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Victoria: survey indicates that the manufacturing industry is still in recession and that there is a need for a tariff review.

ELLEN FANNING: Well, back home, and it's not just Australia's farmers who want a review of tariff cuts. Manufacturers in Victoria have joined the bandwagon for a slowdown for the push for free trade. The latest quarterly survey of the State's Chamber of Manufacturers shows Victoria industry is still in recession, and there's widespread pessimism about the prospects for the short term. The Chamber says Victorian manufacturing is operating at below 70 per cent of capacity and there's an urgent need for a review of tariff changes. The Chamber's national executive, John Paterson, is speaking with Ali Moore, in Melbourne.

JOHN PATERSON: We don't see very much change occurring in terms of sales and production or profitability in the months ahead and, if anything, the present state of affairs is going to continue on as is, which is rather disappointing.

ALI MOORE: Is the situation worse than forecast?

JOHN PATERSON: No, I don't think it is worse. I think we've had some changes where people, in the past survey, have expected significant growth to occur, and they are changing that to say there's going to be slight growth and, at the same time, those that felt there was going to be a significant contraction in business activity, have now moved away from that, and there's a smaller number saying there's going to be a slight contraction. So that I think from the two extremes they've come in, and the main stream of them tends to believe that the current conditions are going to apply for some time into the future.

ALI MOORE: Why are they still so pessimistic?

JOHN PATERSON: Well, they don't see anything happening, and the previous survey already indicated that as far as the contents of the One Nation statement was concerned, there was insufficient or very little in there that would encourage particularly small business manufacturers, relative to investment and having a better production level and demand level for their products.

ALI MOORE: You've called for a change in the pace of tariff cuts. Why should Victorian manufacturers or Victorian industry be given special treatment?

JOHN PATERSON: Well, we're not asking for special treatment for Victoria, we're saying that this applies to all manufacturing throughout Australia. And I think what we're saying is that the tariff regime that has been in existence for quite a number of years, did result in a number of other things occurring, which have to be addressed. I mean, the tariff level itself is only the consequence of a problem, and all the discussion that is going on at the present time, is more directed to the consequences with what level of tariffs, rather than addressing the problem, and that problem is made up of many things, including sales tax, payroll tax, training levies. All of these things have got to be looked at in terms of our ability to be competitive with overseas manufacturers.

ALI MOORE: So, you're saying the pace of reform in those other areas is not fast enough?

JOHN PATERSON: That's correct. I mean, the areas where we should be at an advantage, in terms of our natural resources, particularly in oil and gas and electricity, we find that we're taxed to world parity, to make us equal to the world rather than give us an opportunity to use these advantages for the betterment of our manufacturing and our society.

ALI MOORE: And that's despite One Nation?

JOHN PATERSON: Yes, it is. I think it's fairly clear that the One Nation statement did provide some opportunities, but it was more directed towards large investments in excess of $50 million It was more isolated than we would have liked it to have been, rather than being a general application to industry at large.

ALI MOORE: Would manufacturers be any better off under a Coalition government?

JOHN PATERSON: Yes, at least they're addressing part of the problem in terms of payroll and sales tax, which is not being handled or tackled in the One Nation statement.

ALI MOORE: That's despite the fact that you'd have no guarantees that those business costs would be reduced quickly enough to make up for the reduction in tariffs?

JOHN PATERSON: Well, you've got to start somewhere. I think none of us would be very sort of keen to use the word 'guarantee' about anything these days, but I think if you do install a policy that's directed towards improving things, then you've got to support it.

ELLEN FANNING: John Paterson from the Victorian Chamber of Manufactures.