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Wednesday, 12 October 1983
Page: 1665

Mr SIMMONS(5.33) —The question of assistance to manufacturers of agricultural tractors goes back many years. In fact, a bounty in some form or another has been payable since 1922. I understand that, all in all, some 15 Tarriff Board or Industries Assistance Commission inquiries have been held since that year. The Bounty (Agricultural Tractors) Act 1966 provided for the payment of a bounty to the manufacturers of tractors. This Act was last amended in 1976, and the amendment was operative from 1 January 1977. The amount of the bounty varies with the power of the tractor, and the period during which the tractor was manufactured and is adjusted from time to time in a manner reflecting the prices of imported tractors. The Bounty (Agricultural Tractors) Amendment Bill proposes a doubling of the existing bounty assistance as a short term measure for a period of 12 months. The Minister Assisting the Minister for Industry and Commerce (Mr John Brown), in his second reading speech to the House on 5 October 1983, commented:

The Government considers that the bounty as proposed by this Bill will no only assist the industry to sell its output but will restore effective assistance to the industry to about the level intended by the Industries Assistance Commission when the present bounty was introduced.

Assistance to tractor manufacturers under present legislation will terminate on 31 December 1984. It is important therefore that the question of approriate forms of long term assistance to tractor manufacturers be addressed as expeditiously as possible. Pending a full report by the IAC, the Australian tractor manufacturing industry should be supported by the Government. Tractor manufacturers hopefully will not have to wait too long for such a report. The reference to the IAC was sent on 16 June this year for report to the Minister by 15 June 1984. The IAC has also been asked to inquire as to the desirable levels of assistance after 1 January 1985, that is, when the 1976 amendment Act is due to terminate.

The interim report is due by 15 February 1984, with the final report to be handed down on or before 15 June next year. I understand that the IAC will also consider the question as to whether temporary assistance associated with this amendment Bill should be extended until the end of next year. This will be prior to the commencement of any new arrangements that may flow from a consideration by the Government of the full IAC report. The cost of providing temporary assistance is certainly modest. The Minister, in his second reading speech, noted:

When the Government's decision was taken, it was estimated . . . that the additional bounty assistance could cost up to $3.4m in a full year, depending on . . . sales. However, the actual cost is now likely to be significantly less in view of the current depressed market conditions.

Indeed, the Minister made an apt comment. Coupled with the twin evils of economic recession which the Government is actively trying to remedy and the disastrous effect on farm incomes of about five years of drought, this could certainly be the case. However, given the realistic expectations particularly in the wool-wheat zones of Australia of a wheat harvest approaching 19 million tonnes this season, perhaps there could be no better time for taking action to encourage Australian manufacturers of tractors.

The contribution made by the primary producers of Australia to our national wealth, particularly in the export arena, cannot be overestimated. I believe and , understandably, so does the Government, that we should assist and promote our primary industries. However, farmers and farmer organisations, most notably those in our very efficient grain areas, constantly draw attention to the fact that bounties are preferable to tariff protection. Therefore, to blend the desirable objectives of promoting Australian manufacturers of agricultural implements with the desire of the farming community to move away from tariff based assistance, in this instance is a successful formula. To me, it is common sense that a country that has 47 per cent of its export income generated from primary production should seek to establish complementary secondary industries. Further, the industry's preference for the application of bounties rather than straight tariff assistance was clearly echoed by both the National Farmers Federation and the Australian Wheatgrowers Federation in their submissions to the Temporary Assistance Authority earlier this year.

I turn briefly to the Bounty (Tractor Cabs) Bill which was also introduced into the House on 5 October. It should be pointed out that tractor cabs imported into Australia attract a duty of 20 per cent. However, if they form part of an agricultural tractor, they are imported duty free. Naturally, under such rules there are very few imported tractor cabs. The reality is that they are part of built-up tractors. It therefore follows that local tractor manufacturers are not protected by the 20 per cent duty, which was clearly the intention of the original legislation. The Temporary Assistance Authority recognised this in its report on agricultural wheeled tractors, presented to the Minister for Industry and Commerce (Senator Button) on 31 March this year. On page 10 the Authority notes:

The trend in recent years has been towards imports of tractors with cabins. In the six months to the end of December 1982, 98 per cent of tractors over 90 kilowatts were imported complete with cabins.

Page 20 of the report notes:

The evidence indicated that the problems of local component producers were related to imports of complete tractors rather than imports of separate components.

This trend towards the importation of fully imported tractor cabs has become pronounced in the last two to three years. It is certainly not limited to Australia. Indeed, there is a world-wide trend to supply completed vehicles. No doubt both the Temporary Assistance Authority and the Government are unsure whether this is a short term or an enduring trend. In bringing forward this legislation the Government said that something should be done to protect local tractor cabin manufacturers. In short, the tractor bountry on agricultural cabs is linked to the same IAC inquiry into the long term future of agricultural tractor manufacturing in Australia. The proposed level of the bounty of 15 per cent of factory cost approximates the proposed double bounty payable to local tractor manufacturers who produce cabs for their own tractors. Again the cost of this is minimal. It is $750,000 in a full year, depending on the level of sales. Australian content in the cabs must be at least 85 per cent and the bounty will apply to those cabs produced, but not sold for fitting to the imported tractors, prior to 10 June this year. The Bills are deserving of the support of all honourable members.