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Thursday, 5 December 1974
Page: 4651

Mr O'KEEFE (Paterson) -I support the Bill for an Act to authorise the giving of guarantees on behalf of Australia in respect of loans made for the purposes of structural adjustment in industry. At the outset, I should say that this Bill has been made necessary by the maladministration of the economy by the present Government. There would be no need whatsoever for Bills of this nature to be presented to this House if the Government had acted wisely and had managed the economy efficiently. There was no need to make a 25 per cent tariff cut right across the board which has created such chaos in the manufacturing industries of this country. It is interesting to read the comments of the Minister for Manufacturing Industry (Mr Enderby) in his second reading speech. He said that the Bill is:

To help progress towards the community's social and economic goals, the Government sees it as desirable in appropriate cases to promote and make easier the process of structural change in industry.

For the reasons that I have mentioned, this structural change in industry should not be necessary. When we look at the reasons for the problem being created, we find that there has been a very sharp increase in imports into this country. They are increasing all the time. Profits are being squeezed by rising wages and costs and, of course, by the activities of the Prices Justification Tribunal. Interest rates are another problem which are causing industry great concern. There is no doubt that in the near future interest rates will certainly increase and finance will become very hard to obtain. Domestic and export demand have been slackening right across the country. This Government has made no real attack on inflation which is eating out the heart of our economy. Those are the reasons which have brought about the necessity for legislation of this kind.

There has been a fall in profitability with a consequent fall in capacity to invest and capacity to employ people. There is to be a reduction in the rate of company tax. But a great deal more must be done if the manufacturing sector of industry in this country is to get back on its feet.

All companies in all sectors have been told that they need to comply with the requirement that they pay their tax in quarterly instalments. This requirement is putting a very severe liquidity problem on many companies. The suggestion that deferment of quarterly tax payments is not now necessary because of the assistance to business liquidity from the proposed Vh per cent tax cut is totally wrong. It will not rescue companies on the brink of closure or assist others to maintain present production and employment. The urgent need of a great many companies is to have money in the bank right now so that wages and salaries and supplier accounts can be paid.

The dramatic increase in working capital is now necessary in order for companies to do the same amount of business, because the rapid escalation of wages, salaries and other costs, the steady lengthening of debtor payments and the erosion of profits have left many companies in a situation in which it is a struggle simply to achieve a cash flow which will meet their liabilities. This will be intensified in the next 2 months when holiday pay and loadings are due. The problem is one of time and the time to help is right now. Many companies right across the land will find it extremely difficult to meet their wage commitments at this Christmas time. The money now going on quarterly tax payments for many was the main hope of remaining solvent. For many, it would have enabled them to maintain present production and employment levels which otherwise would have to be cut back. The proposed 2!£ per cent company tax reduction, while greatly welcomed, will do little or nothing towards overcoming the immediate liquidity problems. The official stance that deferment of quarterly tax payments can be applied for if a company has not the money likewise does nothing to assist the company which has the money but which needs that money to keep business going.

In order to assist companies to maintain their operations and to curb the employment rundown the Australian Industries Development Corporation has recommended to the Government a return to the previous annual tax payments at least until the present crisis is over. This organisation urges strongly that an immediate announcement be made so that companies will know their position. Of course, the Government must do something about the damage being done to industry, as I mentioned earlier, because of its 25 per cent tariff cut across the board. That tariff cut has certainly failed to do what it was supposed to do. It was supposed to keep down prices. This has not happened. Prices are just as high as ever they were. All it has done has been to damage Australian industry and put many thousands of good Australians out of work. There must be more encouragement for export. There must be more encouragement for investment in industry and industry must be able to get finance on just terms. The Bill we are debating tonight is designed to assist industries by way of adjustment loan guarantees by the Government. As I have said earlier in this speech, there would have been no need for such legislation to be brought forward had sensible action been taken in the first place and not the irresponsible 25 per cent tariff cut which has thrown so many Australians out of work.

The tragedy is that whatever the Government does there is really no sign that it intends to do anything more than the meagre amount which it has done already. The outlook for the immediate future is by no means encouraging. It is estimated by economic experts that in the first quarter of next year inflation will be running as high as 25 per cent in this country. There is no sign at the moment of increasing domestic demand. World demand will remain slack. Liquidity will remain a problem and interest rates are unlikely to fall. As a matter of fact, interest rates in the business sector could increase considerably in the future. The picture is a depressing one.

I have tried to draw attention to these things to indicate that had our economy been properly managed in the first instance, assistance by the Government in the manufacturing field would not have been necessary. The Government now has to knuckle down to the job of trying to patch up as best it can the mess that it has created and carry manufacturing industry through the coming tough times with the least amount of economic and social fallout. Industry in this country is at the cross roads. A combination of circumstances has brought manufacturing industry virtually to the cross roads. The way straight ahead towards continuing growth of a viable manufacturing sector cannot at this point of time be said to be open. If present policies continue many sectors of industry will turn back or withdraw from domestic activity. There is already a strong turn to importing and to off-shore manufacturing. This means that many of our manufacturers, particularly those established close to the area that I represent, have closed down their industries. They have gone over to Asian countries to have their goods manufactured and have brought them back to Australia for sale here with the tragic loss of the employment in those areas. Companies taking these roads do so with the greatest reluctance. But they must take them for survival. In fact, most of such companies will be more profitable and the loss will accrue to the Australian people through growing unemployment and the closing of avenues for the application of higher skills.

Owing to the Government 's policy in regard to tariffs, in my electorate- in the city of Maitlandthe great mills of Bradmill Industries Ltd at present are employing just over 600 people whereas 12 months ago they employed 1,300 people. As I say, this action has been brought about by the tariff reduction. Clothing factories in my electorate are on the verge of closing down for the same reason. We have clothing manufacturers in the nearby city of Newcastle having to do the same thing. Policy need is urgent. This situation makes the establishment of comprehensive positive central policies for manufacturing industries a matter of the greatest urgency. If the Australian economy were much larger, the economic climate-setting approach previously referred to could well be the appropriate policy for the Government. It could perhaps be left to market forces to determine whether an industry should survive or not, but the facts of life are that the greater part of Australian manufacturing industry needs protection against imports or some other form of assistance if it is to survive and have some assurance of continuity, just as is done in the most highly developed countries. Highly developed countries overseas that many of us have had the privilege of visiting have high protection for their manufacturing industries. This being so, there is a need for some process of selection so that the industry structure built up largely under protection will be the most worthwhile from the national point of view. The way to do this is to establish the facts and, applying them to some frame of reference, identify the industries that are most worth while. The way not to do it is to destroy industries, hoping but not knowing that something better will take thenplace.

It can be said that the tariff policy adopted by the Tariff Board, now the Industries Assistance Commission, is an attempt to establish a basis for selectivity, but it is not acceptable because it is based on guesswork and it applies the second approach mentioned. It destroys the approach of hoping for the best. It now appears to have been adopted by the Government and, with the proposed addition of a structural adjustments board and a training scheme, both to operate in its wake, this has been referred to by the Government as its industry restructuring policy. Australia at present has no positive central government policies for manufacturing development. These assistances are all very right, but the Government has no across the board policies for manufacturing industries in this country. The need for them is urgent, and it is gratifying that at last a move towards establishing such policies has been taken by the creation of the committee within the LAC. It is imperative in the national interest that it completes its work with the utmost despatch. Mr Deputy Speaker, this legislation will no doubt be of assistance to industry, but it would not have been necessary if the economy of this country had been properly managed in the first instance.

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