Foreign Affairs and Trade are strange bedfellows in Australia today.

Aug 10, 2020

Paul Barratt’s recent article, favouring a freestanding Trade Department should be supported. As our nation stumbles through the fog of the Corona virus, it is time to navigate a path toward economic recovery in our relations with China.

‘Foreign Affairs and Trade’ have long been strange bedfellows. The very name mixes metaphors and the logic, which dares to suggest that two central pillars of our government do not deserve their own space, remains a mystery. If the trade portfolio fell victim to the politics of hierarchy, when the Country Party and our agricultural exports lost their primacy, that is a shame. A proud trading nation should never allow its trade portfolio to be subservient to another Ministry. Indeed, our trade arguably assumes a greater presence on a global stage than our voice in international affairs. Put simply, trade punches above its weight (albeit on a miners’, not a sheep’s back).

I would not, however, diminish the Foreign Ministry’s critical place in our policy armoury. Indeed, the case for a stand-alone Foreign Ministry seems equally strong. The US, China, Britain, Japan, Germany, and many others have stand-alone Foreign Ministries. Why not Australia? Many issues shape foreign policy – trade, defence, aid, and humanitarian issues etc. Even standing alone, it is a daunting portfolio.

But refined intellect rarely shakes hands with grimy commerce. Combining trade and foreign affairs is like including artichokes in a bouquet of roses. Foreign policy is crafted by diplomats, bureaucrats, and politicians in a Canberra policy conclave, while trade is driven by events remote from Canberra, in our capitals and regions, and by distant market needs, rather than central policy dictates. Our architecture must reflect that.

The contribution of our traders is rarely acknowledged. A proud, collegiate culture unites a small army of fellow traders, who risk their capital and livelihoods on distant shores, in dingy hotel rooms and in difficult markets. They are our forward pioneers and we must find ways to better support them in a post-Covid world.

If there is anything positive to salvage from the Covid pandemic, it is the breathing-space it gives us, strategically, to review our government architecture. In the trade arena, I would start by integrating trade policy, trade promotion, investment, and technology transfer, Export Finance Australia and the FIRB under one roof, to better align and focus our resources in a new ‘Ministry of Trade and Investment’.

If we are to reduce our supply chain dependence upon China, bolster economic self-reliance, rebuild manufacturing, and encourage further processing, then trade needs to join hands with an expanded investment function and be more closely aligned with industry and innovation.

We must also overcome the mindset that only Canberra understands trade. It is axiomatic that those who practice in risky, private sector markets bring great acuity to the task of informing our trade strategies.

That brings me to trade promotion. In reviewing this area, it serves to contrast the former Trade Service with John Dawkins’ Austrade. Contrary to popular notions, I found John a very capable and likeable Minister. We worked closely on the $HK 1 billion Light Rail Project and I admired his skills of advocacy. John helped me win that project, but his reform of our Trade Service was, I believe, misguided.

When Dawkins dismantled a field-based service, attacked its esprit de corps, and replaced it with a fee-charging government agency, he arguably sterilised a swashbuckling team of trade advocates. Recruited from the private sector on contracts, those former Commissioners had no security of tenure and so, with some exceptions, evolved their own, elite career stream within government.

They became market, or industry, specialists, fluent in Mandarin, Indonesian and other languages, and these things helped them to integrate seamlessly into foreign business communities. More at home in foreign markets than in Canberra, they were passionate advocates for their private sector clients – not fee charging bureaucrats. That difference yawns like a policy chasm.

Reforms which rebuild that market-driven culture and provide a voice of advocacy for businesses within government, will better inform trade strategies. I also favour an enlightened partnership with the private sector, via an exchange program, whereby business people with market or industry skills are offered short term, project-related assignments as Trade Commissioners, and returning Commissioners, with recent market expertise, are attached to businesses for a spell, building strong alliances.

I would be remiss if I failed to comment upon Industry policy. If ‘Foreign Affairs and Trade’ is a mixed metaphor, how much more so is ‘Industry, Science, Energy and Resources’, a Ministry which struggles to meld those disparate parts into one, national industry strategy and spreads responsibility across five Ministers. For the record, those are Karen Andrews (Industry, Science & Technology), Angus Taylor (Energy & Emissions), Michaela Cash (Employment, Skills, Small & Family Businesses), Keith Pitt (Resources, Water & Northern Australia) and Michelle Landry (Assistant Minister, Northern Australia). A single Ministry, with subordinate agencies, might better centralise Ministerial accountable. ‘Industry and Innovation’, perhaps?

An excellent summary of challenges in the industrial development and manufacturing sectors is provided in an article by Michael Emmery, accessible via the following link:

So, given a free hand, how would I reshape our architecture? I would start with (i) a federal ‘Ministry for Economic Reconstruction’, (ii) a ‘National Council for Reconstruction’, (combining the offices of the Prime Minister, the Treasurer, a Minister for Trade & Investment, and a Minister for Industry and Innovation – balancing this with an equal number of business leaders) and (iii) an independent Dept of Trade & Investment.

Change comes at a cost, but the pandemic teaches us that failure to be policy nimble in times of rapid change can be more costly. In the current climate, our political leaders must boldly re-imagine their government architecture to make it equal to new challenges. We must use this economic hiatus to develop new policy levers to ignite a speedy recovery. And Australia should lead, not follow

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