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Wednesday, 16 November 1983
Page: 2772

Mr LIONEL BOWEN (Minister for Trade)(12.14) —in reply-I very much appreciate the remarks made by all speakers in support of the Export Finance and Insurance Corporation Amendment Bill. As the last speaker, the honourable member for Paterson (Mr O'Keefe) said, this measure is one way of further boosting trade. He made the quite valid point that we have to be very flexible in trade because conditions certainly change. I think that what has been said here today clearly indicates that it is necessary to be very alert to the need to identify the changes and where they come from. They certainly come in the method of assisting exporters, particularly in financial operations. I pay tribute to the Board of the Export Finance and Insurance Corporation for its excellent work and to its former Chairman, Mr John Clarkson, who is now retired. They have devoted a lot of time and attention to try to identify these areas. I think they all agree with the Government's view that there is a need to update this legislation.

Let me address my mind briefly to a couple of remarks that were made during the debate, firstly by the Leader of the National Party of Australia (Mr Anthony) who led for the Opposition. He departed from the strict measure of the legislation to express fears about what we are anxious to promote as a further boost for exports, namely, an overseas trading corporation facility. A legislative measure to establish such a facility was opposed in the Whitlam era and it never got off the ground. I think it has to be emphasised again that world trade is changing rapidly. Forty per cent takes place on a government-to- government basis. It is important that we have that facility. I note that one of our largest engineering groups, namely Transfield Pty Ltd, when giving evidence to the Senate Committee on Industry and Trade, inquiring into trade with China, expressed the view that there should be some facility which would combine government and private enterprise initiative to co-ordinate all the necessities to handle trade.

I say in answer to the Leader of the National Party that I would like him to look at, for example, what the Canadian trading corporation has done, how it has assisted trade and how it has been able to make a profit-not that that need necessarily be a criterion. The important thing is that it should provide assistance. Similarly the trading corporation in Singapore not only operates in Singapore, but also has equity in 17 subsidiaries and operates offices in Indonesia, Malaysia, Thailand and Hong Kong. These are vital markets. The same facility also exists in India, as it does in Spain. I cannot understand why the view is expressed by Burns Philp and Co. Ltd and others that they can do it best . If the Australian Wheat Board is trying to sell a lot of wheat to an oil producing country and it is suggested that the Wheat Board take oil by way of payment, of course it cannot do so. I do not know why we do not look at being able to assist the private sector by providing the facility to take the goods.

Let me make a point, which is worthy of comment. It was said that EFIC has certainly been able to function and has carried some of the risk. The total liability of EFIC and the Government at the end of June was $2.3 billion. One could say, 'well, that is not all government', and no, it is not. Certainly, at the end of June the national interest cover was a mere $308m. But do honourable members know that since the end of June that figure has increased enormously? It has more than doubled because of sales that had to be made on extended credit with very little deposit. It had to be so because of the world market. I am reminded that whilst the national interest cover was $308m in June, it is now approximately $1058m. Honourable members can see that it would be helpful in a number of areas to have that facility. I would like the Leader of the National Party to understand that problem. Those statistics are right up to date. Traders are rapidly realising that money is not available any more, but goods are. If we are to import those goods, let us look at how to establish the facility to do so and get the private sector involved.

Another matter that has been mentioned, in a particularly thoughtful speech by the honourable member for Bradfield (Mr Connolly)-and I compliment him for the research that he has done on it-is where we are heading in world trade. The answer is that we are heading downwards. We have lost our share of world trade. I am desperately trying to establish in my own Department a better understanding of where there are opportunities, particularly in the manufacturing area. Australia has the best farmers and agricultural producers in the world, but they cannot get into markets which are subsidised against them. Honourable members will see that the slowest growth has been in those areas which the honourable member for Bradfield identified. So, given our population with its talents and its expertise, we also have to look at other areas, such as the manufacturing area.

A survey available from my Department clearly shows that our share of world manufactures has been very small indeed. It is very interesting that of the 1, 741 individual manufacturing groups surveyed, Australia records exports in only 941-about half. There has been a continuous growth in the value of world trade and in the value of Australia's exports. But our share in the manufacturing area has continued to decline. Despite that, we have increased our ability to trade in about 29 products. We have been very competitive. It is worthy of note that many of these products are in the high technology area, namely television and radio transmitters, telecommunications equipment parts, electro-medical equipment and accounting and data processing machines. This information provides us with an idea of what Australians can do if they are given this incentive which the Export Finance and Insurance Corporation and others can give them.

I come back to the question generally as to what has happened. Australia's share of world manufactures is considerably smaller than its share of total exports. Our share has weakened. Our penetration of the world markets in that area is very small indeed. Fifty-three per cent of Australian manufactured exports comprise basic manufactures. This contrasts with the composition of world manufactured exports of which only 25 per cent were basic manufactures. Basic manufactures were the slowest growing component of world manufactures between 1979 and 1981. In general terms, basic manufactures are comprised mainly of transformed manufactures, that is, metals and simple metal manufactures. In other words, we do things at the wrong end of the scale. We really have to improve our competitiveness. To do this we need all the facilities that have been mentioned in this chamber today.

The honourable member for Bradfield hit a very sensitive note in talking about the exchange rate. It is very difficult to manage that rate. At the present time it is causing no end of concern to exporters. One of the problems is that the speculative inflows into our currency cause an escalation in that rate. Without saying too much, as this matter does not fall within my portfolio, I think there has to be a clear understanding of the purpose of money coming into this country . There is nothing wrong with it from the point of view of intelligent foreign investment. But, in terms of foreign investment, we should look at it in respect of the Australian Trade Commissioner Service review that I have tabled. In that report there were references to export franchises which prevented foreign investors in Australia being able to export. I think that matter has to be looked at; it is very important. That review identified about 900 companies subject to export franchises that already operate against us. It is of no value to us to have investment in this country which prevents us from exporting.

Again it is important for us to appreciate that, when we are looking at the problems we are now facing in the coal industry, if investment means just opening up more coal mines, in many cases to sell the coal back to the person who has invested, certainly the price for coal will be drastically reduced. We will have a proliferation of coal mines, a proliferation of coal and no markets for it. There will be enormous problems and contests between Queensland and New South Wales as to which State will get the markets. It is counterproductive and it is not in the national interest for us to be fighting one another for those markets on a State by State basis. These are matters at which the Foreign Investment Review Board ought to have a look as well. I know that it will.

Generally, the problem has been the gap in our trade. The previous current account deficit was $9 billion. It has been forecast as being $6 billion this year. Whilst we have that massive deficit there is always the necessity to cover it by capital inflow. If that capital inflow is of a highly speculative nature, with high interest rates as well, we are heading into all the areas where we will have problems with the exchange rate. These problems have been identified by the honourable member for Bradfield. Those in the private enterprise sector recognised that something has to be done to identify, if the inflow is speculative, whether it should be encouraged or even allowed as it affects the exchange rate. This is causing no end of concern to people who are anxious to increase their exports.

Generally, the matters that have been identified by all speakers are: We need to be more modern in our approach to trade. We need a department that understands the problems. I assure all honourable members that I am very anxious to upgrade what might be called the flexibility of the Department of Trade's capacity. I am very anxious that we establish consultation processes between ourselves and the State governments as that is important. I do not readily approve of having seven trade commissioners, one for us and one for each of the States. I think that is quite stupid. I want to see some co-ordination in that area. A section of my Department must be able to identify and work closely with the States. I think that can happen.

It is important that my Department have an input in the area of industrial relations, wage claims and other matters with the Australian Council of Trade Unions, particularly in the area of industrial relations. I give high praise to Senator Peter Cook who has been able to instigate better industrial mechanisms for the Pilbara area. If we are exporting iron ore we do not want a lot of ships held up because of an industrial dispute, often of a very small nature and often due to a personality clash. A mechanism will be developed which will enable us to have an input into that area. It is important. We are affected dramatically by industrial matters in Australia. They can affect trade. This Government will work closely with the trade union movement, in accordance with the Prices and Incomes Accord, to maintain jobs and people's standard of living. We have to realise that there will be enormous competition from a number of resource commodity areas, particularly from South Africa, the United States of America and Canada. We will also face pretty hectic competition from Brazil in the iron ore area, as has been identified.

All these matters are challenging. I think Australians can well measure up to them. Australians are brilliant when it comes to being able to meet a challenge. Australians must not be so divided and so divisive on matters that perhaps are not as important as we think they are. I thank all honourable members for participating in this debate. I assure honourable members that this will not be the only innovation in a new trading concept.

Question resolved in the affirmative.

Bill read a second time.