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Wednesday, 10 October 1984
Page: 1577


Senator GRIMES (Minister for Social Security)(5.14) —I move:

That the Bill be now read a second time.

I seek leave to incorporate the second reading speech in Hansard.

Leave granted.

The speech read as follows-

This Bill proposes amendments to the Industries Assistance Commission Act 1973 as a consequence of an independent review of the functions and operations of the Industries Assistance Commission (IAC).

The Government's election platform included a commitment to review the role of the Industries Assistance Commission to ensure that its operations are directed towards the development and extension of industry.

The independent review conducted by Mr John Uhrig was announced on 3 August 1983. Mr Uhrig presented his report to the Government on 16 December 1983.

The Government's major concern in initiating the review was to maximise the effectiveness of the IAC as a provider of practical advice to Government on questions of industry assistance. In the past, the Commission has tended to focus on tariff and other related forms of protection, with the result that its recommendations have often been stereotyped, with lower levels of protection frequently being put forward as the sole solution to an industry problem.

In the Government's view, the restructuring and revitalising of Australia's industrial base will require that there be a much greater emphasis on the development and implementation of a wider range of positive industry assistance measures.

In agreeing with the thrust of the Uhrig report, the Government concurs that it is now time to make changes to the Commission so that it will be able to contribute more effectively to the formulation of the Government's industry policy. Changes are proposed to the Commission's approach to the inquiry process and the nature of its advice, but not to its basic independence.

The Uhrig report called for a re-orientation towards industry-wide references which specified in greater detail the information needs of the Government. In addition, it proposed that references should normally require that options be provided (including the Commission's recommended option), and that the Commission's advice should extend beyond its current somewhat narrow focus on barrier protection to cover other forms of assistance. The Government has accepted these recommendations and believes that they should lead to the Commission providing considered advice on a number of methods by which the Government can pursue policies to facilitate structural change and industrial development.

The Government has also accepted the report's recommendation that while no formal link should be established between the IAC and the industry councils, there is scope for increased use of the Commission by the industry councils.

In particular, the councils may find it useful to draw on the extensive information base built up by the Commission during the course of its inquiries. They may also see benefits in requesting the Commission, through the Minister, to undertake research tasks which complement the Commission's work schedule or require some of the special skills of the Commission's staff.

The Government believes that its acceptance of the vast majority of the review' s recommendations will result in an emergence of a new era in the industry assistance advisory process. In particular, the improved operations and procedures of the Commission should allow it to become more effective in meeting the Government's industry policy objectives and needs.

These objectives stress the need for industry to become more internationally competitive, more flexible and better able to take advantage of technological developments. In pursuit of these objectives, the government wants to shift the focus of industry assistance away from the past concentration on protection to more positive forms of assistance which will actively assist industry to restructure. This includes measures designed to stimulate investment, increase industrial research and development, provide more and better training and retraining facilities, upgrade export support services and provide industry with easier access to development finance. It also involves developing mechanisms which will ensure that the benefits of restructuring are realised, and the economic and social costs of adjustment are not borne disproportionately by those at the face of change.

The government has agreed that the commission's policy guidelines should be simplified to reflect widely supported industry policy objectives. Accordingly, the new guidelines as set out in clause 11 of the bill, are cast in terms of facilitating adjustment and encouraging the growth of efficient and internationally competitive industries having regard to the interests of other industries and consumers.

Clause 13 of the bill proposes to implement the acceptance of the recommendation that the commission's power to initiate its own inquiries be revoked. Such decisions are policy matters and are more appropriately made by the government itself. However, the new arrangements will not prevent the commission from suggesting to the government the need for an inquiry where this is considered to be warranted.

A major recommendation by Mr Uhrig was the abolition of the temporary assistance authority and that the IAC be responsible for advising on all temporary and short-term assistance matters. The government has agreed to this and to the related recommendation that a separate set of guidelines be developed to apply to all temporary assistance matters. The guidelines proposed in clause 17 of the Bill are based upon those proposed by Mr Uhrig.

The government's decision to alter the temporary assistance arrangements reflects its concern that the current provisions provide opportunities for assistance to be granted where the underlying problems are not temporary but of a long term structural nature, or reflect an economy-wide problem which is impacting adversely across all sectors.

We have therefore decided to make temporary assistance available only in cases where serious injury is occurring or threatened to an industry by circumstances largely outside its control, and where the circumstances are peculiar to the industry or are impacting with particular severity on the industry. Further, the form of such assistance is not to seriously disadvantage other Australian industries.

The Government has also decided that where temporary assistance is recommended by the IAC it is to be limited to a maximum of twelve months and the Commission will be required to report on whether circumstances warrant a subsequent inquiry into longer term assistance. The Commission is to also report on whether in their view an inquiry into the need for further temporary assistance would be likely to be required prior to the expiry of any temporary assistance already granted. This provision is to cover those situations where 'temporary' problems may exist for longer than a 12 month period. In addition, the Commission shall report on what actions it considers the industry should undertake during the period of temporary assistance.

A further recommendation accepted by the Government is to make specific reference to tertiary and service industries in the Industries Assistance Commission Act. This reflects the importance of this sector to the Australian economy and the higher priority the Government will be placing on examining issues which may be facing tertiary industries in Australia.

Also by agreeing to eliminate, in most instances, first round public hearings as proposed by clauses 23 and 24 of the Bill the Government is seeking to improve the efficiency of the Commission's operations and reduce the costs incurred by many interested parties in presenting evidence.

In line with its objective of increased consultation in the decision making process, the Government has further agreed that, in most cases, final reports will be published prior to a Government decision being taken. The only exception to this will be those occasions where significant commercial gain could ensue, or where international negotiating positions might be jeopardised.

The Government is confident that the changes to the IAC's charter and operations as proposed by this Bill, will enable the Commission to provide a more valuable input to industry development in Australia. Together with other changes occurring in the advisory and consultative process, these changes further reflect the Government's consensus-based approach to industry policy formulation and economic policy generally.

FINANCIAL IMPACT STATEMENT

The measures contained in this Bill have no direct financial implications.

I commend the Bill to the Senate.

Debate (on motion by Senator Reid) adjourned.