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Value of China Free Trade agreement to regional Australia

Your Say by Steve Whan.

There are a million more cows on New Zealand’s South Island since their China Free Trade Agreement (FTA) was signed. Well, mostly cows. The boom in the number of dairy cattle has come about of the massive demand from the Chinese middle class for clean green produce, including milk products and the fact that New Zealand exporters enjoy no Chinese tariff as a result of their FTA.

In Australia the China FTA debate quite rightly focuses on jobs. My view is that the plus side of the ledger on jobs for Australia will be much bigger than the minus and it is vital we get on board.

Over in New Zealand those one million extra cows need thousands of people to maintain, milk, process and package their product. A large proportion of those jobs are in manufacturing. Sure they aren’t making cars, but the product and the jobs, are just as valuable as those building vehicles or machinery.

The Chinese middle class is expected (by the world bank) to grow by more than more than one billion from 2005 to 2030 so there is growing demand, not just for milk products, but for a massive range of food products, services and energy.

The great news for regional areas is that (if we are ready for it) many of the opportunities will be there for us. Our reputation as a producer of clean healthy food means we have a great chance to boost exports of food products which can be grown, processed and packaged in regional areas.

The demand from China’s middle class for infant formula and other milk products is well known. It is part of the reason for the growth in New Zealand’s dairy export income from $372 million in 2004 to $6 billion in 2014 (Statistics New Zealand, 2015). It’s a boom market some Australian exporters are involved in as well and one likely to grow even further with the removal of China’s one child policy.

Opportunities for organic produce, regional education, wine

But it’s much bigger than just infant formula and powdered milk. China’s health conscious middle class are paying premium prices for ‘luxury’ food products and products that are good for them and their kids. The opportunities are there for packaged fresh vegetables and other horticultural products, meat, nuts and specialised product like organically certified or allergen free.

Regional Australia could also be the source of other in demand products, fine wine, education at our regional universities, tourism including eco-tourism and many other things. Regional Australia may also continue to play a role in meeting China’s ongoing demand for energy for many years ensuring the employment of many mine workers and regional engineering employees.

The China FTA will see the removal of Chinese tariffs for most of our agricultural products and that puts us on an equal footing with our major competitors.

It is a huge opportunity to grow Australian jobs and – if we get it right – to reverse the decline in manufacturing.

Those million cows in New Zealand have seen New Zealand’s dairy corporation, Fonterra, expand its direct employment to 16,000. Holden Australia employs 3,500.

The key is for Australian producers to be ready with product that sees elaborate transformation (processing, packaging etc) occurring here in regional Australia – thus maximising the jobs on shore. Up until this point we have seen pretty sporadic efforts by Government on this front. Victoria has done it well with a very active Government strategy (from Labor and Liberal Governments) – NSW has not been as proactive and needs to do more than leaving it up to individual companies (like Freedom foods and Norco).

This huge jobs potential is precisely the reason that Labor under the Rudd and Gillard Government’s undertook most of the negotiation of the China FTA.

All that is not to dismiss concerns from people about labour and workplace standards – those are very important issues. Any electrician working in Australia must be qualified at acceptable Australian levels and we must undertake labour market testing – but all those concerns can be met by a Government properly enforcing the existing legislation and should not be a reason to oppose the China FTA.

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