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Wednesday, 8 June 1994
Page: 1552

(Question No. 1327)

Senator Hill asked the Minister for Industry, Science and Technology, upon notice, on 22 April 1994:

  (1) Please advise of progress of the Partnerships for Development (PfD) Scheme, in particular: (a) have some participating companies largely ignored their obligations for investment and exports, as undertaken voluntarily in the signed agreements; (b) have these companies been advised by the Department that the partnerships agreements were a breach of the General Agreement on Tariffs and Trade (GATT); (c) have these companies been advised by the Department that the partnerships agreements were a public relations stunt by successive Labor Party industry ministers, which could thus be effectively ignored; and (d) have these delinquent companies been told by the Department that any breach of the agreements will be quietly forgotten by the Government, as no effective disincentive processes had been set in train by the Department which could affect government tendering processes?

  (2) If any of the answers to (1)(a) to (b) are answered in the affirmative, please explain: (a) what the Minister sees as his legal responsibilities, and those of the Department, to companies which may have incurred a loss by complying with their partnership agreements in good faith, and which may seek some form of compensation from the Commonwealth; (b) what review processes are in place to improve communications between his office and the Department on Government industry policy; and (c) how the Minister intends to be taken seriously in any future negotiations with transnational companies about industry agreements.

Senator Cook —The answers to the honourable senator's questions are as follows:

  (1)(a) No. The companies that enter into these arrangements place great store in honouring their agreements. They operate on a global basis and have global as well as domestic clients, including other governments.

  The PfD scheme encourages the headquarters of companies to thoroughly explore opportunities for investment which make good commercial sense and which complement their global and regional strategies.

  However, some have had more difficulty than others in identifying activities that make good commercial sense. For example, changes to the global structure of the industry have necessitated some changes to their corporate strategies and Partnership business plans. My Department has worked closely with these companies to ensure that the appropriate consideration is given to investing in commercially sustainable activities in Australia.

  In this context, it is important to note that the Government provides no guarantees to Partners about levels of government business.

  Overall the PfD Program is continuing to deliver very encouraging results and Partnerships firms remain committed to achieving the levels of activity they have volunteered under the terms of their agreements. Between 1988 and 1992, the Partner companies alone have delivered some $860 million in R&D and $2.4 billion in exports between 1988 and 1992.

  I believe that Partnership companies would be prepared to brief you on their activities in Australia.

  (1)(b) The Department considers that the PfD Program does not contravene Australia's GATT obligations. The PfD Program does not involve any form of Government assistance to participating firms. The Program merely provides a framework for international and Australian companies to develop commercially sensible new products and services in Australia and win new export markets.

  A January 1994 report by the GATT Secretariat on Australia's trade policy and practices noted that Australian officials have stressed that "policy implementation has remained free of any discrimination between participants and non-participants in PfD initiatives" and that the "authorities acknowledge that commercial realities may require changes in activities and strategic direction after signature of the Memorandum".

  (1)(c) No. I am not aware of any such advice and it is incorrect. Also, the companies have indicated that their participation with the Partnership Program is a good marketing tool and that the investments made in Australia have been beneficial to the corporation.

  (1)(d) No. Partnership companies report annually on their performance and are independently audited at least every 2 years by Ernst & Young to validate the information. In the event of any company falling behind on its commitment, my Department works closely with the company to ensure that a program of strategic activities is established which will be sustainable over the longer term. Audit results to date have validated Partners' claimed performance.

  Where all levels of consultation have been exhausted, the Government retains the right to advise companies that they are in breach of their undertakings.

  (2) Not applicable.