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Tuesday, 26 March 1985
Page: 819

Senator BUTTON (Minister for Industry, Technology and Commerce)(6.16) —I appreciate the comments made by honourable senators and particularly the way in which Senator Short put his remarks at the beginning. He showed a recognition of the size of the problems which the manufacturing sector generally faces. I noted with interest that Senator Chaney drew a comparison, by way almost of a rhetorical question, between why Swedish industry had two major manufacturers of heavy commercial vehicles which exported and why Australia did not. I do not seek to make a glib political point.

Senator Chaney —Nor was I.

Senator BUTTON —I did not say that you were. It is an enormous problem. I am not seeking to make a good political point but I do have to make the point that I suspect that one of the reasons is that Sweden in the relevant period had 30 years of social democratic government while Australia in the same period had 30 years of Liberal-National Party government. I qualify that by saying that it could have been a bad Labor government or Liberal-National Party government here compared with a Swedish social democratic government which, on a wide range of issues fundamental to the success of a manufacturing industry, developed consensual mechanisms which were tremendously important to the success of the industry-consensual mechanisms basically concerning wages and conditions in manufacturing industry but also a whole range of supplementary issues such as the importance of productivity, design, quality and so on in workmanship. These sorts of things were developed on a highly consensual basis in Sweden over 30 years.

In Australia over the same period there was always the great debate-again, I am not being party political about this-about whether we should or should not impose on the then most efficient sectors of the Australian economy, such as the agricultural sector and later the mining sector, the burden of a fairly heavily subsidised manufacturing industry. That debate went on for a very long time and was never really successfully resolved. The questions which that debate engendered were filled with sort of cargo cult stuff about a resources boom and things of that kind which would sustain El Dorado here to the year 2000 and beyond and that we did not really as a society have to address serious questions about the importance of a manufacturing sector in the economy as a whole.

Those issues have changed, not so much because of things that we have done here but because the world environment has changed. We find ourselves, in terms of agricultural products, resource-based products and so on, in a highly competitive international environment. Very significant changes in the economies of countries such as Japan will lead to less and less demand for resources from this country. A whole range of issues which affect the international environment bring the debate to which I have just referred into much sharper focus and make it much more important to the overall economic well-being of Australia.

The industry which is the subject of the Bill-again, I am not seeking to make a party-political comment-is a classic example of everything that went wrong. Currently, we have 17 manufacturers-or assemblers, to use Senator Short's term, which is much more precise-of heavy motor vehicles in Australia. They have been allowed into this country to manufacture without any question of the desirability or otherwise of fragmenting the market to that extent. Sixteen of those assemblers producing heavy commercial vehicles in Australia are 100 per cent foreign owned. There is one classic exception-a gentleman called Mr Whitehead. I do not wish to be unfair to his manufacturing establishment, but I understand that it is described as a tin shed. In a tin shed in Sydney he produces custom-built, dedicated heavy commercial vehicles for the mining industry. He is the only Australian producer. Over many years-I was about to say that he has cut his coat according to his cloth-he has built his vehicles according to the specific needs of a particular market in Australia, and I think that he has been quite successful. Otherwise, there has been none of that, and we have all the successful international manufacturers assembling here in operations with various degrees of success and various degrees of local content, but ranging up only to about 65 per cent local content. Amongst those companies, there has been very little attention to questions such as quality control, indigenous design, and so on. Why should there be? They are 100 per cent foreign owned.

In a sense, this industry provides a convenient case history of what has gone wrong with the development of a manufacturing sector in this country. There are two ways of dealing with it. One is that one says that the Government will adopt a totally hands off policy, and the market will sort things out amongst those 16, and so on. If we went to that extreme, probably none of them would be here within a few months. All sorts of considerations are involved, such as the desirability of having some capacity in this country in respect of a very important industry, as Senator Short points out, in terms of its relationships with the transport industry and so on. Employment consequences and a wide variety of matters of that kind must be considered in the context of this industry.

Senator Short addressed a couple of more specific questions to me. He asked what was the possibility of this industry becoming more outward looking and exporting. My frank view of the answer is none. There is no possibility of that-except to New Zealand; one or two companies send stuff across the Tasman from time to time. But if I were asked for my frank answer about the possibilities in the foreseeable future, that is, during our lifetimes, of this industry exporting its product, my view would be none. The reason is as I have said, that it is a classic colonial culture industry, foreign owned, fragmented, with no attention to the issues in the past which make a strong indigenous industry. We can do that in Australia; we have done it in some other area.

Secondly, I was asked how the bounty relates to the passenger motor vehicle plan. I think that the relationship, as Senator Short himself suggested, is tenuous indeed. Senator Short asked me who the main beneficiaries of the bounty were. I have a list of who the main beneficiaries of the bounty have been up to 30 June 1984 but, rather than seeking leave to incorporate it in Hansard, as it would be totally boring for any reader of the Hansard, I merely table it. In that list, Senator Short will see all the names with which he is totally familiar-Volvo, Saab, Daimler, Mercedes-Benz; and International Harvester, until that company had a slight flutter downwards a couple of years ago, internationally as well as in Australia, which led to the demise of Rockwell in Australia, in my view, as a manufacturing operation.

I was asked whether there has been any cost-benefit analysis on the extent of the bounty. I do not think that I am in a position to answer that question at this stage. However, I make the point, as I did previously, that all sorts of costs, hidden and otherwise, must be taken into account in assessing whether one wishes to retain an industry such as this in Australia and in what form. I was asked about the long term prospects for the industry. As I indicated previously, they are not particularly good in the industry's present form.

Senator Chaney invited me to deal with a wide range of issues about labour market on-costs, labour market rigidities, strikes, cost of inputs, and a number of things. I am not running away from the invitation. I do not want to deal with them tonight. In this industry so many other factors impinge on its latent competitiveness. I never have disagreed with the view that all those factors are relevant to competitiveness; they are relevant. But so many specific problems impinge on this industry that I do not know whether it is appropriate to say that those things may contribute to making this industry less competitive. However, if one fixed up all those things, as one would like to do across the range of manufacturing endeavour, one would probably still have enormous problems with this industry because of some of the factors I mentioned earlier.

I have to address myself to two other questions. On the first, yes, we have been slow about this matter; I concede that. It is enormously complex. One of the reasons for delay was that last year there was an important inquiry into the national road freight industry. A lot of material was given to that inquiry, which we felt might well impinge on what we ought to do about heavy commercial vehicles. That inquiry reported in September 1984, and then the election campaign started in October. The two reports, as it turns out, are not of great relevance to each other, but that was something about which we were concerned at the time.

We have tried as much as possible to consult with the industry. There have been numerous consultations with my Department. They have taken place with all major assemblers, through the Federal Chamber of Automotive Industries and through the Automotive Industry Advisory Council. The Automotive Industry Advisory Council will be providing its final view on this matter-there is a lot of conflict about it-by the end of March, and I hope then to provide a more expeditious solution to the problems that this industry faces.

There was, perhaps, one other question, but I do not recall it at this stage. I thank honourable senators for their support for the Bill. I welcome the contributions to the debate, which have all been about serious issues. But I again repeat that there are particular problems concerning this industry which put it in a pretty special category and perhaps require some very powerful medicine, which I am not sure is totally mixed at this stage.

Question resolved in the affirmative.

Sitting suspended from 6.30 to 8 p.m.

Bill read a second time, and passed through its remaining stages without amendment or debate.