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Thursday, 11 October 1984
Page: 1671


Senator PETER RAE(3.52) —The Industries Assistance Commission Amendment Bill 1984 follows the report which was prepared by Mr John Uhrig as a review of the operation of the Industries Assistance Commission. As may be anticipated, that report was a very detailed and well considered review of the operation of the Industries Assistance Commission which has played an extremely important part in the development of Australian industry over the past decade of its existence. The principal amendments which are proposed in this legislation include a new definition of industry specifically to provide for primary, secondary and tertiary industries, including service industries, to be within the purview of industry as defined for the purposes of the Industries Assistance Commission. There is also provision for the simplification of the Industries Assistance Commission policy guidelines to require the IAC to provide options in its reports to the Minister including the IAC's recommended option. That is something which I imagine will be looked at with very considerable interest by those concerned. It also provides measures to abolish the Temporary Assistance Authority and introduces new policy guidelines relating to inquiries for temporary assistance.

The Temporary Assistance Authority has served a purpose but the recommendation is that its functions can be carried out in another and better way. We do not have any quarrel with that recommendation. There is also provision for temporary assistance to be limited to 12 months. Again, not only is that something with which we do not have any quarrel but it is part of the Opposition's policy that that should be the situation. There is provision to dispense with public hearings prior to the publication of IAC draft reports, and many sections of the industry will welcome the cost saving that will be involved in relation to that.

Also a number of outdated provisions in relation to the transitionary arrangements which were to apply between the IAC and the then tariff board, will be repealed. Obviously it is appropriate that that be so. In general the proposed changes comply with the Liberal and National parties policy on industry and commerce in relation to short term assistance to which I will refer in more detail in a moment. We would seek to change, perhaps for cosmetic reasons or perhaps for much more than cosmetic reasons, the Industries Assistance Commission to an industries development commission. One of the reasons why we would change the name of the body is that we seek to change and develop its role into one of developing and playing a part in ensuring that Australian manufacturing industry is restored to a competitive, profitable and expanding role in the total Australian economy.

One of the criticisms which has existed is that there has been too much emphasis on the negative or on the side of people who are wanting assistance to overcome what have been claimed to be temporary problems but which convert into permanent problems and require permanent assistance. We see the policy of the Government as one which we would support in many ways, if one takes what is stated by the Minister for Industry and Commerce (Senator Button). If one takes it as being the policy stated by the Australian Labor Party's conference industry policy it is certainly far more interventionist than would be supported by the coalition parties. The proposed amendment to delete the power of the Commission to initiate its own inquiries is opposed to our policy and is one about which I will be saying more shortly.


Senator Button —That will be new, Senator.


Senator PETER RAE —I am fully aware of that. It is a little like a spare tyre. I will return to that matter in more detail in a moment. The Bill has been brought on after relatively little consultation with industry. I think it has probably been caught in the rush of the Government to the early and unnecessary election. It is unfortunate that there has not been greater opportunity for the Government , which has prided itself on consultation, to have consulted with industry in relation to the proposed changes, although people did have an opportunity for what amounts to consultation by putting in submissions to the Uhrig review of the Industries Assistance Commission. Many industries and many industry organisations put in submissions. I will refer to those in a moment.

One of the problems to which we must pay attention in any consideration of the role of the Industries Assistance Commission, or as we would have it, the industries development commission, is the causes, not simply the symptoms, of declining international competitiveness. We must look at those causes. What we need to do if Australian manufacturing industry is to be able to change that trend from one of a decline in its relevance in Australia to an increase in its relevance in Australia, which is something we warmly and firmly believe must happen, is look to the development of international markets. We have to look to the development of those sectors of Australian manufacturing industry which have a capacity to be able to produce, on a competitive basis, goods which are desired within the market areas which we can best serve. It is for those reasons that the Opposition's industry and commerce policy, in referring to the Industries Assistance Commission, states:

The Industries Assistance Commission has fulfilled an important role in the decade since its establishment. It has filled an important gap in the knowledge that Government and the community has about the nature of Australian industry. Its recommendations have not always been acceptable to all, nor accepted by Government. It has, inevitably, been the subject of both praise and criticisms.

It is important that the function be carried out with due regard to the current world industry environment and that it be responsible to the changing needs of the community.

The basic thrust throughout the Coalition's manufacturing industry policy is to develop an export oriented manufacturing industry.

This will require changes to the structure or structural adjustment or structural change (whatever term you may wish to choose probably has the same fundamental meaning).

We do not propose to impose any such transition.

However, we will assist this transition by noting the change from the emphasis of the previous 'import substitution' assistance approach to a more 'competitive export-oriented' approach by some fundamental changes.

I was disappointed, and I am sure that the Minister for Industry and Commerce was disappointed, to find that the recent Australian Labor Party conference would not accept that type of approach and insisted on the retention of the importance of import substitution and the relative downgrading of export orientation as being fundamental to the restoration of the fortunes of manufacturing industry. In noting what the Opposition would do, the policy states:

First, we shall amend the IAC Act to change the emphasis to that of an Industries Development Commission.

We shall encourage the Commission to take evidence and recommend accordingly on industry structure and on the causes of declining competitiveness, including labour costs, Government charges and regulations.

We shall encourage the Commission to take evidence on the measures employed by other countries to encourage development of and export of goods under reference.

We shall encourage the Commission to investigate and report on the impediments to a more export-oriented industry structure.

We shall retain the independence of the Commission by enabling it to initiate its own inquiries.

The Commission will also be able to appoint particular staff with special expertise on a consultancy or temporary basis for particular inquiries. Without giving directions to the Commission as to the results, we see it as desirable that it be required to take into account the desire to achieve an export- oriented manufacturing sector and its commitment to bring Australia's trade practices more into harmony with existing world trade practices.

The Uhrig report on the IAC has provided some valuable information and guidelines to assist in the development of the new broader Coalition Parties' approach to structural change. The Industries Development Commission will operate as an objective, effective, independent, investigative, and advisory body.

I believe that a number of the proposals in this Bill will serve towards the achievement of those objectives. It is for that reason that the Opposition will not be opposing the Bill as it stands, although we would have preferred industry to have had a greater opportunity to see the provisions of the Bill and to comment, and particularly the cross-section of major industry organisations which are concerned.

The Opposition has also, in its policy, made provision in relation to short term assistance to industry. The current procedures, which are noted, are deficient in two areas. One is in time delays before assistance arrangements are introduced; the other is that temporary assistance tends to become long term assistance. So provisions are set out there which include that such assistance as is deemed necessary by the Government be for a period of 12 months and not be extended unless previously reviewed by the Commission which is something akin to the provisions in this Bill.

We have also a commitment to the Commission reporting on short term assistance arrangements within 45 days, and the Commission reporting on long term assistance arrangements within nine months of the receipt of a reference. Where the Commission indicates that the report on long term measures cannot feasibly be completed within the nine-month period and requests an extension, due consideration will be given to such a request. There is also a reference to quotas and to the disaster which quotas have brought to so many sectors of Australian industry and commerce, and to the fact that whilst they may serve as a useful quick, short term measure associated with our defence against other nations' unfair trading practices, they are not a measure which it is desirable to apply on a long term basis.

In support of what I have said about the desirability for the Industries Assistance Commission to be able to have the right to be able to conduct an inquiry-Senator Button has pointed out that it has not exercised it-I should like to refer to some of the submissions that were made to the Uhrig report. First, however, I should like to refer to an example of the sort of annual report which the Industries Assistance Commission has made and in which it has followed the practice of drawing to the attention of the Government the areas in which it believes that investigation should be carried out. Although in the past it has had the right, it has not exercised it because it has not needed to. It has rather taken the more conciliatory role of pointing out to the Government areas in which activity is desirable and then seeing what sort of response comes forth. At page 30 of the Industries Assistance Commission Annual Report 1982-83, in paragraph 3.24, the Commission states:

One industry where a review of the structure of assistance is overdue is the chemicals industry. The industry as a whole has not been reviewed since the Tariff Board inquiry in 1966. A review was scheduled to take place in 1975 but was deferred. In 1979 the Government again deferred a review, but indicated that the timing of the review should be considered in 1984.

A little later in that paragraph the Commission states:

The Commission proposes to prepare a discussion paper which will examine the current structure of assistance accorded this industry and its implications.

That is, in effect, saying: 'We are going to conduct our own inquiry'. It has not formally done it, but, in effect, it has been doing it. I want to refer to a number of the submissions which relate to the importance given to the right of the Commission to initiate inquiries. The first one to which I refer is that of the Australian-British Trade Association, which, at page 3 of its submission, under the heading 'Power to Initiate Inquiries' said:

This should continue to reside with relevant Ministers, for example, the Minister for Primary Industry and the Minister for Industry and Commerce, both on Industry Assistance and problems of Customs Administration, which would be better resolved by the Commission after public hearing. There should be no barrier to the Commission being given a reference on a broad economic subject affecting the costs of Australian industry such as the transport industry of Australia.

The Commission should also be encouraged to draw attention to any particular industry or subject which it believes should be the subject of a reference for inquiry and report either in its annual report or if the matter is considered urgent, by a communication to the relevant Minister preferably made public or tabled in Parliament at the time.

That is the approach which was preferred by that body. On the power to initiate inquiries, the Australian Retailers Association said:

The Association believes that these powers should be maintained and suggests that where there are very high levels of protection, such as the levels in the textiles, clothing and footwear industries, a period of six years and not ten should apply.

I now refer to the Australian Chamber of Commerce. Under the heading 'Power to Initiate Inquiries', it said:

The IAC's power to initiate inquiries should not be curtailed. The minimum periods of 6 or 10 years of assistance, (depending on the form of assistance provided), before the IAC can initiate its own inquiries are excessive and represent an undue restraint on its responsibilities. These periods should be reviewed with a view to reducing them.

One is starting to see some of the difference of view that has existed in relation to this matter. We find that the CAI suggested at page 9 of its submission that the powers of the IAC to initiate inquiries should be revoked and that the IAC be empowered to request a reference from the Minister to permit an inquiry to be held, and where a request for an inquiry is refused by the Minister, that the Minister be required to set out in writing his reasons for so doing. But then one comes on to the PVC Pipe and Fittings Manufacturers. They say in their submission:

It is generally felt that the Commission has been remiss in not initiating more inquiries in its own right . . .

There they are criticising the Commission for not initiating inquiries. They say :

Provision exists for the Commission to inquire into matters brought to its attention either during the course of other inquiries or by representations from parties affected by changes in economic circumstances. The Commission should be encouraged to fully use the legislative powers conferred on it by the Parliament .

That is a view strongly put by a wide cross-section of industry. I quote what Cramb Corporate Services said in its submission made on behalf of the Cramb Tariff Group of companies, which has provided Australian industry and commerce with industry policy advice for almost 40 years. It says at page 7 of its submission:

While it is acknowledged that the Government would wish to maintain a broad control of policy development for industry, there appears to be reasonable grounds for the IAC having a much greater flexibility in the initiation of both appeals type inquiries and minor/single Commissioner inquiries covering anomalies and emergency protection issues.

At present it is necessary for prima facie cases to be developed with the Department of Industry and Commerce which are then presented to the Minister for approval. The prima facie case procedure can take much longer to process than the IAC inquiry itself and there appears to be no particular benefit in maintaining this procedure. The IAC is quite capable of conducting a prima facie vetting of applications and it is noted that the Trade Practices Commission conducts substantial inquiries into major industries, without any reference whatsoever from Government.

I refer honourable senators to that quotation in particular. I rely upon it most strongly. I think it summarises the sort of attitude which we believe ought to be adopted. In these days of fast movement in trade and fast changes in trade we need to expedite proceedings in relation to what is happening with regard to dumping and other unfair trade practices. Their impact on Australian industries should be examined and steps should be taken to expedite the Australian capacity to react quickly, firmly and fearlessly in relation to that. I particularly wanted to quote from the Cramb Corporate Services submission to the Uhrig inquiry because it sums up the reasons why I will later be moving an amendment to delete the provision which takes away the power of the Industries Assistance Commission to move expeditiously of its own volition, even though it may not have done so in the past.

I will not read all the quotations I noted, but let me read part of the submission from the Department of Industry and Commerce, which I thought again raised some quite interesting and important matters which should also be placed on the record of debate on this matter. Paragraph 6.21 reads:

A disadvantage however, particularly if the IAC were to be given a general investigatory role, would be the loss of the capability to derive from the Commission an overview, based on its inquiries, of all relevant aspects of business and industry development. A solution to this could be to require the Commission to submit an annual assessment to EPAC. This assessment would also be publicly available and other organisations would be encouraged to submit comments to EPAC. EPAC could also, if it wished, advise the IAC on any aspects of the assessment or its basis for compilation with which it disagreed or wished to question.

Paragraph 6.22 reads:

The sixth question is whether the IAC would be free to initiate inquiries or would only conduct inquiries in response to a reference from the Minister.

I think those two things are somewhat associated because there are various suggestions that the role of the IAC should be linked to the role of some other organisations-the Bureau of Industry Economics, the Bureau of Labour Studies and the body created by this Government, the Economic Planning Advisory Council-so that there will be a greater interrelationship between and an exchange of expertise between those bodies. One would hope that if that sort of thing were to happen there would be a reduction in the total cost and duplication and, possibly, greater expedition. It is one of the areas on which I certainly propose to continue to have discussions with as wide a cross-section of qualified people as I can to explore further the potential advantages of going down that track. I think Senator Jack Evans also would like to see that sort of step taken, that of bringing together a little more the expertise available in government-the Bureau of Industry Economics, the Bureau of Labour Studies and the Bureau of Mineral Resources or whatever-and the Industries Assistance Commission so that we can more expeditiously deal with some of the problems which arise so quickly in modern trade. It is interesting that the Department applied itself to that aspect. Paragraph 6.22 of the Department's submission continues:

The principal disadvantage of self initiated inquiries is that they are costly to those involved and add to the lack of predictability in industry assistance matters which has been of considerable concern to business and trade unions in the last decade.

I find it curious that the Department used such words because the fact is that, as the Minister pointed out, during the past decade, there has not been any exercise by the Industries Assistance Commission of its right to initiate inquiries; therefore it could not have been responsible for any of the lack of predictability in industry assistance matters which has been of considerable concern to business and trade unions in the last decade. I think it is probably unfortunate drafting of the submission, but I do point out that it is quite obviously not because of the existence of the right that there has been concern about the lack of predictability. I agree, however, that it is important for industry planning, with heavy investment and long lead times, that there be as much predictability as possible and that the lack of predictability and certainty has been a matter of concern. The Department's submission went on:

The advantage of requiring a reference from the Minister is that it is consistent with the primary role of the Commission as an instrument of Government policy.

I pause to say that I am curious again about the choice of words: 'it is consistent with the primary role of the Commission as an instrument of government policy'. I thought that there was an attempt to retain a degree of independence and arm's length advice as far as the Industries Assistance Commission was concerned. I thought it was not merely an instrument of government policy. The submission continues:

If the Commission is to become a general investigatory body then it would be appropriate for it periodically to submit to the Government for consideration and direction as to priority, a program of inquiries into industries where direct assistance would not be the principal issue involved.

I can see the sense of that comment. I refer also to the submission from the Queensland Government which, at page 18, also refers to the power to initiate inquiries. It reads:

The Queensland Government believes that the Commission currently has adequate power to initiate inquiries. There is certainly no need to give more power to the Commission in this area.

However, the Queensland Government did not go on to say that it should be curtailed. It talked about the need for fast track steps to be able to be taken, so that it would seem to me to be supporting the continuation of the status quo. I refer also to the fact that Professor Freebairn in his submission to the Commission made reference to the importance of the continuation, as did Mr W. A. McKinnon, who has great experience. I was also fascinated by some of Mr McKinnon 's other comments. Even more, I was interested in the submission of Mr Geoff Miller of the Office of the Economic Planning Advisory Council and a lot of the suggestions he made. He said, amongst other things:

A low-cost way of substantially improving the efficiency with which EPAC discharges its responsibilities would be to loosely network the Bureaux with the office of EPAC to form an Australian Bureau of Applied Economic Analysis.

He was referring to what I was referring to just a moment ago, that is, bringing together all of the various bodies. The Australian Federation of Consumer Organisations also had a view to express in relation to the Commission's functions. It said:

The Commission's value lies in its ability to report comprehensively, independently and objectively with respect to the guidelines set down in its Act .

I believe, therefore, that the preservation of the independence of the Commission to have the capacity if it needs to act is of importance. As my time has expired I shall leave the remainder of my remarks to the Committee stage in relation to the amendment which I propose to move then. The Opposition will support the Bill with the intention of moving that amendment during the Committee stage.