of trade are already, and still being, harvested and gained. Our trade deals we’ve done haven’t just been with China, they’ve been with Japan and Korea, with Vietnam, with Canada, with Indonesia, with Mexico. And can I tell you that we’ve seen strong growth in Australian exports, not just to China, but into many of those other markets like Japan, Korea, Vietnam.
So we do have to recognise, these deals are delivering benefits. We can’t control exactly what another country does, and we would wish that China weren’t undertaking the types of actions that it’s doing right now. And we are urging dialogue with them, but we’re also reserving our rights to pursue legal avenues. But the deals themselves have provided, and continue to provide, real benefits that have driven Australian exports to record levels.
Laura Jayes: So has China breached those free trade rules under the agreement?
Simon Birmingham: We certainly think that China has, in relation to things like the anti-dumping duties placed on Australian barley, breached its commitments, and that is why we have used all of the appeal processes available to us in the Chinese system and are now consulting with the Australian industry about the next steps involving a potential WTO appeal and challenge. And we will monitor all of the other areas of trade disruption to see what avenues and recourse is available to Australia.
Our policy on China has been a firm and a consistent one. We want to have a continued, mutually beneficial relationship, including in areas of economic cooperation – we’re willing to talk and have that dialogue. But nor are we equally going to compromise on Australian values and Australian interests, as I’m sure your viewers wouldn’t expect us to.
Laura Jayes: You say you’re willing to talk, but when is the last time you spoke to your counterpart in China?
Simon Birmingham: Too long ago, but that’s not for an unwillingness from my perspective, Laura. The ball is very much in China’s court. We have made it clear-
Laura Jayes: But what happens here, Minister? Do you make contact- you know, attempts to contact, and your phone calls are just simply blocked? Or are they- do you get any kind of response? Or is it just like a beeping truck on the other end of the phone line?
Simon Birmingham: So, we’ve made request by a number of means – I’ve written; our ambassador in Beijing has approached officials in Beijing; our officials in Australia have approached China’s Ambassador in Canberra. These are the usual sorts of processes for how you would ordinarily set up these types of calls, and it is not a reflection on the Australian government in terms of our willingness – we are very willing to do so. Ultimately, that’s a matter for China, and the ball is very much in their court.
Laura Jayes: Okay. Well, just finally, should child care be tax deductible? This is something that some of your colleagues are pushing for within the Party.
Simon Birmingham: Look, the Productivity Commission had a close look at how we reformed the child care system a few years ago, and we implemented reforms in keeping with their findings and recommendations, which did analyse the option of tax deductibility. The problem with tax deductibility is that it provides the greatest financial support to those who are earning the most, because in our tax system the people earning the most pay the greatest level of tax.
What we designed and implemented was a system that provides the greatest hours of subsidised care to those who are working the longest hours, but the greatest degree of financial support, the greatest rate of subsidy to those who are earning the least so that we have the fairest possible system for people to be able to access child care. I have no doubt that, as its implementation is only a couple of years old and it’s been disrupted this year by the pandemic, there will be reviews of that in years to come to make sure that it is built upon and operates as effectively as it can.
Laura Jayes: So you’re willing to entertain the idea?
Simon Birmingham: Look I think the problem, as I said, with tax deductibility is that it provides the greatest financial benefit to those who are earning the most. And in terms of being able to pay and afford child care, what we’ve designed is a system that gives instead, that greater support to people who are earning the least, working hard nonetheless, working long hours nonetheless. But what we’ve designed is a system where they pay very small amounts for, for their child care, and it’s important that we don’t lose that, that for those low income and middle income families.
Laura Jayes: Alright. Minister, thank you so much for your time.
Simon Birmingham: Thanks, Laura. My pleasure.