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Thursday, 1 December 1983
Page: 3154


Mr SHIPTON(11.55) —In the debate today on the legislation before the House-the Industrial Research and Development Incentives Amendment Bill, the Australian Industry Development Corporation Amendment Bill and the Management and Investment Companies Bill-I wish to focus on the role and the nature of the small business, the medium sized business and enterprise in Australia-the small firm.


Mr Barry Jones —Hear, hear!


Mr SHIPTON —I get 'Hear, Hear!' from the Minister for Science and Technology (Mr Barry Jones). I shall focus on the role of the small firm in the Australian economy because it is vital to the future of our economy and the future of the free enterprise, private enterprise system. Let us debate the issues. At the outset, I have two reservations about the legislation in respect of management and investment companies. Firstly, the Management and Investment Companies Bill is set out by the Government as having an essential purpose of attracting investment by offering a tax deduction of 100 per cent for equity invested in licensed management investment companies. Of course, we do not have before us the legislation to amend the tax Act and provide for the tax deduction. It really serves no purpose to have this Bill before us without the accompanying tax amendments. I think the Government has let the community down. We are getting only one half of the package and I believe we should have the full package before us before the House decides on the issues. My second reservation relates to government intervention. I was very concerned when I heard one of the former speakers from the Government side in this debate talk about the role of intervention and rationalisation of industry. I do not believe that government intervention helps industry. We do not want to create bureaucracies to control industry. I have some concern about the powers the Management and Investment Companies Licensing Board will have to issue, suspend, revoke and renew licences . Here we are setting up another authority administered by bureaucrats who will tell small and medium sized businesses what to do.

Having indicated those two reservations, I move on to focus my comments on the role and nature of small business. Small business is innovative and flexible. As the Minister said, perhaps the role of small business in the community is not understood. In fact, small business is able to take advantage of technological and technical change-perhaps more readily than the Minister recognises. It is often thought that only large enterprises, large businesses, can take advantage of technological and technical change, but that is not so. I invite honourable members to look at what is happening in the large corporate sector. There are takeovers day by day. Another one was reported in the paper this morning-the takeover of Carlton and United Breweries Ltd. There are mergers and rationalisations. Jobs are being lost in the large corporate sector. The growth will come from the small firms, from the small businesses. The large corporate sector will not have the capacity to generate many job opportunities as we move on through the decades to the year 2000. Job opportunities in society will be generated in small business and through the small firm. The role of the small firm in technical and technological change is not understood.

Perhaps the Minister does not mean this to be so, but when he talks I think people believe he is talking about high technology all the time. It is not necessarily high technology; new technology that can be adapted to existing manufacturing processes might be as important or even more important than high technology in creating job opportunities in the community-creating the opportunities for private enterprise to create profit and wealth. Technical change that can be adapted by the small firm might be as important as high technology; certainly in many respects it is more important than high technology for the large firm.

As we know, technological change and technical change is going on in the market place, in the community, in the business sector today, without the need for large government bureaucracies to decide where it ought to be and ought to go. New technology does not necessarily mean huge sums; it does not necessarily mean large corporate production; it does not necessarily mean large production runs. Similarly, high technology and new technology do not necessarily have to be capital intensive. I think it can be proved that small businesses are in fact more innovative and flexible than larger corporations and that small business is often able to take advantage of technical change better than and before large firms. One of the interesting things-I will be interested in the Minister's reaction to this-is that modern technology favours the small enterprise and the small firm. The Minister nods his head in agreement. The honourable member for Bendigo (Mr Brumby) almost got to that point in his speech. He understands what is going on in the technical revolution in society but he did not pull out that answer and recognise that it was the small business sector in which it is occurring.

Let us look at the computer and the word processor. Those items are being reduced in cost day by day and can be used by the smaller firm to great advantage. One can see the growth not only in the manufacturing sector but also in the services sector-solicitors, accountants, advertising agents, and public relations consultants; the lot. They all have the advantage of being able to use these new technologies. But let us look at a case study in the manufacturing sector which I think is quite interesting. It is an example of new technology being used in an existing manufacturing business that was a large scale production business but which is now a small scale production business. I refer to the bread baking and pastry industry-a basic industry to us all. I do not think people recognise that Australia is the inventor of the hot bread kitchen. All electorates would have hot bread kitchens in them. People go to those hot bread kitchens. But let us stop and look at what lies behind the hot bread kitchen. What has happened is that technological change has been taken advantage of. New types of baking ovens with low and small batch productions can be used to produce individual, specialised bread that the consumer wants and needs. If one were to go to Glenferrie Road in my electorate on any morning, one would see people queued up at the hot bread kitchen to take advantage of this technological change being used by the bakers and pastry cooks. There is a machine called a prover. A prover is in fact a refrigerator by night and an oven by day. The bakers and the pastry cooks, taking advantage of the modern technology and technological change in a basic industry, make up the dough by day and put in this new machine. They are using these new developments. It is a refrigerator at a certain time in the morning and it becomes an oven. It bakes the bread and when the baker arrives at the hot bread kitchen in the morning the bread is ready for the consumer to buy. That is an example of technological change. It shows how a small firm, an owner-operated, self-employed family business has a vital and important role to play and how it can take advantage of a technological change for profit, for the betterment of society as a whole and for the betterment of the consumer. The nature of the manufacturing process is, I believe, working in favour of the small firm. Today, we have to question the concept with which I was brought up at school and at university that scaled up plants bring cost reductions ever onwards.


Mr Barry Jones —You have not mentioned CAD-CAM, and that is a perfect example.


Mr SHIPTON —Well, let us go back to the bread industry. A few years ago there were takeovers of bakeries and massive production runs of bread; it was all the same. It was all in plastic wrap and the consumer bought it all at the supermarket. The consumer and the community as a whole got totally sick of the situation. We wanted a change; we wanted to use our freedom of choice. The market place reflected that wish and, taking advantage of technological change, introduced the hot bread kitchen. So the concept that economies of scale will increase forever is not necessarily so. Of course, economies of scale are important but they are not the complete answer and in society today there is a backing away from them. Of course, big business and small business are related but we have to look at what is happening in the corporate sector. I was going to talk about the three areas of technological change-electronics, automation and biotechnology-but time will not allow me to go into them. What I will say is that there have been dramatic reductions in the cost of electronic components and the miniaturisation of chips that make it feasible and possible for individual small firms and for entrepreneurs to take advantage of this electronic circuitry in base equipment to start new businesses and to change the nature of existing businesses. The new modern generation of small batch production plants based on flexible modern machinery is giving great opportunities to the small and medium firms. This is happening in the market place today without the necessity for any government intervention or legislation . Small firms can and will have, as they go into this decade, the advantage of a strong technological base because of what is happening in society.

Let us look at the printing industry-a traditional industry. Metal typesetting was hot, dirty work. It has been replaced by photo composition. There is a revolution going on out there in the printing industry. Photo composition gives small firms, small businesses, the opportunity to grow into larger and bigger businesses and to take advantage of technological change not only for the betterment of the businesses and the creation of profit but the creation of new job opportunities. The honourable member for Bendigo recognises the technological and technical change that is going on in society but he should also recognise that it gives opportunities to the small firms to grasp those opportunities and to grow. I am an optimist about the future. I believe Australia has a great future and that it can lead the way. We tend to undersell ourselves. I gave honourable members the hot bread kitchen example. Through using innovative ideas, we led the world and we exported the idea of the hot bread kitchen around the world. It will be small businesses that take advantage of technological and technical change, not necessarily involving large sums of venture capital, that will grow and create a new society of small firms if only we as governments create the climate for them to do so. I fear that as a society we are placing enormous burdens on these small businesses. I will not go into the various constraints in detail, but there are things such as permits, regulations, payroll taxes and financial taxes-everything to stop the small firm from growing. But fortunately for society, the small firm has not to this stage been stopped.

If we are to have a future as a private enterprise system, a free enterprise system, it has to come from the small firm and small business sector. That is the only chance we will have for job opportunities in the future. If we are to create the climate in which to create profit-I fear we are squeezing that day by day; I believe this Government is squeezing it day by day-what we need is a new attitude towards the small firm and its role in creating profit and wealth in society. We need to create a climate for the growth of a dynamic, virile and growing small business sector because small business is big business. I say to the Minister that I worry because day by day his Government is throttling private enterprise. Later in the session we will discuss price surveillance legislation. That legislation will have a strangling effect by trying to control the profits and prices of every business. That is the last thing we need.

But let me return to small business. I believe this Government has consistently failed small business. It has not implemented any of its small business action program. I conclude by calling on the Government, as I have done on so many other occasions, to declare 1984 the year of small business in Australia so that the small business, the self-employed, the entrepreneur, the family business, can be encouraged to grow and to create profits and wealth for the betterment of society as a whole.