Trade between Australia and Indonesia (Federation Chamber)




Indonesia is our next door neighbour.

And it’s a big and important neighbour.

It’s home for more than 250 million people.

In population terms, that means it’s the fourth biggest country in the world.

By the middle of this century it will be the fourth biggest economy in the world – sitting only behind the United States, China and India.

But at the moment trade and investment with our big northern neighbour is massively underdone.

Indonesia doesn’t even register on the list of top ten trading partners for Australia.

We trade more with New Zealand – a country of less than 5 million people – than we do with Indonesia with a population of 250 million people.

The comparison is stark.

There are more than 12,000 Australian companies currently doing business in New Zealand.

There are less than 300 in Indonesia.

This is what I mean when I say that our trade and investment relationship with Indonesia is massively underdone and why the free trade agreement currently being negotiated between our two countries is potentially so important.

That agreement has the potential to provide the foundation and a framework to increase trade and investment between Australia and Indonesia and to make the most of the economic growth of this economic juggernaut in the decades ahead.

Just one statistic gives you an idea of the potential opportunity that awaits us in Indonesia.

Indonesia is a young country. The median age in Indonesia is 28.6. In other words more than half the population is under 30.

By 2030, 70 percent of Indonesians will be of working age. That means about 135 million potential consumers and a market worth almost $2 trillion US dollars.

Our challenge here as we look at this opportunity, is how do we build the foundations now between our two countries that will help to make sure that as Indonesia grows in the decades ahead, it also creates more jobs here and more opportunities here at home for Australian businesses.

Because if we don’t, other countries will.

The opportunity is enormous and it’s up to us to make the most of it.  

The free trade negotiations between our two countries kicked off about seven years ago. They kicked off under the former Labor Government. They were initiated by Julia Gillard and by President Susilo Bambang Yudhoyono in 2010.

We understand now that these negotiations are reaching a conclusion.

The Prime Minister of Australia and the President of Indonesia made the commitment in Hamburg at the G20 that they would seek to finalise the free trade agreement negotiations between our two countries by the end of this year.

We look forward to seeing the details of that agreement when it’s finalised and we hope the Government can forge a high quality agreement.

Because the opportunities here are so great.

In particular for Australian farmers, for Australian universities and other education providers, for the tourism sector – as well as for increased investment in both directions.

We will wait to see the details but one of the interesting features of these negotiations is the role business has played so far in helping to focus negotiations and identify the real opportunities that are available here.  

The Indonesia-Australia Business Partnership Group was established in 2011.

It is made up of business peak bodies from our own country as well as from Indonesia. It includes:

  • The Indonesia Australia Business Council
  • Asosiasi Pengusaha Indonesia (APINDO)
  • the Australian Chamber of Commerce and Industry (ACCI), and
  • the Ai Group.

They have done a lot of important work in identifying the opportunities to increase trade and investment between Australia and Indonesia and also identified some of the impediments and provided advice on how they could be overcome.

This is not something that happens with all of the free trade negotiations that Australia undertakes.

It’s unusual to have business leaders from both countries do this sort of work and I think it’s constructive and extremely valuable.

Hopefully, the agreement that’s signed later this year will be the better for the work that these business organisations have done.

There are a number of other issues that I also hope that this agreement, when it’s finalised later this year, addresses. Some of these are picked up in this report.  

This report that we are debating here is a report of the Joint Standing Committee on Trade and Investment Growth.

They were asked by the Government to inquire into Australia’s trade and investment relationship with Indonesia and they have made a number of, what I believe, are very important recommendations.

One of them is that the free trade agreement with Indonesia should not waive labour market testing.

 I agree.

Labour market testing is a pretty simple concept.

Before a company can bring in a temporary worker from overseas they should have to check if there is an Australian who can do the job first.

Waiving that in this agreement would mean workers from Indonesia can come to Australia without the company they’re going to work for first having to check if there’s an Australian who can do the job.

This is the sort of stuff that makes people angry.

It’s the sort of stuff that makes our constituents angry.

It’s not protectionism, it’s just common sense that before you bring in an electrician or a carpenter or a plumber from overseas, the company seeking that person to do the work should first have to go through the basic task of seeing if there is an Aussie who can do it first.

The report recommends that the free trade agreement with Indonesia doesn’t waive labour market testing and we agree.

The report also recommends that the final text of the agreement should be accompanied by independent economic analysis conducted either by the Productivity Commission or by an equivalent organisation.

This is just another sensible, practical but important recommendation.

It’s not a new idea – the Australian Chamber of Commerce and Industry has recommended this before, so has the Australian Council of Trade Unions.

It’s also been recommended by a number of committees in this place by the Joint Standing Committee on Treaties, by the Senate Inquiry into the Trans-Pacific Partnership and the Senate Standing Committee on Foreign Affairs, Defence and Trade’s review of the treaty-making process in 2015.

The important point here is this – public scepticism about trade, about open markets about globalisation is real and it’s increasing.

You see evidence of it with the election of Donald Trump last year, of Brexit, even the rise of Hansonism and the vote One Nation got at our last election.

This sort of independent economic analysis of a trade agreement once it’s struck between our two countries helps to respond to these sorts of concerns.

That is important because public trust, public faith, public confidence and public support for free trade and open markets is important.

One in five jobs in Australia is directly related to trade.

More trade means more jobs and more high paid jobs.

We need to be able to say when we are debating a free trade agreement that we know not just because the government says so, but because the independent analysis proves it – that this is going to provide a real benefits and more jobs for Australians.  

So I hope that the government takes this report seriously and implements it.

This is a good report.

It’s a bipartisan report.

It’s not just Labor members on this Committee that have recommended that this free trade agreement with Indonesia:

  • Not waive labour market testing, and
  • Should be subject to the scrutiny of independent economic analysis.

It’s the Government members too.

Both sides have said this.

Unfortunately, all the evidence to date indicates that the Government is going to ignore their own members and the recommendations in this report.

If they do that this will be a mistake.

The free trade agreement with Indonesia, currently being finalised, is an enormous opportunity for our two countries.

We shouldn’t be afraid of independent analysis of it.

And we shouldn’t have to trade away the rights of Australian workers to get the first crack at a job before overseas workers, in order to get a great deal done.