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Thursday, 1 December 1983
Page: 3158

Mr CONNOLLY(12.21) —The Management and Investment Companies Bill, the Industrial Research and Development Incentives Amendment Bill and the Australian Industry Development Corporation Amendment Bill, which extends the financial base of the AIDC, are of considerable importance to the development of Australian industry. I think it is fair to say, from the point of view of the Opposition, that the Bills probably represent the first major initiatives by the Government in the context of its industrial and development policies. We support the broad thrust of all three pieces of legislation. However, in a number of areas we naturally have some concern and there are questions which need to be raised with the Minister for Science and Technology (Mr Barry Jones) and on which I trust he will be advising the Parliament.

I congratulate the Minister for his long interest in the question of technological development. I think it is fair to say that in political terms he probably played along with the previous Minister in pioneering a role in generating major interest in the Parliament and in the nation in this most significant area. It is a sad reality of life that there is a strong Luddite tendency in much of the Australian industrial system and certainly in the trade union movement.

Mr Barry Jones —And management.

Mr CONNOLLY —Yes, and in some management. It is based upon a fear that change must be bad because it involves taking Australia and its people into realms which we perhaps do not understand in the full sense. It also demonstrates that some believe that we can isolate and hermetically seal Australia off from the developments taking place in the rest of the world. For that reason I wish to refer principally to the Industrial Research and Development Incentives Amendment Bill. The amendment to the legislation, which was introduced by the Fraser Government, is significant because it extends the scope of the Australian Industrial Research Development Incentives scheme to increase its effectiveness. I think the following words of the Minister in his second reading speech are relevant:

There can be few who fail to recognise the significance of advanced technology. It is the key to the establishment of an internationally competitive industrial sector. It is crucial to the maintenance and growth of real national wealth. Both directly and indirectly it provides the means to create new employment opportunities and to maintain activity in traditional industries.

In terms of my earlier observations it is a very sad fact that at times of high unemployment in particular the Government must face a very real community concern. I have not seen yet in the development of Government policy an acceptance of the reality that they must do their best to identify to management and the trade union movement the need to be prepared to make changes in this area. I think the Minister will be well aware of the attitudes that have been adopted by the bank employees unions, for example, which have effectively turned their face against automation in banking despite the fact that their industry is one of the few which in net terms have increased their labour force in recent years. The reality is that a return to Ludditism will solve nothing and cannot be the basis for economic recovery for Australia. Technological change is causing job opportunities to change with it and in many industries these changes are very radical, but our failure to develop in this direction will most certainly cause massive retrenchments as industries become less and less competitive in the face of greater efficiency and cost-competitive imports from overseas. Tariff walls and other protective devices cannot reverse this trend, regardless of how much some people may wish it to be so. Therefore the Government must, together with technological development and the application of innovative financial policies, work towards a more flexible wage system.

This Bill provides incentive grants, for example, to manufacturing, mining and certain on-site construction companies, to reimbursement of specified eligible expenditure-effectively a commencement grant. We are also told that the membership of the Australian Industrial Research and Development Incentives Board that has been established to administer this legislation has been made up of people who have pre-eminence in technology and commerce. I am very pleased to notice that Dr Kevin Foley, a previous colleague of mine and a person with whom I have had a great deal of contact in recent years, has been appointed by the Minister as chairman of the incentives board. I am sure that he will do worthy work in that field. The Government has also foreshadowed action to stimulate the venture capital market. The first indication of that is the introduction today of the Management and Investment Companies Bill. We must wait to see its effect.

Leading on from that, I wish to make some general observations on the other side of the Governments political coin. I refer specifically to the report produced some months ago by the Chairman of the Government's Caucus Industry Committee, the honourable member for Burke (Dr Theophanous). It is entitled ' Democratic Socialist: A Report from Canberra-Towards a Socialist Industry Policy : The Need for Substantial New Measures'. In this document the honourable member for Burke has told us that the long term strategy of the Labor Government is to 'have controls over the behaviour of large national and multinational firms'. He states that this can be achieved only through the socialisation of part or whole sections of strategic industries and direct investment by government in potentially profitable industrial areas. This will become part of the Government 's total industrial policy and will involve the Government not only in propping up existing industries but also in 'establishing new profitable companies in various areas of manufacturing industry, especially high technology'. This is the essence of one of the difficulties which the Opposition has with this aspect of the package. Frankly, we are suspicious about the capacity of government to choose winners and losers in this field.

The honourable member for Burke continues in terms of the role of the AIDC. He sees it as an ideal weapon to increase governmental involvement in and control of industry. He recommends increased public equity which will give the Federal Government a greater stake in important decision-making. Again we see this intrusive attitude of members of the Labor Party who believe that as members of parliament, regardless of their background and of their ability to be involved in the decision-making process, that by osmosis they are more qualified to second guess decisions of management than the board of directors of a company which has the legal responsibility. All I can say to that proposal is that we cannot reinvent the wheel. This formula has proved to be unsuccessful in most, if not all, of the Eastern European bloc countries and I fail to see how it can be suggested, at a time of high unemployment in Australia, that the Government will be able to encourage capital investment-that is one of the principal objectives of this legislation-if at the same time the honourable member for Burke persists in allowing members within the policy-making machinery to disseminate, views which will clearly have exactly the opposite impact. That would lead to a strike of capital, not an opening up of the capital markets, which is the objective of this legislation. The honourable member for Burke went on to advocate the expansion of the AIDC. He stated:

. . . funds must be dramatically increased-a five fold increase . . . and its extended powers to borrow overseas be fully exploited . . .

The legislation before us today effectively goes down that road although perhaps not far enough for the honourable member and the left wing, the Marxist element of the Labor Party. Nevertheless, we are told in the amended legislation that it is proposed to increase the statutory capital of the AIDC by $50m, bringing it up to $150m, and that the Corporation will be able to call upon this additional capital in amounts of up to $12.5m per annum. We are also told that the gearing ratio will be increased to enable the Corporation to borrow up to 15 times the level of its capital and reserves. I ask the Minister why the figure of 15 has been chosen. My view is that it can often be very dangerous to lock into legislation provisions such as that which do not given the management of AIDC the degree of flexibility it may require from time to time.

Furthermore, we are told that the legislation will provide Commonwealth guarantees of all borrowings by the Corporation. Here again we see the tendency to ensure that a governmental body will have a definite edge in the market place . Overseas loans will probably attract a net interest rate of half a per cent lower than the market rate available to other commercial borrowers. Those inconsistencies in the market place can cause major difficulties elsewhere. Generally the Opposition supports the legislation. In conclusion the Organisation for Economic Co-operation and Development's table on research and development investment, for which I thank the Minister, shows that Australia ranks in the middle with respect to government-funded research and development. In regard to privately-funded research and development we are twenty-third out of 24 nations. In Sweden for every krona spent by government on research and development, industry spends eight. However, in Australia for every dollar spent by government, industry spends about 50c. Clearly the situation is quite unsatisfactory. Therefore, the Opposition supports the objectives of the Government's policy in this regard.