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MTIA representative comments on the effects of the Asian crisis on the manufacturing sector.

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PETER CAVE: One in every three Australian manufacturers is now sacking workers with business conditions in the sector their worst for five years.  The Metal Trades Industry Association says things are about to get worse, and Chief Executive, Bob Herbert, is outlining the findings of the latest survey to his members to our economics correspondent, Peter Martin.


BOB HERBERT: We’ve had companies experiencing orders being cancelled, projects being deferred ….


PETER MARTIN:  This is all because of Asia?


BOB HERBERT: Well, primarily because of Asia.  As well, they’ve had a flow of products coming into Australia from Asia as they’ve attempted to export their way out of difficulties.


PETER MARTIN: So is Asia really the cause of the situation that you’re in now, where you say one in every three manufacturers is sacking workers?


BOB HERBERT: Yes.  It’s taken a little while to kick in, and what we’re now seeing is the consequences of the difficult Asian circumstances.


PETER MARTIN: Are you expecting it to get worse?


BOB HERBERT: The indications from the survey are quite clear, that for the rest of this year there will not be a turnaround.


PETER MARTIN: The Howard government promised in the election campaign to create - a nice round figure it was - 200,000 new jobs by the year 2000 in manufacturing.  Is that looking at all possible?


BOB HERBERT: We see that this year will be a pretty tough year.  I don’t believe, from the survey that we’ve just undertaken, nor do our companies believe, that the employment situation will improve for the balance of this year.  There is some optimism about what might occur in 1999.


PETER MARTIN: Would a GST make any difference?  Is the Government offering anything that can help?


BOB HERBERT: Well, I think that tax reform is a first order issue for the Government.


PETER MARTIN: To create jobs?


BOB HERBERT: The first order issue has to be tax reform because it does penalise ….


PETER MARTIN: The first order issue is tax reform to create jobs in manufacturing?


BOB HERBERT: That’s right, because what happens is that, at the moment, the tax system is penalising manufacturers.  You’ve got to spread the burden across industry, across the ….


PETER MARTIN: And penalise the service industry.


BOB HERBERT: No, not penalise the service industry but have the load that now is borne primarily by manufacturing shared across the community.  You also need to look ahead at what we might do with investment, attracting investment into the country;  look at some of the strategic issues of immigration.  You certainly need to be investing heavily in investment.


PETER MARTIN: We need more immigration, you’re suggesting?


BOB HERBERT: We’re saying that we need to have a strategic view about how we deal with immigration.


PETER MARTIN: You mean we need to look at a strategic view about a program to increase immigration?


BOB HERBERT:  What needs to be done is to look at the business migrant programs which are now being undertaken.  Indeed, the Government is undertaking an examination of those programs to see where we should be strategically placed today and in the 21 st century.  You need to ensure that we’re seen as a very solid base for companies setting up headquarters here, manufacturing operations here, because we have the attributes to do it.


PETER CAVE: MTIA chief executive, Bob Herbert.