Transcript
16 June 2009
Interview: ABC Illawarra Mornings with Steve Parsons
Subjects: NSW Budget Buy Australia policy, protectionism
STEVE PARSONS: Let's continue talking about Australian - buying Australian. The difference between that and protectionism. The buy Australia policy looks like it's going to be included in some form in the state Budget tonight. But is this dangerous and what are the dangers?
Simon Crean is the Minister for Trade. Mr Crean, good morning.
SIMON CREAN: Good morning, Steve, how are you?
STEVE PARSONS: Very well. You say this risks setting off an international trade war. Is that overstating it a little bit?
SIMON CREAN: No, it's not. Because if you think of it, what's a 20 per cent price differential do, Steve? It's a tariff.
STEVE PARSONS: Tell us how you see it working, because they're saying the Budget would offer local firms a 20 per cent premium in bidding for tenders compared to foreign bidders. How would you see that working?
SIMON CREAN: Well, first of all, it puts the cost up here, so I don't see the sense in that. Second...
STEVE PARSONS: Why would it put the cost up?
SIMON CREAN: Because it's really saying to local bidders, you can charge 20 per cent more and you'll get the contract.
But the second thing is, it invites the retaliation. Now, you might recall not so long ago the US talked about a Buy America campaign. And we went in really hard against that, because it was going to have an impact on our steel makers down in the Illawarra. It meant that their steel would not be able to get into US markets, even if it was competitive, because what the US was saying is, ‘we will mandate that it has to be bought from American sources’.
Now, once we start doing it, other countries will start doing it. We attacked the US initiative because we said it was wrong. It was against the international trade obligations. Fortunately, we've got insurance because we've got an FTA with the US. But once one country starts it, the others will do it in response. And you create this downward spiral into protectionism.
Now, you would have heard all the debate, Steve, going on at the moment in terms of the G20 meetings, the solutions to the global financial crisis. Everyone is urging: “do not revert to protectionism, because reverting to protectionism was what drove the economy into deeper recession the last time, we had the Great Depression”.
STEVE PARSONS: But what is happening overseas? Are we not seeing in countries like the United States, in Britain, across Asia and Europe, are we not seeing some nations there having buy local campaigns?
SIMON CREAN: There's no problem with a buy local campaign. The problem is, when you mandate it or where you jack up the prices and effectively have ... another form of tariff. That's what invites the retaliation, and that will cost Australian jobs.
Now, understand this: Steve, government procurement and urging the preference to Australians, that's fine. But we've got to get into other people's markets.
The FTA with the US enables us, for the first time, to get into government procurement and secure contracts in domestic markets in the US. We go in this direction here and close off our markets or restrict it by, you know, 20 per cent price differentials or mandating, or whatever, we will invite the retaliation and that will cost jobs. In the name of protecting jobs, it will, in fact, cost Australian jobs.
STEVE PARSONS: So the New South Wales Government has got it wrong, but the Treasurer, Eric Roozendaal, he says - he understands the policy could lead to some increased cost. But I quote: ‘but frankly, if it's going to support local jobs, we think it's appropriate’. You say it could have the opposite effect.
SIMON CREAN: It'll have the…it's a misguided strategy, because it will have the opposite effect. This is what we have been telling other countries they cannot do. It's what all the leaders around the world have been urging countries not to resort to.
STEVE PARSONS: Did you have this view when you were ACTU president?
SIMON CREAN: I did. I did have that view when I was ACTU president. But I was confident enough, as ACTU president, Steve, to know that if we got the structure of our Australian economy right, we could compete with the rest of the world.
The problem for us is, we can't get into markets in the rest of the world, because there are a number of restrictions. That's why we're advocating and pushing so strongly to get the Doha Round concluded, so that we can open those markets in the knowledge that we can compete with the best of them because we are efficient, we have a great skill base, we have a great ability to trade with the rest of the world.
We are too small as a country simply to produce for ourselves. We have to trade with the rest of the world. Our future lies in trade. One in five Australian jobs is reliant on trade. And not just exports, but also imports. Think of the people in logistics, in retail, in distribution. That's where Australian job opportunity can come if we do two things: continue to open markets, not close them, and secondly, to maintain and develop that competitive and productive edge. That's what I was confident about when I led the trade union movement and I'm still passionately confident about it. And what I'm trying to do is to continue to argue the sensible course, the correct course.
And people who think that they can protect jobs by putting up barriers to trade, in fact, are doing the exact opposite. They are denying the opportunity for real job opportunity going forward.
STEVE PARSONS: Would you be talking to the State Government about this proposal then, or have you?
SIMON CREAN: Well, I read the report yesterday, and as a consequence of that, I've written to the Premier expressing our concerns. I've not seen the full details, and the response that the Treasurer made yesterday about the cost, that's one side of the coin, and I must say I'm surprised that what we'd do is agree to put costs up. But there's another side to it as well. And they say that they're doing it in the names of protecting jobs. It is a misguided view. It will, in fact, cost jobs. And that's the message that we've got to get through, Steve.
STEVE PARSONS: All right, Mr Crean, thanks very much for joining us this morning.
SIMON CREAN: Okay, thank you.
STEVE PARSONS: Simon Crean, who's the Minister for Trade.
ENDS
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