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Thursday, 26 June 2014
Page: 3987

Senator KIM CARR (Victoria) (10:10): This is a private senators' bill which deals with questions of symbolism. I suppose in some senses the Australian flag is one of those great icons that are used to highlight a much broader symbol about the whole question of buying Australian. I would not want necessarily to suggest that in itself the Australian flag should not be subject to questions of debate as to what it should look like in the future, and that has been a substantial question in this country. But I think the issue is that the Australian flag itself as it stands represents a very important symbol for this country. The fact is that the flag flying over this building is currently an Australian made flag and I am firmly of the view that it should be an Australian made flag, and that is a decision that is made by government through public servants. The joint committee has made that decision at some point and that is why we have an Australian made flag flying over this building, and that is exactly as it should be.

The issue of symbols is quite important in politics. We can say without doubt that this is a government that does enjoy, as my colleague Senator Cameron has pointed out, wrapping itself in the flag but does not seem to care whether or not that flag is made in China. It strikes me that it goes to a much broader issue about whether or not we should pursue the question of made in Australia. I have long been a strong advocate for buying Australian. I have long worn the Buy Australian badge and participated in the campaign for Buy Australian. I have done so out of conviction that that is a very important issue for the future of this country. When I go into a store to buy a product, I ask where the Australian product is, and I have urged other Australians to do the same, because part of this question is about people demanding Australian made. It is all too easy for people to say, 'Look, it is cheaper to buy something from overseas,' rather than think through the implications of not buying Australian. When it comes to government, it seems to me that this is a basic issue.

Senator Xenophon has done me the credit of acknowledging my commitment to this issue and I appreciate his remarks. However, I would disagree with him when he goes to the point that the previous Labor government was tardy in this regard. I will defend strenuously the Labor government's record on pursuing the issues of buying Australian and particularly around the issue of procurement. Procurement is not something that only governments do, and so when we discuss the issue of procurement we also have to discuss how the private sector operates and understand the intrinsic links between procurement policy and industry policy. I put it in a more nuanced way and say that innovation is industry policy in the 21st century, so innovation policy and industry policies are very closely linked. That is all about building capabilities in this country. The whole point of industry policy is to ensure that we are able to develop those capabilities in this country so as to secure the high-wage, high-skilled jobs for Australians in this country. It is about intelligent purchasing policies that stimulate investment, that sustain industries and that actually nurture innovative small- and medium-sized enterprises in particular and also foster a competitive economy. These are not incompatible objectives.

Government procurement has a critical role to play in advancing Australian industry. If we take, for instance, the figures that I have here from 2012, the government was spending over $40 billion in acquiring goods and services through various tendering processes, and $18.6 billion of that was for non-defence arrangements. It highlights just how significant government purchases are in the market for goods and services in this country. I take the view that policy has to be directed at the issue of how procurement is undertaken, not just in the government but also in the private sector.

Senator Xenophon made the point that the Thai free trade agreement had been a disaster. I hope I have not misrepresented him. In terms of the automotive industry, he is absolutely right. Labor opposed that agreement. When I was in office I asked the department to tell me exactly what had been the trade implications of that free trade agreement. I was advised, in 2010 when I asked them to do the figures, that there had in fact been a growth in the value of exports from Thailand to Australia of a 287 per cent increase. It had started at virtually nothing. In regard to exports from Australia to Thailand, they fell by 25 per cent. We had a situation where the Thai free trade agreement had a profound significance on the Australian automotive industry insofar as it did not deal with the issues of non-tariff barriers and allowed discriminatory policies to be pursued which had devastating consequences for Australian workers in this country.

Free trade theorists will tell us that Aussie firms have to compete in a open market and, of course, that is true. But it is also true that the government purchasing and using its powers has a leading role to play in the development of capabilities. This is not inconsistent with trade agreements. The free trade zealots, often populating the other side of the chamber, will suggest, as we have just heard from Senator Back, that there will somehow be retaliation if we actually pursue a Buy Australian policy. They misunderstand the fundamental principles of the provisions of the Australian procurement guidelines and our commitments under free trade agreements.

Free trade agreements which we are currently entered into do not prescribe assistance to small- and medium-sized enterprises. Free trade agreements which Australia is a party to also allow for principles to be undertaken to actually assist with particular interest in Australia—for instance, the purchase of motor vehicles. We all buy Australian-made motor cars, as members of this parliament, through our procurement principles. We also have opportunities to acknowledge that, when you enter into these agreements, the international trading environment is not performed on a level playing field. It is a fundamental principle that you have to appreciate. Of course, quite contrary to what the theorists would have us believe, you have to acknowledge that governments around the world pursue a different approach to these agreements than what is pursued in Australia. I say that the international procurement policies, for instance in the United States, cannot be overlooked when it comes to the question of procurement policy in our country.

Senator Xenophon, let me remind you that in terms of Labor's record we understood and appreciated, because it was not a level playing field, that we had to introduce—and we mandated this—Australian Industry Participation Plans for the private sector for projects over $500 million. We undertook to ensure that domestic projects worth $500 million or more had to demonstrate what commitments were being made to the Australian supply chains. If they did not, they were not able to get access to tariff concessions that were in operation. Large projects worth $2 million also had this provision applied with the Enhanced Project By-law Scheme to ensure that the global supply chains were also recognised. We implemented mandatory Australian Industry Participation Plans, not just for the private sector, but also for the government sector for purchases in excess of $20 million. We introduced projects which led to the additional investment, in terms of economic activity, of somewhere between $1.6 billion and $6.4 billion worth of additional work for Australian firms. Labor also ensured that the Australian Industry Participation Authority oversaw these changes, raised the profile of these activities and coordinated opportunities, on top of what we did for the ICN, to ensure that people were aware of the industrial capabilities that were available. We established the Buy Australian at Home and Abroad program within the Department of Industry.

We established suppliers advocates within the Department of Industry. We ensured that advocates in the steel industry, in rail, in water, in clean technology, in resources, in ITT and in the TCF sectors were appointed to actually promote Australian industry capabilities and to provide that liaison between Australian firms and the procurement officers within major projects. The steel industry was one where there was substantial work undertaken. Of course, we had to ensure that the procurement principles for our resources projects were able to be pursued. I acknowledge that this was a substantial area of market failure, and that is why governments have to intervene. You have to acknowledge that the market has to be there to serve people—and not people there to serve the market. This was a classic case of market failure but we did so on the basis of making economic sense and applying principles so that supply chains could ensure that there was value for money while developing capabilities.

The truth of the matter is that none of these schemes are perfect. None were without criticism and none could not have been improved further. But it is unfair and wrong to say that nothing was done about these matters to deal with international trading pressures in terms of advanced industrial countries such as ours and the pressures that are being placed on our manufacturing sector. It would be helpful, I would have thought, for those in this parliament to actually acknowledge that other countries, like the United States, have a very different attitude to these procurement questions from what has been experienced amongst the financial press in this country and from the Liberal Party itself.

When we talked about the steel industry I at no point supported the issues of mandating of pricing or mandating of particular firms that had to be used, because we had to ensure that the supply chain development was not based on the principle that we could allow for price gouging or featherbedding of the industry itself. That is why the $300 million Steel Transformation Plan introduced measures to encourage investment and to help the industry transform so that it could compete more effectively and deal with the in-built biases against Australian firms.

When it comes to industry and procurement policy, we have to ensure that we do strike that balance. We have to ensure that the balance that allows Australian firms to be able to compete, to be given the opportunity to compete, is protected. I make the assumption that this is based on a fundamental principle about what sort of society we want to be. What sort of country are we seeking to achieve? If you think this is going to be a country of cappuccino makers and burger flippers, or that we live a life on the beach or in a quarry, then you are making a fundamental mistake about what this country is capable of and a fundamental mistake about the economic opportunities that you are opening up for this country—or, more importantly, closing off. That is the issue that strikes me as so important when it comes to the question of industry policy and innovation policy.

I am particularly concerned to ensure that we are able to secure programs which, I might add, the current government is in the process of systematically destroying. The Abbott government has ripped $82 million out of the Australian industry participation measures. This is a government that is systematically destroying the Buy Australian at Home and Abroad campaign. This is a government that is walking away from tens of thousands of jobs in the automotive industry, the textile industry and the steel industry. This is a government that is doing all it can to gut the programs through the industry department. For instance, we have seen: the destruction of ARENA; the dismantling of Commercialisation Australia; the destruction of the commercialisation committee, the innovation precincts, the venture capital programs and the TCF programs; and $620 million cuts to the R&D program. These are all measures that build capability and allow Australian firms the opportunity to compete, to attract new investment and to attract the high-skill, high-wage jobs. In the vocational sector we have seen the same pattern of mindless destruction being pursued by this government to destroy people's capacity to be skilled up to compete in a 21st century world.

It strikes me as pretty clear that, when it comes to industry policy, supporting Australian jobs and backing Australian firms, this government is incredibly short-sighted. It is driven by an ideological obsession because of its domination by North Shore Sydney and the merchant bankers' view that this is a country that should allow our manufacturing industry to be someone else's problem—because it is really in the business of exporting jobs. That is what we are really good at under this government: exporting jobs.

This bill is an opportunity for us to pursue this question. I have long worn the 'Australian made' badge with pride. I firmly believe that Australian purchasing policy has to be about making sure that we develop products, develop Australian capabilities, encourage Australian investment and secure high-wage, high-skill jobs for this country. The government must not be interested in just a narrow view of what these principles mean. I am firmly of the view that we must be interested in price. We must be interested in the question of value for money. We cannot dismiss these principles. They are fundamental to procurement policies. But the question of price goes much, much beyond just the value-for-money argument as it is narrowly seen. It is about: encouraging competitiveness; encouraging non-discriminatory processes against Australian firms; using Australian Commonwealth resources in an efficient, effective, economical and ethical manner; transparency and accountability; and building the Australian economy. In short, value for money goes much further than just the lowest price. It goes to the fundamental long-term price of a product, the replacement value.

The case of the slouch hat is an example that I want to draw to the attention of the Senate. Under the Commonwealth procurement guidelines—I am very proud to be able to say this—I was able to work with Jason Clare back in 2012, the then Minister for Defence Materiel, and to announce that Akubra hats and Mountcastle had been selected to supply hats to the Australian Army and the Australian Air Force for the next five years under an offer of a $2 million contract. There are provisions within the existing guidelines to secure the production of iconic items such as the slouch hat. We have the capacity to do these things within the existing guidelines if we have the political will to ensure that we actually move to defend Australian jobs and defend industrial capabilities in this country to allow us to effectively compete in the international market.

The question of procurement within free trade agreements has to be faced up to squarely. It has to be looked at in the same way as the Americans understand it—we have to be able to find a way to ensure that procurement policy serves the interests of Australia and serves the interests of both the public and private sectors by securing industrial capabilities in this country. Labor are very much in the business of fighting for Australian jobs, and we have a very strong preference for backing Australian firms. Our record is crystal clear. For these reasons we think we have the capacity to secure the future of manufacturing, despite the international pressures and despite the enormous difficulties we face, if the government is committed to work in partnership with Australian industry to secure the future of jobs in this country.