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Tuesday, 3 May 1994
Page: 11

Senator SPINDLER —Mr President, my question is directed to the Minister for Industry, Science and Technology. I refer to the minister's announcement that AIDC Ltd—in effect, the Australian Industry Development Corporation—is now to be sold in its entirety. I ask the minister: is this proposed 100 per cent sale contrary to the previously announced government intention to retain 51 per cent ownership and control in AIDC based on existing official ALP policy? Secondly, how does the minister justify this about-face which will discard an important strategic instrument to provide development finance for Australian industry, the need for which has yet again been confirmed by the Kelty report? Thirdly, how does the minister justify the loss of government control over the financing of important defence contracts such as those of the Australian Submarine Corporation? Finally, is this somersault yet another example of privatisation by stealth of critically important public assets such as happened with the Commonwealth Bank and the Commonwealth Serum Laboratories?

Senator COOK —It is important to note that there are two entities in question: the corporation—the AIDC—and AIDC Ltd. Last week the Minister for Finance and I announced the sell-down of the remaining shares in AIDC Ltd; that is a sell-down of 80.6 per cent of shareholding.

  I am asked how this stands with ALP policy. Of course, ALP policy requires the government to hold 51 per cent of Limited shares. We will seek to change that at the forthcoming national conference of the Labor Party and, assuming that that is the case, we would proceed in those circumstances.

  In answering the questions that have been posed to me by Senator Spindler, it is necessary to go back to 1983. In 1983 the government deregulated financial institutions in Australia. As a consequence of that, we created a stronger market for investment and development finance and there is now in existence a number of well-known banks—BT, Schroders, Citibank, Macquarie Bank and so on—that provide finance in this area.

  In 1989 the AIDC was floated and 19.4 per cent sold off, and that is AIDC Ltd. Since then, it has been functioning as any other commercial bank—or any other commercial financial institution, I should say, to be precise. It has been doing so in competition with some of the other institutions I have mentioned, but with the advantages of a government guarantee, a point that has been made to us from time to time. It has been acting purely commercially. It has not been providing special funding for small to medium companies in Australia.

  When Senator Spindler sees the industry statement tomorrow, I am sure he will see that we have tackled that issue, in all of its complexity, in greater detail. The AIDC has certainly not been doing that; it has been hunting at the big end of town and investing commercially in major propositions.

  In his question, Senator Spindler asked me about the Australian Submarine Corporation. The AIDC does have a shareholding in that corporation, but it has it on a commercial basis; it does not have it on the basis that we needed to make an investment for some national interest function. If there are issues of national interest, they will be raised with the government through the AIDC itself, the premier entity, which will remain in full government ownership, and will be dealt with in that context.

  I hope that, in light of this explanation, the honourable senator's announced opposition to any legislation on this might now dissolve and that he will recognise the changes that have occurred since banking deregulation and the need no longer for a government to hold ownership of, and to maintain a guarantee to, an institution such as the AIDC. We have indeed a deeper and richer financial market now than we had before; and the institutions that are there are capable of answering the problem, subject to the changes we will make for small to medium companies in that area of finance access.