CHAIRMAN --I declare open this meeting of Estimates Committee D. On 12 May, the committee was charged by the Senate with examining and reporting on particulars of proposed additional expenditure for three portfolios. The committee has already examined these matters during its public hearings on 26 May and 27 May and has reported to the Senate on those hearings. Senators have given notice that they wish to raise certain matters during the supplementary meeting of this committee. We will deal with those matters of which notice has been given. We will deal with the industry, science and technology portfolio, then the Treasury portfolio and then the finance portfolio.

I draw the committee's attention to a letter from the minister, Senator Cook, regarding the short time given to the department to provide answers to questions on notice. I certainly appreciate that the department was given a short time, but the basic timetable for the process was set by the government. I think all the people who put questions on notice would appreciate that, inevitably, those which require a lot more work cannot be provided within such short deadlines. I would like to thank the department for providing such a substantial amount of information in that very short period.

I would also like to mention the amount of notice required for matters to be raised. I believe that the intent and requirement of the supplementary meeting is for matters to be at least more specific than most of the matters of which notice has been given, most of which refer only to programs or subprograms. Otherwise it makes it a very broad matter. So I hope that, in future, senators will be a bit more specific with respect to the particular matters they intend to raise. The first portfolio we will deal with is industry, science and technology. The first matter of which notice has been given is the passenger motor vehicle assistance arrangements.

Senator CHAPMAN --I want to ask a question about the pharmaceutical benefits scheme.

CHAIRMAN --The pharmaceutical benefits scheme?

Senator CHAPMAN --Yes, factor F.

CHAIRMAN --That is not a matter to be dealt with at this hearing. The only matters to be dealt with are those which are listed.

Senator CHAPMAN --I understood that I had given advice that that was to be raised.

CHAIRMAN --Obviously not by the deadline.

Senator CHAPMAN --Probably because I did not have the answer prior to that. I now have an answer which I want to follow up.

CHAIRMAN --That is not in order at this hearing. You gave notice of the matter regarding the passenger motor vehicle assistance arrangements.

Senator CHAPMAN --Yes, that is right.

CHAIRMAN --I invite you to ask your questions on that.

Senator CHAPMAN --Is there anyone here who can provide some answers on the factor F pharmaceutical scheme?

Senator Cook --We have not invited to the committee any of the officers who deal with factor F because we were not aware that the matter would arise.

CHAIRMAN --The deadline for the notification of matters is three days before the hearing. In fact, the deadline that was observed was the close of business on the third day before. So there were really only two and a bit days in which to give notice of matters.

Senator FERGUSON --As well as that, there was also a deadline for answers to questions. Mr Chairman, you have also said how difficult it was to get some of the answers back, and we understand that. Some of the reasons for reserving the program, not only here but also in Estimates Committee A, was that no answers were received. If no answers are received, and you think they might come later, you cannot prepare supplementary questions if you do not know what the answers to the original questions are. I think it is only fair that if answers are received after the deadline questions should be able to be asked after the deadline.

CHAIRMAN --Not as far as the standing orders are concerned. Senator Chapman would have been in order if he had given notice prior to the close of business last Monday that he wished to raise matters in connection with factor F, regardless of whether he had received the answer by that time. He did not do so, and I can do no other than to call on the passenger motor vehicle assistance arrangements.

Senator CHAPMAN --It makes these hearings a farce, Mr Chairman, if you cannot follow up issues.

CHAIRMAN --No, Senator Chapman. It is a question of what the standing orders of the Senate say.

Senator CHAPMAN --There is some scope for flexibility.

CHAIRMAN --Not in this particular supplementary hearing. It is only for matters of which notice has been given.

Senator CHAPMAN --It is just ridiculous. What happens now? Do I put the questions on notice? What is the procedure?

CHAIRMAN --The procedure is in the standing orders, which you are as capable of reading as I am. I call on the matter regarding the passenger motor vehicle assistance arrangements.

Senator CHAPMAN --I asked a question in the original hearings about how it was proposed to undertake the objectives outlined in the program regarding the price of motor vehicles. The Automotive Industry Authority report indicated that the price of motor vehicles rose sharply in 1993 and that the price rise outstripped both the increase in the consumer price index and the increase in average weekly earnings, resulting in a massive decline in car affordability and a consequent fall in private purchases for the third consecutive year. I asked how the objectives outlined with regard to the price of motor vehicles were to be undertaken in light of that. The answer reads:

The major contributor to price rises of both local and imported cars in 1993 was a substantial depreciation of the Australian dollar against the Japanese yen. The price increase of local cars is also a reflection of the inclusion of additional imported safety features and consumer items in new cars, for example, airbags, anti-lock braking systems and sophisticated sound systems.

That does not answer the question. All that does is give some reasons for prices increasing. It does not in any way answer the question that I asked. Could I please have an answer to that question.

Senator Cook --Can you frame the question again.

Senator CHAPMAN --How is it proposed to undertake the objectives outlined under this program, given that the price of vehicles rose sharply in 1993 and that that price rise outstripped both the increase in the consumer price index and the increase in average weekly earnings, resulting in a massive decline in car affordability and a consequent fall in private purchases for the third consecutive year?

Senator Cook --The question you asked is: how do we fulfil the objectives of our program, given the higher levels of price increases for the year in question, which I think was last year? I am not sure whether that question is asking why the prices went up or how we fulfil the objectives of the program. If it is a question of how we fulfil the objectives of the program, I can say that those of us involved in the program are working on a multitude of fronts with the automotive companies in the context of wider government policy on micro-economic reform, macro-economic management and so on. Because we have those settings and because we have a strategy for tackling those issues and reducing input costs on car manufacturers, the level of cost to them should fall and, as a consequence, they will hopefully price their product more cheaply. In other words, they will pass on the costs to consumers.

The issues provided to you in the answer all relate to pricing. They include issues of fluctuations in the dollar-yen relationship and issues related to the extra requirements for safety, which are social concerns. They are germane to the price that is charged for a motor vehicle. In 1993 we were in a year in which the economy was emerging from recession. The levels of production were lower than they are this year. Therefore, the unit price is affected. Because of the higher retention rate of motor vehicles and the age of the motor vehicle fleet in Australia, we along with the manufacturers are concerned to encourage people to renew and update the level of that fleet. There is consumer resistance to doing that, particularly in the uncertain times from which Australian consumers have emerged in 1992 and so on.

Together with the car manufacturers and the rest of the automotive industry, we expect to deliver the goals that we have set in this plan. From my discussions with them--I talk to them constantly about these things--I gather that they have a pretty aggressive view about that. We are working further on elements of micro-economic reform. Some of those issues are right in the centre stage for state governments rather than Commonwealth government but for the car producing states--South Australia, Victoria and New South Wales--there is a strong cooperative relationship between the governments irrespective of their political colour. We are working together to nurture this industry as a core industry for Australia.

If you are asking me more specifically about pricing, some of those questions are questions for the company. Perhaps with that introduction I should ask Mr Lansdown if he wants to add more specificity to what I have said.

Mr Lansdown --I do not think I do. I do not think I need to. The issue of price is clearly stated in the objectives of the policy, and that is something that the AIA has been monitoring over time. Up until recently price increases were less than the CPI. As a general principle, it is certainly an issue that needs to be monitored. Certainly in the last 12 months the change in the exchange rates has been pretty critical.

Senator CHAPMAN --Minister, in your answer you indicated the high retention rates with regard to private car ownership and, obviously, the ageing of cars in private ownership. Would you acknowledge that the present price of new vehicles is a significant contributing factor to the ageing of our vehicle fleet--people simply have not been able to afford to update their vehicles?

Senator Cook --As I said in my reply, to some extent that is and was a recession era mentality. If economic fortunes are a bit uncertain, people will act conservatively. As you know, the levels of consumer confidence in Australia are high. The view of Australian industry in all of the surveys about business trends, business investment plans and market expectations from the private sector--some of which I referred to in question time in the Senate today--is quite bullish. I expect that those figures will change.

It is true that Australians buy cars and hang onto them for a long time expecting them to have a longer life than people in other countries would expect. Some countries, like Japan, have legislated use-by dates which guarantee that their national car fleets will turn over, and consumers buy cars knowing that. We do not have that type of compulsion nor do I think it is desirable for Australia. I think it is desirable though that we positively encourage a greater turnover factor. One of the things we have done in order to do that--for a host of other reasons as well--is to prevent the dumping of used vehicles from Japan in Australia for competition in the second-hand market.

CHAIRMAN --As Senator Ian Macdonald is not here at the moment for the next section, the Australian Institute of Marine Science in Townsville, we will move on to the next matter and come back to that if there is still time.