Senator SHERRY (Deputy Leader of the Opposition in the Senate)(8.00 p.m.) —Madam Acting Deputy President, I seek leave to incorporate the remainder of Senator Mackay's speech.

Leave granted.

The document read as follows—

For the RAAF, the Productivity Commission recommends that the services should be contracted out to some no frills airlines for the supply of air defence, air strike, long range maritime surveillance, close battle field ground support and troop transport.

The Productivity Commission follows the maxim that every and any thing that government provides should be contestable. It presupposes that people are educated enough to understand the choices that they have in front of them, that Productivity Commission bills they will gather information to help them to make a informed choice. However, given the recommendations the Productivity Commission made in their submission to the west review on education, its highly unlikely that people will be able to afford the education in order to make a informed decision.

It's interesting to note that despite the commission advocating the contracting out of government services, it doesn't suggest its own economic advice be contracted out.

The government believes in contracting out all of its services however, Mr Howard doesn't look at contracting out economic advice, instead he creates this monolith.

The Productivity Commission will be a flawed institution, if only for its support of suspect quantitative methodology. Now you don't have to be an economist with a special inner glow for econometrics to see that the Orani and the Monash models are flawed in their assumptions.

The commission used the Orani model to arrive at their assumptions in their micro economic report. The inputs used were premised on time periods that were so short that no fixed asset could be introduced into, or removed from, any production process, so short that no exchange rate could vary, so short that no household could begin to spend any increase in income.

However there was a wonderful paradox that for some aspects the time period was so long that all prices adjust fully to a change in wages which adjust fully to prices which adjust fully to wages ad infinitum. What a surprise!

The fundamental flaw in the Orani model is the assumption of full employment. Now we all know that there isn't full employment, yet Costello and Howard seem to have suffered amnesia, or is it rather a case of wishful thinking? How can we implement a economic advice bureaus recommendations that are premised on suspected parameters.

If this commission was not going to have such an impact upon Australian society, the institution would be farcical.

A derivative of the Orani model, the Monash model, used to justify the cut in car tariffs, is just as suspect. This model again has reasonably simplistic views. The Monash model believes that the gains estimate will vastly exceed an approximate upper estimate of the gain provided by a simple rule of thumb based on imports.

What we have before us is a commission that uses suspect econometrics which have been savaged by economists, business and academics. And because of this set of bills, the Productivity Commission will be unchallenged.

This set of bills will create as the unions argue a entrenchment of power of the Productivity Commission as the epitome of dominance of economic fundamentalism in government decision making.

In conjunction with this is the concern I have over the virtual monopolisation of economic policy advice under the treasury portfolio which will adversely effect Australian industry. This will only mean that more people will being losing their jobs.

As the 29 July 1996 Sydney Morning Herald article said:

in the name of reform, Peter Costello is engineering a big reduction in the amount, diversity and breath of view of economic research done by federal agencies.

Inherent within this monopolisation of research and economic information, is the removal of key institutions from the portfolio of prime minister and cabinet to the auspices and the control of treasury. It has been argued quite succinctly in the press that the manipulation of the Productivity Commission by treasury is the culmination of its efforts to restore the monopoly over pretty much all of the economic advice that it had lost to prime minister and cabinet.

By putting the Productivity Commission under Mr Costello's effective control the commission will act as a intellectual filter. That's it pure and simple. The Productivity Commission will act as a sponge for economic rationalist policies and a barrier to competing and dissenting economic views.

This control over economic advice will signify the death knell for industry policy. For as we already know and are aware Mr Costello is not an strong patron of industry policy—or as he defines it "business welfare".

This attitude is inherent within the department of treasury. The treasury's intellectual horizon is limited, it does not have the academic ability to analyse regional differences or look at the economy in terms of industry. This will be further exacerbated with the introduction of the Productivity Commission.

The clearest example of this are the comments made by Mr Staples, from the Industry Commission. Mr staples slammed the Mortimer Report saying that there was a lack of depth in its analysis and that he had grave concerns about the "call for a one billion dollar fund to attract investment."

I suppose it shouldn't have been too much a surprise, however the Mortimer report is one of three reports damning the government's lack of industry policy. The MTIA report even went as far as saying that there was now a political imperative to get industry policy under way.

The absence of any sign that qualitative research is used in treasury analysis raises the question about the fundamental nature of this department. What does it take for treasury to realise that there are people attached to quantitative research? Or is the treasury and Costello not overly concerned that for example, one hundred thousand TCF workers could join that "work for the dole" queue with no hope of ever getting off. Or is the government looking for more participants for its work for the dole scheme? One hundred thousand workers could lose their jobs all because the treasury, Costello and Productivity Commission don't want to be seen as dealing out "industry welfare".

How many examples does this government need to show them that major sections of the manufacturing sector are leaving? In the last month we have had Gloweave, Berlei, Clark's, Dupont's and in my own state Blundstone's leaving or threatening to leave.

Last Thursday the senate supported an alp motion to freeze tariffs until 2005. It will remain to be seen whether the government will respect the Senate's wishes.

This coalition government is abandoning our industry, whilst the Productivity Commission sits back and argues that we don't pay enough attention to agriculture and mining sectors.

I'm not inferring that we should forget those sectors, however there is an urgent need for the manufacturing sector and industry as a whole to receive more than tacit support and lip service. We cannot afford to keep losing our industry assets.

The TCF tariff issue is one case in point. The Productivity Commission, otherwise known as the industry commission, recommendations are to cut TCF tariffs from up to thirty seven percent to five percent by the year 2008.

If the Productivity Commission implements its TCF report's recommendations then we are in immediate danger of losing and selling off our talent to our overseas competitors. We are exporting our jobs, our skilled labour and our talent.

A reduction in TCF tariffs will effect three thousand companies and one hundred thousand full time jobs. Regional areas, such as Tasmania and the nation as a whole cannot sustain this loss. One hundred thousand people who are directly employed will be thrown on the scrap heap. And that figure doesn't even account for those people who are reliant on TCF industries for their business such as the small corner shop, retail shops, supermarkets—basically every business that TCF workers patronise will lose if the Productivity Commission's recommendations are taken up.

TCF industries are represented in every state, they play a significant and crucial role in state economies.

Tasmania is one such state that cannot afford to lose industries. The Tasmanian economy is not just standing on the brink of the economic abyss it is in it. The Nixon report would have told the prime minister this—but rumour has it that his office doesn't even know of the reports existence.

If the Howard government implements the Productivity Commission's recommendations, it will be further damning evidence that Howard has abandoned Tasmania. The Productivity Commissions recommendations will see the loss of two thousand, three hundred jobs. That is one thousand jobs in the south, five hundred in the north and seven hundred on the west coast.

This job loss will destroy regional communities. It will push Tasmania further into the economic black hole. And ultimately the responsibility for this will be at John Howard's feet.

As all senators would be aware, a major Tasmanian family business, Blundstones announced last Wednesday of its planned move offshore if the government implemented the soon to be Productivity Commission's recommendations.

This company is one of Tasmania's success stories, it has been producing boots since 1870. During its one hundred and seventy years of production, it has employed generations of Tasmanians. Now three hundred and fifty young Tasmanians are facing a uncertain future.

As Tony Stacey, chief executive of Blundstones said;

We need at least the same level of certainty from the Howard government as they have given the motor vehicle industry. . . we need and ask no more from policy makers than to ensure our industry has a level playing field on which to compete internationally.

Tasmania needs every job and every industry it has, we simply cannot afford to lose anymore because of the government's complete disregard for regional areas.

Tasmania has already lost ten thousand jobs in the last eighteen months. Let me make this very clear to all senators, ten thousand jobs in eighteen months means twenty jobs per day, one hundred and forty jobs a week, five hundred and fifty per month gone. We only have one hundred and thirty five thousand, five hundred full time jobs left in the state. That is sixty thousand less than the population of Hobart. If the Howard government has its way and implements the Productivity Commission's recommendations then there will only be one hundred and thirty three thousand, two hundred jobs left in the state.

Tasmania is haemorrhaging—we are losing jobs and we are losing skilled labour.

We simply cannot afford this jobs drain anymore. Reduction in TCF tariffs means for Tasmania's economy a loss of around forty eight million dollars in wages, will Mr Staples come down and tell Tasmanians that we can afford this? I doubt it.

Mr Howard came to Tasmania, but could not bring himself to face Tasmanians and could not bring himself to talk at the CEDA forum on regional development. It would appear that John Howard has lost interest in Tasmanians and their economic fate. It would appear that Mr Howard simply does not have a commitment to Tasmania. Or maybe one of his advisers left Tasmania off the map!

Howard has dug himself a grave, a grave that is called the Productivity Commission whose adherence to hard economic rationalism will cost the Australian people more money than the supposed savings this commission projects.

Howard's government has instituted a body that will be a reflection of this government's true agenda.

If this set of bills are passed unamended then we will lose the depth of knowledge and debate that has arisen because of competing economic advice bureau. Industry, unions and community groups would have lost an important forum which aided the development of economic advice.

We will lose rational and balanced economic advice emanating from a range of government portfolios. Thereby relinquishing the diversity and range of fully qualified and experienced individuals and organisations.

Instead we will have instituted the dominance of the Treasury and the Productivity Commission over all economic policy and advice. And there will be no regard for the larger economic, social and regional consequences of the Productivity Commission's advice.

We will have instituted the government's ideology and agenda, which will be expressed through the Productivity Commission's recommendations .

We will have instituted the driest form of economic rationalism which will have not have a government economic advice voice against it. We will have instituted a piece of legislation, if unamended will have dire consequences for industry and therefore for working Australians. And for those who haunt the dole queues it will signal the end of hope for a job, a future, and self esteem.