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Thursday, 1 December 1983
Page: 3156

Mr ALLAN MORRIS(12.09) — I take some interest in the knowledge of small business of the previous speaker, the honourable member for Higgins (Mr Shipton). His Government certainly was knowledgeable about small business! In the last seven years the escalation of bankruptcies of small businesses has been horrific. The Industrial Research and Development Incentives Amendment Bill, the Australian Industry Development Corporation Amendment Bill and the Management and Investment Companies Bill introduced in the first six months of this Government will do more for small business than was ever done for it in the last seven years. I will come back later to how this legislation affects small business.

In a changing world we must address ourselves to the fact that technological change has been a continuum since the days of the cave man. The movement through stone, iron and copper-the various metals-and the various warfare skills and the development of steam engines are all part of a continuum. The continuum has moved along picking up new things on a leading edge and dropping off old activities on the trailing edge. For example, the farrier and the coach builder gave way to the tyre manufacturer and the panelbeater. That continuum has gone on since time immemorial, since man has been on earth. In the last 30 or 40 years the rate of change has compounded dramatically. In fact, the rate of change has become so profound as to question man's capacity as individual humans to absorb and adapt individually to that rate of change. That is obviously a separate issue. The continuum has been there.

We, in this country, have picked up and dropped off new activities. We have initiated a number of those activities. We have led the world in a number of fields. Until the last 10 or 15 years most countries were relatively equal. In fact, Australia is well endowed. With our natural resources and our primary industry we had a fairly excellent base. However, in recent times a number of factors have come forward for the first time in history: Firstly, the change in transport methods; secondly, communications; and thirdly, miniaturisation. In previous decades and previous technologies it was easier to transport manpower, to transfer knowledge to a country and develop the skills and industry there. Right now it is easier to keep the knowledge resident and transport the results. That is what we are facing. In effect, in that context, Australia is vastly disadvantaged because we have a small population and large distances; we have a small local market and a long way to the nearest large markets for our products. We are the victims, if you like, of technological change in its broadest sense- the change in transportation, miniaturisation and communications.

Mr Shipton —It gives us great advantages too.

Mr ALLAN MORRIS —I will get to that point. That is what the previous Government did not recognise and that is what this legislation is addressing. In that context, how do we react to technological change as a community or as a society? If we look at how capital reacts, capital will react conservatively. In Australia we have enormous capital skills and enormous investment skills. Let us take a company such as the Australian Mutual Provident Society. It would know more about finance and economics than most members of parliament and most specialist organisations. It has enormous management, investment, financial and entrepreneurial skills, but they are applied in conservative ways because of a lack of understanding of the creative and the leading edge end of technology. The fact is that it will invest in real estate, commercial buildings-good, safe, solid things which will not return a high dividend but are secure. Even though Australians are supposed to be gamblers, with our technology we are certainly not. We are enormously conservative because we are, essentially, a small population and it is that smallness which tends to give us a narrowness of vision.

One of the earlier speakers talked about the Australian Industry Development Corporation being developed and established by a previous Country Party Minister and said that its intention was not to allow nationalisation. This narrow-minded attitude towards the Government's role in the community and in industry has been a choking influence on the development of technology in Australia. Whilst we have this black and white, fairly mindless attitude that the Government does not know anything about it, it eventually reinforces the conservative nature of Australian capital. The fact is that Australian capital has maintained a very narrow, very tunnel-vision outlook into the very secure industries. It, therefore, has not been able to withstand the intrusion of foreign capital. So most Australian large businesses are not in fact Australian, they are owned by somebody else whose skills are imported and whose management is largely imported . The example I mentioned earlier was one of the exceptions to that general rule .

The Government has recognised that to develop the continuum or to maintain Australia's place in the technological continuum we have to change the climate, we have to change the context in which it operates. The Minister for Science and Technology (Mr Barry Jones) and other Ministers, whilst in opposition, highlighted areas of possible change and they coined the term 'sunrise industries'. Unfortunately that has been interpreted as meaning sunrise companies, and that is very different. Sunrise industries do not necessarily mean that there will be new companies for sunrise industries. The Government has been attempting to identify areas of fertility, to suggest that if the Government does not change the financial climate in which our industries operate the industries will not change either. In other words, there has to be a recognition of the difficulty of technological change in manufacturing terms and of the need to change the climate and the context to encourage that experimentation. The most likely thing is that sunrise industries will develop from old companies, not necessarily from in-house development but from their picking up and marrying smaller, more creative, more leading-edge companies. Leading edge is by its very nature small, totally flexible and, in many cases, maverick. It almost invariably lacks a depth of management and financial skills. The weakness in Australia has been that the creative skills of the small companies have not been matched by a financial depth or by a management depth, so the failure rate in those areas has been much greater than it should have been.

We talk about large companies in Australia, but in world terms those large companies are very small. So, in effect, it is all relative. Companies the size of our largest companies are seen in world terms as being relatively small companies who should be in leading edge. In the Australian context they are seen as being large, conservative and unable to adapt quickly. The intention of these three Bills is to stimulate the potential development of new activities and to get us back into the mainstream of technological change, back on to the continuum so that as we drop off the older activities we also pick up newer ones .

Since I came back to Australia in 1970 my regret over that last 13 years has been that the computer industry has not employed the people it could have employed. In my mind, the Australian computer industry should be a net employer of people rather than a disemployer, but the fact is that our computer industry is a dumping ground for other companies and for other countries. The Government is trying to change the climate and the context in which technological change can occur. Let us look at individual industries, for example, the software industry for the Australian Industrial Research and Development Incentives Board . The fact is that software is not an industry. Companies have been coming to me over a long time and have said: 'If we apply for an industrial grant or a State decentralisation grant to develop software, we are not recognised'. Software is not recognised as an industry. To anybody who has been in the computer field, that is obviously nonsensical. That partly reflects the inability of the Government to react to what is happening, and the very long lead time in Australia required to understand and to respond to what is taking place in the world. The amendments to this legislation play a major part in ensuring that software is recognised as an industry. That is an important change because it will not just affect those grants, it will also flow down into the State systems . The decentralisation grants, the industry grants, the assistance and co- operation available from State governments will now include software, which has not been done previously or the changes have been occurring only at State levels in very recent times.

The Australian Industry Development Corporaton Amendment Bill will allow the AIDC in a joint venture and in conjunction and co-operation with Australian companies, either small or large-I expect a mixture of both-to venture into areas that are difficult for us to handle and to display the innovation and flexibility required of leading edge technology. That is what we are talking about. That is a risk area and it is an area of great uncertainty. The AIDC can offer to small creative companies the depth, the back-up, and the management skills that they so desperately lack. If we are looking for a reason for lack of change, that is mainly it-the lack of depth in our creative companies. Let me take as an example the Broken Hill Proprietary Co. Ltd. and the orbital engine. BHP, for the first time, after 60 or 70 years, picked up an innovation in a new field. It was a world first; it was not just a matter of picking up gas and oil, which was obviously a well known and well established technology. In fact, BHP now has a very large section that is looking constantly at new developments. I do not think it has done that particularly well. I do not think it has developed enough skills to do that, but I can see that in years to come BHP could well be a major generator of management investment companies, AIDC developments, linking up with small, creative companies or individuals to generate new activities, not as part of BHP, but as spin-offs.

The third factor-the MICs-is a fundamental change. This change heightens my bewilderment in this Government's first six months at finding how little the previous Government understood business. I have been absolutely amazed in talking to business people all over Australia to find that they did not understand the previous Government and that that Government certainly did not understand them. There was an assumption that they knew each other's situation and understood each other's roles, but the fact is that neither did. The widening gap between government and industry in Australia has been a major component of our industrial demise or emasculation. This Government in its first six months is giving leadership and saying to industry: 'We understand the situation. We are prepared to try to help to change the climate and we will play an active role in that change.' I am sure that industry and business will respond very strongly. I think that this Government, rather than being condemned by industry, will be applauded by it because for the first time we are getting out into the real world in real ways. I commend the Bills to the House.