Prime Minister Malcolm Turnbull is partnering with his Japanese counterpart to lead a push for the early ratification of the Trans Pacific Partnership (TPP), just days out from Donald Trump’s inauguration as US President.
It comes as Coalition backbencher and former Prime Minister Tony Abbott urged the government to act sooner rather than later to ensure the Australian economy can withstand any potential effects of a Trump administration.
The President-elect vowed during his election campaign to withdraw from the TPP on his first day in office, however, Australia and Japan will reportedly encourage all TPP signatories to ratify the agreement in a bid to place pressure on the US congress to implement the trade deal.
Turnbull met with Japanese Prime Minister Shinzo Abe in Sydney over the weekend and in a joint statement the two leaders said the TPP remains an “indispensable priority because of the significant economic and strategic benefits it offers”.
There are 12 signatories to the TPP, negotiations for which were finalised in October 2015. The trade deal involves Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the US and Vietnam.
Australia’s joint standing committee on treaties has recommended the deal be ratified and the next step is for the treaty to be approved by Parliament.
According to The Australian, if the TPP does not proceed Australia may instead pursue bilateral trade deals with Mexico, Peru and Canada, with trade deals already in place with the other TPP signatory countries.
However, both Turnbull and the Japanese Prime Minister reinforced their commitment to the TPP over the weekend.
“While there is more than a whiff of protectionism in the global political environment, the Prime Minister and I are thoroughly committed to free trade and the open markets, to bring into force the TPP,” said Turnbull.
Representatives of the Australian small business community have previously voiced their support for the TPP, which they believe will give Australian firms greater access to markets in the Asia Pacific region.
Abbott: Now is the time to boost the Australian economy
While some experts say to it too early to make long-term predictions about how the Trump Presidency will affect the Australian economy, former Prime Minister Tony Abbott says, regardless of the outcomes, “economic policy here in Australia will need to respond fast”.
“It will be a good opportunity for the government not just to talk about agility but actually to be agile,” Abbott said in a column in The Australian over the weekend.
“Whether Trump turns out to be good or bad for the world, our economic reform challenge is becoming more acute. If Trump’s tax cuts work, we will need to cut tax to stay competitive; if his tax cuts fail, we will need to reform fast or suffer a swift loss of confidence in a highly exposed economy.”
Abbott said it is “a pity” that the Turnbull government has not embraced the tax reform and federation reform white papers that were underway when he was leading the Coalition and argued that “the government’s commitment to repeal days and to deregulation more generally seems to have waned”.
And as attention starts to turn to what measures will be included in the government’s budget in May, Abbott called for a “renewed” focus on savings measures.
“It’s never easy to find savings, as Joe Hockey and I discovered in 2014, but by far the best time for a tough budget is the first one after an election,” he said in reference to the Coalition’s 2014 budget.
When it comes to the government’s plan to cut the corporate tax rate, the former Prime Minister said any “responsibly-funded” cuts should not simply be made in response to tax cuts in other countries.
“It would be so much better to bring in business boosting policies now, because we believe in them, than to be forced to do so in response to someone else,” he said.
Australian Chamber of the Commerce and Industry chief executive James Pearson told SmartCompany the plan to cut company taxes is a “here-and-now opportunity” for members of parliament to show they are serious about stimulating the economy and encouraging business investment.
“The most important thing that should happen and should happen as soon as Parliament resumes is to pass the company tax cut legislation,” said Pearson, adding that smaller firms will be the first to benefit under the proposed arrangements.
The Australian Chamber is also advocating for changes in a number of key areas in the lead up to budget time, including an overall goal to balance the budget in order to reduce the burden on business operators and their customers.
Support for apprentices and employers who hire young people is also a priority, as is greater support for exporters through the Export Market Development Grants scheme.
“What I have seen while travelling around the country, particularly in regional areas, is how many small businesses have actually gone out and off their own back spotted and made the most of export opportunities,” says Pearson.
“It makes sense for the government to help those businesses to establish new export markets.”
Pearson is also hoping to see attention paid to the tourism sector or “visitor economy”, including changes to how international visitors claim goods and services tax refunds.