AGENDA I/V: MR VAILE October 2004
SIMON Well let's begin with a question an easy ball down the leg side for you. Why should Australians re-elect the coalition?
MR. VAILE The coalition government over the last eight years has managed our economy in Australia during some very difficult international circumstances as well as domestic circumstances. We now have an economy that’s well structured, very low level of debt, low interest rates, and one of the fastest growing economies in the OECD in the developed world.
SIMON So the economy's in pretty good shape right now. That’s obviously great for New Zealand as well, how long can it last though?
MR. VAILE Well there's no reason why it cannot continue indefinitely, we're about to move back into a growth phase internationally, In the international economy particularly with our major trading partners, we've been through the last four or five years at a time when our major trading partners economies have been rather flat if not going backwards and if you look at the period post the South East Asian recession of 1997 we managed a growth economy all through that period. Now we're moving into a global growth phase it should only indicate stronger opportunities in the future and if we manage our economy in a balanced way and focus on the key issues it should continue to go very very strongly and as you indicate that has a beneficial effect on New Zealand as well.
SIMON Despite that, export growth under John Howard has fallen- the current account deficit is running at almost 6% of GDP, the trade deficit is at its second highest point ever- how concerning is this?
MR. VAILE Oh look I think that we need to keep it in perspective and it's partly as a result of a strong and growing economy where we've had some interesting fluctuations in the exchange rate that for a period of time we had a very high exchange rate on the Australian dollar reached up into the high 70 US cent bracket, at the same time we'd suffered a severe drought in Eastern Australia where we halved agricultural output, at the same time the SARS virus was ravaging East Asia and particularly some of our major markets and that all had a dramatic effect on our export activities and we saw a softening in exports for a period of time and at the same time we're still maintaining a high growth economy between 3½ and 4% growth in GDP and that was pulling a lot of imports in, particularly capital goods, business investing in new machinery and new technology and that caused the current account balance to go the way it did. We're looking in our budget forecast this year for significant growth in exports particularly on the back of improved economic circumstances in most of our major trading partners.
SIMON Some would say the economic boom though is only due really to increased debt from the purchase particularly of imports and also the housing boom. What would be your response?
MR.VAILE No we believe that it's much deeper than that, that the broad economy is growing and a lot of our industries that manufacture for re-export are growing, I mean the automotive industry's a classic example. We are now exporting something like about five billion dollars worth of automotive parts and fully built up motorcars out of Australia, that target, that’s the overall Australian industry is to hit 10 billion dollars worth of exports by 2010 and they're on target to do it.
SIMON What dangers do you believe a Latham government would pose to the Australian economy?
MR. VAILE Well what we are concerned about and the Australian people should be concerned about when they look at two things, firstly the track record of Labour in office in Australia has not been good in terms of economic management. Just bear in mind that the 13 years of Labour from 1983 till 1996 delivered us with a 96 billion dollar public sector debt which we've now reduced to around about 25 billion dollars. They pushed up interest rates which crippled our economy in the late 80s early 90s, but the major concern apart from that level of economic mismanagement that we've seen them deploy in the past, the major concern are the retrograde steps that would be taken in terms of industrial relations policy that the reforms we've made in the workplace have freed up our economy, have delivered high wage growth based on productivity gains whereas a Labour government would go back to negotiating wage claims within an archaic and arcane industrial relations systems that would be controlled by the union movement in Australia and that in itself will drag our economy down and if you have wages growth or wages blow-out that's not based on productivity, that itself puts upward pressure on interest rates. That is the major concern across the Australian community.
SIMON So you’re saying business confidence essentially would be undermined. What about the effect on foreign investment?
MR. VAILE Well that also obviously has an effect on foreign investment in terms of inbound flows of FDI or foreign direct investment is based on a healthy economy, a much freer economy in terms of the ability for business to make decisions, in terms of expansion, growth, employment, and a freer labour market, you tighten that up and obviously that generates concerns for inbound flow of foreign direct investment.
SIMON Let's look at the relationship between Australia and New Zealand , economically how important is New Zealand to Australia , do you need us at all?
MR. VAILE Yes, the growth in the economic relationship between Australia and New Zealand particularly over the life of the CER agreement, that’s the last 20 years has been quite profound, the economic relationship over that 20 years has grown by 500% and we use that as an example of what can be achieved by having a much closer integration of our major trading partners. We've obviously used that example in advancing our case for negotiating the free trade agreement with the United States, we look at that and it's gone beyond just trade, it is not just a trade agreement between Australia and New Zealand, it's an enhancement of everything that we do together, you know the economic relationship and moving progressively towards a single market, and so New Zealand, and New Zealand as a market for Australia is very very important to our economy just as we are very important to the New Zealand economy as well and we are inextricably linked in our part of the world.
SIMON So, if successful at the polls what would the coalition government then want next for the trans Tasman relationship?
MR. VAILE We want to keep on enhancing what we're doing together, removing any of the remaining barriers and we're down to working on issues like you know relevant taxation treatment of companies, our companies operating in Australia, companies operating in New Zealand, we've got the trans Tasman Mutual Recognition Agreement, so we're harmonising our regulations across the Tasman whether it be in food or in other areas of regulation, you know we need to be working on telecommunications and those sorts of issues, and so we need to continue to remove any remaining barriers of a regulatory nature between our two countries and then of course we have our shared objectives with our trading partners in the region just prior to the calling of election. in fact one week before both Jim Sutton and I were in Jakarta where we launched with our ASEAN trade minister colleagues our ambitions to negotiate a free trade agreement between the two CER countries and the 10 ASEAN countries and that'll go to the leaders' meeting that'll be held later on this year in South East Asia.
SIMON You have though pursued bilateral trade agreements with the US with Singapore , with Thailand , all of those in the last couple of years, CER is 20 years old, is going it alone the way you intend to pursue free trade from here on in?
MR. VAILE There are some circumstances and this is something that obviously we've had lengthy discussions with our colleagues in New Zealand about both myself and my counterpart, and our two Prime Ministers. There are circumstances where it is more advantageous for us to do things individually just as New Zealand has with Singapore , with Thailand , moving with Malaysia , with China , we collaborate, we share and compare positions and what we're doing and issues we're confronting but often it is simpler and less complex to be doing it bilaterally and so.
SIMON And faster?
MR. VAILE And faster, and faster, and often New Zealand can move faster than Australia .
SIMON So philosophically you believe in the pursuit of a multilateral trade deal?
MR.VAILE Oh both our governments and I know I can talk for Jim Sutton on this as well to a New Zealand audience, that our central focus in both countries is that the best and deepest and broadest outcomes as far as trade are concerned can be and will be delivered through the multilateral system through us negotiating with the other 147 countries in the World Trade Organisation, but it's a slower path, and that’s why we've also embarked upon our bilateral negotiations where we can deliver benefits faster than we have been able to in the past in the multilateral system but Jim Sutton and I were both in Geneva earlier this year where we passed a milestone in the multilateral system in getting the Dohar round of negotiations locked in are on a much higher level and platform than we've been in the history of the WTO and the GAT and particularly in terms of our core pursuits our core shared pursuits of agricultural trade liberalisation.
SIMON How important were those Geneva talks in reaching that agreement to abolish agricultural export subsidies, how important was that for Australia ?
MR. VAILE Oh it was crucial to Australia , I mean we've been pursuing this outcome or getting the negotiations to the stage they are now for 50 years. I mean 50 years ago we started abolishing the impediments to trade in industrial goods and manufactured goods, there is no justifiable reason why agricultural products should be treated any differently and that’s been our argument, it's been New Zealand's argument all over that time, and we have a couple of players representing the European Union and the United States in the dynamic at the moment where we're able to position ourselves and deliver a commitment as we move towards the beginning of next year to negotiate you know the abolition or the elimination of export subsidies and significant reductions towards the elimination of domestic support to key issues that Australia and New Zealand have stood shoulder to shoulder and fought for in the world of international trade for the last 50 years.
SIMON I want to go back now to look more at CER implications and where that’s going. You mentioned the pursuit of a single economic market, how long do you think that will take, when can we see a single economic market, when can we see common business citizenship?
MR. VAILE Look we're moving very quickly towards that now, but where you have issues like taxation arrangements and some of the technical health and quarantine issues that we both are very very focused on and we need to work through specific processes as we have done in terms of the joint food safety body that’s taken a number of years so we need to continue to put the energy into it in pursuing this and if it takes a few years if it takes 10 years we need to keep the work programme going which we do, we have an annual meeting of CER ministers and this year's meeting was scheduled to take place in Queenstown this year about the time that this election was called so hopefully sometime between the end of our election and Christmas we'll have that meeting in Queenstown, Jim and I have agreed that as soon as the election's over we'll quickly reschedule that, but both countries committed to slowly but surely moving the last remaining barriers out of the way, and we've also instituted a broader circumstance with more ministers involved in dialogue on these issues as well as the business community, so you know the Trans Tasman business communities are always now saying to government you are the most important issues for us for you governments to deal with to make it better for us to be doing business across the Tasman because at the end of the day that’s what it's all about.
SIMON Clearly there are compliant costs for businesses dealing trans Tasman?
MR. VAILE Sure.
SIMON How much would you like to see a standardised regulatory regime, one for instance a competition watchdog that could deal with both sides of the Qantas Air New Zealand deal?
MR. VAILE Yeah I think that in areas like that we have very similar domestic policies, I don’t know because it's not my area but whether we would get to a common watchdog but we probably should be moving towards and we may already be getting close to a common set of principles as far as competition is concerned but I think that it wouldn’t hurt if there were a lot more common work being undertaken by our ACCC and the organisation that has responsibility for competition policy in New Zealand.
SIMON Let's look at the broader picture of the election coming up, ultimately age and political affiliation aside what is the difference between Mark Latham and John Howard?
MR. VAILE Oh look I that John Howard is a very inclusive leader, he's shown the people of Australia that he has a deep history of connection with the Australian people, an understanding of every facet and aspect of Australian society, an absolute commitment to the Australian way in looking after everybody in the community and also a tenacious ability to pursue the structural outcomes that can deliver benefits to everybody and I think that what we have done in terms of the economy is something that John Howard has pursued for his entire political career both in terms of the economic structures in Australia freeing up the labour markets, and in latter years John Howard has shown himself to be a great advocate for Australia in the international stage and certainly is highly respected in the international stage and so all those attributes you know position our Prime Minister very very well for the confidence that is shown in him by the Australian people, and I think that that’s one of the big issues that differentiate John Howard from Mark Latham.
SIMON So that’s John Howard, describe Mark Latham.
MR. VAILE Mark Latham is not understood by the Australian people, people still say to us in the streets well we don’t know we're not sure about what he'd do, we're uncertain about him, all the people in the streets know about his form and his history as the mayor of Liverpool Council and some of the more wacky things that he's done as an opposition back bencher and some of the commentary that he's made in his more heated moments as a hothead and making public comments that have not displayed the Australian way as well as they should have, and so there's a significant uncertainty in the Australian community about Mark Latham, but one thing we do know is that going back in time as a back bencher and as a junior front bencher he was far more focused on opening up our economy and liberalising our economy and a freer workplace than he is now as the Leader of the Opposition and that’s because he is now under the direct control of the union movement in Australia who underwrite the Labour Party's campaign.
SIMON Let's look at your own party's role in the coalition, the National Party 1996 had 18 seats, 1998 16 seats, 2001 13 seats, a party in decline how optimistic are you this time?
MR. VAILE Oh look we're every optimistic in terms of our position representing the interests of country Australians, we're a party that is particularly focused on the regions of Australia, we don’t have any base in the cities, and we've been consistently delivering back into regional Australia during the course of the eight years that we've been in office, and along with those central themes obviously as a junior partner in a coalition government sometimes it's difficult to differentiate and sometimes you don’t want to differentiate because you know we have a shared philosophy in terms of the importance and the strength of the economy and the way that it delivers to the farming community and the small business people in regional Australia just as our coalition partner does, we have a core belief in the freeing up of the labour market and what that can do to our exporters, and of course my portfolio of trade is of significance importance to regional Australians given that one in four jobs in regional Australia rely on exports out of this country, it probably is a higher statistic in New Zealand, and so we continue to push that message out there into the regional communities. Where we've seen a change in seats we've seen the rise of some Independents and you know for all sorts of local reasons and that will be an issue that we have to confront and we'll come and go on the regional landscape across the Australian electorate but I think that people, and I get this message as I've been travelling Australia and particularly regional Australia during this campaign that people are looking now to come back and committing to the National Party and the Nationals in government and they are seeing what we have been delivering in government over the course of the last eight years and recognising that independence cannot deliver the same. They can be a voice they can be a voice for populist ideas and populist notions, but in a policy sense they cannot deliver back into their electorates, they are not a voice in government and what we are saying that if you are a supporter of conservative politics and you want a coalition government then you need to vote for it you can't get it if you vote for an Independent.
SIMON Australian Trade Minister Mark Vaile thank you very much for giving your time to Agenda.
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