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Tuesday, 10 May 1994
Page: 487

Senator SPINDLER —My question is directed to the minister representing the Treasurer. I refer to the government's proposal to sell the rest of AIDC Ltd and ask: apart from any strategic considerations related to the provision of investment funds to Australian industry, how can the minister justify selling a taxpayer's asset earning approxiately $37 million per year when the comparable cost of a loan would be approximately $24 million or less? Is it correct that the real reason for such a ludicrous financial decision is to hide the true size of the budget deficit? Finally, when will the government introduce a rational system of public accounting which shows changes in the government's balance sheet rather than just cash flows?

Senator COOK —The finance minister and I, in my capacity as Minister for Industry, Science and Technology, announced a fortnight ago that we would dispose of the remaining public shareholding in the AIDC. That was an in principle announcement. The full scoping study has to be completed by the Department of Finance, and the way in which the disposal will be conducted will, of course, be announced at a later time. But this question is not so much about that. As I understand the question, it is about how the government will deal with the provision of finance to companies that the AIDC may have serviced.

  I have answered this sort of question on several occasions. But I should perhaps reiterate that we believe that the reasons the AIDC was first introduced in 1970 by the then Deputy Prime Minister, Mr McEwen, have been substantially met by the fact that we deregulated the financial markets in 1983. In 1992, as Senator Spindler said, there was a dividend paid to the Commonwealth by the AIDC. But he omitted to say that in 1991 there was a $90 million loss incurred by the AIDC although, to be fair to the institution under its new management, it has certainly been conducting its affairs very well, and one would expect that it will continue to be in profit from now on.

  The question is whether this asset should be retained in public shareholding or is it better able to service the needs of industry if it is in private ownership. The answer to that question is that it can work effectively both ways. But there is no reason why the government should remain as the sole owner of the AIDC, or even as a shareholding owner—no reason at all.

  The change since the Black Jack McEwen days is the deregulation of the financial market and the rise of a number of other companies able to service the same sort of market need that the AIDC was established to service. These include Citibank, Schroders, Bain and Co. and a whole range of other private banks that do this sort of work. Therefore we made a decision, which will be subject to a national conference of the Labor Party on whether policy change will occur, that we would proceed to dispose of the AIDC. It will not affect the provision of finance to the sorts of projects that the AIDC now operates. There is a more competitive market there.

  The illusion that has been referred to in Senator Spindler's press releases that somehow or other this will deprive small to medium business of access to finance is but that—an illusion—because the AIDC operates at the big end of town; it really does not operate in providing funds or support for small to medium enterprises. As Senator Spindler will have seen in the white paper, we have deepened, broadened and enriched the access to finance area for small to medium companies in Australia so that they can have access to equity and developmental finance and venture capital to establish themselves more effectively.