Address to the Abares Outlook 2023 Conference
Thank you Sarina [Locke, ABC National Rural Reporter] - can I say what a pleasure it is to be here at the 2023 ABARES Outlook conference.
As the son of an agricultural scientist, growing up in Glen Innes in North-western NSW, it is a genuine pleasure to be here with you all.
I want to recognise the work that ABARES does, it is a very important contribution to have an evidence base sitting there in the community for policymakers, business and investment decisions in Australia.
I’d like to acknowledge the Traditional Owners of the land on which Canberra sits, the Ngunnawal people, and pay my respects to their Elders past and present.
Later this year, every Australian will have the opportunity to vote in the referendum to enshrine an Aboriginal and Torres Strait Islander Voice in the Constitution.
Recognition and consultation; it’s a simple proposition.
The Australian Government has committed to the Uluru Statement from the Heart in full.
The first step in that process is listening carefully to the voices of Aboriginal and Torres Strait Islander communities and I would urge anyone who hasn’t already read the Uluru Statement to take up that offer.
Importance of trade during global uncertainty
I’m glad to be here today, because at a time of such global uncertainty, one of the certainties for Australia is that trade – particularly agricultural trade – remains vital to our ongoing national prosperity.
I know the trade session that follows this opening today will touch on many of the global challenges we face:
- inflationary pressures in the global economy,
- the lingering health and economic effects of the pandemic,
- the challenge of global warming and
- Russia’s illegal and unjustified invasion of Ukraine, among many other issues.
Persistence of distorting agricultural subsidies and displacing production are undermining emissions reduction and food security efforts.
In such a challenging global context, the title for your trade session this morning – is there any hope for agricultural trade negotiations? – does seem bleak, if understandably so.
I know there’s a wealth of experience in this room about how slow global trade negotiations can be and a cynicism about our prospects advancing Australia’s traditional agricultural agenda.
But in a time of sharpening geopolitical contest and weakening global economies, it’s critical to remember the efforts we make, whether bilateral, regional or multilateral, do bear fruit over time.
Australian agriculture – a cause for hope in 2023
As we know, Australian agriculture is benefiting from a third consecutive year of high rainfall.
Most of the rain news we hear these days is about floods.
There’s no doubt the triple La Niña has devastated some communities, and many people are still struggling on a long road to recovery.
But at the same time, agricultural production will be at record levels in 2022-23, driven largely by strong winter crop production.
Even despite localised losses and disruptions caused by flooding on the East coast late last year, conditions in other regions have driven record production nationally, with an expected record of 67.3 million tonnes of winter crop harvest.
The figures released by ABARES have shown the value of production is forecast to be the highest on record at $90 billion, as is the value of exports, at $75 billion.
Prices are starting to come off record highs of 2021-22, where they were driven significantly as we know by Russia’s invasion of Ukraine.
But this financial year is still expected to see exceptionally strong global commodity prices.
One of the certainties about agriculture, however, as any country family will tell you, is that good times always end. This is an opportunity to reflect and invest in strategy for the future.
Uncertainties around inflation, energy prices, input costs and worse-than-expected global growth remain significant risks for producers.
There is strong early evidence that our Energy Price Relief Plan is making a difference to wholesale prices and taking some of the pressure off local manufacturers and households too for that matter.
Capping gas and coal prices at the end of last year was the right call.
New analysis of gas spot market prices is further proof that the Government’s intervention in the energy market is taking the sting out of energy prices.
While wholesale prices rose in other markets between November and December, Australia’s gas prices on the spot market dropped by almost $5 per gigajoule over the same period.
But, while domestic energy security will continue to be a priority for this government, Australia is committed to remaining a reliable energy trade and investment partner, and a positive contributor to global energy security.
Australian agriculture and resources are resilient, but we face very significant challenges that will require agility and commitment.
Trade diversification and China relationship
We saw that most clearly, of course, through the great extent to which Australian exporters diversified their markets in response to trade impediments on some products by China.
Market diversification has been and remains a central plank of the Government’s trade policy strategy, as Trade Minister Farrell outlined late last year.
The COVID pandemic as well as impediments to some Australian exports to China have exposed the risks of over-reliance on any single market or product.
It has been and remains important that we diversify our trade to support national resilience – just as it remains an important national task that we continue to diversify our industrial and manufacturing base to support and grow our national economy.
It’s not just who we trade with, but also, what we trade, as Minister Farrell has said.
Reliance on any one market or any one product makes Australia vulnerable to global supply chain shocks.
That is why we need to pursue product diversity and move Australian products higher up the global value chain.
A Business Council of Australia and University of Technology, Sydney report from late 2021 is instructive here.
It examined the shape of Australia’s exports and found that the jump in Australia’s goods exports share to China between 2015 and 2020 was overwhelmingly a commodity price story, that Australia’s market share is close to the peer average and dependent on commodity prices and volumes.
However, the report did set out another related challenge – our export product concentration.
In 2020, primary goods accounted for more than 80 per cent of Australia’s goods exports. That is eight times the peer average.
Manufactures fell to 15 per cent in the same year, as our industrial base has continued to decline.
So, market diversity, yes, but product diversity and export complexity are key Australian challenges.
It’s time for an end to complacency.
In our approach to trade and industry portfolios, where I have junior assistant ministerial responsibilities, that is where Anthony Albanese has charged us with the urgency of re-establishing Australia’s manufacturing capability.
Does anyone believe, seriously, that Australia can prosper and guarantee our security in the region or the world if our industrial base and our economic complexity stay the same or decline?
The economic and social case for industrial revival is strong. For our outer suburbs and our region, for our country towns, industrial jobs are good jobs.
Industrial diversification protects those communities especially vulnerable to the winds of economic change, particularly in a carbon constrained global economy.
And that has a social and democratic cohesion component too.
The increasing shift of good jobs and opportunity from our regions into our central business districts has left a generation of Australians who feel isolated and abandoned, vulnerable to the politics of exclusion and grievance.
That matters, as a matter of social justice, as well as in democratic cohesion terms.
But put that, all of that, aside, and just consider the security implication of continued decline in export complexity and industrial diversity.
I mean security in its broader sense – our capacity to solve national challenges, for resilience and to contribute as an equal partner in our region.
So, trade market and product diversification, and industry policy is interwoven with security policy.
Supply chain security, critical minerals, sovereign capability, climate adaptation, energy security, energy prices and stability, market diversification, product diversification, export complexity, industrial diversification and industry policy, regional economic development and democratic resilience are all related to our national security.
Not incidentally, but integrally.
That is why Labor went to the election with the National Reconstruction Fund. One of the biggest industry policy and investment strategy in Australia’s peacetime history – directed squarely at all of these challenges.
And agriculture and resources must play their part, in shifting Australia up global value chains.
In agri-tech and high value agriculture inputs.
In processed food products.
In mining technology for here, but also deploying our mining engineering capability around the world.
And in converting our high value mineral resources into higher value processes and products.
That is what the National Reconstruction Fund is directed toward.
$500 million of the NRF will be targeted to value adding in agriculture, forestry and fisheries, as well as food and fibre.
Pursuing product and market diversification in tandem is critical to our national prosperity.
The National Farmers’ Federation has set a vision for the industry, to exceed $100 billion in farm gate output by 2030.
I agree with them. But the task of shifting Australian agriculture up the global value chain is vital to our national interest.
As a Government we have big ambitions to broaden our economic complexity across a range of areas from value-adding in food and fibre to agritech.
As we continue to stabilise and develop the Australia-China relationship, our trade diversification efforts remain a priority for the Albanese Government.
What the Government is doing
That’s why the Government has taken action to support exporters to diversify, delivering new and expanded bilateral and regional trade agreements, and working within the WTO to remove non-tariff barriers to trade.
Even though gains in multilateral rounds have been hard to come by in recent decades, the WTO is critically important.
Australia can use the WTO system to defend the interests of our producers and resolve disputes in an orderly manner.
The international rules-based system has been under intense pressure in the past 12 months – Russia’s invasion of Ukraine being an attack not only on the Ukrainian people but also sovereignty at large.
Fundamentally, we want nations working together on a common, transparent, rules-driven basis on the challenges we face, across the spectrum of global policy – and trade is a great place to start.
At a time when it is tempting for the big players to advance their ends by throwing their weight around, continuing to put our shoulder to the wheel of reform offers a constant reminder that there is a better way.
That open, transparent international institutions and architecture provide benefits for nations big and small, both in terms of growing prosperity and supporting stability and peace.
So, since the election we’ve been advocating for free, open and rules-based global trade, including through the WTO, the G20, APEC and the OECD.
One other thing we’re focused on is non-tariff barriers to agricultural trade.
On sustainability, for example, we’re keen to make sure that too-proscriptive definitions of “sustainability” don’t come to hurt Australian exporters.
It would be ironic and deeply unsettling if they did, because we know Australian agricultural exporters are genuine world leaders in developing greener approaches to their work.
Australian farmer’s green credentials are an asset when it comes to trade negotiations, particularly with our partners in Europe.
But the current state of play when it comes to equitable agricultural trade reforms sells Australian farmers short.
The OECD estimates support to agricultural producers totals $817 billion USD annually.
But a large proportion of these subsidies are distortionary.
They operate to displace production, they undermine global emissions reduction by subsidies high emissions, low productivity production and are corrosive for global food security.
A World Bank report found only 35 cents in the dollar of domestic support ends up with farmers.
Australia has played a leadership role in agriculture trade liberalisation.
The Cairns Group, a Hawke Labor Government achievement, was established in 1987 to champion and coordinate agriculture liberalisation efforts and plays a crucial role today.
This is why the Trade Minister and I are working to refresh the agenda of the Cairns Group, to ensure the benefits of our trade agreements are delivered into the hands of farmers.
There is a risk that approaching these reforms with a narrow focus on Australia’s interests will limit progress.
We must approach these conversations with an eye on the interests of other members and respect their perspectives.
Food insecurity, curbing the effects of a warming climate and reducing emissions are key areas where Australia’s interests and those of Cairns Group members intersect.
The Cairns Group agenda must widen to attach the corrosive impact that distortionary subsidies have on the climate and on the world’s poorest people in food security terms to our agenda.
Otherwise we are talking past the Pacific Nations and least developed countries whose interests we share.
A constant reaffirmation of the benefits of free trade – talking at least developed countries – must be replaced by a shared agenda that promotes redirection of subsidies, more efficient low emissions production and a shared approach to food security challenges.
It is in our interest, but it is in the global interest too.
Colleagues, we live in challenging times.
All sorts of headwinds and challenges buffet us from overseas.
Those forces impact on Australian prosperity.
We can see how they’re impacting trade and investment all the time – often, on our supermarket shelves.
Australian business, particularly Australian agriculture, has continued to be highly resilient in the face of drought, bushfires, pandemic, floods and war in Europe.
I have to say that resilience is something I’ve seen first hand, particularly in our outer suburbs and regions, having grown up on a cattle farm on the North Coast.
Now, the Government seeks to support that resilience, by continuing to advocate for fair rules, for open markets, for common sense.
I look forward to hearing more about your perspectives and thank you for coming today.
Part of this speech has been redacted in accordance with Digital Transformation Agency guidelines.
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