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Government risks offence to Japan by favouring Germans

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Ian McLachlan Media R elease Shadow Minister for Industry and Commerce



Future trading relations with Japan were being put at risk by the Government's continuing flirtation with a plan to subsidise the establishment of a German wool processing plant in Australia, the Shadow Minister for Industry and Commerce, Ian McLachlan, said today.

'The Japanese, one of our major customers for wool and a significant processor already established in Australia, are deeply offended by the Government's plan.

'The confirmation by senior Ministers that an application from BWK, the German wool processor, is being still actively considered, puts at risk trading relations worth millions of dollars each year.

'Japanese wool buyers and processors have understandably become increasingly apprehensive at BWK's plan to produce wool tops for the Japanese market from a mill established with a $25 million subsidy from Australian taxpayers.

'They are also concerned because three of Japan's largest wool companies - Nikke, Toyobo and Kanebo - have plants in Australia and a fourth is in the process of establishment.

'Quite properly, none of them have attracted taxpayer subsidies.

'However BWK, one of the world's largest and one of the most competitive processing plants, appears to have been picked as 'the winner' to receive a subsidy which amounts to about $250,000 per job created.

'This totally overlooks the merits of all other wool processors already established in Australia including one with more than a century of commitment to the wool industry.

'Expensive Government schemes such as this, financed by taxpayers to encourage commercial investment in Australia are a shabby means of expanding our industry base,' Mr McLachlan said.

'The Government's decision, expected to be announced shortly, begs a number of important questions:

1. Where is the independent analysis to demonstrate net national benefits arising from the selective use of taxpayers' money to subsidise this particular wool processing plant?

2. What will be the impact on the competitive balance in the marketplace if one or just a few companies are chosen for such massive assistance?



What will happen to other firms who are ineligible for grants because they want to build only scouring plants?

How will woolgrowers benefit and by how much?

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5. Where is the substantial analysis of the competitive bottlenecks' facing the industry which would justify a subsidy of around 30 per cent to make the industry viable?

'It is time for the Government to abandon the artificial schemes designed to curry favour with one company at the expense of another, in one electorate or another, and instead concentrate on the real task of making Australia an attractive place to invest by dealing with the underlying causes and not the symptoms of the current lack of overseas investment,' Mr McLachlan added.

Further information: .

Ian McLachlan Telephone: 08 2377140 10 April 1992