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Thursday, 19 March 1987
Page: 1006

Senator SIDDONS(5.00) —I asked Senator Messner to say when we were going to see the Opposition's policies on the management of the economy. He answered: `You will see them closer to an election'. The fact that there could be an election at any time-I read a prediction about May in the media this morning-would seem to me to make that a very precarious policy for the Opposition. However, it is even more irresponsible for the Opposition to have no policies at all which can be debated constructively in this chamber when the nation is in such a perilous situation. We are on the brink of bankruptcy. We run the danger of having our lines of credit cut off. We run the danger of becoming a satellite of Japan because we will be in debt to Japan to such a degree. Yet the Opposition refuses to give us a constructive proposal as to where Australia should head from here. That is irresponsible.

We heard from Senator Bolkus, who is no longer in the chamber, that we had 20 or 30 years, I think he said, of Liberal-Country Party mismanagement which turned our economy into an agrarian economy and dissipated our industrial base. That is very true. However, I do not see too many constructive suggestions from the Australian Labor Party as to how we can rebuild our industrial base. It is obvious to most people, and certainly to the general public, that unless Australia rebuilds its manufacturing base and its industries and it exports manufactured goods we will never pay our own way again; we will never get out of debt. But the Government has been very slow. I would have thought that a Labor government would have attacked the problem aggressively and come up with innovative policies to get industry moving again. But so far nothing has happened. Investment in industry is stagnant. There has been no new investment in manufacturing for the last decade-a fact which has not changed since the Labor Party came to office. Our industrial development is still stagnant. It is true that the dissipation of our industrial base started in the early 1970s under the Liberal-Country Party Government but the Labor Party has done nothing to change the situation.

Debates which talk about generalities and get involved in mud-slinging get nowhere. They will not get anywhere until the Opposition comes clean and says how it would manage the economy. From what Mr Howard and the Opposition spokesperson for the Treasury have said, I can conclude only that the Opposition is advocating an almost identical policy to that being applied by the Labor Party and advocated by the Treasury, namely, that market forces should have free rein in the economy and that governments should not interfere or assist in controlling, directing or encouraging the economy in certain directions.

The message of the Unite Australia Party is very clear and straightforward: We have to manage the economy. Unless we do that we will never get out of the situation we are in. Unless we control the overseas money markets Australia will inevitably become a satellite of overseas finance. We are very close to that happening now. I wish to cite a few figures to illustrate the seriousness of the problem we currently face. We are told that we must have foreign capital; that is the only way we can balance our Budget. Australia is hooked on foreign capital like a drug. We think we have to have it. We think we cannot live without it. Other countries do. Ninety per cent of the capital that has gone into developing Australia over the last two decades has been Australian money, Australian capital. Only 10 per cent of it has been foreign. Unfortunately, that 10 per cent of foreign capital has been directed at buying out our wealth-producing industries. That has to stop.

We have to stop borrowing money. We cannot do it straightaway, but we could have a plan over a five-year period to get free of foreign capital. Why we have to do so becomes very clear when we look at a breakdown of the balance of trade figures. In 1986-87 the balance of trade is $4 billion, but the balance on invisibles is $10 billion. Invisibles, as we all know, are things such as interest, dividends and services such as shipping and insurance; however, particularly dividends and interest. Our dividend and interest bill is so high because of the money we have borrowed and because of the degree of foreign ownership of Australian industries. Foreign ownership means simply that all the dividends go out of the country and Australia has to find the foreign exchange to pay for the transferal of those dividends to the overseas owners of our wealth-producing industries. So we have to stop borrowing money. We do not need it. Other countries can survive without it. India does not go round borrowing money. Japan does not go round borrowing money. They export. It is very largely an Australian disease which perhaps some Latin American countries have also. But Australia, in particular, has been saying for 20 years that we cannot develop without foreign capital. We can, and now we must. We have no alternative.

Interest rates are another fundamental problem. Let us consider the situation. Interest rates in Japan run at 4 per cent; in Germany, at 4.7 per cent; in France, at 6 per cent and so on. In Australia interest rates are 18 per cent. Why are interest rates in Australia 18 per cent? It is simply because we are trying to bribe foreigners to send capital across to Australia. We are trying to encourage foreign money to flow into the country. We have to do without foreign capital and reregulate our financial institutions. There is no other way we will get interest rates down. There is no other way we will control interest rates on housing, important investment and so on without regulating the financial institutions of the country. That means regulating the banking system and the non-banking financial system. The Government does not need any new legislation to do this. All it has to do is say to the banking system, through the Reserve Bank of Australia: `We want to encourage investment into productive areas. Make loans available to entrepreneurs who want to develop an industry but be hard on people who want loans to import luxury goods and so forth'. One can very easily control investment in this country through the banking system but one has to reregulate it. One has to go back to the practice of the 1960s and early 1970s.

Senator Messner —What would that do to the dollar?

Senator SIDDONS —I do not think it would do very much to the dollar at all. As well as reregulating the financial system we have to introduce exchange controls. Those two things go together. In that way we can prevent large amounts of money being withdrawn from the country.

Senator Messner —Thank God you won't be in government.

Senator SIDDONS —Senator Messner sits there with a smirk on his face. He has spent half an hour saying nothing about how the Opposition would manage the economy. If he has a better solution, I would love to hear it. I would love to debate it with him. I am putting forward a practical solution to our problem. The Opposition might not like additional controls on the economy. It might not like to go back to exchange control. But if Senator Messner can tell me an alternative, I would be delighted to hear it. There is no alternative. Time has run out. We have borrowed as much as we can borrow. We have to stop borrowing and reintroduce exchange controls to protect the Australian dollar.

We have to build our industries. How can we do that? We have to do it by direct government assistance very selectively applied to those industries that show the greatest potential to earn export dollars for the country. We have to direct government assistance with rifle-shot accuracy to those industries which will show the greatest benefit to the country. In the past the Government has brought in such things as an investment allowance to assist industry, but that was spread so thinly over both secondary and primary industries that it achieved virtually nothing in re-equipping our industries. We cannot afford these broad brush solutions. We have to be selective as to where government assistance is directed.

This means that governments have to pick winners, and if they pick winners they will also pick losers. But any assistance to industry by the Government should be very carefully assessed on very carefully laid down criteria. There should be a very definite time limit. If the particular assistance is not effective it should be withdrawn straight away. Criteria that the Government could use for assistance could include such things as profitability, export orientation, local content and perhaps the market share that that industry enjoys. The Government could use those four criteria and work out a score on each one. If an industry has, say, a high score on the first three and a low score on the fourth, obviously it would be a good candidate for government assistance. These things can be done and have to be done if we are to rebuild our industrial base quickly.

What sorts of assistance to industry do we suggest? Low interest finance on the production of an export order is an example. The fact is that many Japanese industries have virtually financed their development simply by showing export orders to the Government, which in turn has given them low interest finance to the extent of those export orders. That is a very simple approach which was very effective in Japan. I believe that there should be a facility for concessional finance to those industries that can show that they have the potential to earn export dollars.

There should certainly be a commitment on government purchasing policies. If 5 or 10 per cent of government purchases were directed towards Australian production or Australian sourcing, $1 billion to $1.5 billion would be saved on our balance of payments debt. The Government should give direct assistance in marketing, export finance and patent protection on new and innovative ideas and inventions. It should have local content rules for resource and infrastructure projects. It should have new initiatives in recruitment and training of skilled staff.

I know that other senators wish to speak in this debate, so I conclude by saying simply that while Senator Messner and his colleagues may not like the idea of re-regulation or the Government directly co-operating in assisting industry they certainly like the idea of the Government sitting back and letting market forces do what they will. They philosophically agree with the laissez-faire approach of the nineteenth century, but these policies have been tried and have been a dismal failure. These policies are being used by the Government currently and on the evidence they are a disaster.

The Australian people realise this, which is why politicians are held in such scorn by the population at large. The people know that there is something wrong. We in Australia inhabit a whole continent, the only continent in the world which is governed by a single, unifying government. We are sitting in this country, surrounded by enormous natural resources, with a very low population for the size of the land. Australia has everything going for it, yet the country is riddled with debt. A large percentage of our work force is standing idle and the Government is more or less helpless against the money markets of the world.

The people of this country know that there is something wrong. They are confused as to what the solution should be and they will continue to be confused as to solutions until there are some constructive debates in this place.

There cannot be a constructive debate in this place when the members of the Opposition sit there and say: `We have policies, but they are under wraps. We will not let you know what they are until there is an election'. How can we discuss a constructive policy in an election atmosphere? It is the absolute height of irresponsibility for the Opposition to say: `We don't like the solutions that the Unite Australia Party is coming up with. We have better ones, but we will not tell you what they are'. That is irresponsibility. The sooner this Parliament gets down to debating the alternative approaches to economic management, the sooner this Parliament will get some measure of respect from the population at large.