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Thursday, 7 June 1984
Page: 2785

Senator BUTTON (Minister for Industry and Commerce)(5.43) —by leave-The Government commends to the Parliament the very significant report of the review of the Industries Assistance Commission conducted by Mr John Uhrig. The review has been widely and justly recognised as having considerable merit. With the Government's acceptance of the great majority of its findings, the review will play a major role in revitalising the industry advisor process.

The principal reason for the Government requiring a comprehensive review of the IAC lay in a concern to ensure that the IAC will be able to maximise its effectiveness as a provider of practical advice to Government on questions of industry assistance. Over recent years, there has been increasing criticism of the contribution of the IAC to industry policy. Some of this criticism has been justified. But, while some of the blame can be directed to the Commission, a significant part of the problem lies in the legislative charter for the Commission and the nature of government references.

In the past the Commission's approach has focused on tariff and other forms of protection. This has often resulted in a stereotyped approach by the IAC towards its recommendations, with lower levels of protection frequently being the sole solution proposed to an industry problem.

In the Government's view the focus on protection has been excessive; the Government is of the view that it is essential that a wider range of more positive forms of assistance should be developed. Such positive measures are of particular relevance to the Government in its efforts to restructure and modernise Australia's industrial base.

The Government, in agreeing with the thrust of the Uhrig report agrees also that it is time to make changes so that the IAC is able to contribute effectively to the formulation of the Government's industry policy. In this respect there is no wish to disturb the IAC's independence.

The IAC has performed an invaluable role over the years, particularly by drawing the attention of the community to the cost of protection. Australia's public inquiry and public report system knows no parallel overseas. It is a system which, supported by the highly professional individuals who have constituted the Commission, has brought great benefits to Australia. Implementation of the review's recommendations will, however, require changes to the IAC's approach to the inquiry process and to the nature of its advice. In his report, Mr Uhrig said:

There is no doubt that the standing of the Commission in influencing government policy has declined. If this process is allowed to continue there is a danger that more influential advice on industry policy will be progressively transferred to the less public domain of various State and Commonwealth departments. Independent advice on assistance based on the maximum public exposure is crucial to informed and equitable decision making. This requires an advisory process which has the respect of all participants and which can express the disparate views in an impartial way.

He went on to say:

The major conclusion of this review is that the Commission should be a more effective advisory body than it is at present. It should be more responsive to the information needs of government in implementing its industry policy objectives. The Government too should play its part by specifying more clearly the information required.

Mr Uhrig recognised that changes in legislation will not, on their own, ensure that more effective advice is forthcoming. He pointed out that much depends on the IAC being more responsive to the information needs of government in implementing its industry policy objectives. Similarly, it was recognised that the Government must ensure requests are framed to permit effective use of the Commission. The Government agrees with these sentiments.

The report calls for a reorientation towards industry-wide references which specify the issues on which advice is sought and the information needs of the Government in greater detail. The Government intends to follow this path and will shortly be sending an industry-wide reference on the chemicals industry to the IAC. A reference on the textile, clothing and footwear industries will also be sent in due course. There will, however, inevitably be a transition period during which narrower references will still be necessary. However, the Government intends that the industry-wide approach recommended by Mr Uhrig will be adopted whenever possible in future references. A related recommendation in the report was that references should normally require that options be provided, including the Commission's recommended option.

The Government accepts this recommendation, and the report's proposal that the Commission's advice should extend beyond its current rather narrow focus on barrier protection to cover other forms of assistance. Both changes should encourage the Commission to provide government with considered advice on the range of available means by which to pursue its policies of facilitating structural change and developing industry. In line with this, the Government accepts the recommendation that the Commission's policy guidelines should be simplified and reformulated to reflect widely supported industry policy objectives. The new guidelines will be:

To encourage the development and growth of efficient Australian industries which are internationally competitive, export oriented and capable of operating over the long term with minimum levels of government support;

to facilitate adjustment of industries to structural change and persons affected by those changes having regard to the need to minimise any social and economic hardships that may be involved; and

to have regard to the interests of other industries and consumers likely to be affected by assistance measures.

The IAC, with its skilled staff and extensive industry data base, can play a significant role in advising the Government on broader issues of industry policy . It is, for example, the Government's intention that references in the areas of industry restructuring and structural adjustment assistance will be sent as appropriate.

The Government has also accepted the recommendation that the Commission's power to initiate inquiries should be revoked. The Government believes that such decisions are policy matters which should be decided by the Government itself. The power to initiate inquiries has not in fact been used in the past. Rather, the Commission has been able to suggest an inquiry to the Government where it considers this is in fact warranted. This course of action will remain open to the Commission under the new arrangement.

A major recommendation in the report was that the Temporary Assistance Authority be abolished and that the IAC be responsible for advising on all temporary and short term assistance matters. The Government has agreed to this and to the related recommendation that a separate set of guidelines be developed to apply to all temporary assistance matters. These guidelines will be based upon those proposed by Mr Uhrig. They will ensure that the Government can make temporary assistance available in cases where serious injury is occurring or threatened to an industry from circumstances largely outside its control, and where that injury is peculiar to the industry or impacting with particular severity on the industry. Where temporary assistance is recommended, it should be in a form that will not seriously disadvantage other Australian industries and be limited to a maximum of twelve months.

The Government has also accepted the report's recommendation that specific reference to tertiary or service industries be included in the IAC Act. This decision reflects both the importance of the tertiary sector to the Australian economy and the Government's intention to have greater recourse to the IAC in future examinations of issues facing this sector.

In an effort to improve the efficiency of the Commission's operations and reduce the cost burden on interested parties, first round public hearings are to be eliminated in the great majority of cases, and draft reports will be based on written submissions and informal investigatory work. However, the responsible Minister will retain the power to authorise first round public hearings, either on his own initiative or at the suggestion of the IAC Chairman, should the circumstances of a particular inquiry warrant such hearings. Public hearings following the issue and examination of draft reports will, of course, remain. This should encourage increased participation in the inquiry process and is consistent with the Government's objective of increased consultation with parties affected by possible change. We intend to complement this action by, on most occasions, publishing final reports prior to a government decision being taken except in cases where it is evident that significant commercial gain could ensue or where this may jeopardise international negotiation positions.

The Government has also accepted the recommendation that no formal links be established between the IAC and the industry councils. The report considered the respective roles of the IAC and the councils to be different and it would be inappropriate to formalise their relationship. The report, however, stated that there was some scope for increased use of the Commission by industry councils and the Government agrees with this suggestion. The councils could draw on the Commission's industry data base and non-confidential information collected by the Commission in the course of its inquiries. Councils could also request the Commission through the Minister to undertake research tasks where such requests complement the Commission's own work schedule or draw upon some of the special skills of the Commission's staff.

The Government has rejected two of the report's recommendations. The first was the recommendation that the responsible Minister's power to give directions to the Commission as to priorities to be observed be revoked. The Government believes that as a matter of principle it should determine priorities to be observed with respect to policy guidelines rather than delegating such responsibilities. The second is the recommendation that a position of Deputy Chairman be established. After consulting with the Chairman of the Commission, the Government has decided that there is no need for this at present.

In accepting the vast majority of the report's recommendations, the Government considered that the changes to the IAC's guidelines, references and procedures should result in an industry assistance advisory process which is more effective in meeting the Government's industry policy objectives and needs. Amendments to the legislation have been set in train and the Government expects passage to take place during this year's Budget session. However, the changes proposed go beyond the legislative amendments. The IAC must play a major part in the advisory process by which the Government wishes to bring about the restructuring and revitalisation of industry. New guidelines and broader industry-based references will be instrumental in permitting this change in direction. The change in style, with less formality in initial hearings, will also assist in this regard. But the legislative changes will not be the most important aspects of the process which Mr Uhrig's review has set in train.

I expect that the change in approach by the IAC will be an evolving one. That evolution I expect to occur in tandem with other changes occurring in the advisory and consultative process. The new Australian Manufacturing Council and industry councils will also be assisting the Government in the formulation of industry policy. These changes represent a major redirection of policy-making towards one based on co-operation, consultation and consensus. I seek leave to move that the Senate take note of the statement.

Leave granted.

Senator BUTTON —I move:

That the Senate take note of the statement.