Mr GAVAN O'CONNOR (10:35 AM) —I am pleased to rise today to support assistance being provided to the textile, clothing and footwear industries in Australia, particularly the industries which form one of the manufacturing pillars of Geelong's employment base. I am pleased to be joined in this debate on the Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005 scheme) Bill 2004 and the Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005 Arrangements) Bill 2004 by the honourable member for Braddon, who has, during his time in the parliament, been a passionate advocate on behalf of textile, clothing and footwear workers in his electorate.

In my electorate, there were around 2,200 persons employed in textile, clothing, footwear and leather manufacturing in the Geelong region in 2001, according to ABS census data extracted by the Productivity Commission and used in their review of TCF assistance which was published in 2003. That same census data indicated that in my electorate of Corio there were around 1,450 people directly employed in the TCF sector, with several thousands more deriving their employment from activities related to the sector's commercial presence in the local economy.

I have on many occasions spoken on the floor of the House in defence of those employed in Geelong's TCF industries and in support of ongoing Commonwealth assistance to local companies that seek to restructure their operations and invest in new plant and equipment to secure their place in Australian manufacturing. On 8 and 9 March this year, when the government introduced the TCF SIP amendment bill, I outlined to the House the importance the Geelong community places on retaining employment in these industries and in securing their commercial future. That support stretches across the whole Geelong community—from the members of the Textile Clothing and Footwear Union, the Geelong Manufacturing Council, which has in it all of the textile, clothing, footwear and leather manufacturers, the City of Greater Geelong, state politicians, local government councillors, community welfare organisations and the general community. All of them stand squarely behind the work force and the entrepreneurs in Geelong's textile, clothing and footwear industry.

I have a clear mandate from the Geelong community to support the assistance measures in this legislation and to support the tariff related measures we are proposing in our response to this legislation. In 2003 the City of Greater Geelong, under the leadership of former mayor Councillor Barbara Abley, in cooperation with the Geelong Trades Hall Council, the Geelong Chamber of Commerce, the Geelong Manufacturing Council and the Victorian branch of the Textile Clothing and Footwear Union of Australia, determined a position which supported industry budgetary support—the SIP scheme—at existing levels. They supported broadening its scope and also freezing of tariff levels until 2010. They promoted this position in response to a dramatic decline of over 20 per cent in Geelong's TCF employment since the last 1996 inquiry. I congratulate Councillor Abley on her initiative and efforts in support of Geelong workers and textile, clothing and footwear entrepreneurs. She has been a strong and passionate advocate on behalf of the Geelong work force and the Geelong community on this matter.

As far as this particular legislation is concerned, Labor welcomes the government's TCF package, as it provides assistance for the TCF sector over the next 10 years. It is very important that the Commonwealth government supports these industries through their restructuring phase. The bill makes a number of changes to the TCF Strategic Investment Program that Labor believes will simplify the program and will hopefully cut down application costs for companies. The bill also includes reducing the number of grant types from five to two, and it provides subsidies for capital expenditure as well as for innovative activities.

I have in my electorate a very prominent textile company—Godfrey Hirst. The success over time of Godfrey Hirst, a major manufacturing employer in Geelong, is directly related to the investment that they have been able to make in new plant and equipment and the support of innovative activities in their enterprise. It is an enterprise of which Geelong is justifiably proud. On the floor of this House, I congratulate the management, owners and workers of that company. It is one that is important to Geelong's manufacturing future, and we want to secure the employment base in that company and in others—and elements of this legislation will certainly do that.

Most companies will be eligible for support under the scheme for the first five years. In the second five years the scheme will be available only for clothing and finished textile activities. Labor notes that these are the two main areas of the TCF industry that will require ongoing assistance for restructuring. I am very pleased that in this legislation the government has established a TCF small business program, which Labor welcomes. We have been calling for more assistance to small textile, clothing and footwear companies for a long time, and we are pleased that the government has taken up the sensible suggestions that we have made. In my electorate, several small companies have established niche markets and are seeking to expand them. I am very pleased that they will now be able to have access to a Commonwealth support program that will assist to secure the future of those enterprises and their workers.

The most disappointing thing about the legislation is the government's linking, through the commencement clause, of the SIP with the tariff reduction bill. The SIP cannot commence until the tariff cuts are legislated. We will be moving amendments to decouple these two aspects of the bill—the strategic investment program and the measures that reduce tariffs beyond the year 2010.

As far as the tariff bill is concerned, the TCF tariffs are already legislated to fall on 1 January 2005. Before those cuts are in place, the government is already trying to legislate for more cuts. So we have a situation in which tariff cuts are already in the pipeline. Those tariff cuts are already being made in 2005 and now the government, in the mechanisms of this bill, wants to put further tariff cuts on this particular industry and tie it to the assistance that it is receiving now and will receive from 2005 to 2010. Labor will be foreshadowing amendments to decouple these bills so that we can vote on them according to the position that the opposition is taking. The government is really doing the industry a disservice. The government is politicising this debate by trying to link tariff cuts beyond 2010 with the SIP and the assistance that the industry will receive.

This bill reduces tariffs on yarns, fabrics, certain finished goods and footwear parts from 7.5 per cent to five per cent from 1 January 2010; it reduces tariffs on footwear, cotton sheeting and woven and knitted fabrics from 10 per cent to five per cent from 1 January 2010; and it reduces tariffs on most articles of apparel and certain finished textiles from 17.5 per cent to 10 per cent and then to five per cent from 1 January 2015.

There are several things that we need to understand about the government's position in relation to the bill. I think it is instructive to reflect on the history of this legislation in the parliament. The government announced the package in November last year and it has taken this long to introduce this legislation to give effect to its policy position. This is not something new that we are seeing from the government; this has happened not only in this area but in other policy areas as well. The bills were only introduced to the parliament on Wednesday, 16 June, and the government is really trying to force them through to suit its election timetable, not to allow this parliament the proper scrutiny that the bills deserve. I have to say that the government did not even provide the opposition with an exposure draft of this legislation. As I understand it, it has not offered the shadow minister a proper briefing. It is really not serious about getting the total package through; it is serious about playing politics with it.

The government is trying to force Labor to vote for further tariff reductions in order that there will be a new Strategic Investment Program. Labor support that program, but we do not support further tariff cuts. We will be moving amendments to this proposed legislation in the House when it is considered in detail—I want to make it quite clear to the chamber that we will be taking that action.

Regarding the tariff cuts that the government is proposing beyond 2010, let me reflect on the position of the Victorian government on this. The Victorian government has certainly got a handle on these industries throughout that state and it estimates that around 6,500 jobs will be lost in Victoria alone. Throughout Australia, if the government proceeds with the legislation in the way it is intending, the real losers will be regional communities all around the country. In many of those communities, textile, clothing and footwear manufacturing is a mainstay of employment. In some cases it is the only significant full-time employment available to workers. We really need to look at how the 2005 cuts, already legislated and in the pipeline, are going to impact on communities before we make further decisions on tariffs with regard to this industry. Labor does not consider that to be an unreasonable policy position. I think it is eminently reasonable where there are already legislated tariff cuts in the pipeline that we—both communities and government—are given the opportunity to assess the impacts that those cuts have on those communities, particularly regional communities.

My community in Geelong, in the seat of Corio, very much support the Labor position in this regard. Right across the political spectrum employers, unions, local government bodies and the general community support the position that Labor is putting to this parliament on this legislation. We want consideration of this legislation decoupled. We want to decouple the TCF Strategic Investment Program from the tariff bills and we will be moving amendments to this effect when the legislation is considered in detail in the House.

The government does not have a policy advice position on the action it has taken. Its own Productivity Commission could not demonstrate any net national benefits of reducing tariffs further. The Productivity Commission is known for the economic advice that it gives to government in terms of tariffs. It has generally supported a continuing lowering of tariffs. However, on this occasion when it was asked to undertake the economic analysis, it concluded that, as far as the net national benefits to the Australian economy were concerned, there were not any real gains of lowering tariffs further. The submissions to the Productivity Commission, as part of the inquiry, from TCF businesses across the nation, from local councils and state governments, who have an important voice in this debate, all called for a freeze on tariffs. That is the position that has been taken by, for example, the City of Greater Geelong in my electorate.

Let me summarise Labor's position as far as post-2005 TCF assistance is concerned. The recent national conference of the Labor Party spelt out our position quite clearly. We will hold TCF tariffs at current levels pending a review to be undertaken by a Latham Labor government when it is elected later on this year. This is not about winding the tariff clock back; it is simply about sensible policy. We are not going to reduce tariffs just because of the government's ideological obsession. At the end of the day, it must be because it is reasonable policy and it has some basis in the economic analysis that is being provided by bodies such as the Productivity Commission. Tariffs should only be reduced where that encourages greater innovation, exports and competitiveness, and we have seen, with actions of past governments, that this has been the basis of tariff cuts.

But Labor will not be supporting the government in legislating for tariff reductions in 2010. We ought to be having a review in 2006-07 of the impacts of the 2005 cuts on the industry, rather than making decisions now in 2004 about the environment that is going to be faced by these industries over the longer term. We do believe that it is time there was an independent review of TCF assistance. The recent Productivity Commission review did not adequately look at the social impacts of any further reductions in tariffs, nor did it seriously look at trade barriers imposed by other countries. I think it is not only important for government to receive economic advice on the costs and benefits of actions that it takes, but it is incumbent on government to go broader than that and to look at the impact that the decisions it will make are going to have on regional communities. Of course, it also ought to be looking at the barriers that Australian companies face when they seek to export into other countries.

I mentioned Godfrey Hirst, which is in my electorate. It is a major employer, employing over 1,000 people, and it is a very innovative company which down through the years has invested heavily in training its work force and in capital equipment to keep ahead of the game. It has adjusted its operations to market environments overseas and it has been the target of predatory commercial practices by overseas companies that sought many years ago to buy it out. American interests were involved in that attempt to buy the company. I guess if that had occurred we would not have a company in Geelong like the one we have now.

It is a very innovative and dynamic company. It has good management and a productive work force. Of course, it has real problems when it comes to the international marketplace because, when it goes into many markets in our region, it faces non-tariff barriers that are quite substantial. When you sit and talk to the managers of the company about the sorts of problems that they encounter in getting their products into other markets, they say that they face not only tariff barriers but also a plethora of other practices which make it extremely difficult for them to sell into those markets.

I think it is eminently reasonable for a government to take a position that it will support an industry through a difficult restructuring period and that will support its innovative practices and its attempts to capitalise and prepare itself for a new market environment. But I think it is unreasonable for a government not to take into account in its decision making the impacts that those decisions will have on communities and the great difficulties that our companies have in gaining market access when they face both tariff and non-tariff barriers not only in our region but also throughout the world.

We are simply saying that, if our trading partners have not made sufficient adjustments at all levels to bring themselves into line with their international obligations or if the negative impacts in a social sense on Australia are too severe, the tariff freeze will remain until these issues are addressed. We are simply saying to our competitor nations in our region and elsewhere: you have signed up to certain international obligations and we want you to honour those particular commitments that you made in the international arena.

As far as we are concerned, we support a labour adjustment program—or, as the government has termed it in this legislation, a structural adjustment fund—as part of the 2005 assistance package. But we have to put on the public record that the Howard government abolished Labor's labour adjustment program for the TCF industry in 1996. This particular proposal is for $50 million over 10 years and we simply consider that this is not enough. On the election of a Latham Labor government, we will reinstitute a proper labour adjustment program with appropriate levels of funding.

Ms Panopoulos —How much?

Mr GAVAN O'CONNOR —It will be a non-means tested program to assist TCF workers in improving their English language skills, in vocational training and in finding new employment. The honourable member asks me how much, and behind that is the age-old Tory question: where is the money coming from? We should ask the Treasurer that question because on the road funding issue in the House the other day he was caught with a $500 million hole in his calculations. So we are simply saying the $50 million—

Mr GAVAN O'CONNOR —You talk about this. Your Prime Minister, when he was Treasurer, left Labor with a Liberal debt in current dollars of $25 billion. The honourable member for Canning was not here, but the most incompetent Treasurer Australia has ever seen left Australia with negative growth, high interest rates, an unemployment rate of double digits and an economy going backwards. If that is the great Liberal legacy you are referring to, I am quite happy to debate you any time in this House—any time, anywhere—on your record and the record of your Prime Minister when he was Treasurer.

Mr GAVAN O'CONNOR —You have political amnesia.

The DEPUTY SPEAKER (Ms Corcoran)—Order! The member for Corio will not respond to interjections and will address his remarks through the chair.

Mr GAVAN O'CONNOR —Madam Deputy Speaker, I am under provocation. It is very clear that Liberal members opposite—

Mr GAVAN O'CONNOR —That is exactly the point I am making to the House about the politicising of these issues. This government is incapable of bringing to this parliament a set of legislative proposals that does not attempt to hold a gun to the head of this industry. Here we have some constructive strategic investment program proposals that the government is putting forward and, as they have in other legislation, they have supported what Labor did in government. We are quite happy to support those particular situations. But it is policy lunacy to be tying these adjustment measures to a 2010 tariff cut when you do not know the conditions that are going to apply for the industry at that particular time. Of course, we have not at this point got our trading partners to dismantle not only their tariff barriers but their non-tariff barriers as well. If you want political stupidity on a grand scale, this would have to be it.

Mr GAVAN O'CONNOR —The honourable member for Braddon understands exactly what I am saying, because in his electorate there is significant employment tied up in the textile, clothing and manufacturing industries. We are simply saying to the government that it is stupidity to be tying an adjustment program in 2004 to tariff cuts to be made in 2010 when you do not know the conditions that the industry will face at that time.

We are going to propose an amendment to this legislation to decouple the bills so that we can give effect to the sensible position that we believe ought to be the position the government is adopting, and that is that we have in the pipeline tariff cuts to 2005, we evaluate the impacts of those particular cuts in 2007 or thereabouts, and we do that by virtue of an independent review that not only takes into account economic considerations but also takes into account the social dimensions of losses of employment in regional areas. I know the honourable member for Indi would be very interested in that because I understand that she also has significant employment in the textile, clothing and footwear industries in her electorate, as has the member for Braddon. We are simply saying that that particular review ought to take into account also the actions of our trading partners, who have at this point significant tariff and non-tariff barriers to the entry of Australian products.

I think that is a reasonable proposition. I do not think there is anybody who is so stupid that they cannot understand and accept that position, but there seem to be some blockages on the government side to reasonable propositions. We know why the blockages occur: because we are in election mode and the polls have us with a bit of scoreboard pressure on and the government backbenchers are all dancing around saying, `Let's play politics with this particular bill.' I think every textile, clothing and footwear worker in Australia would like you to step back from the politics of these things, to look at this in a policy sense and to do something in the interests of the industry for a change. (Time expired)