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Tuesday, 26 March 1985
Page: 814

Senator CHANEY (Leader of the Opposition)(5.47) —The Senate has before it the Bounty (Commercial Motor Vehicles) Amendment Bill 1985. The Bill extends an existing bounty from 1 January 1985 to 30 June 1985, and makes provision for a further extension to 31 December 1985. The reason for the possible need for further extension is the failure of the Government yet to respond to the Industries Assistance Commission report which has been in its hands for some time, but on which it has yet to announce a decision; a report which relates to the assistance, long term or otherwise, that ought to be provided to this industry.

I make it clear from the outset that the Opposition does not oppose this Bill. I make a number of comments about the industry affected by it and the reasons for the Bill being necessary. Before doing that, I acknowledge the very useful debate on the Bill in the House of Representatives. I think we will see a series of quite lengthy debates-provided the Government does not gag them, of course-on industry policy and I acknowledge the contributions to the issues arising from this Bill which were made in the other place only last week. We are dealing with an industry which has a complex assistance package. I am speaking rather slowly because I had hoped the Minister for Industry, Technology and Commerce (Senator Button) might be here to consider the Bill-no doubt he will turn up eventually.

Senator Peter Rae —He is in the wings watching and waiting.

Senator CHANEY —I am glad he is there. He is probably smoking. I am quite happy for him to finish his cigarette and I will carry on in his absence. There are tariffs on imported completely built-up vehicles and some components; there is by-law entry for original equipment components in general purpose vehicles and prime movers; and there is bounty assistance for locally sourced original equipment components for use in general purpose vehicles and prime movers. This Bill affects only the bounty part of that assistance, which expired on 31 December. The bounty is paid at the rate of 20 per cent of the inter-store cost to the assembler of certain components. Bounty assistance is not available if those components are produced in-house by the assembler or of the local content is less than 65 per cent. On any description, that is a fairly complex set of arrangements. Clearly, that complexity must affect the business decisions made by people in this industry. There must be a tendency for them to make decisions which relate to the assistance package rather than to the most efficient way of going about any particular task. The very complexity of the system-for which I do not blame in any way the present Minister or the present Government-stands as a problem to be dealt with after due consideration.

We are dealing with an industry which has seen a pretty severe downturn. As a result of that downturn in the industry's performance a reference was forwarded to the Industries Assistance Commission in May 1983. There seemed to be a degree of urgency in the matter, because the Government requested an interim report within two months. It did, in fact, receive an interim report. The report recommended that temporary assistance was not necessary. The Government accepted the IAC recommendation and amended the reporting date for the full report by bringing it forward from May 1984 to 29 February 1984. I suppose that this, in itself, applied a degree of urgency on behalf of the Government and on behalf of the industry. I do not think there is any doubt that the industry was in a state of some decline. There are a range of reasons for that.

Notwithstanding the assistance which has been given in the various ways I have described since 1978 when the existing assistance measures were introduced, the level of local assembly has, in fact, declined quite markedly. There has been a slight growth in the overall market for heavy commercial vehicles since 1978, but imports have rapidly increased their share, particularly at the lighter end of the market, going from 45 per cent to 68 per cent in 1983. There has been a decline in registrations and I suppose that has had something to do with the economic conditions generally, but there has been a position of real difficulty for the industry. Over five years jobs in the heavy vehicle assembly industry have been reduced to less than half of what they were. So we had a situation of some difficulty-the facts are fairly stark-and we had the Government calling for a quick response from the Industries Assistance Commission. It is a little puzzling, therefore, to find that, notwithstanding that request for an earlier report and bringing it forward to February 1984, there has been a very long delay in addressing what package ought to be provided for this industry. There is a very great readiness in government to identify problems. One finds, of course, that they are rather more difficult to tackle in practice than they are to define. We have certainly had a definition of a problem here and, as yet, whilst there may have been an attempt at a solution, certainly no solution has been produced.

The Opposition and the industry expressed concern late last year over the delay in making an announcement on the future arrangements for the industry. Eventually the Minister announced that the bounty would be extended to 30 June 1985. That announcement was made on 7 December, 24 days before the bounty was due to expire. In light of the Minister's views about the need for predictability for industry-views with which I concur-I think he would agree that that is not the best way to be dealing with the industry and the best basis for planning that can be given to it by government. We have a position, therefore, where we are considering this legislation after the Government has now had the final IAC report for over 12 months. Early in February a decision was made to release the report, so it was released when it was nearly a year old. One can imagine that that has been a source of some embarrassment for the Department and perhaps also some embarrassment for the Minister. The Opposition expresses the hope that there will be no further unforeseen delays in dealing with this matter and that the bounty period will not need to be extended until the end of this year because no decision has been taken, but we accept that given the history of the matter it may well need to be extended and we, therefore, will not oppose that or any other part of this Bill.

I think the history of this matter sits oddly with some of the Ministers who have expressed concerns about how industry should be approached. I think also that the structure of this particular industry does not sit particularly well with some of the criteria the Minister has laid down generally for industry, and the car industry in particular if one wants to take a comparable area. It would appear from the growth of imports and from the declining share of the market that the local industry is not competitive with the international industry. There are, of course, a very large number of participants in this industry. I have seen nothing which would suggest that the Australian industry is outward looking and seeking to expand its horizons to overseas markets. I would have thought, again given the Minister's approach to some of the other industry matters we have been dealing with, that he would see these as real difficulties which need to be addressed in determining what the long term protection situation for the industry should be.

We are dealing with an industry which continues to be important, directly and indirectly, in the Australian economy. Employment, indirectly and directly, is estimated to be about 13,000 people. The turnover is about $540m. The Bureau of Transport Economics estimates that road transport accounts for 80 per cent of the total freight carried throughout Australia. The IAC estimates that the value of freight movement activity accounts for about 3.5 per cent of our gross domestic product. I think these figures illustrate the important role that the industry plays in the economy. I hope that the Government will take long term decisions which will enable the industry to become more efficient. We have some very stark international comparisons. Sweden has a domestic industry that supports two internationally competitive manufacturers, Saab-Scania Australia Pty Ltd and Volvo Australia Pty Ltd. Those companies have substantial export markets, including Australia. I suppose they demonstrate that a small market need not be an inhibitor to growth, nor to export potential. Whilst I would not suggest that the position of Sweden is parallel in many respects to our own-it is much closer to the very large European market-I am sure that on the Minister's own statement he would be concerned that the present fragmented Australian industry is in a condition which does need some change. It will be interesting, I am sure, to the industry and I think to Australia, if in the debate today the Minister can give us some indication of his thinking in these matters. Indeed, if there could be perhaps--

Senator Button —I am sorry. I did not catch that.

Senator CHANEY —We would like an indication of how the Minister sees the future of the industry, the present shape of it and what his objectives are in the longer term decisions which undoubtedly he will be taking over the coming months. I cannot see any particular need for that to be a matter of enormous secrecy and privacy, and some public debate on the issuses which face this particular industry may be of assistance to the Minister and to the industry itself. I would have thought, in looking at the ultimate decisions which will have to be made, that those decisions should acknowledge that we have, at the moment, something less than the ideal of a truly internationally competitive potentially exporting industry. The potential may not be very great in the immediate future, but one would hope that the directions that are going to be set by the Minister would be in the direction of encouraging that possibility. The Opposition points out to the Minister that the Australian industry in this area, and indeed in other areas, still carries many burdens which help to keep it uncompetitive. Many of these have been acknowledged by the Minister, but there has not actually been much change. In the labour market, for example, where work practices often relate to history rather than present productivity, there seems to be a difficulty in achieving change. I do not know whether the Minister is able to tell us what, if anything, the Government is seeking to do about that.

Senator Peter Rae —He hasn't done much about penalty rates, has he?

Senator CHANEY —Senator Rae interjected on a point that I had intended to mention-another problem that has been acknowledged by the Minister; that is, the problem of penalty rates and so on and the on-costs which afflict most sections of Australian industry. Again, although they have been acknowledged by the Minister, there is not much sign that they are, in fact, being tackled. We remain in a situation where substantial sections of industry are brought to a halt by strikes and there have been some very significant examples of that affecting areas of industry and commerce in Australia over the last couple of months. It remains true that the cost of many local inputs is inflated by other elements of inefficiency within the economy. I noted that Senator Button's ministerial colleague the Minister for Communications (Mr Duffy) had some very caustic things to say about the Australian Postal Commission and its contribution to efficiency in the Australian community in a speech just a couple of weeks ago. The cost of government services and government instrumentalities is high and has expanded much more quickly than the inflation rate for other areas of the economy. I simply wish to say that in any future that this industry might have it will be important that the Government is seen to be tackling some of these problems which are acknowledged by the Minister but where we have seen a lack of any positive action over the two years of this Government.

I hope that the Minister is aiming at decisions which will, in fact, encourage a more efficient industry in Australia. I ask the Minister to use the opportunity of this debate to give us some indication of the ways in which he thinks that can be encouraged. It is not enough, each time these matters are raised, for the Minister to chronicle the fact that there are many issues to ask would the Opposition kindly stop concentrating just on wages policy. On this occasion I invite the Minister, after two years in office-he has had time to consider these matters very fully, to discuss them with his colleagues and to urge the Government to tackle some of these problems-at least to give us some indication of what signs of progress he sees and where he thinks there can be other areas of progress in the not too distant future.

Another area that I would like the Minister to address is the extent to which he and his Department have engaged in dialogue with this industry to get it thinking, as well as to get its thinking for the benefit of the Government and to get its views on the possibilities that face it for moving towards more efficient and more competitive production. I raise that point because I think the Minister has been successful in having a very useful dialogue with the car manufacturers in Australia which I believe they have appreciated and which undoubtedly has helped the Minister in his shaping of the car industry policy.

I listened with interest to the comments the Minister made in Question Time today when he reminded the Senate yet again that the success of the car industry policy probably will involve a reduction in employment in that area. The policy involves a reduction in the number of car manufacturers in Australia. I confirm what the Minister has, I think, told the Senate on occasions-a point that has been made by many commentators-which is that there appears to be quite a high degree of acceptance in this important industry of the fact that there are to be quite substantial changes over the period of the car plan. The commercial motor vehicles industry is perhaps not a critical industry. However, it is an important industry. It has direct links with the car industry. It is the large end of the market. I would be interested to know the extent to which the Minister has, through his Department or otherwise, been able to engage in the same sort of constructive dialogue with the many manufacturers and assemblers which are members of this industry.

This Bill is just an interim measure and, as I say, is not being opposed by the Opposition. I say to the Minister that we would welcome it if he would use debates such as these to deal with some of the common problems which afflict all areas of the manufacturing industry and to describe some of the problem areas where changes are being made, which, as I say, he has been quick to identify during his first couple of years in his portfolio. The concern of the Opposition is that, with some exceptions, the record has been one of identifying the problems rather than necessarily being able to remove the very substantial barriers which exist to change in the many areas where change is required. I hope that Senator Button will do something to inform us this afternoon of the extent to which some of the factors which make this industry uncompetitive are being tackled by the Government and the extent to which the Government is working with the industry to encourage thinking about ways in which the industry can be rationalised to Australia's and to the industry's advantage.