Extra flights a boon for export market

Scott Morrison will boost Australia’s COVID-19 trade recovery with a $350m injection supporting export flights.

Scott Morrison in Canberra on Thursday. Picture: NCA NewsWire / Terry Cunningham

Scott Morrison will boost Australia’s COVID-19 trade recovery with a $350m injection supporting export flights carrying lobsters, beef and salmon, as the government advances plans to target ­Indonesia when the free-trade agreement starts on Sunday.

The funding will extend the International Freight Assistance Mechanism, operating in more than 50 countries, until the end of the year and protect $3bn of agricultural and seafood exports.

Australian exporters face long international border restrictions, which have grounded commercial flights used to ferry premium products into key markets in the Middle East, Asia and Europe.  As of this week, the government-backed international freight program has locked in more than 1800 flights and 36,000 tonnes of produce worth $1bn. The freight network is delivering products to key export markets including Hong Kong, Singapore, Qatar, the UAE and Thailand.

The government is believed to be working on deals to get beef, salmon, blueberries and avocados to Indonesia — Australia’s 13th largest export market — over the next six months. Frozen beef, sheep and goat meat, dairy products, grain, fruit and nuts exports will have tariffs eliminated under the free-trade deal with Jakarta.

Australian Bureau of Statistics data released on Thursday showed Australia’s trade surplus lifted 2 per cent to just over $8bn in May, with iron ore exports continuing to carry the economy.

Amid rising tensions with China, Beijing this week boosted tariffs on Australian beef from 4 per cent to 12 per cent after ­earlier slapping tariffs on barley products and suspending four meatworks exporters.

Trade Minister Simon Birmingham said the tariff increase was triggered after Australia hit its beef export quota to China earlier than expected, and that this showed that demand for our beef remained strong in key export markets despite COVID-19.

 

The value of iron ore sales in ­recent months has surged on the back of high prices and strong ­demand from China, partially offset by a sharp decline in coal sales to major buyers such as South Korea and Japan.

Economist Saul Eslake said China’s reliance on Australian iron ore made our key export an unlikely target for further trade imposts, but that “almost all of our other goods and services are ­potentially at risk from vengeful actions from the Chinese government”.

Senator Birmingham said the freight flights, which are bringing critical medical supplies back to Australia, had been vital in getting produce “out the door during these tough times”.

“With international travel ­restrictions expected to remain in place for the foreseeable future, our exporters and key importers will continue to face significant barriers,” he said.

“This funding extension will provide ongoing certainty for our exporters who rely on airfreight and will help to protect the tens of thousands of jobs of those who rely upon our export sector.”

Deputy Prime Minister ­Michael McCormack said “with few international passenger flights, restoring supply chains has been vital to maintaining relationships between exporters and their customers around the world”.

The freight program has helped export more than $500m worth of Australian seafood to Asia and the Middle East.

Australia’s trade surplus climbed to a record $10.4bn in March. Imports — especially for services such as tourism — dropped sharply as borders closed earlier this year, while exports have fallen at a slower pace, supported by resilience in the iron ore market.

The latest trade data showed services imports in May were a fraction of what they were pre-COVID: $45m versus more than $2bn before the crisis.

But services export earnings have only halved during the pandemic, as spending by many international students already in the country before the borders closed are counted in the trade figures.