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Wednesday, 13 May 1987
Page: 3148

(Question No. 5142)

Mr Wright asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 25 February 1987:

(1) Has the Minister's attention been drawn to a report published by the Metal Trades Industry Association in August 1986, in which it is claimed that the reason for Australia's economic problems today can be related to the Fraser Government when the country's manufacturing base was destroyed.

(2) Is the Minister able to say why Australian business went offshore or desisted in manufacturing pursuits during that period.

(3) What initiatives have been taken by the Government to assist manufacturers to establish and expand businesses since 1983.

Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question:

(1) Yes.

(2) A number of factors contributed to the adverse performance of Australia's manufacturing sector in the period.

In particular the sharp downturn in 1981/82, associated with the second world oil shock, saw a decline in the performance of manufacturing in most western developed economies. At the same time, in Australia, wage settlements were increasing sharply which also contributed to the very substantial reduction in the international competitiveness of our manufacturing from late 1981.

Partly reflecting this loss of competitiveness and downturn in demand, manufacturing employment fell from 1.24m in 1981 to 1.11m in 1984, a loss of more than 130,000 jobs. Real manufacturing gross domestic product fell by over $600m over the same period.

The economic opportunities of the so-called resources boom were unduly emphasised by the then Government. Restrictive monetary policy and the Government's policy of maintaining an artificially high exchange rate as a crude anti-inflation measure added to the loss of Australian competitiveness, jobs and business opportunities throughout the period.

Overall, the environment for industry during the Fraser years was not supportive of new investment. Industrial relations were at a low ebb. Commonwealth and State Government policies for industry were unco-ordinated. Industry and technology policies had not been brought together. Trade and industry policies were often pursuing contradictory objectives. Regulation of industry was steadily increasing. These and many other disincentives to invest have since been addressed by the present Government.

(3) The Government has put macroeconomic policy onto a growth path. It has floated the Australian dollar and provided Australian firms in the manufacturing and traded services sectors with a substantial boost to their international competitiveness. Through its unique accord with the trade unions, this Government has been able to accommodate strong economic growth without a wage explosion.

The Government has developed a comprehensive set of positive and generally available measures to assist Australian industry to upgrade its performance. In this area the Government has given special attention to encouraging innovation and new industries.

Already manufacturing research and development, as a proportion of GDP, has risen from 0.25% in 1981/82 to 9.45% in 1985/86. Projections suggest it may reach 0.52% in 1986/87.

Positive measures have been designed to provide support for each link in the chain of innovation. Incentives for R & D activity, such as the 150% taxation concession for R&D expenditure and the Grants for Industry Research and Development Scheme, are complemented by programs to assist diffusion of new technology. Commercialisation of the results of R&D can be assisted by the Management and Investment Companies Scheme and the Australian Industry Development Corporation. Comprehensive assistance is available through the National Industry Extension Service to encourage improved production techniques and modern business practices. The Government also has programs to assist in marketing, particularly export marketing. Examples are the revised Offsets Program, Government purchasing policies, the Buy Australian Campaign and the Export Market Development Grants Scheme.

Where such generally-available positive measures could not adequately address the need for adaptation by specific industry sectors, more specific sectoral policies have been put in place. Examples include the Steel Plan, Passenger Motor Vehicle Plan, the Textile Clothing and Footwear Plan and the Heavy Engineering Package.

For industries with special growth prospects, other sectoral arrangements have been made, e.g. the Industry Development Strategy for the Communications Equipment Industry.

The Government has been working to eliminate, wherever possible, obstacles to international competitiveness and barriers to change. Key achievements include the abolition of State Purchasing Preferences; the review of standards, accreditation and quality control; the special conference of restrictive work practices; and the establishment of the Business Regulation Review Unit.

Similarly, it has been aiming to achieve coherence in the range of wider Government policies which impact on industry. Major initiatives have been taken in the area of taxation reform; financial deregulation; improved linkages between publicly funded research bodies, such as CSIRO, and industry; and the harmonisation of State and Commonwealth policies.

Finally, the Government has been encouraging a sense of common purpose among Australians about future directions for the development of Australian industry. Specific achievements include the establishment by the Government of the Australian Manufacturing Council and industry councils, and the formation of the Commonwealth/State Australian Industry and Technology Council. Each of these bodies has since made major input to the Government's policy approach.