From apples to oil, Liberals get lost in afternoon light

The Dreyfus Files - The Age

The Liberal Party of Australia may need to change its name.

For just shy of 30 years, Australia's two major political parties, the Australian Labor Party and the Liberal Party, have been in agreement that Australia's markets should be open to global competition.

For three decades, as Australia tore down our trade barriers, led by Labor reformers Whitlam, Hawke, and Keating, and as we pursued a free trade agenda that has driven economic growth in Australia under Howard and Rudd and Prime Minister Gillard - both parties have been in agreement about the importance of free trade to Australia's economy, and neither major party has sought to exploit public anxieties about opening the borders.

Until now.

As Opposition Leader Tony Abbott digs in for the mother of all mudslinging campaigns, strange noises have started coming from within the opposition. In a Coalition attack on New Zealand apples, and in a move to require compulsory labeling of a widely used oil product, the very principles of liberalism seem to be breaking away as collateral damage.

In July, the opposition's agriculture spokesman, John Cobb, announced via press release that the Coalition would introduce a Bill to overturn a World Trade Organisation ruling that New Zealand apples be allowed into Australia subject to scientifically-based quarantine restrictions.

In speeches to Parliament and media interviews Mr Cobb confirmed that the Coalition's policy would be to violate world trading rules, disregard the science, and tear up our trade agreement to stop New Zealand apples from entering Australia.

What his press release didn't say, among the puns about apple crumble, was that by breaching the very rules under which we trade our goods and services overseas, we would open ourselves up to retaliatory action from New Zealand.

Australia exported about $8 billion in goods and services to New Zealand last year. If we went down the path proposed by the Coalition, New Zealand could retaliate by raising their tariffs on any Australian products - the $110 million of sugar we send to New Zealand each year for example, or the $90 million of pork, the $39 million of chocolate or the $18 million of beef.

For more than a month, the opposition put forward a position that broke with the 30-year consensus in this country, and said to our international trading partners that Australia under a Coalition government could not be relied upon to comply with the rules.

Such was the impact of the opposition's position that New Zealand Prime Minister, John Key, called upon the Coalition to see common sense, and reportedly warned "I think it's a very negative step for Australia to start saying it's going to oppose a WTO ruling".

This reminder from the Prime Minister of one of our major regional trading partners, was enough to prompt the Coalition to back down. According to media reports, Abbott said to his party room last week that he would no longer pursue the plan to overturn the WTO ruling, because "at the end of the day we . . . cannot pursue short-term political gain at the expense of the long term national interest that Australia has as a trading nation".

The irony was, he'd already done so. In the media interviews the opposition had already given, in the public alarm that they had already caused about the dangers posed by New Zealand apples, and the message they'd already sent to our trading partners, the damage was done.

But it's the Coalition's support for another bill, which seeks to make it compulsory to label all products sold in Australia that contain palm oil, that is more alarming for Australian business and trade relations.

This bill, sponsored by Senator Nick Xenophon and the Greens, is likely to pass and become law if the Coalition continues their support for it, and don't re-enact the backdown they've displayed over apples.

Again, this is a bill that could also breach Australia's World Trade Organisation obligations.

But what the opposition knows is that this is potentially an emotive issue and another way for them to tap in to voter anxieties. The reason why there's a call to require compulsory labeling of palm oil is because palm oil plantations in Malaysia and Indonesia are seen as a key driver of the rampant clearing of native vegetation in those countries.

Preventing deforestation in Malaysia and Indonesia is a worthy aim. But this bill is the worst possible way of going about it.

Leaving aside the costs that this bill would impose on Australian business, two countries, Malaysia and Indonesia, have already indicated that they will take a dispute against Australia to the World Trade Organisation if the Parliament proceeds with the palm oil bill. And if we lost that dispute, we would expose ourselves to the threat of retaliation on any of Australia's significant exports to those countries.

As well as all that, the opposition-backed bill is inconsistent with Australia's existing federal/state co-operative food regulations and consumer law, is inconsistent with international labeling practices, and is unlikely to have any real impact on preventing the rate of deforestation in Malaysia or Indonesia.

In short, it is deeply flawed legislation that puts Australian farmers and business at risk of trade retaliation by two of our regional trading partners. A better approach is to tackle deforestation on the ground, which the government is doing via the $273 million International Forest Carbon Initiative that targets deforestation in developing countries, including a $100 million investment in Indonesia.

But the political spectacle that we're witnessing now is not the sparks from a great battle of ideas. This is a mudslinging campaign led Tony Abbott, in which he is seeking to drag his party to victory with a campaign of negativity, by exploiting public anxieties, and in the process taking his party further and further from the principles upon which it is based.

When the Liberal Party was formed in 1944, Robert Menzies said the name liberal was chosen to describe a "progressive party, willing to make experiments, in no sense reactionary but believing in the individual, his rights and his enterprise".

I doubt there are many in Australia today who would describe the Liberal Party of Australia in this way.