• Transcript, E&OE
Topics: Australian manufacturing, trading relationship with China; state border restrictions; domestic airlines.
02 June 2020

Jenna Clarke: Joining me on the line this morning is the Federal Trade and Tourism Minister Simon Birmingham, calling in from not so sunny Adelaide this morning. I guess we have a lot in common with Adelaide over here in Perth.

Minister, thank you so very much for joining us. I guess first cab off the rank when it comes to things like trade and what I’ve been hearing from a lot of people, why don’t we make our own stuff here in Australia?

Simon Birmingham: Well Jenna, we do make a lot of things in Australia, but we also make a lot more than we need. It may be a surprise to many people to know that for the last 27 months, Australia has exported more than we import. We’re a country that sends goods, and products, and services out to the world and we now routinely record trade surpluses. But we don’t make everything. However, when you look at the experience of this pandemic in these troubled times, we’ve seen that we do still have some amazing advanced manufacturers who have been able to pivot on a dime in many ways. That those who were making gin started making hand sanitiser. Those who were making fast food wrappers started making facemasks, and were able to scale up manufacturing of respirators and things as well. So I actually think that across all sectors of the Australian economy, we have many different assets and strengths and we’ve demonstrated that even in those areas that we talk ourselves down a bit like advanced manufacturing, we actually have some highly capable businesses that have shown just how they can help in these times of need.

Jenna Clarke: Yeah. That is a great point, but I guess there’s a lot of talk now that people want to see big manufacturing to almost kickstart new industries. Are we going to see cars rolling off the production line and things like that, because I think we’re used to seeing, specifically here in WA, iron ore is a massive economic booster for us, it’s our main source of revenue, so I guess we’re not going to see figures like that for a number of years. But what do we need to be doing? What can the government be doing to ensure that we are working on new industry now?

Simon Birmingham: So our industry policy is all about making sure that Australian business can be as competitive as possible and that it’s attractive to invest in growing new businesses. If you’re going to have successful advanced manufacturing sectors, they need reliable energy, affordable energy, and so making sure that we have the energy roadmap that involves making gas affordable and available right across the country, supporting renewables but ensuring that’s done in a way that keeps affordability and reliability in the energy mix is crucial. And the work the Prime Minister’s now announced as part of the JobMaker program to invest more in reforming and delivering skills training and in getting unions and employers to the table to look at how we can make our industrial relations systems more competitive. They’re are all things that go to making businesses operate in a more competitive environment, that makes it more conducive to investment. That means whatever type of industry it is, but particularly those that might be heavier industries, might be more labor intensive, you’ve got an environment where it can stand up again. Now I don’t- I don’t think we’ll be seeing cars rolling off the production line in Australia again soon, we’re a country that where consumers have chosen to buy a whole range of different cars. We have the most diversified car fleet in the world, and we had that while we were still making cars in Australia. But what we can always be aspiring to do is to have even more manufacturing of components in Australia, which does happen. We are still making components for cars, that then get shipped to Thailand and to other countries into their production lines.

Jenna Clarke: What I find really fascinating is around now there is this rhetoric that is probably coming out, and this is only anecdotally, but a lot of people are saying we need to buy Australian first and things like that. And that’s all well and good, but when you can go and buy an Australian-made T-shirt for $50, as opposed to a $3 made t-shirt from Kmart, what would the impetus be? What can- is there any Government assistance that can help in terms of like driving down the cost of locally produced goods and services like that?

Simon Birmingham: Well this is where I think we need to be mindful of the fact that we’re a trading nation that benefits greatly from exporting, and we shouldn’t be aspiring to a view that absolutely everything should be made here because if every other country took that approach, that would of course see our exports crash. And as a country that produces more than three times the amount of food that we need, we want to make sure that those agricultural goods can get to the export markets. But I do want to make sure in those areas that we value add where we can, so that we’re not just sending carcasses of meat, but if we can, we’re sending premium cuts of meat that have already been packaged and branded in Australia and carry that seal of Australian quality and approval. Indeed, I know some manufacturers are taking the next step to actually do prepackaged meals made here in Australia and then exported to other markets around the world. That’s actually taking an agricultural product in cattle or sheep and pushing it right through the value chain then into a manufacturing process and actually getting a final product that’s got all of that value add to it. And that’s where I think we can really drive the competitive advantage of Australia to further lift our exports, to further grow jobs. Not thinking that we’re going to necessarily compete in making cheap T-shirts.

Jenna Clarke: Yeah, sure. I guess barley has been and barley tariffs have been on the minds of many Australians for the past couple of weeks. What is the Federal Government doing for Australian farmers?

Simon Birmingham: So we are working hard with our barley producers in particular to firstly continue to defend their integrity. They are not people who go out and dump their product on global markets at cheap prices. They’re not subsidised by government. They are producers who happen to be amongst the world’s most productive and efficient and that’s why they can ship large volumes around the world of high quality barley, competitively priced but without subsidy. And so in this dispute with China, we will look at all of the avenues of appeal both within the Chinese system and through the World Trade Organization. But while we’re doing that, we’re also working to see where else we can try to help Australian barley producers find alternative markets. China is a big market, but it’s not the only market. Western Australian barley to Japan more than doubled last year, up some 122 per cent to more than $180 billion of exports of barley heading to Japan. And it’s that type of growth in other markets that we now need to seize while we try to rectify this issue of the anti-dumping claim made by China.

Jenna Clarke: Have you heard from your Chinese trade counterpart? Because a couple of weeks ago, the calls were going unanswered. What’s the update there?

Simon Birmingham: Disappointingly, no. We’ve continued to reinforce publicly and privately that we would appreciate a discussion about these matters, and that from the Australian Government perspective, if there are difficult discussions to be had, we’ll always front up and we’ll have them. And we’ll have them in a respectful, engaging way. We may not always agree with all of our international partners, but we’re always happy to have the discussion with them and it’s unfortunate that this type of stance has been taken.

Jenna Clarke: Is that continual? You know, are there daily calls being put in? Is there someone on this job trying to get China to pick up the phone daily?

Simon Birmingham: Well, we have people working daily on the China relationship. I wouldn’t say that we’re going into the embassy or China’s commerce ministry every day pleading for a phone call. China knows that we would like to have a ministerial level discussion. But, in the interim, we get on with everything else. I work closely with the industry sectors, the farming sector in the case of barley. Other industry sectors and with our department and our diplomats, including those in Beijing and making sure that we’re having engagement at the other levels of the Chinese system, that we’re putting forward the strongest possible case to defend our industries. And we continue to see vast significant trade flows; between Australia and China, that are mutually beneficial to our both our countries. China’s growth and progress has been fueled by things like WA’s iron ore and indeed, now, a much more urbanised and much wealthier population than China was decades ago, which is a success that we celebrate and applaud. Also now looks to Australian produce and Australian food as a source of safe high-quality protein and nutrients, that is important to their community too.

Jenna Clarke: I guess- this issue has become so inflamed. I mean, you just have to look on social media to some of the comments and it’s sort of spiraling a little bit out of control. What exactly is the Australian Government’s issue with China?

Simon Birmingham: So, we see China as an important partner in the region. We have a comprehensive strategic partnership agreement in place that enables cooperation between Australia and China in a range of ways. But China is also now well and truly a major world power. Once again, it’s a country that has had issues, that we’ve had disagreements of policy position over for some period of time, issues in relation to human rights matters, our concern to make sure that there is full respect for matters of sovereignty, across the region, including issues around ensuring that there is a successful outcome. Ultimately, in relation to matters in the South China Sea; these are all important factors to ensure that we have regional stability, regional peace, to go alongside regional prosperity. And that’s why we work with countries right across the region in our engagement with China and with each other to try to ensure that.

Jenna Clarke: If the issue is that China can be a bit of a bully. Looking at the scenes coming out of the US right now, and obviously the US is a very big trade partner of ours, surely, is that an issue for us dealing with the US moving forward, and in particular, a US run by Donald Trump?

Simon Birmingham: So, the United States is our largest investment partner, just as China is our largest trade partner and that shows the mix of relationships that Australia has. It’s also not surprising though; they are the number one and two largest economies in the world and we should always just keep that scale in mind, when people suggest that that we’re too engaged with one or the other. Most countries of the world will have the United States and or China at the top of their investment and or trade relationship, just because of the scale and size of those two economies. The US is clearly going through very troubled times right now in relation to this violence that we’re seeing and the ongoing concerns in relation to racial tensions. And it should make us all very grateful for the fact that we are Australians, living in Australia and it’s a reminder that we are not the same as any one other country in the world. We have our own values, our own approaches. We form strong alliances, like we have with the US. We seek strong partnerships, like we have with China, and we seek to work with all being true to our values being firm in the defense of the policy interests of Australia. But then, always seeking to engage in a respectful way with our partners.

Jenna Clarke: I guess the one thing that we need to focus on is that trade relationships take a long time, and specifically, very lucrative ones take a long time to build. There’s been a lot of focus on India and Indonesia for the past couple of weeks. Where else are we seeking to invest in Australian exports moving forward?

Simon Birmingham: So, what our government has sought to do over the last six years, is really steadily open up opportunities for Australian businesses. And we’ve done that in large part, through our negotiation of free trade agreements that give Australian exporters preferential access into the markets, where we do free trade agreements. They get to land their products, their goods, their services in those markets, without facing as many taxes, tariffs or other barriers to trade. And so, our FTA is not only with China; but also with the other major north Asian economies, and Japan and the Republic of Korea have been very important to that. So too has the finalisation of the Trans-Pacific Partnership, which gave us new market access terms into countries, like Vietnam, in our region who have very high growth prospects and are seeing really exceptional returns in their economy, and a number of Australian businesses investing in growing the export relationship there and also in growing some of their activities and their investments within Vietnam. The Trans-Pacific Partnership also gave us our first ever trade agreement with Canada, with Mexico, and on 5 July, we’re happily going to see our agreement with Indonesia enter into force. And that has been talked about by Australian Government for many, many years, to get that type of breakthrough and we’ve done it. And it’s about to happen and this huge population right on Australia’s doorstep, is now going to be more open to our business engagement. But, crucially, you can’t always do it through a free trade agreement, and with India, we’ve outlined a comprehensive India economic strategy. And the second last overseas trip that I made as Trade Minister before the travel restrictions came into place was to India, taking a delegation in February of this year of more than 100 Australian business people who are pursuing a range of different economic opportunities with India. And we take that market very seriously and working comprehensively to try to grow that, which will be on show later this week when Prime Minister Morrison and Prime Minister Modi sit down with one another. Virtually, I should say.

Jenna Clarke: Yeah. Zoom in.

Simon Birmingham: Correct.

Jenna Clarke: I guess that is great and the fact that there are some plans on the boil is fantastic. But how urgently do we need to repair our relationship with China, and is this your priority right now?

Simon Birmingham: Look, my priority is to both maintain the trading relations that we have, and where they’ve been disrupted by COVID, to restore them because the breakdown in global aviation and the disruption to markets right around the world has obviously caused a lot of disruption to many trading relations. And that’s why, as a government, we’re providing more than $100 million to air freight subsidies that is now securing vast sums of Australian produce, including a lot of fresh seafood out of WA, headed right around the world again as we’re getting those planes flying without passengers but with cargo and with freight, which is crucial.

But in addition to that restoring and rebuilding of those ties, including making sure that we have that access into the China market, we are working hard to expand new opportunities for Australian exporters. Yes, they take time, but we also do need to be mindful of just how much we have grown our exports in recent years, how successful we’ve been in that regard and therefore, there’s a great base for us in working with other emerging countries to try to do the same.

Jenna Clarke: I guess short term in the economic prospects is tourism, which is another one of your portfolios. WA’s border has been a bit of a hand-wringing issue for many of the leaders around the country. When do you think that they should come down purely from your perspective as Tourism Minister?

Simon Birmingham: Look, I respect what different state leaders have done in terms of their approach working through the National Cabinet and within their own jurisdictions to successfully suppress the spread of COVID-19. And WA’s achievements have been remarkable and I applaud Mark McGowan and his government for their success there in what they’ve achieved and I understand that nobody wants to put that success at risk because it is something that we can be proud on the world stage of what we’ve done. Logically, that means, as you are reopening, you start with reopening things internally first. So, get the restaurants and the pubs open properly, get people engaging across the community once again as they normally would. But assuming all of that is done safely as different states are doing, then I would hope that we can move pretty quickly to see interstate restrictions lifted as well. Now, I sit here in a state adjacent to WA, in South Australia, where there’s been just one case, I think, in the last few weeks. The state is essentially COVID-free in terms of known cases and retains amongst the highest testing rates in the world and our priority has got to be on making sure that people continue to understand, if you’ve got a cough or a sore throat or anything, get tested. Maintain high testing rates, maintain the tracing of that. And again, if people haven’t downloaded the COVIDSafe app or it’s not open in the background on their phones at present, they should do that because that all helps. And then, with that tracing, where an odd case comes up, we can move quickly to quarantine that individual and those around them who’ve been in contact. And they are the number one points that safeguard for us, that high testing, tracing, quarantining, so crucial.

In terms of the interstate borders, I hope we can see them open up after the states have opened up their internal restrictions. But they certainly shouldn’t be- continue to be restricted any longer than is necessary because the longer those restrictions are in place, the more many tourism operators will bleed and the more that will hurt jobs in those regions and those businesses.

Jenna Clarke: And speaking of that, we’ve seen- I’ve just anecdotally, over the weekend, I’ve had friends in Perth try to book flights to Broome. And last week, it was 199 to get there with Qantas. And as of Friday, when the Premier announced that Broome will be opening up pretty soon, went up to 500. What are you going to do to fix domestic travel in this country? Because sometimes, Perth people can’t get to Sydney. They’d rather go to Bali because it’s less expensive. We need to get people travelling in our own country. Are you going to put pressure on airlines to make it cheaper for us in Perth, and you in Adelaide, to get to places like Sydney and Broome?

Simon Birmingham: We’re having discussions with the airlines about just how important it is for them to operate in a price competitive way that encourages people to get out across the country and especially to get to the regions that might traditionally be a little bit more reliant on international visitors, which is something as Australia’s Tourism Minister, I don’t usually worry about Australians travelling across Australia. My focus is usually on getting international visitors to come to Australia…

Jenna Clarke: Hence, the Hemsworth. We get it.

Simon Birmingham: …and around nine million people do each and every year when it’s a normal year. And that’s nine million people who choose Australia because of the amazing experiences, the exceptional places and the safety and the reliability and so on of Australia. And now, our effort has got to be to try to get Australians to backfill some of that in terms of going to some of the places that those international guests would have gone to. And I certainly acknowledge that up around Broome and sites like the Horizontal Falls are just incredible destinations.

And so, we’re talking to the airlines. They have businesses to run, and we’ve seen in the case of Virgin just how challenging it can be to do that profitably. But we do want to make sure that they get the right model and we’re certainly determined that when a reconfigured Virgin comes back online, that we will make sure that they get to operate in a competitive environment, where they have every chance of succeeding alongside Qantas.

Jenna Clarke: Great. That is good to hear that you’ll be keeping one eye on that. Federal Trade and Tourism Minister Simon Birmingham, thank you so very much for joining us on The West Live.