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Wednesday, 7 December 1983
Page: 3423


Mr HOLLIS(8.44) —I welcome this opportunity to make a contribution to this cognate debate. We are debating the Steel Industry Authority Bill, the Bounty (Steel Mill Products) Bill and the Bounty (High Alloy Steel Products) Bill. I was very interested in what the honourable member for O'Connor (Mr Tuckey) said. One thing came across to me very clearly. I do not know what sort of a farmer, money manager or investor he is, but he certainly does not understand the steel industry and he most certainly does not understand the trade union movement. Mr Deputy Speaker, I know how closely you are associated with this matter as we share adjoining electorates. I know of your great interest in the steel industry and in its workers. But the honourable member for O'Connor came into this chamber and, on the one topic on which I thought we could have had a bipartisan approach, we heard the usual old rhetoric. The honourable member for O'Connor might as well leave the chamber as he is going to get quite a serve.


Mr O'Neil —Leave the chamber.


Mr HOLLIS —The honourable member should leave the chamber. That is his way. He has his say and then he runs out. One would have thought that he could have adopted a bipartisan approach to this matter, but no. He stood up and made all sorts of comments about the unions-(Quorum formed) I hope that honourable members opposite have had their fun and games and we can now get down to some serious business. It is typical of members of the Liberal Party of Australia in this House to do that sort of thing and call for a quorum.

I could have shared in some of the comments the honourable member for O'Connor made, as I have some reservations about the management of the Broken Hill Proprietary Co. Ltd. I have been very public in my criticisms of the management of BHP. I want to see some of the fat cats there removed and shaken up. I have said many times that there should have been a shake-up of the management of BHP. I admit that the honourable member for O'Connor made that comment during the last 15 seconds of his speech, after a tirade of half an hour in which he abused the trade union movement, which is about his level of debate. Honourable members should make no mistake. Behind the formal titles of these Bills we are talking about the salvation of the Australian steel industry and the great steel centres , those areas of Newcastle, Whyalla and Port Kembla that have contributed so magnificantly to the development of this great country, these great working class areas that our conservative opponents would have thrown on the scrapheap.

My remarks wil be directed mainly to the Steel Industry Authority Bill. On election our Government pledged itself to maintain a viable steel industry and to take measures to assist the seriously depressed regions of the Illawarra, the Hunter and Whyalla. Under the conservatives the steel industry was in a state of chaos. With massive redundancies and declining markets the future of the steel industry was in jeopardy. In part, the crisis in the steel industry was caused by the disastrous deflationary policies of the Fraser Government. The abrogation of responsibility for economic policy under Fraser created the conditions for the dismantling of the Australian manufacturing sector and, as a result, inputs from the steel industry dropped dramatically. In addition, the thrust of policy for the steel industry was to write an open cheque for BHP, through depreciation allowances and investment allowances, to invest in technologies that did away with labour. It is fair to say that under the Conservatives government did not have unduly to concern itself with economic policy, as this was done for it in the boardrooms of the large corporations. The Minister for Industry and Commerce (Senator Button) was given the extremely difficult and unenvious task of stabilising the steel industry and establishing a framework for the future development of the industry. In the time available, the Minister did a very commendable job.


Mr Cadman —I raise a point of order. Is it appropriate for members to wear badges or slogans in the House?


Mr DEPUTY SPEAKER (Hon. Les Johnson) —There are some restrictions about that matter, but nothing appears to offend my eye at the moment in that respect.


Mr HOLLIS —The Australian people will be indebted to him for the stabilisation of the industry brought about by the introduction of the steel industry plan. Of course, the Minister knows that if each of the parties-that is, the unions, the Government and management-had separately prepared the plan it would have been different, but the plan is seen by the Government, the industry and the union movement as being essential to reverse the decline in the industry's fortunes and represents a new approach to industry policy in Australia. The plan involves a significant investment of public funds in the steel industry. For the first time, assistance to the steel industry is clearly visible and not hidden behind capital investment subsidies. The Government has also provided a mechanism to review assistance if BHP's market share is threatened by cheap imports. This provides a framework for the steel industry to develop without giving carte blanche to the private sector.

With the establishment of a Steel Industry Authority, the Australian Government and people will become more informed about our major manufacturing industry and will be in a better position to avoid the type of situation that has arisen in the past couple of years, with such tragic consequences for miners and steel workers, their families and the steel regions. In return for assistance, BHP has agreed to maintain its integrated steel plants at Newcastle, Port Kembla and Whyalla, invest in modernising the steel industry, and provide some security for its work force. I say 'some security' with regret, following the company's announcement of the retrenchment of 44 electricians and 16 bricklayers and the proposed putting off of 300 of this year's 340 apprentices at Port Kembla after the steel industry plan was outlined. There is also no commitment by the steel companies to provide protection of jobs for injured workers on light duties. One of the costs of the drive for higher productivity is that past victims of that drive are dispensed with. This contradicts the International Labour Organisation 's commitment to the rehabilitation of injured workers and is a matter I will be referring to the Steel Industry Authority for consideration.

Following the announcement of the steel industry plan, it is interesting to note that BHP's steel division is back in the black, though the steel regions are still very much in the red. Recovery of the steel industry means nothing if we cannot provide a future for the thousands of people out of work as a result of the recession and BHP's corporate strategies. Given the amount of public assistance to the steel industry, it is absolutely essential to have an independent authority to monitor the industry and to develop a data base to assess the real situation in the industry. In the past few years, government and the public have been bombarded with claims about low productivity, high wage rates, and imports being the causes of the crisis, without having the information to determine properly the accuracy of the claims. During the steel industry crisis BHP used the threat of abandonment of the steel industry as a means to procure the requested assistance. According to the Industries Assistance Commission, the company stated:

. . . due to the magnitude of the investment required and the time taken to plan , construct and achieve optimum production levels on new steel plant, an assurance of ongoing support would be required before funds could be committed to the envisaged development plan.

It added that it regarded the assistance requested as the mimimum required if the industry were to survive and develop and said that, unless the requested assistance was forthcoming, the company's steel division could be moribund. Given the enormous fixed investment by BHP in the steel industry, it is unlikely that complete cessation was considered an option, even if further assistance were not forthcoming. This view has been confirmed by Mr Peter Laver, the General Manger of BHP's steel division, who recently estimated the cost of closing down Newcastle and Whyalla at $1,000m, hardly an option for the company.

Although steel is not a highly profitable industry, I doubt that it is as unprofitable as the industry claims. Most of the losses in BHP's steel division in the last financial year can be attributed to two factors that the honourable member for O'Connor did not mention. Firstly, massive amounts were paid out to reduce the size of the work force. These are non-recurring costs. Secondly, investment was at record levels in the industry, and this capital expenditure was being offset against profit. It appears that BHP was using the threat of cessation of the steel industry as a means of socialising the costs of investment and the minimisation of private risk in the modernisation of the industry. Those in the steel industry work force were the victims of this strategy. Certainly this is a matter that should be taken up with the Steel Industry Authority.

The key component of the steel industry plan is labour productivity. I believe the Authority should investigate this concept very closely. Every report on the steel industry in the past few years has conceded the inappropriateness of comparing productivity in different countries because of the different basis of management. We heard the honourable member for O'Connor talk about productivity and compare it. Let us compare productivity. In Japan, much of the work for the steel industry is done by outside contractors. This is not included in their productivity figures. In Australia, management is included in the measurement of productivity. If management were excluded, surely our productivity performance could be improved. Despite these difficulties and the impossibility of comparing different steel products, comparisons are still made between our poor performance and the performance of overseas steel producers.

Although there is scope to improve labour productivity, it is by no means clear why the onus for improving the performance of the steel industry should fall on the company's diminishing work force. The Authority will be able to address questions such as the competence of management and industrial strategies to develop a more sophisticated manufacturing sector, creating new employment opportunities and pricing and investment policies in the steel industry to assist in revitalising manufacturing. Certainly, the evidence on labour productivity is inconclusive. It should be noted that at the same time as BHP was preparing submissions to the Government on low productivity, it was telling its shareholders of the improvements in productivity at its largest Port Kembla plants. The improvement in labour productivity at the Port Kembla steel works in the late 1970s has been demonstrated by a study prepared at the University of Wollongong.

It is clear that we need a Steel Industry Authority to provide some public accountability for the large public investment in the steel industry. In addition to improving the economic performance of the steel industry, the Authority should also investigate ways the industry can improve the work place environment by investing in plant and equipment that minimises health and safety hazards and improves the physical environment in the steel regions. As well as safety mechanisms for imports, we should develop a health and safety program to provide a protective mechanism for workers. Too much emphasis on boosting productivity alone may lead to increased fatalities and accidents in the steel industry. The year 1978-a peak year for productivity in the 1970s-had the greatest number of fatalities of the 1970s.

Australian standards in minimising coke oven emissions lag well behind American and European standards. It would be in the interests of steel workers and the industry to close the No. 3 battery of coke ovens at Port Kembla and construct No. 7A. We should be looking at ways of creating new jobs through technologies that improve health and safety. At present, the steel industry is introducing technologies for steel production appropriate to the 1990s, but with the working conditions of the 1930s. There are many dangerous chemicals and substances in the steel industry. Provision should be made for BHP to provide a chemical registry. This information should be forwarded to the Authority and monitored by the relevant health authorities.

The Authority should also encourage the steel industry to improve the physical environment in the steel regions. In response to the crisis in the steel regions , the Federal Government has invested millions of dollars to improve the natural environment in order to increase employment opportunities. In the Illawarra, Australian Iron and Steel Pty Ltd is proposing to establish a coal wash disposal and slag dump on beautiful rural and rainforest areas in proximity to residential areas in West Dapto which, as you will know, Mr Deputy Speaker, is in my electorate. By permanently degrading the region's unique natural environment, this proposal will detract from the region's potential to improve its image. It could be argued that this slag dump is the only thing that BHP has ever given back to my region. It is certainly an unwanted gift.

To conclude, this Government has gone further than any other Australian Government to provide a future for the steel industry and to assess its development accurately. The challenge will be to ensure that the benefits of the revitalised steel industry are shared by the work force, the steel regions and the Australian people. It is essential that the Government's steel plan works and I am convinced that, given good will on all sides, it will work. Indeed, it must work, because if it does not Australia will not have a steel industry. I commend these Bills to the House.