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Wednesday, 26 November 1986
Page: 3748

Mr MOORE(12.25) —The rearrangement of the order of debate this morning has enabled the Bounty (Ship Repair) Bill 1986, the Navigation Amendment Bill 1986, the Subsidy (Cultivation Machines and Equipment) Bill 1986 and the Fertilisers Subsidy Bill 1986 to be discussed individually. As a result, in speaking to the Subsidy (Cultivation Machines and Equipment) Bill I will raise a couple of broader issues. The constant debate in Australia on industry policy is something in which the House ought to take more interest. Debates on bounty and tariff come before us quite regularly. The sort of debate that takes place, as we have seen in relation to the two preceding Bills, always applies to the particular rather than the general. We ought to put aside some time to address ourselves to how the Australian manufacturing sector as a whole is going rather than just look at the smaller mosaic.

Mr Barry Jones —That is why we wanted to give you time for a cognate debate.

Mr MOORE —I thought it might have been to give the Minister time to go outside to get a briefing. In view of the circumstances that flow from that, we have seen in Australia in the last few years an attempt by industry to review its processes and to accept that many practices, both management and work practices, are totally outmoded and are ruining Australian manufacturing. The recommendations of the Industries Assistance Commission and the approach to work practices by the Opposition, which I welcome, and in latter days by the Government certainly point in the right direction. No matter what one does in this area, no one will put into the manufacturing sector the money that is necessary until there is some surety in relation to profitability, some capacity to predict the future market in Australia for products and some capacity and confidence to predict what can be done in export markets. Uncertainty is resulting from movements in government manufacturing policy.

Movements in tariff and bounty payments are extraordinarily potent in their effect on management decisions, but they are not as important as the overall economic structure set up by taxation policy, particularly in respect of depreciation, and the overall interest rate structure which is imposed upon the whole community. Who would invest in an industry of doubtful profitability? The shipping industry is being subject not only to the ravages of totally irrational union action but also to poor management decisions in many areas. Who would invest in such an area when the return is minimal, a loss is probable and, in most cases, everything is dependent upon government support, subsidy or tariff protection? One might as well buy debentures in a government or semi-government instrumentality guaranteed by a State government or the Commonwealth Government. The yield today on Commonwealth scrip is 13 per cent and on semi-government scrip up to 15 per cent. It involves no risk; it is government guaranteed.

Investors are being invited to take the risk and invest in industry which is dependent on unpredictable union action, unpredictable interest rate charges, unpredictable Australian markets and unpredictable government policy movements in the area of manufacturing. Because of these circumstances, more than anything else, we are seeing a reluctance-there is almost a strike-by people to invest capital in certain areas of the manufacturing sector in Australia. Until those matters are seriously addressed, the nation's ability to come to grips with the balance of payments problem will be impaired. Many people have said that the devaluation of the Australian dollar is the answer to everything-indeed, I have heard it said by the Prime Minister (Mr Hawke).

Mr Simmons —It is not a bad start.

Mr MOORE —It is a very poor start in a commentary on the Australian economy. The dollar goes down according to the economy; it does not go down in order to adjust itself to the manufacturing sector. The price of the Australian dollar is totally the perception of an outsider's view of our economy. That is caused through the Government's actions over the last couple of years. There is no doubt that a devalued Australian dollar is of advantage to people who sell their products outside Australia. One of the best examples of this is Fosters lager. It can now be manufactured in this country, sent abroad and sold in America and Europe-its greatest success has been in the United States-at a competitive price. In other items which are straight manufactures from our primary products the same sort of pattern is developing, but the success of Fosters lager is probably the most noteworthy. That has come about, firstly, through investment by Carlton and United Breweries Ltd, and, secondly, through the advantage flowing from a falling dollar; but the investment would not have taken place unless the profitability was there. No matter how much is put in in government subsidies, tariffs and the rest, that area is not subsidised in any respect.

These matters must be addressed in determining manufacturing policy, but also to be considered is the subject of the transport industry in Australia, and we were talking earlier today about shipping. On average, up to 40 per cent of the input cost of every product in this nation is affected by transport costs. The transport system in this nation does not work smoothly. There are large areas in which transport costs are unnecessarily high. There are areas in which industries are directed to use State railway services. There are areas in which certain alternative transport systems are denied to those industries to protect certain enterprises or usages. The honourable member for Gwydir (Mr Hunt), as a former Minister, will know the difficulties in that area. Australia's manufacturing sector has to live with the consequences of the cost of transport, the inefficiency of delivery and poor container management.

Mr Hunt —One of the biggest problems.

Mr MOORE —Poor container management is responsible for an alarming cost to manufacturers in this nation. There is also in some areas a sheer inability to use modern techniques from overseas because they have been banned by trade union action; in some cases certain companies here have been unprepared to invest money to adopt new container systems or transport modes. Those are important considerations and should be addressed in debates of this kind. Far too frequently in our debates, in five or 10 minutes, we make ad hoc statements as to what is occurring in Australian industry. That applies particularly to the Subsidy (Cultivation Machines and Equipment) Bill 1986. In that industry for some time manufacturers have been afforded a tariff. The impact of tariff on the Australian consumer-in this case the farmer-does nothing but put up the price to the farmer. The conversion to bounty certainly reduces the cost to the user in the field, and is welcomed by the Opposition. Moves away from direct tariff to direct bounty payments should be welcomed at the best of times because it is a clear indication of the true cost. The cost appears in the Budget and is known.

A tariff is a way in which people can conveniently hide a number of processes such as mismanagement and bad dealings, and the cost is borne by the Australian consumer. The only product from it in some cases has been some fairly dubiously built industries which in the longer term have not succeeded. The IAC has recommended that the tariff be eliminated and that a subsidy of the same amount be paid. I note that there has been some quibble from the producers as to the measurement of the subsidy. I hope that the Minister will be able to assure the producers that they are getting a fair and just interpretation. I do not think it is ever possible to satisfy everybody; I have been around long enough to understand that. In this case I hope that the Minister in his reply will assure the prospective receivers of bounty that the former assistance in the form of tariff will be received in the right order.

In Australia the four largest local producers-Horwood Bagshaw, Connor Shea Napier, John Shearer and E. Anders and Sons-are all having difficulties; there is no doubt about that. There is also a view within the farming industry that some of their products do not meet market requirements. I hope that payment of the bounty will bring about innovations and that the necessary import competition that will arise will bring about some changes within the industry. This will ensure that users of the Australian product will get the first class equipment to which they are fully entitled. This factor plays a huge role in our balance of payments and our position in the world in terms of primary industry products.

The Opposition notes that in 1986-87 the subsidy is expected to cost $16.8m, considerably less than the cost of $39m announced by the Minister for Primary Industry (Mr Kerin) in April. Removal of the tariff will result in revenue forgone of around $2m per annum. No estimate of administrative costs is given, but the Australian Customs Service reckons that it would cost around $550,000 per annum, which figure is taken from the IAC report. The Opposition does not oppose the Bill and commends the move away from the tariff structure to a bounty system.