Speech
Australian Minister for Trade, Mark Vaile
Brisbane. Friday, March 17, 2000
The Australian Economy
Speech delivered at the Conservative Club Breakfast
Ladies and gentlemen, we should be proud of our economy.
Coalition Government’s policies have ensured strong growth and low inflation. In the December Quarter, growth was a very solid 1 per cent, and 4.3 per cent for the year.
Importantly, the National Accounts indicate that inflationary pressure remains minimal.
The Coalition Government’s record of sustained, strong economic growth in a low inflation environment is the envy of the OECD.
The Australian economy has now grown at or above 4 per cent for the past 11 consecutive quarters – a growth rate unrivalled in the past 30 years.
Strong growth in private consumption over recent quarters reflects growth in household incomes and wealth and continuing high levels of consumer confidence.
The full benefits of recent and future economic reforms, particularly the Coalition’s major tax reform, will continue to support economic growth over the next few years.
We have weathered the Asian crisis very successfully and the improving international economic outlook will help underpin continued economic growth.
The Australian economy has the potential to sustain growth of three-and-a-half per cent to 4 per cent over the next few years.
As I’ve said, inflation remains low, at its lowest level since the 1960s, giving savers and investors the confidence to make long-term decisions.
As well, unemployment is at its lowest level in a decade and employment rates are up. We have created nearly 700,000 jobs since coming to office.
And productivity growth is nearly double what it was under Labour, averaging 1.8% per year.
Interest rates remain near historically low levels (despite the recent rise by the Reserve Bank of Australia), underpinning robust business and consumer confidence.
Our national budget has been put into very healthy surplus, and the task of reducing Australian Government debt has begun.
The Government expects an improvement in the terms-of-trade and 5% growth in export volumes this financial year.
The new Business Tax System will provide a substantial boost to Australia's exports.
Under the new tax system, exports will be GST free, and when taxation currently imposed on exports is lifted, costs to all exporters will be cut by more than $3.5 billion a year.
Reforms in areas such as Capital Gains Tax will add to the attractiveness of Australia for investment.
Overall, it is noteworthy that, in its recent Economic Survey of Australia, the OECD said: "The resilience of the (Australian) economy in weathering the Asian downturn is largely the result of a judicious mix of sound macroeconomic and structural policies, which brought inflation down to a very low level, strengthened government finances and generated an acceleration in productivity growth".
Beyond Seattle
As most of you would know, Australia was committed to launching a new market access-focused round of multilateral trade negotiations in Seattle last December.
As disappointing as the outcome was, rumours of the death of the WTO were greatly exaggerated.
Several factors contributed to the Seattle failure.
First, the agenda was unwieldy, created by excessive ambition by some WTO Members in a number of non-trade areas.
Second, it's important that we do not understate the extent of the problems that occurred in the lead up to Seattle.
The organisation of the event by the Americans in Seattle left a lot to be desired.
The major developed world traders, the US, the EU and Japan were the real causes of failure.
This is not just my view, but the belief of the developing world the people of Africa and Latin America that desperately need market access for exports to buy the basic necessities for life.
There are complaints that WTO processes lack transparency and that developing countries do not have an adequate voice.
Seattle has shown us that the big boys of the developed world can no longer call the shots alone. They have to get the agreement of the developing countries of the world. This is now being accepted by many of the more realistic politicians such as Pascal Lamy the European Trade Commissioner.
Certainly with 135 Members and with another 32 in the process of accession negotiations, it’s important that all WTO Members feel a sense of ownership of the WTO and close involvement in its processes.
As we look to the future of the WTO, we must not, as the saying goes, throw the baby out with the bath water.
The challenge ahead for the WTO is one of substance - not process. Most developing country concerns can best be addressed by making real progress in multilateral trade liberalisation in areas of key interest to them, such as agriculture.
The WTO must not become overburdened with non-trade issues. It must be allowed to maintain its integrity - with its effective rules-based system.
On a more positive note, we were able to make Australia's voice heard on key issues like agriculture and services in Seattle.
This was due in no small part to the efforts of the Australian team, including a strong industry contingent, particularly from Queensland. Indeed, the efforts of the team from the sugar industry were outstanding.
I know I have your full support for the Coalition's commitment to keeping markets open. We will stay on that road to increase exports and create growth so that all Australians can share in the benefits from boosting our trade performance.
Australia will also be actively promoting its interests in the negotiations on agriculture and services that are due to commence shortly.
In agriculture, we will continue our efforts in close cooperation with our Cairns Group colleagues, to see that unfair and trade-distorting agricultural export subsidies are eliminated and that substantial and progressive reductions in domestic support are achieved.
Many developing countries supported Australia, and the Cairns Group, in the pursuit of these goals at Seattle.
We'll also be strengthening our relations with our ASEAN neighbours.
I agreed with my ASEAN and New Zealand colleagues last October to set up a high level Task Force to examine the feasibility of establishing an AFTA-CER free trade area by 2010.
The Government's decision to explore a free trade area with AFTA gives us an opportunity to look at ways to enhance access to ASEAN markets for Australian goods, services and investment.
It will also build on the good work already done on trade liberalisation and facilitation, both in APEC and within the regular AFTA-CER framework.
Middle East
Last week I returned from leading one of the largest trade missions ever to leave our shores. With me on the 10-day tour to the Middle East were some 60 Australian business heads, including half a dozen or so from Queensland covering industries as diverse as agriculture, mining, pharmaceuticals and dental products.
The tour included the oil-producing Gulf States, Bahrain, Saudi Arabia, Kuwait and the United Arab Emirates.
I can tell you that Abu Dhabi is Surfers Paradise without the surf, although the gold’s yellower.
By this I mean the construction of new buildings, roads, shopping centres, hospitals and mosques is unbelievable.
Think of places like Riyadh, Kuwait, Dubai and Abu Dhabi as giant construction sites.
Even Sir Joh could not imagine the number of cranes on the skyline. Anyone in the fields of architecture, quantity surveying, engineering and building material supply could surely find a place in the sands.
There are thousands of Australians professionals working in the Gulf, and as you can guess a lot of former Ansett pilots. But that’s another ALP consensus industrial relations tale.
The fact is that the opportunities for Australians in the Middle East are enormous, as no doubt you’ve guessed each time you’ve filled your car recently.
The region is awash with petro-dollars. The market is hungry for new products and new sources of products.
Across the Middle East there is incredible interest in Australia, and in doing business with us.
Government and business leaders were extremely enthusiastic and receptive to the delegation in all the countries we visited.
Not only are our Arab cousins after bloodstock and peregrine falcons, they’re also after our live sheep, our grains, our mining expertise, our alumina, our cars, our engineers and our higher education expertise.
Would you believe that the largest-selling car in Saudi Arabia is the Australian-built, left-hand-drive Toyota Camry?
Many of the business delegations were very happy with their introductions and discussions with potential business counterparts.
It was notable that businessmen were changing their itineraries as they found potential customers.
As part of the trip, in the UAE, I co-chaired a highly successful Australia/UAE Joint Ministerial Commission (JMC), attended by over 200 delegates. The attendance on the UAE side was unprecedented. It was the first time that all seven of their Chambers of Commerce and Industry had been represented at the Chairman and/or Director General level.
Ladies and Gentlemen, in the Middle East, Chambers of Commerce play extremely influential roles and doing business there invariably involves developing good relations with them.
The 84 UAE delegates in Abu Dhabi represented nearly all the major local companies and to give you an indication of the level of enthusiasm and support for our trade group, Sheikh Fahim, the Minister for Economy and Commerce, told me that visiting business delegations from Britain and the US were never granted such access or extended similar hospitality.
The UAE is an ideal entry point for Australian companies seeking to establish commercial relationships in other parts of the Gulf, Iran, the Indian sub-continent and parts of Africa.
As an example of what can be achieved, in 1995 Australia exported just one, repeat one car, worth $14,000 to the Middle East. Last year we exported almost 46,000 cars worth more than $760 million.
To sum up why we should focus on the Middle East and, in particular, on the Gulf?
Australia has established a very sound reputation as a reliable and understanding economic partner with the countries of the Middle East. The region has long been a major destination for our exports of wheat, live sheep, sugar and alumina, and now cars.
The potential of the Gulf States, as a market for Australian products, is very promising. In 1999, Australian exports to the Gulf totalled $2.4billion of which our exports to Saudi Arabia were over $1 billion and the UAE, over $800 million.
The region is also a potentially very significant market for our services, in education, medical, hospitality and communications, in mining and mining infrastructure development, and in energy development. There is great potential for two-way growth in the tourism industry.
In short, the Middle East is awash with petro-dollars. The Arabs like doing business with Australians. They like our country and they like us. This last point is particularly important for boosting tourism … they love the Gold Coast.
Anyway enough of the Middle East talking about the Middle East, my advice is get out there and have a look for yourselves.
Conclusion
So, although I’m disappointed with the outcome from the World Trade Talks in Seattle, Ladies and gentlemen, my trip to the Middle East has shown me that there is much more to life and much more to trade than just Seattle and the WTO.
ENDS