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Wednesday, 7 December 1983
Page: 3418


Mr TUCKEY(8.13) —The Steel Industry Authority Bill is probably one of the principal initiatives of the Government in its term of office. It has set out to save Australia's biggest company, and a company that, as I think the second reading speech states, is responsible for something like 3 per cent of the gross domestic product. The Opposition does not oppose this legislation. However, I think it is necessary for me and other speakers to draw to the attention of the Government the background and the reasoning behind the need for spending such a large amount of the taxpayers' money, and a large amount it is. As we find in the explanatory memorandum, approximately $62m to $63m is to be spent in the immediate future. Of course, it has been suggested that over $70m will be provided by way of bounty assistance to the Broken Hill Proprietary Co. Ltd in future years.

This is a large amount of money. We must question why a business as well placed as BHP in terms of the availability of raw materials and of its establishment and development prior to the Second World War-during the Second World War it was not subject to bomb damage and all the other disruptions that occurred in all the other major industries-finds itself having to come cap in hand to the Government and the people of Australia for support. It is interesting to note that on 16 March 1982, while I was a member of the previous Government, I put the following question to the then Minister for Business and Consumer Affairs:

I refer the Minister for Business and Consumer Affairs to Press statements announcing substantial reductions in the operating profit of the Broken Hill Pty Co. Ltd and in particular BHP's calculation of the negative effect that its iron and steel operations have on that profit. Is the Minister aware of the announcement that BHP has reached agreement to grant its iron and steel workers a 38-hour week? Considering that the Minister's portfolio charges him with representing the consumer as well as business, can the Minister advise the House whether he has any intention of increasing protection by either quota or tariff, which would allow BHP to pass the costs of this unilateral decision to the Australian public?

It was quite clear to me, a back bencher, what such an agreement meant to the Australian people. A company had just told Australia that it was losing money on the steel industry, and it had the irresponsibility, in conjunction with its work force, privately to agree to reduce its productivity by reducing the working hours of that work force. Let us remember that at that time BHP employed approximately 30,000 people. It threw away, in a grand gesture, 60,000 working hours a week. The big Australian! Who had to pick up the tab? Eventually the Australian public, by the generosity of this Government, picked up the tab. The Minister for Communications (Mr Duffy) might tell us that that measure is cheaper than some others, but I doubt it.

The facts are that the basic and classic irresponsibility of management and unions contributed substantially to the need for this Government to throw away $ 70m of Australian money to assist an industry that refused to help itself. Those are the facts. What happened to those workers who took the advice of their leaders? Ten thousand of them received a nil-hour week out of it. That must have been of great help to them. This is the situation we will be confronted with in passing this legislation, but the Opposition recognises that if we do not pass it things could be worse.

It is interesting to note that at this time the workers have had other reasons for upsetting the profitability of BHP. It is clear that even the Minister is prepared to recognise this. In his second reading speech he stated:

Steel production has fallen to approximately 25 per cent below that of recent years and steel employment by the Broken Hill Proprietary Co. Ltd is 27 per cent below the May 1982 level, representing a loss of 10,000 jobs. The severe deterioration in the industry's competitive position resulted in BHP's steel division incurring heavy losses in both 1981-82 and 1982-83.

A number of factors can be identified as contributing to the deterioration in the industry's international competitiveness.

The Minister mentioned falling domestic demand, production cutbacks and rising unit production. It might be said that the company cannot be blamed for that, but the Minister gave us a couple of other reasons. He said:

Labour productivity declined significantly between 1980-81 and 1981-82 . . .

It dropped all right; it dropped to approximately 195 tonnes of raw steel a year per employee when Japanese competitors and other international operators, some of whom have joined the industry only in recent times and certainly did not have the advantages of BHP, were able to produce 350 tonnes per employee per year.


Mr Hollis —You are blaming the work force, I am not.


Mr TUCKEY —I do not care whether the honourable member wants to blame the work force or the company. I am telling him what the situation is. The best possible option the Government can give us is to spend $70m of the taxpayers' money to bale out a group of people who agreed on their self-destruction. That is what we are talking about. That was added to and contributed to at a time when the company was losing money, the workers believed and apparently the company believed-I am sharing the blame-that they could operate two hours a week per man less although they could not produce even half of the amount of steel other companies were producing and often, what is more, with labour that cost less. The situation is, quite clearly, that the company could not afford it and Australia could not afford it, but we are stuck with it.

Let us have a look at some of the other situations that affected BHP at that time when it started losing money. Strikes cost BHP significant production. Its figures show that 5.2 per cent was lost in 1979; 8.4 per cent in 1980; 6.81 per cent in 1981; and 7.7 per cent in the first half of 1982. We know what that was for-so the work force, the union leaders, could achieve this wonderful asset of having two hours a week off. What a great asset that is! Even the workers found out that that cost them money because leisure is expensive. Whereas when they were at work it cost them nothing, they had to turn around and spend money to entertain themselves in their spare time. That was the contribution made for these people. That is what they were doing to an industry. What was the price for doing that? Ten thousand people lost their jobs. That was the price delivered by those kind fellows who said: 'Stick with us comrades, we will do you a great favour; we will save you two hours of work a week'. Ten thousand of them were saved 38 hours a week. That was the situation.

We have to discover what sorts of efforts were made by the comrades of these steel workers who were in such dire trouble and whose employer was in such dire trouble. What do we discover? We discover that BHP, which has iron ore and coal on its doorstep, certainly within this continent, has the misfortune of suffering other government policy. I am not saying that this is necessarily only the policy of this Hawke Labor Government because I do not think it is. It is a policy by which we protect Australian shipping, for some obscure reason. If it is to save us in a war I doubt sincerely that the fellows on those ships would be much help to us. We have a shipping policy that says that BHP must cart in Australian shipping all that iron ore and coal that it requires to come by sea. What did the iron ore and steel industry inquiry by the Industries Assistance Commission of 25 July 1980 tell us about that? It said:

Assistance to coastal shipping also imposes additional costs on BHP. These costs were estimated by the Commission at between $20 million to $25 million in 1977-78.

That is probably something like $40m today. That is what is imposed by the brother seamen's union and the other maritime unions on BHP and the work force. If honourable members think I have just thought that up I take them back to a question I asked of the then Prime Minister on 16 September 1982. I said:

I refer the Prime Minister to his meeting with steel industry unions to discuss the result of the Government's decision to protect Australian steel consumers from the second most expensive steel manufacturer in the world.

If honourable members do not know who that is, it is BHP. I went on to ask:

Is the report in the last issue of the Bulletin correct when it says that Broken Hill Proprietary Co. Ltd suffers a direct negative effect of $25m due to its obligations under the Navigation Act to employ Australian owned and crewed shipping?

I might add that the first time Hansard wrote that it spelt crewed 'crude'. Sometimes I regret Hansard changing it, but it is 'crewed shipping'. The question continued:

As such an amount could be measured as equivalent to 1,250 jobs on land, does the Prime Minister propose any moves to give BHP and its workers protection also from this obviously inefficient and featherbedded sector of Australian industry?


Mr Hollis —You would have cheap Asian labour, wouldn't you?


Mr SPEAKER —Order! The honourable member for Macarthur will cease interjecting.


Mr TUCKEY —I did not talk about cheap Asian labour. I am just telling the honourable member what it costs. I think he has a representative area in his electorate. It cost 1,500 jobs in Newcastle because a couple of hundred blokes got a job on a ship. They are the rules and if the honourable member believes that is a fair balance he should keep it up.


Mr Hollis —Get your facts right.


Mr TUCKEY —The facts are that BHP goes down the drain for $30m or $40m a year because of an obligation to keep a few hundred seamen in a job and those seamen want a job for what is above and beyond a reasonable return. We all know about that. I lived in a fishing town for years. Where were all those seamen when they wanted their well-earned rest? They were working on prawn trawlers and double dipping. We know what honourable members opposite think about double dipping, do we not? They love that double dipping. Every blooming seaman is double dipping. They do not stay at home when they get their six or seven months off. But look at what they are doing to the fellow workers in the steel industry. I do not know whether the Government should be sympathetic to them because, as I have already proved, they have set out on a determined course of self-destruction, ably abetted by their employer, BHP, which seems to be more interested in putting advertisements on the radio and television telling Australia what a good thing it is rather than getting its industry to be efficient. Of course, the Minister has admitted to all this. That is no secret. He has just put it in nice plain words. He has not given the details behind it. He has told us that labour productivity has declined. He also said:

Other factors contributing to the industry's loss of competitiveness included a marked decline in labour productivity, sharply increased labour costs and problems with over-manning industry.

It is interesting to note, to get back to the maritime industries for a moment, what BHP has to do to get anything like the economies of scale it needs. The report on BHP from the IAC states:

Through its cost increasing effect, assistance elsewhere in the economy raises BHP's costs of production--

Here, of course, we are talking about hidden assistance to the shipping industry and putting 100 per cent quotas on the shipping industry-

and hence restricts its ability to export profitably.

In another place the report states:

It appears that the Australian industry producing basic iron and steel could expand more significantly but only by much greater reliance upon export markets.

There is no secret about that. No one needs to be told that the Australian internal market is small. There is no doubt about that. We all know that economy of scale is the rule for steel production; that big is beautiful. But what do we do in our export markets? Firstly, we featherbed and we inflate, as the Minister has told us, the cost of production internally. By protecting an associated industry we upset the economics entirely and further destroy, as the IAC has told us, the chances of this industry being able to export. Then we get a step further. This has been brought to my attention in another arena. When we want some ships to cart that product away from Australia what price do we pay? If BHP were able, as for instance Hardie's asbestos fiberlite pipes in Western Australia are, to meet the international f.o.b. price-it knows that because it is competing with its subsidiaries manufacturing with that so-called cheap Asian labour the honourable member for Macarthur (Mr Hollis) is so worried about-it could beat its own subsidiaries. But why did BHP lose the market? When it called tenders to have its product carted to the consumer and the shipping companies tendered they noticed an absence in their quotations of all the bottom line operators, the cheapest shipping companies. They will go to their Asian subsidiary. Of course, the c.i.f. cost then works out to a situation where the Asian subsidiary, owned by Hardie's fiberlite, wins the contract. In fact, when all this information was put to me Hardie's in Perth was working a three-day week. These companies say to the shipping companies: 'For goodness sake, in addition to some slight savings in travelling the extra distance, come to Fremantle or Newcastle and pick up these goods at the same rate per kilometre and we can win the tender for Australia'. What do the shipping companies say? They say: 'Not likely. We do not want to take the risk of going to that country and having our ships tied up and treated to all sorts of investigations and inspections by people who are not qualified to do it'. I can cite honourable members a recent example of a member of the Merchant Service Guild, a captain, who said that a ship was safe. But no, a mob of wharfies had to tell him that it was not.


Mr Hollis —That shows how little they understand.


Mr TUCKEY —Are you telling me that a ship's captain, a member of the Merchant Service Guild, knows less about ship safety than a wharfie? You can put that in writing any time and I will run it round at your next election campaign to describe to your constituents how dumb you are. Do not worry about it. I have no worries. An extra 9 per cent of people in my electorate recognise my ability.


Mr SPEAKER —Order! I invite the honourable member for O'Connor to address the Chair and to ignore the interjections.


Mr TUCKEY —I will. These people are killing off jobs on the land. These shipping companies say 'We will not come', and they do not come. One of them said: 'I would visit Australia only with a brand new ship on its maiden voyage. I would never come back again'. The reason such companies are so cheap and competitive in international markets is that they do not take the risk of coming to Australia. Who is paying for that? It is the 10,000 or 20,000 unemployed people in the Newcastle and Wollongong areas. The second reading speech indicates that the workers in the steel industry have agreed with the Government to raise productivity and to do all these good things. We have had to buy that agreement off them. My constitutents have had to pay dearly for this agreement to get people to act in their own interests.


Mr Hollis —What about the subsidies we give the farmers?


Mr TUCKEY —I invite the honourable member to write them off, to add the negatives to the other side and tell me the result. Any time he wants to ask the Industries Assistance Commission, it will tell him that there are none. The honourable member tells me that the farmers get subsidies. The farmers get a subsidy of $12 a tonne on superphosphate. The rock phosphate carted into Australia is carted on that wonderful assistance to Australia which recently got $50m of taxpayers' money-the Australian National Line. The differential on that is $12 a tonne. We may as well just pay the money to the Australian National Line, because the farmers do not get it. They get a subsidy of $12 a tonne which is direct compensation for the inefficiences of the shipping industry. Let us forget the farmers for a minute.

I am trying to tell the honourable member why he and his cronies have contributed to 20,000 people being out of work in the steel industry. He suggests that $70m of Australian taxpayers' money will solve the problem. I believe that it will not. This legislation will provide a $71.6m per annum subsidy on the production and domestic sale of certain steel products. What does that mean to us? It means that Australians in the downstream industries will be protected from the other option that was available to the Government. I congratulate members of the Government on being prepared at least to take the bounty option. It must have made their hands shake, considering the amount of money they are spending in so many other ways. It is the only tariff decision the Government has taken and it was only the magnitude of it which caused it not to take the revenue option.

The farming industry is one of four industries in Australia which produce an initial dollar. They are the three Fs-farming, fishing and forestry-and the mining industry. They are all primary industries. Those people are doing their best. While the honourable member talks about his problems, on Monday 350 farmers met with me in a little town called Mukinbudin. They have no income this year. When they get income no one will index the price of wheat for them. They will take the price that overseas buyers provide. What is more, they are stuck with this lousy shipping system. Every time someone comes in to load a ship, the wharfies and others at Kwinana try to screw an extra bit out of them, having already benefited from the indexation to which they are entitled. After the meeting one of the farmers rang me and said: 'Wilson, all our troubles would be over if you could just get the price of wheat indexed like wages are indexed'. What should I tell him? Should I tell him that he is a mug? Fortunately he, like me, is probably reasonably intelligent and can prove it, as I had to on one occasion in this place. We can worry about that in due course.

Let us look at what the Government makes out of tariffs. This year, as I read the Budget Papers, $1.773 billion is the positive revenue component of protection. Although it is not now his portfolio, the Minister for Foreign Affairs (Mr Hayden) every now and again correctly advises the work force what protection of anything costs it. It costs not only jobs but also money. I have forgotten what a seaman costs us to employ, but I understand that we could send him to the Riviera with about $20,000 a year in cash and use somebody else's shipping and the country would be better off; it would be cheaper.


Mr Hollis —That is the sort of rubbish you peddle.


Mr TUCKEY —I am not peddling it. I am telling the honourable member, and again he will not take my advice. I advised honourable gentlemen opposite of the grave difficulty they had with their pin-striped socialist, the man who was bringing down their high reputations by avoiding and evading tax while they were sitting around. They backed him with their votes after I told them that they should not do so. That was good advice too. I will concede that most of them would not stoop to that type of thing and, furthermore, could not afford the expensive lawyers and accountants that the Minister for Finance (Mr Dawkins) and his family can afford. I told them that, but they stuck behind him. They have kept him in the Ministry and, of course, they will take the criticism for that. With one rotten apple in the barrel they know what will happen to the rest of them. That is the way the public will see it. I am trying to tell honourable gentlemen opposite what they are doing and why they are not saving their own people. They are not representing them.

In the talk about the economy we hear daily in this place about the faults of the previous Government. It appears to me that no matter what the subject is-it can be tariffs, bounty protection or anything we like-if the Government is doing something wrong, as we heard restated by a Minister today, it is only because we used to do it wrong when we were in government. Has anybody stopped to think-I charge someone to deny this-that the economic circumstances of a nation cannot be manipulated overnight? It is certainly reasonable to say that any macroeconomic decision of a government would take from six to nine months to filter through. The Prime Minister (Mr Hawke), as if he were a perfect rain maker-the rain has had no significant effect-says that because of his policies certain things are happening and the economy is on the way up. The economy will measure this Government's performance next year. That is when we will find out what its efforts have done.

The economy is picking up because the previous Government did two things. Firstly, it imposed a wage pause. Secondly, it had a $4 billion deficit, which I was not all that thrilled about but which this Government has doubled. The economy is floating along on those two situations at the moment. Nothing this Government has done has had significance-except for one thing; that is, that the business community is greatly relieved that this Government is only about half as bad as it thought it would be; therefore, there is still a bit of confidence out in the business community. I think the business community probably approves of this Government propping up BHP. As I have said, we approve of this Government propping up BHP because the situation is so bad that there is no other solution. The only thing that the Government could have done which would have been worse would have been to introduce quotas or tariffs, or both.

But all in all what has this Government done? We know all about this confidence we have been told about. When I pick up yesterday's Australian Financial Review I see the headlines. This is this great confidence we are being told about. The only reason there is confidence is that it has rained and $2 billion or $3 billion is coming from the agricultural sector. The Government has turned around and, in one of its other tariff decisions, has imposed a $14m burden on that sector to protect an industry to which it could have given a bounty at a cost of $2m. What is the headline in the Australian Financial Review? It reads: ' Manufacturing sector hit by funds outflow'. We have all the hot money in the world flowing into Australia to fill the Government loan, but where is the money that will generate more money going? It is going out. The article in the Australian Financial Review states:

Figures released by the Bureau of Statistics show foreign investment fell in the latest quarter by 43 per cent, compared with a 12 per cent fall in the June quarter.

Maybe this is the instant response to the new Government. The Government certainly should not tell me that this is all due to today's economic activity. The Government should never demonstrate that it is so silly that it believes that in macroeconomic terms the few actions it has taken so far can do this sort of thing. The article continues:

The manufacturing sector suffered a sizable net outflow of foreign capital of $ 281m in the September quarter, compared with a net inflow of $310m in the June quarter.

This was the first net outflow from the manufacturing sector since 1979.

There we are. That is the picture. We are propping up our steel industry, the one industry that should be able to stand on its own feet. Nevertheless, let us hope that it will get the industry back to something worthwhile. This will not happen unless its workers and the associated workers recognise their responsibility also, and I stress the word 'also'. I do not hold a brief for the managers and the directors of BHP. I think they are equally open to criticism for what they let happen to the steel industry. I sincerely hope that the Government's plan will work. I am not in this chamber to suggest for a moment that I wish it would not work. I would rather see this Government stay in office for a longer period and the plan work. I recognise the importance of BHP. But it is no good saying that this is the way Australia will go and then going on to say that we can keep propping people up so that they can enjoy more leisure. Unless we are prepared to encourage people to do a day's work and to recognise that they have as much responsibility as the management has to keep a company viable things will go down the drain quite badly. This particular step will not help us.