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Friday, 5 October 1984
Page: 1301

Senator PETER RAE(10.16) — We are dealing with a group of bounty Bills. I propose certain amendments to them with which we will deal in the Committee stage. The comments which I wish to make relatively briefly in relation to the Bills are grouped into two categories. One is simply that the Bounty (Computers) Bill 1984 proposes to introduce a bounty on the manufacture of certain computer hardware, computer sub-assemblies and electronic micro- circuits. The bounty period is from 6 July 1984 to 5 July 1990 and the bounty will be paid at the rate of 25 per cent of value added. The bounty is part of the Government's decision which was made on the Industries Assistance Commission report entitled 'Computer Hardware and Software, Typewriters, Calculating and other Office Machines, Parts and Accessories, Recording Media, Metal Working Tools and Robots' dated 7 February 1984. The Government's decision in relation to the bounty also foreshadowed that changes would be made to Customs tariff legislation to allow imports into Australia of certain computer hardware, computer sub-assemblies and electronic microcircuits at minimum rates of tariff.

The decision taken by the Government was welcomed by equipment suppliers and equipment manufacturers. Nevertheless, considerable concern is being expressed about the need for a decision. The previous position was that there had been a bounty under the Automatic Data Processing Equipment Act 1977 which had been extended over a period. That had provided certain assistance to automatic data processing construction in Australia. The position is that the Automatic Data Processing Equipment Bounty Amendment Bill (No. 2) 1984 with which we are dealing today is simply an extension of that legislation, which had run out as of 6 May, to the date on which the Bounty (Computers) Bill 1984 is to come into force which is, retrospectively, 6 July 1984. So the two Bills are inter-related , the Automatic Data Processing Equipment Bounty Amendment Bill (No. 2) 1984 being simply to extend, ex post facto, the legitimacy of the continuation of the payment of the bounty under the 1977 legislation from 6 May 1984 to 5 July 1984. The amount involved is anticipated to be about $200,000. The Opposition supports this obviously necessary legislation. I have no further comment to make, nor an amendment to move, in relation to that Bill. In other words, that is a Bill which I think we may now put aside for practical purposes.

I go back to the Bill which deals with the future. The Bounty (Computers) Bill 1984, when enacted, will operate for six years and this will be an extremely important period in the development of the computer industry in Australia. I think that this legislation will enable the Australian computer industry to reduce the price of computers purchased by industry and commerce and this will have carry through effects on the efficiency of many sections of both manufacturing industry and the tertiary sector of Australian industry. We certainly welcome steps which will have those impacts.

The Minister for Industry and Commerce (Senator Button), in a news release of 5 July, the day before the new scheme was to come into effect, said:

This decision, combined with our earlier decisions, means that we are now moving towards a proper mixture of development measures to meet specific industry needs and measures which provide a framework for longer term growth.

The Press release stated that the bounty would be of 25 per cent value added. It also stated:

the cost of systems design and systems software will be eligible for bounty.

bounty will be paid on all production whether for domestic or export sale.

The two bounties are estimated to cost about $7m next year.

I am not quite sure what he meant at the time he made that statement. I think probably he meant during the 1984-85 year. The Minister nods his head and I thank him for that. I imagine that the statement was drafted perhaps before 30 June and came out in July. He was talking about that year.

Certainly the Opposition supports this legislation. We have proposed measures in our own industry and commerce policy which are designed to encourage the development of the use of computer aided design and manufacture. We have made provision for assistance for the introduction of flexible manufacturing systems. Without taking a lot of the time of the Senate to discuss in detail the problems of manufacturing industry in Australia, I think it is common cause amongst most people who have studied the subject of manufacturing industry that one of the things that is badly needed in Australia is assistance and encouragement to the upgrading to the maximum extent of those areas of Australian manufacturing industry where equipment is either out of date or not as modern as it could be and, therefore, not as competitive as it could be when compared with the equipment of producers in other countries.

The sorts of steps which can be taken which will make Australia more productive and competitive are steps which are to be welcomed. Again, I believe it is common ground that for Australian manufacturing industry to reverse the declining trend which has been taking place over recent years it will be necessary not to rely solely upon import replacement and the domestic market but to expand in a competitive way the export market and to increase Australia's share of that total market. That being so, the provisions of this legislation will play a part in encouraging the achievement of that objective. I therefore indicate that the Opposition supports this proposal. But as I mentioned, an amendment will be moved at the Committee stage, as has been the case in relation to similar legislation, because the Bill contains what have become in recent times standard clauses relating to search and entry by authorised officers without a warrant. This is a matter of some concern which I will address at the Committee stage and I will move an amendment in relation to it.

The next Bill in this cognate debate is the Bounty (Electric Motors) Bill which proposes to pay a bounty at a rate of 14 per cent to manufacturers of electric motors which have a power output of between 0.746 kilowatts and 38 kilowatts. The value added of the motor must be at least 33 1/3 per cent of the total factory cost for the bounty to be paid. The bounty is to be payable from 17 July 1984 for a 12-month period or longer. Again, I point to the fact that it is retrospective. But as is common in these sorts of provisions, that form of retrospectivity is accepted because it has been announced and people are clear as to the date from which a benefit will become payable. It is very different from retrospectively imposing a penalty which people did not know would be imposed. I draw the distinction between the two and make no further point about the retrospectivity.

The Bill gives the Government the power to extend payment of the bounty by publishing a notice in the Commonwealth of Australia Gazette. This provision is made to enable the Government's decision on the IAC report on long term assistance for the industry due on 16 April 1985 to be announced while this temporary measure is still in place. As the period for extension is open-ended- that is, it could be extended ad infinitum-the Opposition has to consider whether there should be a fixed period. I will refer to that further in a moment . The payment of the bounty, as I said, is one which is temporary pending the recommendations of the long term report. Although there has been a shake-out in the industry in recent times, it is quite obvious that there is a necessity for there to be a continuation of assistance pending the long term decision being taken. The Commission in its recommendation for short term assistance suggested that assistance should not be accorded to the local industry. This was not accepted by the Government. The Government has implemented the bounty as a temporary measure and has also done so at a slightly increased rate of 30 per cent. Again, the Opposition accepts the Government's right to make its assessment and its decision about how it should deal with the temporary problems of this industry.

The payment of the bounty is limited to a maximum of $300,000 to any one manufacturer during the bounty period. The total cost in 1984-85 is estimated to be less than $500,000 and accordingly we are not dealing with a huge amount of money. We look forward to a report in April next year on long term assistance, and a decision by government following that. At that time it would be more appropriate to debate this in more detail. As I mentioned in relation to the Bounty (Computers) Bill, this Bill contains a provision for the right of authorised officers to enter premises without a warrant, to search and take documents. That is a provision which, for reasons which I will outline at the Committee stage, the Opposition believes is inappropriate; it should be subject to the normal requirement of the issue of a warrant for the right of entry and search.

The next Bills to which I refer-the Bounty (Agricultural Tractors) Amendment Bill 1984 and the Bounty (Tractor Cabs) Amendment Bill 1984-are related although they are separate Bills. When the Industries Assistance Commission Report on Agricultural Wheeled Tractors and Certain Parts was tabled in the Senate on 22 August, I made some comments on the report and on the problems of the agricultural wheeled tractor industry in Australia. I noted that that drew forth responses from some people. One of the things I wish to correct is that I said that there is really only one manufacturer of agricultural wheeled tractors left in Australia and referred to Chamberlain John Deere Pty Ltd. I should have qualified that by saying 'of a range of tractors'. I was not intending to exclude those manufacturers of the small quantities of very heavy equipment which are rather more special and have different problems, to which I will advert shortly.

What I did point out is that although a bounty is being paid the position in Australia for the tractor industry is that there is very hectic competition. If one looks through the rural Press and rural magazines, it appears that discounting is taking place at a significant rate. There are the problems of a very large number of varieties of tractors and of whether in the future servicing and parts will be available for all those tractors throughout Australia or whether some people who have bought some of the makes of tractors which are being introduced into Australia at the moment may find themselves with useless equipment eventually-I refer not only to tractors but also to other agricultural machinery-or whether there is a reasonable assurance that parts and servicing will be available throughout Australia for the wide variety of tractors which are available and which have been purchased.

On 7 March this year I asked a question of the Minister for Industry and Commerce and recently, on 17 September, I received a reply. The reply from the Minister indicated:

There are more than 40 brands of tractors and in excess of 300 models (mainly from overseas) competing on the Australian market which is of the order of some 13,000 units per year.

He stated:

Such a competitive market should by its nature ensure a certain level of performance by the dealer organisation if continuity of sales is to be secured.

It is in the farmer's own interests for them to thoroughly investigate a dealer 's ability to provide the required services and to seek information about recent performance in this regard.

However, I would not argue against action by the industry to eliminate or reduce the potential problem for future purchasers of tractors.

If after appropriate examination of the facts the industry concludes some measure of self regulation is desirable, codes of conduct could be developed by the industry (including Australian manufacturers) and representatives of the farmers.

He continued:

Of course, codes of ethics, etc., should not substantially lessen competition in a market or otherwise contravene the Trade Practices Act, unless the Trade Practices Commission is satisfied there are countervailing public benefits.

Consumer protection is primarily a matter for the States and the parties involved should use avenues provided by the States in the first instance if they wish to proceed further.

The Minister prefaced his answer by indicating, as I had asked him to do, whether he was aware that from time to time suggestions had been made about regulation of the Australian market in relation to service and parts and particularly whether this could be done by self-regulation. I read that into the Hansard to explain the sorts of concerns to which I was referring when I addressed the matter on 22 August last. I draw attention also to the fact that there is a difference between the number of distributors, which I was informed on inquiry existed in the industry in Australia, and the number of brands referred to by the Minister in his answer. But the difference is not particularly significant. The point is the same, and that is that at a time when we are trying to see whether this Government's efforts to reduce the number of models and the number of manufacturers of motor vehicles in Australia is bringing down the problems being experienced by the automobile industry, we are seeing an expansion of the number of tractors and of agricultural implements being made available in Australia. I did not think it was very radical when I was drawing attention on 22 August to the fact that this expansion was taking place and that perhaps the users as well as the manufacturers and distributors should give some thought to some form of self-regulation before they reach the stage of getting into such difficulties that government feels it incumbent upon it to intervene in some way more than just by the provision of the bounty which is provided for in this legislation.

I was a little surprised to get quite a strong reaction from Chamberlain John Deere. I make it perfectly clear that my comments in relation to Chamberlain John Deere were to point to the irony of a bounty being paid to a local manufacturer when what was happening was that that manufacturer was having to compete in a very heavily competitive discount market, or what appear from advertisements and from statements made by many of the people involved in the industry is a heavily discounted market. I referred in no way adversely to the performance of Chamberlain John Deere as an Australian manufacturer with a variety of models or to the manufacturers of those large specialised tractors which are manufactured in relatively small numbers but to a high standard by some manufacturers in Western Australia, Victoria and New South Wales. The bounty rates which are proposed are those which appear to the Government to be reasonable for the purpose, and the Opposition does not in any way oppose the Government's decision in that respect.

Before I go on to the Bounty (Tractor Cabs) Amendment Bill 1984 I wish to refer to the anomaly which exists-I will refer to it in more detail at the Committee stage-with imported tractors. If they are already fully built, complete with engines, the engine component does not attract duty. But if an engine alone is imported into Australia-the sorts of engines which are required for virtually all the tractors manufactured in Australia have to be imported-a duty of 2 per cent is payable, which is a positive disincentive to the manufacture of Australian tractors. That is an anomalous situation which the Opposition believes should be the subject not only of attention but also of correction in the interests of equity and economic efficency. I will be moving an amendment, which has been circulated, when I conclude my remarks in relation to the tractor cabs. It is an amendment to the motion for the second reading of this Bill, the Bounty (Agricultural Tractors) Amendment Bill. I will therefore have to ask that we take the second reading separately.

The DEPUTY PRESIDENT —I do not think that will be necessary, Senator Rae. The Senate has agreed to take them all together.

Senator PETER RAE —Thank you, Mr Deputy President. I therefore move:

At end of motion, add ', but, in respect of the Bounty (Agricultural Tractors) Amendment Bill 1984, the Senate is of the opinion that, in the interests of equity and of economic efficiency:

(a) existing anomalies in relation to duties on diesel engines for tractors and to the application of the bounty for Australian manufactured, or substantially manufactured, agricultural wheeled tractors should be resolved by the removal of the 2 per cent duty on diesel engines imported for incorporation in Australian manufactured, or substantially manufactured, tractors, until such time as Australia's commitments under the General Agreement on Tariffs and Trade no longer require the imposition of duty on the importation into Australia of diesel engines already installed in completely built-up tractors, and that thereafter the matter should be reconsidered; and further,

(b) until such time as the Government makes a final decision on the long-term future arrangements for the agricultural wheeled tractor industry in Australia, the existing bounty should be extended to all agricultural wheeled tractors manufactured, or substantially manufactured, in Australia'.

The Opposition has raised those matters in an endeavour to provide a little more equity into the tractory industry in Australia in extending the bounty to manufacturers of large tractors as well as small tractors and, secondly, to overcome the anomalous situation to which I referred where, if an engine for a tractor is imported for a tractor which was manufactured in Australia, a 2 per cent duty has to be paid, whereas if a tractor is imported wholly made up, it does not attract any duty. This is a positive penalty on the Australian manufacturing industry which may be regarded as anomalous and undesirable.

The next matter to which I refer briefly concerns the Bounty (Tractor Cabs) Amendment Bill 1984, which proposes to extend the temporary bounty of 15 per cent from 10 June 1984 to 31 December 1984, or until the Government's decision on the IAC report on long term assistance for the industry is announced, but not later than 30 June 1985. The Bill also deletes retrospectively the term 'heat treated' from the definition of bountiable cab. The IAC recommended in its interim report on agricultural wheeled tractors and certain parts that assistance not be extended due to the substantial changes taking place in the industry. There is considerable evidence of some very real problems to major manufacturers in this area, including in particular A. F. Gason Pty Ltd, from Ararat, which is one of those firms which is heavily involved in the manufacture of tractor cabs in Australia. They are being adversely affected by the fact that a large percentage of tractors imported into Australia-as I have already said a large number are being imported-are being imported with cabs already fitted. This has reduced the markets available to the major producer, A. F. Gason Pty Ltd, as well as to others involved in that industry. (Extension of time granted) I am being as quick as I can.

There are some five Bills to debate but I will only be a few minutes longer. I point out that the extension of the bounty to 31 December 1984 is proposed to cost some $85,000. I ask for the confirmation of the Minister that my understanding is correct. Is the estimate of $85,000 for a continuation only until 31 December 1984? If the Minister exercises the right which he has under the Bill to extend the time to 30 June 1985, the amount involved would be greater. The Minister nods and I thank him. But the amounts involved are not large and the Opposition does not propose to object to the particular type of extension of Executive power, although we do wish to draw attention to this, as did the Senate Standing Committee for the Scrutiny of Bills in its tenth report dated 3 October 1984 when it drew attention to this type of extension under various pieces of legislation where a Minister is given power to extend the operation of bounty legislation.

The Opposition's attitude is that where there is power to extend for a limited period that is not an offence in relation to the general principle that there should be a time limit in relation to the length of time which Parliament provides for the payment of any particular bounty. In other words there is a terminating date. The way in which the Bills operate means that there are two terminating dates. The first terminating date allows the Bill to operate until the end of the year with the Minister having the power to extend it for another specific period, until 30 June 1985. The Opposition views an open-ended right of extension with greater concern and would adopt a different attitude to the introduction of a practice of just open-ended rights of Executive extension.

Senator Button —So would I.

Senator PETER RAE —So would Senator Button and I thank him. I make the point that although attention has been drawn to this fact, we regard it as really just a matter of the Parliament identifying two possible conclusion dates.

As far as the tractor cab industry is concerned, the principal manufacturer has taken a wide number of steps to make his industry as efficient as possible, but one of the major problems is the volume question rather than that of the efficiency of the industry. I am assured that the Australian industry is an extremely efficient producer of tractor cabs and that there is a continuing market for a variety of different types of special cabs, for those types of equipment which do not at the moment have the cab attached at the time of import . These include road graders and various other types of equipment. The Opposition will not oppose the Bill, but we do wish to raise one question. Is the Minister satisfied that there is no dumping of cabs from another country, which is affecting this industry and this Australian manufacturer's prospect of being able to compete? The question has been raised, but I do not have sufficient evidence to make a specific allegation. If there has been no investigation, will the Minister consider checking further as to whether there is a dumping element involved at this stage?

With those comments I indicate that the Opposition does not oppose these Bills, but it moves an amendment to the Bounty (Agricultural Tractors) Amendment Bill and it will have certain amendments at the Committee stage of the Bills.