ECONOMIC AFFAIRS: by Colin TeeseNews Weekly
How will trade and agriculture stack up under the Coalition?
, September 28, 2013
True to all of the indications of Coalition intentions before the election, the Department of Foreign Affairs and Trade (DFAT) has undergone a radical change. Its trade function has been separated from foreign affairs and recreated as a stand-alone department with the added function of investment. The new Trade Minister is Andrew Robb.
This has transformed the policy, enacted in 1987 by the Hawke Labor government, of amalgamating the formerly separate departments of foreign affairs and trade into DFAT. This arrangement was subsequently continued during the life of the Howard-led Coalition government.
Whether investment will be a good fit with trade remains to be seen.
The new Prime Minister, Tony Abbott, and those closest to him, made known their view that they were dissatisfied with the lack of progress by two Labor administrations in the conclusion of so-called free trade agreements (FTAs) with South Korea, China and Japan.
However, to explore the validity of that proposition is not the prime purpose of this article.
It is, nevertheless, worth pointing out that, under the former Prime Minister Julia Gillard’s Trade Minister, Craig Emerson, it can hardly have been for want of trying. With the departure from federal politics of Mark Latham and Lindsay Tanner, Mr Emerson, was perhaps the most committed free trade ideologue in the Labor Party.
What we now know is that the Coalition, including the National Party at the leadership level, are apparently content to see the trade portfolio in the hands of the Liberal Party. It has even been suggested that the reason for this was that the National Party — presumably because of its farm connections — was soft on trade liberalisation.
The National Party apparently did not contest this proposition. Precisely why is not clear. But, to the casual observer, there does not seem to be much evidence that trade ministers of National Party persuasion during the Howard years were any less eager to conclude free trade agreements.
Mark Vaile, for example, who in 2005 became National Party leader, Deputy Prime Minister and Trade Minister, could hardly have felt more elated than to preside over the negotiation of the free trade agreement that Australia concluded with the United States. If anything, Mr Vaile might have been accused of over-enthusiasm.
Certainly, the outcome has been shown to have been seriously unbalanced in favour of the U.S. Very little of value was secured for Australian farmers, whose access to the U.S. market remains decidedly restricted.
Such was Mr Vaile’s eagerness for a successful outcome that, even before the negotiations had begun, he imprudently announced — somewhat to the surprise of some trade experts — that “everything is on the table, including quarantine” (see News Weekly, August 5, 2006).
Until the Keating era, Australian governments had always argued, quite genuinely and properly, that decisions on quarantine were separate from trade considerations.
The minister’s comment, unfortunately, opened the door for the U.S. and Australia’s other trading partners to mount successful campaigns against a number of our important quarantine restrictions. Australian farmers today continue to pay the price for this mistake.
Thus the facts simply don’t support the contention that the National Party, since the Hawke/Keating era, has been soft on free trade.
What is really surprising is that the present leader of the Nationals, Warren Truss, may have given currency to that proposition when the facts suggest otherwise. Indeed, some might see it as a tacit acknowledgment by the Nationals of their declining status within the Coalition.
This is all the more surprising since Mr Truss announced after the recent election that the Nationals had secured their best result since 1998. The Nationals have gained at least two seats — those vacated by the two rural independents, Tony Windsor and Rob Oakeshott, who supported the minority Labor government in the last parliament.
Importantly for the party’s future, the electorate of New England is to be represented by former senator Barnaby Joyce, a National who seems deeply committed to the interests of Australian farmers. He has been appointed, as we now know, as Agriculture Minister in the first Abbott Cabinet.
A strong advocate for country interests is certainly needed from the junior partner of the Coalition.
From the time that the first postwar Coalition was established in 1949 by the incoming Prime Minister Robert Menzies, the leader of the Country Party (as the National Party used to be known) was simultaneously appointed Deputy Prime Minister and the most senior Cabinet position.
During his time as Country Party leader Mr (later Sir Arthur) Fadden was both Deputy Prime Minister and Treasurer. His successor Mr (later Sir John) McEwen, when he became Deputy Prime Minister, chose to retain his then Ministry of Trade and Customs (soon to become Trade and Industry).
Both Fadden and McEwen, in their respective periods in office, were the most trusted advisors to the Liberal Prime ministers they served alongside. Such was the status of McEwen that he briefly became Prime Minister in his own right in 1967 upon the death in a swimming accident of the then Liberal Prime Minister Harold Holt.
In fact, so powerful was McEwen at that time that he was able to veto a possible Liberal choice for Prime Minister of William McMahon to succeed Mr Holt. McEwen advised his Coalition partners that if McMahon were chosen, he and his party would be unable to remain in the Coalition.
Those were the days.
Doug Anthony, as leader of the then National Country Party, enjoyed the same privileged position. The Ministry of Trade and Resources was created to accommodate his status as both NCP leader and Deputy Prime Minister in the government of Prime Minister Malcolm Fraser. He joined the list of Country/National Party leaders who, as deputy prime ministers, presided over powerful and influential government departments.
Successors to Mr Anthony, however, seemed to have fared less well.
In 1983, when Bob Hawke became Prime Minister, his incoming Labor government was determined to destroy the power of Mr Anthony’s former Trade Ministry. In 1987, they engineered its absorption into the Department of Foreign Affairs. The fiction of its importance was maintained by re-titling the new department. It became the Department of Foreign Affairs and Trade (DFAT) and had two ministers, both in Cabinet, but the Trade Minister obviously junior to the Minister for Foreign Affairs.
In 1996, the Coalition regained office under John Howard, who chose to retain the structure created by his Labor predecessors. While it may not have seemed so at the time, this proved to be bad news for the Nationals, which, as the record shows, did not fare well in that federal election.
Tim Fischer, the party’s then leader, in accordance with custom, became Deputy Prime Minister. He also took charge of the so-called trade portfolio. But he had no supporting staff other than those provided by DFAT, which was under the control of the Minister for Foreign Affairs, Alexander Downer.
However, paradoxically, in the ministerial pecking order Mr Downer was junior to Mr Fischer. In other words, The Deputy Prime Minister was junior in rank to the Minister for Foreign Affairs. How can one make sense of that?
Of course, it had worked fine for Labor, which was able to appoint the Deputy Prime Minister from its own ranks. But in a Coalition government it was only workable if one accepted that the strength and power of the junior partner in the Coalition was diminished and that the title of Deputy Prime Minister conferred on the Nationals’ leader was ceremonial rather that real.
Until the recent changes announced by new Prime Minister Mr Abbott, the structure of foreign relations and trade responsibilities created by Hawke and Keating remained unchanged through Labor and Coalition administrations alike. In the process, the power of the National Party within the Coalition has been steadily diminished.
Under Mr Abbott, both the ministries of foreign affairs and trade have gone to Liberals. However, Mr Truss is Deputy Prime Minister and Minister for Infrastructure and Regional Development in the new Cabinet, so it would appear that the junior Coalition partner has retained some power and authority, at least in theory. Let us hope that this turns out to be so in practice.
If so, it could result in a welcome and desirable change in the fortunes for farmers and for country people generally; for today our rural sector has never been in greater need of a powerful political voice.
Thus far, neither of the Coalition parties has been prepared to fully acknowledge the problems farmers face in the production and marketing of their produce, both domestically and in export markets.
What we desperately need is a party dedicated to the interests of the farming community in the tradition of Fadden and McEwen, and with the authority to carry the Liberal Party with them in making beneficial changes to help farmers.
In this context, the Nationals’ loss of the trade portfolio may not be the political setback it once might have been.
It is important that Mr Truss is Minister for Infrastructure and Regional Development. From that vantage point he is in a position to shape policies for the benefit of rural communities. Wielding that capacity, and having Mr Joyce as Minister of Agriculture, certainly provides the power base from which the farm sector can be better looked after. It all depends on the capacity of the National Party leadership to push hard for its own constituency.
Nevertheless, the struggle will not begin and end with what can be done in parliament. Farmer representative bodies will need to be shifted from their current mindset, which assumes that all farm problems can be solved by export capabilities. It should become part of the thinking of the National Party at least that farm prosperity cannot be achieved unless farmers have a secure place in the domestic market.
Moreover, farmers’ representatives must learn to speak with the same voice. The successful early farm leaders in Australia certainly knew how to do that.
In pushing this worthy cause, it is helpful that, globally, the focus today is less orientated towards trade than it has been for decades. The importance of ensuring domestic growth is assuming greater importance.
Why this is so and what its implications will be for Australia are matters for further discussion.
Colin Teese is a former deputy secretary of the Department of Trade.