Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 13 March 1973
Page: 520

Mr WHAN (Eden) (Monaro) - The Bill before the House seeks to increase the contingent liability of the Export Payments Insurance Corporation by $250m. At 31st December 1972 the Corporation held 1,090 policies which had a contingent liability of $415m, which was very close to the limit allowed under the provisions of the Act. It is clear that the liability needed to be extended to increase the business of the Corporation. The Corporation was established 'n 1956 as a non-profit making body to cover the risks associated with overseas trade. Throughout its life it has increased its services to the exporter. Now it provides insurance for investment overseas. Thirty-three joint policies have been issued under this activity of the Corporation. They have a liability of Sl im. Buyer credit, which was introduced in 197.1-72, has attracted a great deal of support. Forty-five firms have taken up policies which range from 2 to 10 years in duration. This has enabled Australian manufacturers to enter the capital market overseas. There is a growing market for Australian products overseas. Recently 104 firms applied to take part in a trade fair which was to be held in Hong

Kong between 12th and 17th March. Our manufactured exports overseas have increased from S80.4m in 1967-68 to $ 103.4m in 1971- 72.

No doubt the interdepartmental committee which is considering the advisability of establishing an export bank will be looking very closely at the Corporation. The Corporation is now geared to examine the factors which contribute to risk associated with the sale of capital goods on long term credit. It arranges credit, and it has an information service which gives an extremely good dossier on overseas buyers and their credit worthiness. It might be argued that the export bank could be based on the Export Payments Insurance Corporation. I would like to develop for a few moments the general principle underlying the Corporation because I believe that government risk-taking organisations could play a larger role in our total economy than they do. The Corporation is a purely business operation. No subsidy is involved in this operation. There is a sensible economic evaluation of risk, and the Corporation has the resources to cover those risks. In many other areas of our economic activity Australia is confronted with the same risk problem - either the risk is too great for private enterprise to take or it involves capital larger than any organisation in Australia could muster.

A government risk-taking organisation which followed the principles of the Corporation could, I believe, be developed to insulate primary producers from movements in prices on world markets and could be used also to develop a drought relief organisation. The principle of basing risk taking on proper economic considerations, I believe, deserves a great deal of consideration to insulate these other areas of our economy, some of which have caused great difficulty over the years. I commend the Government for supporting this particular activity, which is indeed properly based and does not demand from the Government any particular subsidy to insulate our exporters from risks. Without the organisation there can be no doubt that our export trade would not have grown as securely as it has since 1967.

I would like to take, too, the basis on which our export market is developing. We have heard from the Opposition that the Government's action in regard to the appreciation of the dollar and its subsequent failure to follow the Amerian dollar down have placed the manufacturing industries of Australia and exporters in general on a very poor basis. Of course, this is true in relation to our conventional outlets. It is true in relation to America and appears to be true now in relation to Britain, although the future may hold a different answer there. It is not true in relation to Japan or now, since this morning, in relation to Germany. The fact is that the whole monetary situation of the world is in the melting pot. One of the major facts which has emerged from recent considerations and could have been anticipated from at least 1971 when the Americans devalued their dollar for the first time is that the American dollar is now not the powerful influence in world business that it has been in the past. The hard reality of this position is that American influence is not as dominant as it was in the past, and we would be very unwise indeed to remain completely chained to the American situation because we could, for example, have found ourselves now in a situation where we would have to follow the European Common Market countries into a float, and then we would know whether or not the present government action had been correct. I sincerely hope that the solidity of our currency can be maintained, and I believe it will be because of government action, and it will not be necessary to float our currency. If it is, the world will pass its judgment. In economic terms the world has already passed its judgment.

This country was forced to take the action that it took on 23rd December in which we appreciated the dollar. It was forced to take this action in pure economic terms, as any economist could read from the level of our overseas reserves. More importantly, I believe, we were forced to take this because of American pressure. I find it very difficult to accept the contradiction inherent in the Opposition's argument. On the one hand this Government is being condemned because of its refusal, the Opposition says, to go along with American directions in foreign affairs, and on the other hand this Government is being condemned by the Opposition for taking the very action that the Americans would wish us to take in regard to our currency. If any honourable members have any doubt about this we only have to examine statements that have been recently made by Secretary Sholtz, of the United States Treasury in which he has announced that the Administration would soon have to introduce a comprehensive

Trade Bill that would renew the President's authority to raise or lower tariffs in relation to trade concessions. This Bill of course has been supported by the President. The Americans have also threatened to use retaliation against countries such as ours with high overseas reserves, and these retaliations would involve capital controls, trade restrictions such as quotas, and tariffs.

There can be no doubt that unless the Australian Government had taken the sort of action that it has taken we would have found that our export outlets in the American market would have been restricted by the use of these controls. More importantly, the Americans are now contemplating relaxing the ban on the flow of overseas currency. They presently have a tax of 11.25 per cent on United States purchases of foreign securities. It is intended to eliminate that tax. They presently have restrictions on United States bank loans to foreigners and it is intended to relax that restriction. There are limits on the amount of American money that firms can send out to build factories overseas. They intend to relax those limits. In other words, unless Australia held a very strong position in terms of its currency in relation to America's we would have found various controls which have insulated us in the past from selling out to this country being relaxed and it becoming extremely difficult, apart from the introduction of very stringent controls in this country, for us to have maintained any sort of jurisdiction over our own currency.

So I believe that the export climate is very favourable in the medium to long term for our Australian industries. In the field of primary produce the market prices tell their own story. Insofar as the export of manufactured commodities is concerned, it would seem to me that it is necessary for Australian manufacturers to look for the markets where we have the strongest competitive advantage. This is a world of change, and one of the areas in which change is becoming very, very frequent and very strong is the area in which we sell our produce and products. Clearly at the moment one would look very carefully, as manufacturers are doing, toward Japan. We must take a second look now at the European Common Market and also, of course, we must look very carefully at China and Russia. These are the changes that the currency movements at the moment are indicating as the future for Australia. It is in such a changing situation, full as it is of risk, that the Export Payments Insurance Corporation plays such a dominant and useful role for our exporters. I commend this Bill to the House and hope that the same principle will be considered for other areas of risk in this business community of ours.

Suggest corrections