27 November 2012
Topics: Brumby Anti-Dumping Review
JASON CLARE: I'm joined by John Brumby, the former Premier of Victoria, to release the Brumby Report Into Anti-Dumping.
As we know, Australia's a trading nation, and trade is the key to our success. The Asian White Paper makes that very clear.
One of the things that can harm trade is dumping. Dumping is cheating. Where goods are dumped into our domestic market, it can hurt Australian industry, it can also reduce confidence in the whole trading system, and that's why it's important that you have a strong anti-dumping system that makes sure that people play by the rules.
There's been a lot of reform in this area over the last few years, and more is needed. In the last few years, we've seen a tripling, an almost tripling in the number of investigations that have been conducted in this area, and off the back of a weak global economy, a surplus in the number of commodities on international markets, a strong Australian economy, as well as a high Australian dollar, there's an expectation that the number of investigations into dumping, will increase.
So what do we do about this? Well in July I asked Mr Brumby to conduct an investigation into the best system to administer anti-dumping investigations, and to do a cost benefit analysis of a stand-alone anti-dumping organisation, or anti-dumping agency.
Mr Brumby has conducted that work, and provided me with this report last week, and I'm releasing it today. It's a very compelling report, very thoroughly done. Mr Brumby has consulted widely and provided me with 13 recommendations, and I'll now consider those recommendations very carefully, and take them through the formal processes of Government, and I'll endeavour to do that swiftly.
I might now turn to John, and ask John to go through the work that he's done, the findings that he's made, and the recommendations that he's presented to me. John.
JOHN BRUMBY: Excellent. Well, if I could begin by thanking Minister Jason Clare for the opportunity to undertake this review, dumping is an important part of administrative policy. It's an important part of public policy, and I think as Jason has said today, if you look at Australia, look at our history as a trading nation, the effectiveness of anti-dumping arrangements, peoples' confidence that they work, work efficiently and work effectively, is really crucial to maintaining public confidence in our system of open, international trade.
I consulted very widely in the preparation of this report, we made contact I think with something like 400 stakeholders across Australia. I personally met with more than 50 of them, we had a series of stakeholder forums, we had an internet survey, and we received more than 20 written submissions.
We met with people in Sydney, in Brisbane, in Canberra, with representatives over the phone from Adelaide, so we addressed all of the major capital cities.
In preparing the report too, obviously I met with people who are importers, and those too who are local manufacturers. I think there were three major conclusions that I drew from the consultations.
The first of those is that despite significant recent reforms, which the Government has made, there is still a - really a lack of confidence in the arrangements as they operate in Australia today, and that lack of confidence in the system, comes through not just from the manufacturers, but from the importers as well.
What everybody wants, is a system where the rules are clearly known, and clearly established, and where the system works effectively and efficiently and impartially, to administer those rules in a timely way, that's what everybody wants. But the current system isn't working for a range of reasons, as it should.
The second observation that relates to that, is that the current system is in my view under-resourced, it's under-skilled, it lacks appropriate transparency, and there is need, as the minister has said, for a range of further reforms to lift the performance of the anti-dumping arrangements in Australia.
And it's interesting, you know, if you go back to the 19 - late-1980s, when Senator John Button was Industry Minister, and he established a separate, independent, stand-alone anti-dumping authority, at various stages in the operation of that authority, there were up to 150 staff operating in it. The effective full-time staff numbers today are now down to around 40, despite the recent increases that have been made available by the minister.
So the third conclusion that I drew from all of my work is that Australia, in the current global environment, coming out of the Global Financial Crisis, a strong domestic economy, that Australia is an attractive location for dumped goods, that we are an attractive market, we have a big market close to our ports in Brisbane and Sydney and Melbourne, and with a slowing of the world economy, there are a lot of goods that are literally travelling around the world, looking for a market, and we're an attractive market.
And so, if you put all of that together, the likelihood is that we're going to see increasing demand on an already stressed set of administrative arrangements, we're going to see an increasing number of dumped goods come into the market, and in the absence of effective action, we will see injury to domestic manufacturers.
And the WTO by the way, is very clear on this, it's very clear on this, there's no law against dumping per se, but if dumped goods come into your market and they do injury to local manufacturers, then you're entitled and expected to take remedial action, and that's what the dumping system is.
So there are two elements to it, the goods have got to be dumped, and there's got to be injury, but in my view, looking at the strength of the Australian dollar, looking at the global economy, looking at global production systems, we are likely to see an increased demand coming into the system.
So the recommendations that I've put to the minister, there's a number of recommendations, there are 13 in total, but there are a number of really two key recommendations.
The first is that the Government should establish under legislation, new international trade remedies - could be called an authority, an agency or a commission, but it needs to have a higher profile and more independence than current arrangements.
I've recommended that it remain within Customs, and remain within the Attorney-General's department, and this is important, it's important in the sense of policy neutrality, you know, there are some who would say that this should be located in the industry department, I don't think that's the right public policy, I think it would send a signal about Australia, and Australia's approach to international trade.
There are others that say it should be in DFAT, again I think that would send a signal as well. Customs and the Attorney-General's department are the best place for this department, because it's neutral, and it's neutral and it's impartial, and in terms of the relationship with Customs, it's an important relationship because they have all of the data, they have all of the information in relation to trade and imports.
So I've said that it should be located within Customs and the Attorney-General, it should be headed by a legislated commissioner or CEO, who would report directly to the minister, I've said that that CEO should be at a higher level, Level 2, rather than current arrangements, and I've also recommended that the new agency be located in one of the major capital cities, in Melbourne or Sydney, because that's where the best skills base is, and that's where most of the activity is, in terms of importers or local manufacturers.
So they are the principle recommendations.
I've made a second set of recommendations which go the resources question. As I said, if you look at the history of this organisation, it's enjoyed staffing levels for much of the last 15 or 20 years, at more than 100 EFTs. Today it's down around that 40, 45 level. If you look at the ability of the current arrangements to meet their KPIs in terms of timelines, they're struggling to meet them. If you overlay over that a continuing strong Australian dollar, and continued demand for anti-dumping cases, then we face I think a significant shortage of resources.
So the other recommendation that I've made to the minister and the Government, is that there needs to be a significant and immediate increase in resources for the new anti-dumping arrangements.
This is building, I think, on the reforms that have been put in place - and by the way, in terms of the feedback on those reforms that came through from stakeholders on both sides of this debate, very positive feedback on all of those reforms. But I think, as the minister said, there's still more to do.
So changing the structure of the arrangements, giving it more profile, more staff, more teeth, better skills and a more senior level CEO will enable the new agency to undertake the anti-dumping inquiries more efficiently, more effectively, more impartially and in a more timely matter. So I think these things are crucial.
The final thing that I want to say today is again to go back to where the minister and I began our remarks today, and that is to say that Australia has always supported open international trade. We are a trading country. You know, that's how we've achieved much of our economic success.
So I've not made any recommendations here that change the balance of that neutrality, if you like. We've got an anti-dumping system which is fair and impartial, it's not protectionist, it's not free trade. It implements the letter of the regulations of the WTO, and that's the way we want to keep it.
But we want to make it work better, we want to make it work more effectively, we want to make it work more efficiently, so I think it does need a higher profile, it does need a better skill set and it does need an independent agency.
So that's what I've recommended and I think if you couple them with resources, it will enhance and improve the performance.
The last thing I want to say is that the existing Customs staff do their work to the best of their ability, so there's been no criticism of those who do their job currently. They've struggled, I think, with an outmoded system, they've struggled with an under-resourced system, and I hope now, building on the reforms that have been made, I hope that this will be the last tranche of reforms that will really elevate the performance here and give everybody confidence in our anti-dumping arrangements and therefore confidence in Australia's system of open international trade.
JASON CLARE: All right, open to questions, Phil.
QUESTION: Mr Brumby, I haven't had a chance to read your report but what does it say on some of the dumping cases that have been prominent, such as Kimberly-Clark said they had to sack 200 workers because they couldn't compete with cheaper Indonesian toilet paper. And I think anyone who goes to the supermarket and looks at products, say tinned tomatoes, the Australian tomatoes are significantly more than the imported ones. It looks like they're being dumped, you know, they're sort of, you know, real live business issues.
What does your report say how to deal with those sorts of issues?
JOHN BRUMBY: What the report says is that we're party to international obligations and that if goods come into Australia below their normal price, below their normal market price and they cause injury to local manufacturers, then you're entitled to see duties put in place. That's what the regulations - that's what our international agreements give rise to.
So the recommendations I've made will enable the, I hope, the new anti-dumping commission or agency, it will enable it to hear those cases, to undertake those cases impartially, but to do it in a more timely, efficient and effective way, and in so doing, give more authority, if you like, to the decisions which have been made.
That's what everybody wants. There is - there wasn't, I don't think, a single submission to me that said, you know, you've got to throw this whole system out or you've got to make it, you know, completely free trade or completely protectionist. What they want is the system to work better. The rules are there and the rules are pretty clear. There's got to be a product sold below price and it's got to cause injury.
And what everybody wants is certainty and clarity. And you know, what's happened in the last few years, particularly post-GFC, strong Australian dollar, slow-down in the world economy, a lot of goods sailing around the world looking for a home, and we're an attractive market.
So whether you're an importer or whether you're a manufacturer, you need a system that you can have confidence in. And I believe that the changes I've recommended will now give that degree of confidence, building on the raft of very positive reforms that the Government has made.
So it'll give certainty, it'll give clarity and I think I can say with a high degree of confidence, you will see the new agency meeting its KPIs, so in other words, delivering its report within the timeframe set out in the legislation.
QUESTION: Can I ask. I know you mentioned that the applications have tripled over the past two years or so. You mentioned that people have a right to ask for remedies. Has there been any successfully applied? How easy is it to find people who are actually doing the dumping and to make them pay up if there is a case there?
JOHN BRUMBY: Well, there's a long and complex process that is involved in hearing an anti-dumping case. And you know, one of the other things about the system is it's quite expensive to utilise, not because you have to pay to make an application, but because there's a limited number of specialists in the field who have this knowledge.
But what you've got to be able to prove is the two things. Firstly, that the product is being sold below its normal price, and secondly, that your business has been injured as a result.
So in doing that, the Customs officers, the Trade Remedies officers, have to travel overseas to the country of origin. They've got to question and interrogate the local manufacturers there. They've got to establish what the price is. Often these are complex and detailed discussions. You know, it's not uncommon that two or three Customs officers will go overseas and they'll be met by, you know, a team as big as this on the other side to prove that the goods aren't being dumped. So you've got to make sure that what you're doing is applying the letter of the regulation, so the cases are always complex.
There have been a number of cases that have been found in favour of Australian manufacturers but there have been other cases that have been found where no dumping's occurred.
What I know is that there is probably half a dozen to a dozen cases which are in the pipeline. I know this because of the submissions put to me by companies that they are wanting to take action and intend to take action. And again, they're not looking for anybody to bend the rules; they just want the rules to work well and to work effectively.
So you know, it is the fact that because of the high dollar and because of the slow-down in the world economy, overproduction in Europe, overproduction in places like China, there's a lot of commodities, particularly glass, steel, aluminium, and they're literally - you know, there's commodities literally travelling around the world, they're looking for a home, and ours is an attractive market.
QUESTION: What is the actual remedy? Is it financial or just getting an undertaking from the overseas suppliers?
JOHN BRUMBY: No, the remedy is lifting the rate of duty.
QUESTION: So has it actually...
JOHN BRUMBY: Yeah, yeah, that's what I said. Yes, there's been a - Jason might like to go to that, but there's been a number of cases, yeah. So, but the question is here, is the system equipped to cope with what will be an increasing workload, and where damage occurs, where the price is artificially low and there's damage to Australian industry, you're entitled to remedies. And those remedies are either high duties or countervailing action, and it's important in the current environment that this system works well so that where there's genuine injury to Australian manufacturers that the higher duties can be imposed consistent with WTO arrangements.
JASON CLARE: Just to add to that. Yes, duties are imposed. Matters come before me all the time. There's matters that'll come before me shortly.
The key challenge, as John said, is that it's expensive to put in an application for an investigation and it can take a long time. And when the number of investigations is increasing - and it's tripled or almost tripled in the last few years - often the department will come back to me and say they need more time to do this work.
So it's about making sure that we've got the resources we need to do the job effectively. Ultimately, the important thing here is to make sure that you've got a strong, independent, effective umpire to make the right decisions, and they need to be well resourced and well skilled to do that.
If you've got a strong, independent, effective umpire, they'll make sure that everybody plays by the rules, and that's good for international trade. That goes to heart of what John's recommended, and that'll be the focus of my work as I work through all of John's recommendations before I come back to you with the Government's response.
QUESTION: Could this be the tip of the iceberg if a lot of - are some people giving up because it's too expensive and too complex, the system, in some of these areas?
JASON CLARE: Sometimes, particularly for small businesses. Bigger businesses will put in applications. Sometimes small businesses will find it will take too long or be too expensive, and that's why we have funded additional resources for the Australian Industry Group. They've got somebody on board now specifically to help small businesses, SMEs, in their anti-dumping applications.
A lot of the reforms that have been put through Parliament - and we've had four tranches so far, I think there's more reform that's needed - a lot of those reforms are about making the system simpler and less expensive.
There's three bills in the Senate right now. Hopefully three of those bills will be passed this week. And they go to the heart of the need to reform policy in this area.
John's focused on the structures that need to be put in place and how they need to be resourced to make sure that we've got a strong anti-dumping system.
QUESTION: [Indistinct] you talk about immediate and urgent need for resources.
JOHN BRUMBY: Yep.
QUESTION: Do you have a ballpark figure on that, and Mr Clare, do you give any guarantee from the Government there will be an increase in resources?
JASON CLARE: Maybe if I just answer that and then hand over to John. I think John makes a strong and compelling case for reform. It's my job now as the Minister responsible for this area of public policy to carefully comb through his recommendations, and present recommendations to government.
I'll do that swiftly.
I'll do that swiftly, I'll do that in weeks not months. John.
JOHN BRUMBY: I was just going to say when you have a chance to go through the detail of the report you'll see there's quite a lot of data about those workload issues. And as I said if you go back to the late 1980s when John Button set up an independent anti-dumping authority, there were well over 100 EFTs.
At one stage I think there's over 150.
So you know what's happened over time is the resource levels have declined. In recent times the Minister has made available more resources. But what I'm saying is there is an urgent need now for more.
And there's an urgent need now for more because the current staff are struggling to meet the KPIs in terms of time lines. And there is, there's going to be increasing workload, no doubt about it.
Jason mentioned the International Trade Remedies Advisor, which by the way was a fantastic initiative, and just applauded overwhelmingly by industry.
So that officer works from the Australian Industry Group in Melbourne. He is working at the moment on between eight and 12 cases that are likely to come up to the agency. So there's going to be an increase. So these are going to be matters I guess to the Minister and for ERC. What I've said is that don't wait a year or two years or three years to do that.
In my mind, despite the recent increase up to I think it's 45, potentially, EFTs, it needs more staff. It needs more staff and it needs them now. And if you look at this historically, the agency, despite the recent increases, is underdone compared with where it's been in the late '80s, the early '90s, the late '90s, and so on.
So that needs to happen now.
And I think the benefit of that will come in stronger confidence in the arrangements in getting the right and timely results.
Very quickly, too, on the cost of my recommendations - so if you just look at the cost of setting up the new agency, there's always a cost with new agencies - if we've gone for a completely independent stand alone, independent of any department, authority with its - all of its own governance requirements, reporting requirements, all of that - that would have been a costly exercise. What I've done here is given it more profile, stronger leadership, more independence, but still within the shared services model within customs and AG, so the one-off cost of setting this new arrangement up is $1.7 million, that's in the report.
The ongoing costs are under three quarters of a million dollars per year.
Now to that if you were going to provide additional ongoing resources, 10, 20, 30 additional staff - whatever the number might be - that will be a matter for the Minister and ERC.
Then that'll obviously have a cost involved.
In the bigger scheme of things, there's another graph in here of Australia's two-way international trade, you know, and the graph goes like that over the last decade.
The amount we spend in this area, you know, is miniscule compared to the importance of international trade, the importance of maintaining confidence in international trade, whether you're a manufacturer - or whether you're an importer.
So I think this is a small investment that buys a huge degree of confidence in our economy as a good place to operate to invest to generate jobs.
QUESTION: Mr Brumby, when Julia Gillard resigned Slater and Gordon, her next job was working as your chief of staff. At the time that you hired her, did you discuss her resignation from Slater and Gordon, did you have any concerns, and are you satisfied that the Prime Minister has answered all the questions in relation to this matter?
Secondly, you worked on the GST review with Nick Greiner. Mr Greiner has been outspoken in saying the review should look at raising the rate and broadening the base of the GST.
What's your take?
We haven't heard anything on that from you.
JOHN BRUMBY: Well I'll start with the second part of the question on the GST, so the GST report was undertaken by Nick Greiner, myself, and Bruce Carter from Adelaide.
I think it's a very good report. We were given terms of reference I think. Within the terms of reference we were given as a very good report. I'm not going to pre-empt it today, I don't think you'll seriously expect me to.
So that's gone to the Treasurer. It's his property. And to be fair I think he will want to discuss it with the state treasurers and state premiers. So I'm not going to go into that. On...
QUESTION: [Indistinct] raising the rate, broadening the base of the GST...
JOHN BRUMBY: Well...
QUESTION: [Indistinct] Premier an understanding of the pressures that state budgets are under.
JOHN BRUMBY: Yeah, well, again, I don't think it's appropriate for me to comment on those matters given I was asked to undertake a review about the GST.
The Treasurer's got that review. If you want to ask me questions about that after he's released the report I'll be happy to answer them. But I think it would distort, you know, the impartiality of the views that were put together in the report.
On the question of the PM, can I say, when she was my chief of staff, she was an outstanding chief of staff, right. I've been very fortunate in having many excellent chiefs of staff over the years.
But she was a fantastic chief of staff.
When I engaged her, I obviously did check - as you would do as a prudent employer - with her former employer, and that was Slater and Gordon.
So I remember speaking to Peter Gordon. His reference in relation to her was effusive.
You know, in every sense of the word. In terms of her ability, her diligence, her capacity for hard work, and one of the things I've always required of my staff over the years is a commitment to hard work.
So you know, ability, professionalism, honesty, impartiality, a hunger for hard work - like it was a 10 out of 10 reference.
So that's what I did as her employer.
And I remember the phone conversation that I had with Peter, I obviously knew Peter because I'd seen him when he was club President of the Bulldogs and things at the footy. So I knew Peter. But it couldn't have been a better, more exemplary, more effusive reference.
QUESTION: [Indistinct] been to some extent though even at that time aware of the allegations that have been levelled against the PM, being a serving member of the Victorian Parliament, and Phil Goud, a then Victorian Member of Parliament having raised some of those allegations. They weren't discussed at all with the PM, you didn't discuss them at all with the PM.
JOHN BRUMBY: Well - not that I recall, and again to the extent that they've been raised I would have covered that off in the discussion with Peter Gordon, and again I can only repeat you know he was the principal of the firm. Like, really, Peter Gordon was the firm back in those days in a sense.
It just couldn't have been more positive.
And by the way, you know, her work performance for me - it was only for a couple of years - was just exemplary in every respect. You know, like, just in terms of ability - and capacity - and honesty, and diligence, being a team player, all of those things, you know, just a tick in every box.
QUESTION: [Indistinct] you have known her for a long time, a long long time. What do you make of the allegations and the questions surrounding her conduct.
JOHN BRUMBY: Well I - you know, I've got to say just as an outsider, if I can use that expression now, sort of looking in and not involved in the day to day, I just, you know, I am just astonished on a daily basis at the media attention given to this, you know.
So it's just a huge way back in the past. She's answered the questions, you know. I open the paper and I see more of this, I just think it's a nonsense, you know.
That's my view.
My son was home last night watching television and watched Mr Blewitt interviewed on 7.30 Report. Like, he just can't fathom or understand how someone like that is treated credibly by the Opposition or the or the press.
So that's just an outsiders' view, I'm not close to it any more, I'm staying away from commenting as you know on day to day political issues. You ask me today - I'm just astonished at the continuing focus.
JASON CLARE: One question [indistinct].
QUESTION: [Indistinct] announced that it will investigate justice reinvestment, the implementation of that with the unacceptable levels of Aboriginal incarceration in WA, youth incarceration rates there - probably per capita more imprisonment rates than blacks in South Africa, the apartheid era.
One, what are you doing about that in terms of what is your position on justice reinvestment, and do you welcome this particular move?
JASON CLARE: This is a matter that is principally before the Attorney-General, but I welcome any work that the Senate does. I'll consider the work they've done, the recommendations they've made very carefully.
This is very serious issue.
The over-representation of Indigenous people incarcerated in our prisons have been a concern for a very very long time. It remains a very large concern. And I'll look very carefully at what the Senate has said and what the Senate's recommended.
QUESTION: Mr Brumby, I was just going to ask you, as a former Victorian Premier who obviously understands state needs and has done the GST review, Ted Baillieu has recently said that all of Victoria's woes, essentially, are caused by the Federal Government cutting back funding and causing him problems. I'm wondering what your thoughts are on that?
JOHN BRUMBY: Well again I'm trying to avoid commenting on day to day state political events, so I'm not going to start now, but I will say in the GST report, in a sense it's a bit of a zero sum game, you know, the bigger states want more. And little states want more. Everybody wants more out of the pot. But I think you'll see when you've done - when you've looked at the report, you know, it builds on the two interim reports.
And you know I think there's a bit in there for everybody. You know, everybody will come out with a little bit more in my view. And you might wonder how we've done that.
You'll have to wait and read the report to see that. But I think it's a good report. And I think it'll be pretty-well received.
QUESTION: [Inaudible question]
JOHN BRUMBY: No I think you'll have to read the report.
JASON CLARE: All right, okay, thanks very much everyone.
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