13 January 2008

Sky News Sunday Business

Subjects: Exports, Doha Negotiations, FTAs

HELEN DALLEY: Now, exports have not performed well, yet we've been in the midst of a massive resources boom. Why?

SIMON CREAN: Yes. Well, this is the great enigma, and it clearly points to a failure of policy, Helen. I mean we've been surfing the longest resource boom in history, but we continue to record trade deficits. We have never had as long a run of trade deficits in the country's history as we have had over the last five and a half years.

Worse than that, net exports, in a country that simply has to export if it is to sustain its future, net exports have been a net contributor to our economic growth for ten of the last 12 years, a net detractor, I'm sorry, from growth for ten of the last 12 years.

When Labor was in office we were able to ensure that net exports were a positive contributor to growth for ten of our 13 years. Now...

HELEN DALLEY: Why is that the case in these last few years?

SIMON CREAN: Well, I think it's the - it is the key question, and it's why I'm commissioning a review to point us in the direction for how we can get back to that positive contribution again. But if you look at the contrast between the two governments approach to trade, I think the last government simply saw it as trade negotiations. Now, I believe they're important, and we'll come to those in a minute.

But we also need the integrated approach at home. No point opening up markets if you've got capacity constraints, if your infrastructure is failing, if your skills base is not up to scratch, if your innovative base is not driving things, if your integration, if you like, between trade and industry policy isn't up to synch.

None of these things have been in synch under this [previous] government. They cut back on our skills retention rate and our skills agenda, they have not invested in the nation's infrastructure, they took away the tax concessions, which were fundamentally important to driving innovation in this country, and they had no integration between a National Party Trade Minister and a Coalition Government that was never interested in industry policy.

HELEN DALLEY: Okay. Now, that's the past, now that you're in government what will or can you do to push these exports along a great deal more. I mean, must it be this whole of government focus? You're talking about infrastructure blockages, skills shortages. What are you going to do?

SIMON CREAN: It has to be the whole of government approach. We have to put trade policy, and competitiveness in our trading position, right in synch with productivity growth.

Now, productivity growth comes about in a number of ways. It is those things that I've talked about, but the education revolution that Kevin campaigned so strongly on is going to be front and centre. We've already seen the trades in schools argument, the computers in schools, we're committed to 450,000 extra training places.

On infrastructure, we're committed to establishing Infrastructure Australia, so that we've got a national perspective as to what our priorities should be, given the shortages and the blockages. On innovation, you've got Kim Carr, in terms of the innovation agenda driving that. And he and myself, obviously, need to ensure that we get better integration between those two portfolios in particular. But it's bigger than that, Helen, and that's why I think that we need, and why I will be commissioning and announcing shortly, that, if you like, a clean sheet review.

The business council's been calling for it, many have been calling for it, Labor will do it, and what we wanted to do was to bring all of these important linkages together, and give us the map, the way forward, as to how we can do it.

The other thing that I think was terrible in terms of the last Government is that they cut back heavily on the trade facilitation programs, the export market grants scheme. They cancelled a number of programs. These are all important programs, not as hand outs to business, but of helping change the culture to ensure that we're getting our small businesses export ready.

And these very programs, when they were in full swing, were very helpful. I remember when we were there these programs had a multiplier of up to 18 to one. Now, that's an important investment for the country to make, it gets big returns, but if you start cutting back, from a cost point of view, then you lose the gains.

HELEN DALLEY: Okay. Well, now in these reviews that you're talking about you're going to commission and announce, no doubt you'll be looking at free trade agreements. And you've talked a little bit about shifting focus away from free trade agreements with individual countries and back towards the global trade talks which, albeit they are deadlocked, but the WTO trade. Is that just a way for the new Labor Government to score political points over the former Coalition Government?

SIMON CREAN: No, no, we scored the points when we were last in office by actually concluding the Uruguay round, Helen, and that was the right way to go. I mean...

HELEN DALLEY: But, in a sense, why not proceed with both free trade agreements and the global talks?

SIMON CREAN: Well, we will proceed with both, but by far the biggest dividend comes from the multilateral outcome, the Doha round opening up global markets, opening up all of the markets and doing it on a multilateral front.

Why is it important? It's important because trade has been growing at a much faster rate than product in the world. In other words, it's not enough simply to try and capture your domestic markets if you want to sustain your future. The big opportunity, and especially for a country like us, who have been a traditional exporter, the big opportunity for us is to become a better exporter. And that means more diversified exports.

It doesn't just mean commodities and agriculture. What it does mean is value added product, and off the back of those traditional strengths I see huge opportunity for value adding agriculture, particularly food processing, but there's also the big opportunities in elaborately transformed manufactures, smart manufactures, if you like. The services economy, which now constitutes almost three quarters of the national economy, there's got to be huge potential for us if we can get improved access for services trade.

HELEN DALLEY: All right. Well, sorry, I just want to pin you down. Are you saying you would consider scrapping or changing in some way the FTAs, the Free Trade Agreements, that we already have with New Zealand, US, Thailand among others?

SIMON CREAN: No no, no no. We've never said we would scrap them, and in fact the New Zealand CER, which was concluded under the last Labor Government, the New Zealand CER in many sense is a model CER. And if all CERS...

HELEN DALLEY: Okay. So you're going to keep going with some of them? What about the talk of the Free Trade Agreement with China? Is that going to be on the back burner...

SIMON CREAN: No...

HELEN DALLEY: ... or is it still perhaps scrapped altogether, or is it going ahead?

SIMON CREAN: None of them will be on the backburner, but we want all of them to regain the focus that has them multilaterally consistent. In other words, enforces reinforcement of the multilateral round, not detractors from it. They have to be comprehensive. and they have to be supportive of the multilateral outcome. That is what I want to inject in to the bilateral debates.

HELEN DALLEY: All right. In a sense, what can Australia do, kind of by itself, to get the deadlocked global trade talks going, though? You can't single handedly force the EU and the US into, say, greater agricultural liberalisation.

SIMON CREAN: No, that's true, and the lesson of last time is that it could never be done single handedly, but Australia's leadership, and active leadership of the Cairns Group, was a significant factor.

Now, I don't think that same leadership had been as strong as it could have been over the past years. We've seen the emergence of new groupings, the G20 in particular, and we've seen our, if you like, our focus diverted on the FTAs.

I'm not saying we ignore the FTAs, we've just been through that, but I'm saying that the redoubled effort now has to be back on Doha.

HELEN DALLEY: Okay.

SIMON CREAN: Doha is difficult. There are 151 countries now in the World Trade Organization, but it's a regime that can be made to work. And in my judgement an outcome is doable, it's not guaranteed, I think the negotiators had been putting in some terrific detailed work. What it now requires is the political will, and I hope that we can inject some more of that political will into the system.

HELEN DALLEY: Right, Mr Crean...

SIMON CREAN: I think we do need to reactivate and lead properly with the Cairns Group, as well as I've been undertaking important one on one conversations with many of the, my counterparts.

I hope that we can inject that political will, but let's see, let's see. Wait, time will tell, but that's an important focus of the new agenda.

HELEN DALLEY: Mr Crean, we will leave it there, but we appreciate your time today.

SIMON CREAN: Okay, Helen. Thank you very much.

HELEN DALLEY: Thank you. And that was the new Trade Minister Simon Crean.

ENDS

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