Mr KELVIN THOMSON(4.56 p.m.) —The Bounty Legislation Amendment Bill is another bill which demonstrates yet again the dramatic differences between the Labor and Liberal parties. Last week we were debating legislation which increased the level of HECS charges for tertiary students and which brought to a grinding halt that revolution in participation which Labor had achieved in tertiary education with hundreds of thousands of additional tertiary places.

Just a day or two ago we were debating the withdrawal of the operational subsidy for community based, non-profit child-care centres, once again where Labor had a legacy of achievement. We had inherited a paltry 46,000 child-care places and built that up during our term in government to some 270,000 child-care places. With the loss of the operational subsidy, once again that revolution in participation comes to a grinding halt.

We now have a bill before us which relates to industry policy. Labor cut tariffs too enthusiastically in my view, particularly during the 1990-91 period, and it did a lot of damage in my electorate. Our industry policy needs to pay appropriate regard to what other nations are doing. We cannot afford to be suckers here. I am arguing and I will continue to argue in Labor Party forums, before the Productivity Commission and elsewhere that the post-2000 tariff arrangements should not be further reduced unless there is clear evidence of a level playing field internationally.

But Labor did not just cut tariffs and leave industry to its own devices. We wanted manufacturing industry to succeed and in particular we wanted it to export. Our industry assistance programs have been extraordinarily successful—I will provide some figures on that later on. But now we have a government which has no vision of industry policy, which comes stamping into this delicate area like a bull in a china shop, smashing the crockery, smashing the furniture that we had put in place to allow our manufacturing industry to grow and to export.

Make no mistake. The abolition of the bounties, which is the subject of this bill, the slashing of the export market development grants, the slashing of the research and development tax concession and the abolition of the development import finance facility, DIFF—all these things will jeopardise the competitiveness of Australia's manufacturers, placing them at a disadvantage with our overseas competitors.

The Liberals have come into government claiming to know something about the needs of business. But when it comes to manufacturing industry, they are like invading hordes of Huns and Visigoths looting, pillaging and smashing everything in sight. They do not appear to have any comprehension, understanding or appreciation of the value of that which they are destroying, of the art and the refinement which has gone into the creation and development of these schemes.

I want to tell the House something about a particular company in my electorate—Farley Cutting Systems, which is based in Glenroy. It commenced business in 1983 in Glenroy. Its mission statement is to be a leading world supplier of systems for cutting flat metals and similar materials. It was founded by Mr Peter Farley and achieved early success in penetrating the Australian market with sales of cutting machines into specifically targeted sectors such as shipbuilding and the heating, ventilation and airconditioning industry.

That success was based on the relatively quick market acceptance of the innovative and versatile Farley Wizard profile cutting ma chine. Building on the acceptance by the local market, Farley Manufacturing commenced exporting the Wizard in 1985 initially to a similar range of customers in the United Kingdom. Later on, they moved into Europe and by 1989 exports had surpassed domestic sales and total turnover exceeded $A13 million. They opened additional offices in Germany and France. Later they moved into the United States and their most recent stage of market development has been an expansion into the Asian region over the past three years.

They have established a network of agents and achieved machine sales in Japan, Korea, Taiwan, China, Thailand, Malaysia, Singapore and Indonesia. A family of 10 machines is now marketed under the Farley banner together with a comprehensive suite of applications software programs. Farley machines are now productively utilised by steel service centres, heavy fabrication and engineering operations, mining and agricultural equipment manufacturers, structural steel fabricators, contract cutting shops and the like.

In the course of that company's progress, they have collected numerous awards for both technical and export performance including two Australian Design Awards, the Prince Phillip Award for Design Excellence, the John Hart Technology Award, the Austrade Export Award, the BHP Steel Award and the Governor of Victoria's Export Award. In 1994 and 1995 they received high commendations in the Engineering Excellence Awards conducted by the Institute of Engineers, Australia.

Today, Farley Cutting Systems has 300 machine installations in more than 20 countries around the world, a staff of 75 people and turnover in excess of $12 million with exports accounting for approximately 75 per cent of sales. They are actively involved in ongoing research and development activities, including with a range of external partners, and are implementing various manufacturing improvement programs to enhance competitiveness—not a bad achievement at all.

If you look at the value to them of industry assistance—and I visited this company both before and since becoming the member for Wills—their estimates in 1995-96 were $325,000 from the machine tool bounty, $100,0000 from the export market development grants and $900,000 from the tax concession for research and development. With respect to export market development grants, they claimed substantial assistance under the program from 1984 to 1991, which was a critical phase in enabling them to establish an export focus—an activity which has become the cornerstone of their business. The new market provisions of the export market development grants are now being utilised to assist them in establishing new export markets such as Malaysia, China and India.

In relation to research and development, they are beneficiaries of the GIRD program and the cooperative research centres program. Both of those schemes have been invaluable to them in enabling them to develop a highly differentiated product and to maintain the leading edge in their field of technology, which is a key element in their international competitiveness. Mr Farley, the company's founder and managing director, told the Senate Economics Legislation Committee just last Friday:

We budgeted this year on $19 million sales and $800,000 profit. But the duty on imported components, $70,000 cost. Reduction of EMDG, $50,000.

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Reduction of the R&D credit, $70,000 . . . $20,000 in extra compliance cost for the R&D.

So much for the government getting rid of red tape for small business. The thing which really knocks them around is cancellation of the bounty—$300,000 straight off the bottom line. Mr Farley further said:

The things that government actually did will reduce our profit by 60 per cent. The other thing that they have done which is even more disastrous, or that has happened, is just the total collapse of demand in Australia. Our demand in Australia is running at 10 per cent of our budgeted rate.

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The orders are a bit lumpy, so you cannot take one month after another, but we have not had a significant order since the election. We normally get in Australia about $400,000 a month. One month it is $1.2 million and then the next two months it is nothing. But since the election we have not had one significant order.

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The thing that has saved us is our exports to Asia.

I might say as an aside that I had a street stall in Glenroy last Saturday and some people came up to tell me that `Pauline Hanson is right'. It might be too much to hope that the member for Oxley (Ms Hanson) is taking note—she is not here in the chamber—but I hope at least those constituents of mine who consider themselves part of her cheer squad might reflect on what it would mean for Glenroy if the Asian countries on which this company depends decided to take their business elsewhere. Mr Farley went on to say:

The biggest impact is Australia. It is terrible, it is really disastrous. We are just going backwards at a huge rate of knots. We have sold more machines in Malaysia in the last four months or six months than we have sold in Australia.

Later, Mr Farley told the committee:

This year we have had the dollar go up, the 150 per cent reduction, the demand in Australia go down and the bounty eliminated without notice. You can plan ahead for a certain amount of things, but you cannot plan ahead for the sort of quintuple whammy that we got in the last six months.

On being questioned by the committee about that falling off of demand since March, he repeated:

. . . since March we have not had a significant order. I do not think any of our customers predicted at the time of the election that they would change their plans depending on the election. Most of them being businesses and most of them, on balance, being supporters of the coalition, one would have expected a lift in their confidence and investment plans, but it has just failed to happen and it has gone backwards. Our order rate in the last six months is less than it was at the bottom of the recession.

Let me repeat that—`less than it was at the bottom of the recession'. Mr Farley went on to talk about the benefits of the bounty. He said:

Last year we opened an office in Singapore. In four years we had sold $400,000 worth of stuff in that region. We put that guy there and he has got $3 million worth of orders. We planned, when we did our budget in April this year, to do the same thing in Korea and the same thing in China. We have just had $500,000 taken out of our cashflow.

He went on to say:

The good thing about bounty is it comes quick. You spend some money and you get it back 60 or 90 days later. But with the R&D tax concession or any of the other grants schemes or EMDG or whatever, you have got to finance the expenditure for 12 to 18 months to three years to five years, if it is a tax concession. The bounty was absolutely instrumental in us growing from a nine-person company in 1985 to a 100-people company now. In 1985 we had exported one machine. Now we have got 300 machines overseas. We just went through the order book this morning and there are 17 machines on order and the very cheapest and smallest of them is the only one on order for Australia.

His comments were supported and echoed by Mr Boland of ANCA, who told the committee:

. . . I think that with the internationalisation of manufacturing, which is very solid, we are very ephemeral and ANCA could vanish, and there really would not be a ripple in the water. In the broad stream of the economy, we could vanish. The equipment we make is primarily sold in the US and Europe and Asia, and there would be other suppliers to take our place over there. But what you would lose is the employment. We employ 300 people directly, another 200, so you would lose those 500 jobs. You would lose all the taxes we pay, you would lose the technology, you would lose the export revenue we gain.

Those remarks echo comments I have heard from the Leader of the Opposition (Mr Beazley) that Australia's survival is not compulsory. Certainly, our survival as a manufacturer is not compulsory.

These comments were also echoed by the Metal Trades Industry Association which described the cumulative effect of the loss of such measures—the DIFF, the EMDG, 150 down to 125 for research and development, industry assistance schemes such as the bounty—as being profoundly anti-business, profoundly anti-manufacturing and profoundly against the interests of Australia. Interestingly enough, when Mr Farley was asked about the industrial relations changes, he said:

With regard to the benefit of the industrial relations changes, in my view it is not neutral; it is possibly negative because the lack of certainty of the Accord type process is encouraging people who are in demand—and some of the highly skilled people we use are in demand—to be much more aggressive. You can see this from the metal trades workers' 15 per cent claim, which they would never have pursued under the Accord. So in my view it is negative. There is much more turmoil in the job market for people who are in demand than there has been in the last 10 years.

I say to the government: do not come in here saying, `Well, we're taking away your bounty and your concessions and your DIFF and your export market development grants, but you'll be all right because we've got rid of the accord.'

The fact is that the government has taken away from manufacturers the A, B, C, D and E of their competitiveness and international exporting success: A for the accord; B for the bounties; C for the concession for research and development; D for the DIFF, the development import finance facility; and E for the export market development grants. So how do you destroy our manufacturing industry? It is not as easy as ABC. It takes A, B, C, D and E—but they are doing it. We now have a government which is illiterate. When it comes to industry policy and manufacturing, they will put us in the Z class down with Zaire and Zambia.

This is a bill which not only terminates the machine, tools and robotics bounty, about which I have been speaking, but also terminates the books bounty and the ships bounty with effect from 20 August this year, and the computer bounty with effect from 1 July next year. The abolition of the books bounty will have a significant effect on regional areas, such as Maryborough in Victoria where 25 per cent of the local work force is dependent, either directly or indirectly, on the book production industry. It is extraordinary that the government should be treating Maryborough, which supports a Liberal member of parliament, so poorly. But, in fact, it is similar to the very poor way in which the state Liberal government has treated the people of Maryborough by withdrawing the rail service which used to go through Maryborough to Mildura.

Maryborough has a population of 8,800 people, of which some 2,500 are in the town's work force. Two major book printers have plants in Maryborough and employ directly 550 persons, with another 100 being employed in ancillary businesses such as typesetting and film reproduction; they also use casual labour in peak periods. So some 25 per cent of the work force of the town is directly dependent on book production for its livelihood. Therefore, the people of Maryborough will be most adversely affected through the loss of the book bounty and the passage of this bill.

Finally, it is scandalous that in Australia we can have a minister in charge of this bill who has a direct conflict of interest arising from its provisions. The Minister for Industry, Science and Tourism (Mr Moore) has a $100,000 interest in Bligh Ventures. Companies associated with Bligh Ventures in the previous financial year received more than $1 million from the government in computer bounty funding. The computer bounty was not the only bounty, but one of five, to be axed in the budget. Interestingly, it is the computer bounty that gets a stay of life; it gets an extra year. Why is that? Is it because Jtec Pty Ltd, in which Bligh Ventures has an 18.2 per cent holding, is a beneficiary to the tune of $1 million?

The Prime Minister's code of conduct says, `It is important that ministers and parliamentary secretaries avoid giving any appearance of using public office for private purposes.' Yet yesterday the Prime Minister tells the House that he regards it as a `badge of honour'—that is, ministers should have private shareholdings and be out there making money on the side. He has turned his code of conduct into a national joke.

Even without a code of conduct, the concept of conflict of interest is nearly as old as Westminster democracy itself, and it is fundamental. It is that there should be no conflict of interest between the public interest or national interest, which a minister is sworn to serve above all else, and a minister's private interests. But what has happened here? Bligh Ventures has kept the computer bounty. As the member for Hotham (Mr Crean) put it so eloquently three weeks ago, it is the only Bligh that has kept its bounty.

That is just not good enough. There should be mutiny over the abolition of these bounties and the Prime Minister should be playing Fletcher Christian and setting adrift in a very small boat a minister whose shares in Bligh Ventures make him totally inappropriate to command the course of this nation's manufacturing industry.