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Tuesday, 12 May 1970

Mr WHITTORN (Balaclava) - As has been said, this debate revolves around changes in the legislation related to the Exports Payments Insurance Corporation. The Minister for Trade and Industry (Mr McEwen) has told us that 3 major amendments are proposed in the Bill. These are supported not only by Government members but by members of the Opposition as well. I support the amendments, as I have supported the Export Payments Insurance Corporation since its inception in 1956. The first amendment relates to the extension of the activities of the Corporation so that it can carry out its work in New Guinea and other Territories of Australia with the same facility and efficiency as do other countries. I. am surprised that the original legislation and the amendments that have been made over the years have not included provision that insurance of goods exported from Australia to Papua and New Guinea should be on the same basis as Japan's arrangements for looking after its traders and manufacturers. I should think that the proposed amendments relate more particularly to requests by industry in Australia to make certain that they do trade in Papua and New Guinea on equal terms with Japanese manufacturers, German manufacturers and the like. I am pleased that the Minister has seen fit to plug this loophole. In fact, I was unaware that the tariff procedures available in the Territory gave no preference to Australian production whether for goods or for services.

If we are to maintain our trusteeship over the Territory of Papua and New Guinea - and I see no reason why we should not do so for a good many years - then Australian private enterprise must be encouraged, coerced and exhorted to do more business in the Territory. I refer honourable members to an editorial in an engineering publication titled Australasian Manufacturer' dated 4th April 1970. The editorial mentions that representatives of the Australasian Manufacturer have talked to Mr Ashton, New Guinea's Minister for Works, and states:

In an exclusive interview published in the national trade paper. 'Daily Commercial News', Mr Ashton said Australia's inefficiency and poor marketing techniques were losing the Territory's expanding market to West German and Japanese exporters.

These are pretty high sounding words and I believe that not only the Minister and members on this side of the House but all Australians, and certainly all traders, should take notice of what Mr Ashton is reported to have said. The editorial continues:

He said it was a catastrophe that Australia was spending so much in Government grants (SI 20m this year alone) to develop the area only to have foreign exporters grab the market.

How true this is. The Australian taxpayer is subsidising the economy of Papua and New Guinea and Australian manufacturers and commercial houses should be operating in that area on equal terms with Japan, Germany and other countries. The editorial went on to state:

In 1962-63 Australia supplied 5»fr of all Papua and New Guinea's imports. Five years later this had dropped to 54.5%. Other major suppliers were the United States (13.7%) and Japan (!()%). There is little doubt that the Territory's 2.3 million people represent an attractive market, particularly in view of the enormous development now taking place, especially in mining.

Honourable members who have been to the Territory of Papua and New Guinea would realise how fierce is the competition, particularly for what we call white goods - domestic appliances. One quick look at the shops at Rabaul, Lae and Port Moresby indicates that the Japanese are leaving no stone unturned to obtain the business available in the Territory. I find it difficult to believe thai 'he Australian Government has left it for so many years before ensuring that Australian commercial houses and manufacturers can operate on the same basis as Japanese exporters. Japanese and German products are well to the fore, particularly in Rabaul and Lae. As T said, those honourable members who have been to these ports find presented for sale Japanese transistor radios, tape recorders and the like. I believe that Australian manufacturers should have these business facilities put before them.

I believe that EPIC should make certain that this change is brought to the notice of ali Australian manufacturers. As the honourable member for Melbourne Ports (Mr Crean) said, the stimulus to the economy in Papua and New Guinea resulting from the copper find at Bougainville, certainly will mean that capital goods will be required in ever increasing amounts. There have also been copper finds in the western part of Papua and New Guinea and millions of dollars will be spent by the company concerned. The spending power and standard of liv ng of the people in those areas will be reflected throughout the Territory. Australian manufacturers should have some advantage to ensure that they export to those areas.

It is obvious from reading the second reading speech by the Minister for Trade and Industry that some part of industry in Australia approached him requesting that Australian industry be given the same level terms of export as are available to Japanese and German manufacturers. Australian companies believe that they can compete with the overseas manufacturers. I agree with that belief. But they must have the same facilities available to them as are available to manufacturers in other countries. This Bill fills a much needed want not only for Papua and New Guinea but also for those other territories in which we are interested, such as Christmas Island, Cocos Islands and Norfolk Island. I believe that we have some problems with Norfolk Island but they have little connection with this legislation.

The other 2 considerable alterations to the Export Payments Insurance Corporation Act also call for approbation. EPIC must improve its position to cope with the demands of exporters. All honourable members on both sides of the Parliament have used the cliche that 'Australia must export to survive'. Therefore a facility such as EPIC should be increased in stature so that we can export more and more goods. For instance, most honourable members realise that Great Britain is making every effort to join the European Economic Community. Good assessments have been made which indicate that Australia could lose easily 12i% of its export income when Great Britain does enter the European Common Market. I ask the Government: What plans are we making to ensure that this 12i% of Australian exports is made up not only in Papua and New Guinea but elsewhere? Australia's standard of living must decrease considerably when this move by Great Britain and by the European Economic Community is accomplished. There could be prime trouble for Australia if this move is accomplished in a time of stress. This would decrease our standard of living. I ask the Government to look into the need to build up our exports by at least 12£% in the very near future, if it has not already done so. I sincerely trust it has. I was referring to other sections of the Act which are being altered. The figures show that the current liabilities of EPIC total SI 92m. Its ceiling for liabilities at the moment is a maximum of S200m. EPIC has practically reached its limit. Therefore the clause in this Bill which increases the limit from $200m to $300m is well worth while.

The Minister's second reading speech appears at page 645 of Hansard. Because of what he said in the last part I want to make some comments about the origin of this legislation in 1956. The principal speakers in the debate in 1956 were the Minister for Trade and Industry, speaking for the Government side of the House, and Mr Pollard, then the honourable member for Lalor, speaking for the Opposition. In his second reading speech in 1956 the Minister explained that the purpose of the legislation was to promote Australia's export trade. He reiterated that purpose when introducing this Bill. He indicated that the Corporation would enable exporters to insure against certain risks which were not normally insured by business houses. Then, as now, this legislation filled a much needed want. I agree with the honourable member for Melbourne Ports that EPIC has done this with expertise and I offer my congratulations. As in 1956, commercial houses and exporters in Australia in 1970 must be in a position to compete with manufacturers from other countries.

The report of EPIC is quite illuminating. Some sections were mentioned by the honourable member for Melbourne Ports.

The report for 1969 states, in part:

Buyers in world trade have, over the last decade, been progressively successful in obtaining more favourable terms of payment for settlement of their purchases. The shift from cash payment to credit terms has gained momentum in both developed and developing countries alike.

Later on it states:

In consequence, there has been a marked expansion in the business growth and number of export credit insurance institutions throughout the world. When the Corporation commenced business in 1957 there were only 18 countries with such organisations- at 30th June 1969 there were 33 and others in the planning stage.

It is quite evident that early in the piece the Australian Government saw that this type of corporation to insure Australia's exports was needed. As I have said, and as other honourable members have said, it fills a much needed want. The report went on to state:

A further 133 policies were issued during the year resulting in a net gain of 54 after allowing for the expiry of specific type policies at the completion of insured transactions, and the nonrenewal of policies where export business did not eventuate as anticipated.

The total number of policies current at 30th June 1969 was 740. In addition some six unconditional guarantees to banks as additional security for export finance were operative.

So it is evident that the Corporation has been very active during its life of 14 years. It has covered a wide range of production from Australia. Looking at page 7 of the Corporation's report, I find, as did the honourable member for Melbourne Ports that 50% of insurable turnover is in 3 items alone - greasy wool $84. lm, processed wool $43.9m. and dairy produce $20.6m. All of the major items insured by the Corporation appear to come from the rural sector. I am wondering, as is the honourable member for Riverina (Mr Grassby), whether the Department of Trade and Industry cannot do more to ensure that manufacturers and other producers in Australia participate in EPIC to make certain that the goods exported are insured in a rational way. Incidentally, the total amount of turnover was $298. 8m.

The fourth item on the list of insurable turnover is 'aluminium, zinc, steel, etc.'. This item amounts to $22.2m for this year. For the year ending 1968 it was $24.5m. In other words, there has been a drop in insurable turnover of this type of produc tion from Australia. I am wondering why this is so. When one looks down a list of 12 or 14 items insured by the Corporation, one sees there is a reduction in turnover in 1969 compared with the 1968 figures. There are one or two minor exceptions, but it does appear that rural production insurance is increasing and manufacturing or commercial production insurance is decreasing. I think that the Department of Trade and Industry in particular should have a look at this situation to see whether manufacturers and commercial houses are using EPIC to advantage or whether it is a facility that they really need. As I have said before, exporting is the life blood of the future of Australia. The Minister mentioned this in his second reading speech in 1956 and reiterated much the same comments in his speech in March this year. On the latter occasion he offered some criticism about what had happened in the 14 years since the Corporation was first founded. In other words, he indicated to the Parliament - this can be found at page 645 of Hansard of 19th March this year - that on the part of industry, and certainly on the part of Government members, there was a tremendous amount of antipathy to or disinterest in the initiation of this facility in 1956. In fact, he said this:

The birth of EPIC was delayed many years - at least 4 - by the barrage of criticism and opposition raised against it from inside and outside government. Interests representing private institutions such as banks, insurance companies, associations, and elements even within the governmental structure, attacked, criticised and blocked the provision of this new facility by a Government corporation for at least 4 years.

That is what the Minister said on 19th March of this year when he introduced the amendments to this legislation. I have had a look at the second reading speech and other speeches made in 1956 but I cannot find any evidence which would support what the Minister said this year. At page 1761 of Hansard of 3rd May 1956 the Minister is recorded as saying:

In arriving at its decision to establish an export payments insurance arrangement, the Government has been influenced by the undoubted advantages such an arrangement will give to export It has also been impressed by the case for such an arrangement that has been placed before it by a wide spread of commercial and industry interests. Many countries abroad operate arrangements of this kind.

Then the Minister went on to explain the reasons for the establishment of this Corporation. I find these words a good deal different from what he said on 19th March this year. In fact, in 1956, he went on to say, as reported at page 1761 of Hansard:

For some time past the Government has received representations from Australian exporters and manufacturers who have claimed that export payments insurance would greatly help them in building up export trade.

Before these proposals were finally adopted, however, all important points were discussed with representatives of exporters, manufacturers, primary producers, commodity marketing boards, and commercial, banking and insurance interests.

I find the contradiction between the opinion expressed on 3rd May 1956 and that expressed on 3rd March 1970 indecipherable I just cannot understand it. So 1 went a little further and had a look at the remarks of some of the speakers on this side of the House and one or two of the speakers on the other side of the House in the 1956 debate. I found that the honourable member for Fawkner, who is now the honourable member for Casey (Mr Howson), in his opening remarks supported the legislation. He rose at 8.41 p.m. and said:

I rise to support the Bill. Indeed, Mr Deputy Speaker, I welcome it, because I believe that it is a really constructive measure which has been designed to encourage trade with other countries.

The whole tenor of the honourable member's speech indicated that he supported the Bill. He was the first speaker from this side of the House to take part in the second reading debate. Another proponent of free enterprise in those days was the honourable member for Mitchell, Mr Roy Wheeler, whom many of us know. At page 2062 of Hansard of 15th May 1956 he is reported to have said:

From the inquiries I have made I find that the type of risk to be covered under the Bill is normally not undertaken by private insurance companies. The Bill, therefore, seeks, I hope, to provide cover by the Government only of risks that would not normally be covered by private enterprise.

So it seems that we agreed then, as we agree now, that this Corporation was a necessity for Australia. Therefore I find it difficult to understand the remark the Minister made in his second reading speech, that the facility was held up for 4 years, not only by Government members but also by insurance companies, banks, and general pressure from outside interests. At that time, as is the position now, Australia had a pressing balance of payments problem. Although the position is not so significant now so far as percentages are concerned, it is still a problem and will remain a problem for Australia.

We are a small country in terms of population and yet we are one of the great trading nations of the world. We need to give all the help that we can to exporters, commercial houses, rural producers and others to ensure that our exports are maintained and perhaps increased. One way of increasing them, of course, is to produce competitively. I believe we are doing this, although we may be reaching the line ball stage so far as competition is concerned. In reviewing the Minister's speech - particularly the one he made this year - I see that he was flying a kite for his Australian Industry Development Corporation. He wanted to make certain that some of us, anyway, would not look back on EPIC when it was first instituted, because the evidence disproves what he said this year about EPIC. I am hoping that what he said about the Australian Industry Development Corporation will be disproved also. As I have said, I can find no evidence in Hansard. I have also looked at some newspaper cuttings. I found that because when EPIC was set up with a contingent liability of £25m or $50m the newspapers thought that Australia's exports would be increased by at least that amount each year. That contingent liability has been increased from $50m in 1956 to $200m today, and when this Bill is passed it will be increased to $300m.

As I said, I was wondering whether the Minister's remarks had some relation to the Industry Development Corporation and I was wondering whether he was endeavouring to confuse me - and I am speaking for nobody else - about EPIC on the one hand and IDC on the other hand. The only contradiction to what I have already said about the speeches in 1956 is that the honourable member for Melbourne Ports and the then honourable member for Yarra, who is now the honourable member for Lalor (Dr J. F. Cairns), did say a few derogatory things about the introduction of EPIC in those days, but nothing to indicate that it should not be established.

Their only criticism was that it was too timid and did not go far enough. In fact, the honourable member for Lalor wanted it to be a Socialist weapon, and he virtually said so in 1956. He said, as reported on page 2073 of Hansard of 15th May 1956:

In comparison, the situation here is that the Australian legislation, brought down by a doctrinaire private enterprise government, does prevent the projected Australian corporation from entering into that field.

He had referred in the previous paragraph to the democratic socialisation of corporations that existed throughout the world. He went on to say:

This legislation provides for only very limited measures.

So there was a little criticism. The only criticism was that it was too timid and that it was not the democratic socialism that the honourable member for Lalor would like. The Minister in his second reading speech was obviously referring to the Industry Development Corporation. As I see it from reading Hansard, the only support that he has had for his Industry Development Corporation is the very voluble support given by the Leader of the Opposition (Mr Whitlam) when he was speaking in the debate on the AddressinReply to the Governor-General's Speech. In fact, the Leader of the Opposition said that the facility 'should be specifically active in the area of resource development and the rationalisation of industry'. They are lovely words, but to a private enterprise operator they are very frightening. Rationalisation of industry is what the British Government has done and is continuing to do. I can say as a Liberal that I am very scared by what the Leader of the Opposition said. He rejoiced in the announcement in the Governor-General's Speech of the implementation of a facility to be known as the Australian Industry Development Corporation. I can only say that 1 have no such rejoicing thoughts.

I have gone away from the tenor of the Bill, as did the Minister who introduced it into the House; but I say now that I support the Bill wholeheartedly. 1 believe that the Export Payments Insurance Corporation has done a worthwhile job for Australia. I would like to go so far as to say that its contingent liability could be increased from the $300m mentioned in the Bill, but no doubt the Minister, the Cabinet and the Corporation have decided on the $300m for the time being.

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