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Tuesday, 7 May 1985
Page: 1472


Senator BUTTON (Minister for Industry, Technology and Commerce)(9.27) —I thank those honourable senators who have made thoughtful contributions to the debate on the Automotive Industry Authority Amendment Bill 1985 which is before the Senate. I exclude Senator Puplick and Senator Jessop from the category. In the course of their remarks they provoked me to say something about some of the issues that they raised. I do not mind being described as incompetent by Senator Jessop along with a variety of other adjectives which he used to describe me. I am quite used to that. In a way, I object to being described as culpable, and I want to tell him why. The first point I make to Senator Jessop is that he keeps asking the rhetorical question: Why have these miracles which happened in Japan, West Germany, Sweden and Norway, not happened in Australia? One of the reasons why they have not happened in Australia is that in countries like Sweden, as I pointed out to the Leader of the Opposition, Senator Chaney, in the debate a few days ago-


Senator Chaney —Here we go; a cracked gramophone record.


Senator BUTTON —A cracked record, but I will play it again. If the honourable senator does not like it, that is bad luck. One of the reasons why a lot of these things have not happened is that we have had 30 years of Liberal Government in the last 35 years, and in Sweden--


Senator Chaney —The way we are going, we will have another 30 coming up.


Senator BUTTON —It would be disastrous for the country if the next 30 years were anything like the last 30 years, if a Liberal government were elected again-


Senator Chaney —You cannot have a sensible debate on anything. You are incapable of sensible debate on any subject.


Senator BUTTON —The honourable senator should stop behaving like the prefect manque again. I am dealing with Senator Jessop, not him. I will come to his contribution in a minute. That is one of the reasons why these things have not happened in Australia. Senator Jessop conjured up all sorts of expressions, such as 'entrepreneurial skills'. He said: 'Why has not the Government done something about entrepreneurial skills?' I invite Senator Jessop to make an intelligent speech in this Parliament-if he is capable of doing so-about what any government can do in regard to entrepreneurial skills. (Quorum formed) Mr Acting Deputy President, I point out that the quorum was called because I was inviting Senator Jessop to make an intelligent speech in the Senate. The pain of that thought was altogether too much for him and he declined to listen to that suggestion. Senator Jessop ranged over a wide number of countries and asked why things that were done in those countries could not be done here. There are a number of reasons for this. I would just make a point in respect of the motor vehicle industry that we are discussing. Quite favourable comparisons can be made between our motor car industry and overseas motor car industries. For example, it takes about the same time to assemble a car in Australia as it does to assemble the same car in West Germany. It takes something like 22 hours to assemble a car in those two countries which can be assembled in 10 hours in Japan and 43 hours in the United Kingdom. So there are comparisons which are valid and favourable to this industry in the international context. These are comparisons which I thought Senator Jessop might have made if he had wanted to talk about the car industry at all, which he clearly did not want to do. However, the thrust of Senator Jessop's speech was, of course, directed to CADMAS and other projects which have been considered by the Australian Industries Research and Development Incentives Advisory Council and the Australian Industrial Research and Development Incentives Board. An oxygen probe for the aluminium industry would save that industry 20 per cent in fuel costs.


Senator Jessop —And the motor industry.


Senator BUTTON —And the motor industry. It was in this area that I was described as culpable because I had not directed bureaucrats to say that the CADMAS scheme should be funded. Of course, I point out to Senator Jessop that it was the thrust of previous governments in setting up the AIRDIB scheme generally that these decisions should be made at arm's length from government. It is a policy with which I generally agree that decisions about research funding should be made at arm's length from government. One of the important points about that proposition is simply that people such as Senator Jessop and me should not be able to interfere with those decisions and should not be seen to interfere with those decisions.


Senator Puplick —Tell that to Mr Jones and the CSIRO.


Senator BUTTON —I think that is a quite proper principle. Senator Puplick's interjection is quite irrelevant and silly in the context of what I am talking about. Decisions in regard to granting money to companies should be made at arms length from government. That is the important point in the whole AIRDIB scheme. It is to stop people like Senator Jessop and me picking out our favourite scientist or our favourite inventions and seeing that they are funded by government. There should be an independent assessment. That is the function of the scheme. The CADMAS scheme to which the honourable senator referred was dealt with by both AIRDIAC and AIRDIB. In both cases they said that the development of this project should be taken up by the private sector.

All I can say in regard to the second matter to which Senator Jessop referred is that I do not know whether that has been the subject of an application for a grant by AIRDIB, but if the aluminium industry in Australia which, after all, is not exactly broke, thought that it could save 20 per cent of its fuel costs, I think it might be interested in shelling out a couple of hundred thousand dollars for that development to be progressed. Apparently it is not. I would have thought that that is what the honourable senator was talking about in terms of entrepreneurial skills and awareness. If that invention or whatever it is had that benefit, I am sure the industry would have taken it up. So I do not regard what Senator Jessop has had to say as right. I believe that his views quite clearly stem from a misunderstanding of the AIRDIB scheme and the work of AIRDIAC. I think the honourable senator ought to go back and have a look at the legislation because if he does he will understand it better.

The honourable member also gave us a little lecture about the virtues of Toyota in Japan. I, like Senator Jessop, have been around the Toyota assembly line and have had the benefit of being told about the number of suggestions that that company gets from members of the work force and so on every year. I do not regard that as a helpful contribution to the debate. However, it might help Senator Jessop, if he wanted a better understanding of the Japanese car industry, to read a book called Japan in the Passing Lane which is about the Toyota Corporation's operations in Japan. He could then tell us something about the applicability of Japanese organisational structures and working conditions to the Australian industry scene. I think he would then realise that they are not easily translatable into Australia as most other countries, including the United States of America, have recognised for a long time.

Some other contributions were made to the debate by Senators Foreman and Jack Evans to which I do not wish to refer in detail because they were positive.


Senator Chaney —Senator Jack Evans did not speak, so that shows the close attention you have paid.


Senator BUTTON —I am sorry. I did not mean by way of speech. My recollection is that Senator Evans interjected earlier in the debate. I thought it was a thoughtful interjection and a better contribution to the debate than any of the speeches made by honourable senators opposite.

I wanted to refer also to the remarks made by Senator Puplick which I think are largely misconceived in the context of the present debate. It was one of those well rehearsed speeches, before a mirror I suspect, which dealt with a number of issues relating to research and development and--


Senator Chaney —You are an objectionable man, objectionable and pompous.


Senator BUTTON —I have taken a note of that. I will put that in my black book.


Senator Chaney —That is typical, too.


Senator BUTTON —I suppose the honourable senator means that it is offensive to him.


Senator Chaney —Why don't you deal with the points instead of being abusive?


Senator BUTTON —I am dealing with points which were made by other honourable senators when the honourable senator was not in the chamber.


Senator Chaney —I was in the chamber.


Senator BUTTON —Perhaps the honourable senator's interjections will have more validity when I deal with him. A number of questions were raised. Senator Puplick referred to a number of areas of what he regards as Government inaction. He referred to the Inglis report on offsets. He made the point that a large area of offset entitlement or opportunity was not being taken up by Australian companies. I do not wish to digress to refer him to the particular passages of the Inglis report which deal with this issue. They do make the point, however, that the estimates of opportunities not taken up were vastly overstated. It is not that they are not being dealt with but, of course, there are a number of companies which, for reasons of quality or price that are not the subject of this debate, cannot match the requirements of the principal contractors.

Senator Puplick asked why the motor vehicle scheme was not dealt with by AIRDIB under the AIRDIAC scheme as was originally considered. I make it quite clear that that possibility was considered in great detail and at some length. However, I think it is quite clear to most people that the design and research incentives provided under this legislation are part of a total package directed towards the promotion of the restructuring and reorientation of the motor vehicle industry. In the Government's view it is appropriate that judgments on this matter cannot be made on general criteria but have to take into account what is actually happening in the industry and how the project would relate to the activities of other firms in the industry and the process of restructuring. It was our view, finally, that the Authority would be in the best position to make such judgments because it is in day to day contact with the industry and has a detailed knowledge of developments in the industry and their implications for Government policy. Senator Puplick also made some good rhetorical points about the general levels of funding of research and development, the directions of research and development funding, and so on. I do not propose to deal in detail with those matters in the course of this debate. I suspect that we will have plenty of opportunity to debate those issues at some future time. They are not strictly relevant to the subject matter of this Bill.

I thank Senator Chaney for his general support of the legislation before the Senate. By implication, or even directly, he asked a number of questions about the future of the industry. Some of those questions are susceptible to answers, others cannot be answered because this industry, as an international industry, is in a sense a movable feast. Many of the projections for the future have to be considered in that context. Senator Chaney asked whether the plan was negotiable in the future. From the day of announcement of the plan my answer has been no, that the broad parameters of the plan are not negotiable. As I have said, on recommendations from the Authority, if necessary the Government will make adjustments to minor aspects of the plan, but that is all.

Senator Chaney also asked about the future of the industry in the light of the development of a motor vehicle industry in Korea. That is a question that has to be asked in every country of the world. It is quite extraordinary that it was not being asked in Australia a year ago. I find it very strange that the industry was not addressing the problem of the development of the Korean motor industry. Obviously the fixation with the Japanese industry was too strong. If I were to hazard a guess about the Korean motor vehicle industry, I think it will be very competitive in international terms. I suspect that the Japanese industry may become marginally less competitive in world terms than it has been in recent years. All sorts of changes will occur in the competitive relationships of various motor vehicle industries around the world. One result of that undoubtedly will be that throughout the world there will be considerable moves towards more joint ventures between motor manufacturing companies, as is already happening an Italy and the United States, and we believe and hope will happen in Australia, for the benefit of the industry as a whole. It is impossible to say at this stage what the level of competitiveness and the impact of the Korean motor industry on the Australian market is likely to be in 1989 or 1990, for example. The fact remains that, whatever its level of competitiveness, it will be considerable. The Australian industry has to make enormous adjustments to meet that degree of competitiveness, and that is essentially what the motor vehicle plan is about.

When Senator Chaney asks whether any of the plan's parameters are under threat, in a sense my answer is yes, in a number of respects, because it depends on the degree of technological development in this industry as against other industries and it depends on the general level of economic activity in Australia. Senator Chaney made the obvious point that the industry has had an enormously successful 18 months. The projections for the immediate future are very bullish. When the plan was being developed we made a number of assumptions about the future of the plan on the basis that there would be a 2 per cent increase per year in the passenger motor vehicle market in Australia over the seven years of the plan. In the last 1 1/2 years there has been a growth rate of 10 per cent or more in each of those years. That illustrates that assumptions of this kind-assumptions which I think were very conservative, and properly conservative-can be considerably astray. Of course, as Senator Chaney properly points out that affects the response to the plan and the level of enthusiasm for it.

Senator Chaney asked-I may not have the form of the question quite right-whether the Government will take a more directive approach to this industry further down the track. The answer is that right from the beginning the Government has taken the position that it reserves the right to take a more directive approach if in the light of advice from the Automotive Industry Authority it decides that the objectives of the plan are not being met. We have no wish or intention to do that. This is precisely why the Automotive Industry Authority, contrary to a lot of advice the Government was given, was established as a body without teeth, in a sense. The Automotive Industry Authority was established as a body that was to exert a persuasive role on the industry and a negotiating role in a whole range of matters rather than being an interventionist body which would tell companies what to do. We wish to avoid that if we possibly can. If the survival of a motor vehicle industry in this country is dependent on a more interventionist approach in some matters, particularly in relation to the behaviour of importers and the behaviour of companies in terms of their capacity to co-operate with each other and in terms of the various component sectors co-operating with the manufacturers, then if those things are absent the answer is that the Government may have to be slightly more directive than it has been in the past.

The question of shutting out new entrants was also raised. In the Government's view there is no reason for new entrants to be cut out of this market. I say that particularly in relation to component manufacturers. In fact, in the last 12 months a number of restructuring moves have taken place within the component manufacturing industry which have resulted in new entrants into the market. New entrants, who brought with them better technology and perhaps better management, have been encouraged by the Government. Certainly that will be so throughout the life of the plan as far as this Government is concerned. At this stage I would shudder to think of a new entrant to the plan manufacturers. I would need to be persuaded that that was in any sense in the best interests of this country or of the industry as a whole. I take it that the question was basically directed to the component sector.

Those are the major questions Senator Chaney addressed in his speech. In terms of the development of the car industry I believe that he has publicly made the point that it is important that there be continuity. I have made that point on numerous occasions and I will not retreat from it. I think it would be very bad for the motor vehicle industry if the Opposition were to retreat from the sorts of things Senator Chaney has said publicly. Senator Chaney pointed out in his remarks that the question of continuity is of great importance in an industry of this kind with very long lead times. It takes something like four or five years to gear up for the production of a new model car, perhaps three to four years in certain circumstances. The car industry is in a situation in which models for 1988 and so on are now being planned. If there are changes in the environment in which the industry operates all those plans can be upset.

I have said on a number of occasions in respect of the manufacturing sector as a whole, particularly the motor vehicle industry, that we have suffered from policy disasters of the past and we are still suffering. The fact of the matter is that we have a predominantly foreign owned industry which said quite explicitly to this Government: 'For goodness sake, give us a sense of direction in respect of this industry and tell us that we have to follow it'. In a sense there are those elements in this plan. I think they are very necessary in the circumstances we face with an industry of this kind in a country such as Australia. I commend the motion for the second reading of the Bill to the Senate.

Question resolved in the affirmative.

Bill read a second time.