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Wednesday, 19 April 1972
Page: 1219

Senator BISHOP (South Australia) - I move:

That the Senate, at its rising, adjourn until tomorrow at 11.5 a.m.

I do so for the purpose of enabling a debate on a matter of urgency, namely:

The failure of the Government to safeguard the future of the Australian aircraft industry.

I think the facts are well known. This is a very serious topic for the employees in the Australian aircraft industry, in government and private factories, most of whom are very highly skilled. It is also one of great concern to government and private manufacturers who, at this time, do not have any long range plans to help the industry whose capability has become well known and has been recognised over the years. While this Government is providing massive finance or is approving huge borrowings for the purpose of importing military and civilian aircraft and their military requirements, much of which could and should be produced in this country, the Australian manufacturing capacity is only partly employed. As a matter of fact there is a complete lack, of support by this Government for the industry. I suggest that over many years this Government has been frequently warned about the urgent need to give the industry a stimulus.

Some piecemeal measures have been arranged between the Government and private manufacturers, including some from overseas. But there has not been the sort of long range plan which should be adopted to keep the industry going. Over the years all the people in the industry have acquired a great deal of skill and our productvity in the industry has become well known. I do not think 1 need to extend the argument because it is well known that we have a very effective capacity.

As everybody knows, what is happening is that retrenchments or fear of retrenchments are still in the air. During the early part of this year another 26 men were dismissed from the Government Aircraft Factories at Avalon. After representations from the Australian Council, of Trade Unions some few men were kept on. But a general uncertainty surrounds the activities of the aircraft industry. This uncertainty should not obtain because, as I have said, its capability is clear to anybody who knows the industry. It must be clear to the Minister for Air (Senator Drake-Brockman), to the Department of Supply, the Department of Defence and their ancillaries that there is a competence in the industry which ought to be used. There should be a plan to keep the industry going at full steam. There is not such a plan. As I have said, this uncertainty and dissatisfaction are felt not only by people who work in the industry but also by manufacturers. This feeling should not be current.

In addition to all this uncertainty there is also concern about a possible merger. Honourable senators will recall that following representations which have been made not only by people outside Parliament but also people inside various Ministers have proposed rationalisation. We do not disagree with rationalisation but the idea grew into the concept that there should be a merger between the Government Aircraft Factories and the private manufacturers. Although such a motion has not been agreed upon by the Government, it should be adopted only as a last resort. A merger was proposed simply to deal with the defects which I have mentioned and which flow from the absence of a positive policy by the Government to use our capacity in a proper way. In using that capacity we would not only ensure that there would be useful production but also that in the proper defence circumstances we would have a continuing capacity; we would not be caught with our pants down if any crisis occurred.

Over the years, more particularly in the last 2 years, there has been an acceptance by the Government of what we and the people in the industry proposed many months ago, that is, that there ought to be a very definite policy of offset orders and coproduction where that is possible. Unfortunately these aims have not been achieved. The result is that the people I have spoken about, the industry leaders, are still in a state of uncertainty. Why do we keep importing these huge bits of machinery, aircraft and everything else without insisting upon a greater share of the work?.

At the present time the share we are getting, after a lot of agitation, does not amount to more than about $7m. Let me refer to the imports of aircraft since the year 1969-70. The research section of the Parliamentary Library provided the figures for me. For aircraft exceeding 5.000 lb weight, in 1969-70, 35 aircraft were imported at a cost of $39,476,000. In 1970-71, 64 aircraft in this category were imported at a cost of $108,460,000. In the 8 months ended February 1972, 24 such aircraft were imported at a cost of $33,512,000. For lighter aircraft, not exceeding 5,000 lb, in 1969-70, 255 were imported at a cost of $8,639,000; in 1 970- 71, 127 were imported at a cost of $6,700,000; and in the 8 months to Febru- ary 1972, 49 were imported at a cost of $1,928,000. For helicopters, in 1969-70, 28 were imported at a cost of $2,478,000; in 1970-71, 38 were imported at a cost of $4,797,000^ and in the 8 months to February 1972, 22 were imported at a cost of $4,769,000. For heavier-than-air craft, non-powered, in 1969-70, 28 were imported at a cost of $100,000; in 1970- 71, 31 were imported at a cost of $116,000; and in the 8 months to February 1972, 18 were imported at a cost of $84,000. For parts for flying machines, in 1969-70, $76,489,000 was spent in 1970- 71, $38,967,000; and in the 8 months to February 1972, $19,904,000.

Those figures show the extent of the massive importations. The Government lacks strong purpose in this matter; it has failed to give the lead to local suppliers. It should insist that our own factories manufacture substantial parts for these aircraft. Over the last 10 years Australian airline operators have imported $540m worth of equipment. Qantas Airways Ltd has imported $365m worth of aircraft, TransAustralia Airlines and Ansett Airlines between them have imported $175m worth of equipment. Recently, approval has been given for the importation of 4 extra aircraft - Boeing 727-200s - by each domestic operator, at a cost of $67m. Over the years substantial sums of money have been spent on smaller aircraft which could be produced in Australia. The amount involved there has been $6m.

Retrenchments have continued. In March this year 26 more skilled workers were retrenched from the Avalon factory, lt might be appropriate to give figures showing the serious decline in employment in the industry. An aircraft manufacturer is not like a motor-car manufacturer. Employees at these plants are highly specialised workers and they ought to bc retained. They are lost to the industry if they have to leave it. Once they lose that employment, these highly skilled and well trained men get work in a more stable industry and tend not to return to the aircraft industry. That is a sensible arrangement for a worker. He will not stop in an industry in which he thinks his future is not secure. He gets no satisfaction from his work in the aircraft industry, when he does not know what the future holds for him.

In June 1965 the Government Aircraft Factories had 2,750 workers, but by June 1968 the number had fallen to 2,300 and by June 1969 to 2,000. Since then there have been smaller numbers of retrenchments. At the Avalon factory, 26 workers were retrenched in March. The Australian Council of Trade Unions, I understand, has obtained other work for them. At 1st February 1966 the factory at Avalon employed 413 persons, but by February 1967 the number had gone down to 402 and by February 1968 to 351. By 1969 the number was reduced to 286, by 1970 to 271, and by 1971 to 267. At the present time the factory has about 250 workers. One of the larger manufacturing enterprises, the Commonwealth Aircraft Corporation, which has a record of competence and is well known in the industry, had 3,747 workers in 1967. By 1968 this number had been reduced to 3,485. by 1969 to 2,909 and by 1970 to 2,670. In 1971 the number was down to 2,047, and this year it is 1,950.

In my own State, as people know, there have been retrenchments in the industry. For example, part of the Department of Supply aircraft establishment in Salisbury was discontinued a couple of years ago. This year one of the Hawker Siddeley subsidiaries in Salisbury, very close to the Weapons Research Establishment, which is a very convenient location for an electronics manufacturer, was discontinued. We took a deputation to the Minister for Supply and we spoke to the manufacturer. We put to the Minister for Supply the proposition that the Department should feed into the subsidiary of Hawker Siddeley some extra work which would keep men in employment in South Australia. Some 200 workers have been given dismissal notices over a period. It would be very good for the State and for the industry if the Government would accede to that proposal. Strangely enough, the Minister for Supply said that nothing could be done. He said that it was not possible to give such work to the enterprise. We cannot understand this. If we have a competence in Australia, it ought to be retained. We are relying on other countries for our aircraft. Nobody can tell me that we cannot produce in our own country bits and pieces for our own aircraft. This would provide work for employees in the aircraft industry in Australia and would keep in this country huge sums of money that are being spent on imports. Enterprises such as Hawker Siddeley and the Commonwealth Aircraft Corporation, and our own people in the Government Aircraft Factories, are enterprising as well as efficient. For example, 2 representatives of the Commonwealth Aircraft Corporation, Sir Frederick Scherger and Mr Abbott, recently went to Indonesia to see to what extent it might be possible to open up markets in that country for Australian aircraft products. They found that our own aircraft, Project N, was then receiving important consideration in Indonesia. In yesterday's 'Financial Review', a statement by Mr Abbott was reported as follows:

The major problem facing general aviation was finance.

Although there was an expanding market for light aircraft - he instanced the Australian Project N concept built by the Government Aircraft Factories in Melbourne - finance and technical backup in the farm of support and manuals were essential in any gales drive.

Banks and finance houses will have to change their ideas about financing if we are to make an impact on this market. 1 refer the Minister to the assistance given by the Japanese Government to the aircraft industry in that country. Not only should the industry be backed by private finance, but it is the responsibility of the government to provide adequate financial arrangements for an industry facing severe competition and in need of assistance. Project N is a very good piece of equipment lo sell. The Government should be the first to ask how it can assist with the project.

I want to deal particularly with the position in relation to the Commonwealth Aircraft Corporation. To me and to those who have inquired, its reports show that there is no dramatic change in the situation in that industry. It is still working in what amounts to a very low key when one considers its work force and its capacity of previous years. The Corporation points out, as do the other manufacturers, that even with projects which have been built up, whether they be small or large, preproduction planning takes as long as 12 months before the manufacturing can get into gear. Obviously what is required is a long term plan to give work to the industry. I am not saying that the Government should give CAC work which is not necessarily useful. I think it is well known without my stating it that the Service departments and the civil airline operators have requirements for units such as Project N. The Government should so organise orders that work is given to the industry. At present it is not.

I refer now to the position in relation to Project N. As honourable senators will remember, Senator Poyser and others on this side of the chamber have consistently asked when the Government intends to buy some of these aircraft. Reports about the aircraft would satisfy any expert. While I do not want to suggest thai wc should not take account of the specialists and specification requirements of the Services, it is evident that it is the type of aircraft which will sell. That has been stated by people who have seen the test flights of Project N. I think the Minister for Air has made favourable observations about it. As we all know, representatives of the French aviation industry have said that they could sell the aircraft in France. Other people who witnessed the first public demonstration in August 1971 have said that the aircraft is more than a match for a counterpart in the STOL aircraft which is currently being produced in another part of the world.

What surprises members on this side of the chamber is the fact that no Government department has yet placed a firm order for Project N. Only recently the Minister stated that the Royal Australian Air Force has not a requirement for the aircraft. He stated that the Minister for Defence (Mr Fairbairn) and the Minister for the Army (Mr Katter) are studying the position and that investigations are being conducted. But the investigations are taking too long. 1 put to the Senate because it has been put previously - it has been put months ago - this question: Why are not our departments which have requirements for light aircraft and which purchase and run aircraft which are necessary for their operations told by the Government to order the Project N aircraft? I know of some 10 or 12 departments which use aircraft. The Government has already spent a bit over $3m on developmental work for the aircraft. It is an exceptionally good aircraft. It would seem to me, on the expert advice of Sir Frederick Scherger and Mr Abbott, that there is a market for it in Indonesia if appropriate financial arrangements can be made. It is evident that it can be placed and used as part of our defence capacity. It is evident that arrangements might be made with France to sell the aircraft to France and that arrangements could be perfected about coproduction in respect of certain requirements. That will get the project going.

I have mentioned the reported merger of the Government Aircraft Factories and the Commonwealth Aircraft Corporation. I know that recently the Minister has said that the merger might not take place. One of the things I want to mention is the concern which has been shown by the staff associations - the workers in the industry - which have made representations to all parties, I believe, and to the Government. It may be useful if I quoted the submissions because the associations make sensible points which should be considered and which supplement the kind of proposition which we are putting. Their comments were prepared by the deputation to members of Parliament on 2nd February. I understand - I may be wrong - that they met all parties. In part the submission states:

3.   The Combined Committee believes that rationalisation should initially be based on a system whereby a common executive is created to:

1.   Develop a common marketing organisation.

2.   Develop a common tendering body.

3.   Arrange for co-ordinated installation of capital equipment.

4.   Phase out the areas of overlap (estimated to be 40 per cent of total).

4.   The GAF and CAC should retain their separate identities and certain areas of competition for the purpose of providing price comparison and competition.

Initially that is where the Opposition stands. We cannot see any reason why an effective Government enterprise whose capacity has been demonstrated amply should be submerged in any way. We believe that the real need in the aircraft industry is to give sufficient work to ensure that in our requirements and in our ordering both the Government section and the private section of the aircraft industry get the share of work which they should get.

It is clear that following debates in the Parliament the Minister for Defence and, I think, other Ministers in this place have said that they believe in a viable industry. We have been rather concerned because we felt that they did not believe in it. The scale of activity has gone down. Recently the Minister for Defence said that a relatively small but viable aircraft industry was essential in Australia and that there were some studies now being made as to the extent to which increased work might be given to the industry. I suggest that the position is getting very serious. Something more than study is necessary. It is urgent that the Government bring to a head its consideration of what aircraft it wants to replace present Service requirements. The Minister for Air is probably in a better position than most to estimate how long it would take, but it would seem that a very good stimulus would be given to the industry if the Government and the Minister in his own right or in his capacity as Minister representing the Minister for Defence could determine quickly some of the outstanding questions which are arising today. We know, as he reported only yesterday, that there are 6 or 8 proposals from overseas firms offering what would be suitable replacements for Australia. Some of the offers involve co-production, which would be a very suitable arrangement for Australia.

The Government has to consider not only the urgent task of giving work to the industry but also the long range requirements which will be necessary for the country. I hope that the Government will consider as urgent what I am talking about. Honourable senators on this side of the chamber are sure that there is not the note of urgency that there should be. For 2 or 3 years we have been talking about the state of the industry and we have got little or no satisfaction. We have got the acceptance of principles. We have got the Minister for Air to say that the Government believes in offset orders and in coproduction where possible. The industry wants some practical support, and it should be possible to plan for that support.

From questions I have asked and from other inquiries I have made I have ascertained that the Government even now is not insisting on co-production or office orders when it purchases aircraft or when it allows Trans-Australia Airlines or Ansett to order aircraft for the domestic industry. The Italian Government insists on that. The Australian Government is not like the Italian Government, which says: 'If you supply the aircraft we want to produce a certain amount of it'. It is only on that basis that the Italian Government takes the aircraft. If the Italian Air Force wants a special type of aircraft produced in Italian factories the Italian Government pays all the costs of development. The situation in Sweden is similar. Recently I had the pleasure of seeing the Saab aircraft factory in Sweden. Sweden must be a perfect example for Australia to follow - a small country competing with the great countries in the production of an effective aircraft at a low cost. In that country, of course, the Government so backs the aircraft industry that the industry can pay for developmental costs.

As 1 mentioned earlier, our offset complements are very small. Little by little, over a period of about 14 months, we have built up a small amount of offset work. The total amount of work in this field is made up of small amounts from $50,000 to $600,000. As I have pointed out. we are importing over a period of 10 years aircraft worth nearly $600m. But all we are getting out of this sort of deal is minor work. Up to now we have never received any substantial aircraft frame work. We were doing some fibreglass work for window frames and so on. Now we are getting some air frame work, but we are not getting enough. I suggest that the Government ought to show clearly a continuing interest in this matter.

Let rae quote some of the things which Ministers belatedly have said. The Minister for Defence (Mr Fairbairn) has repeatedly said that he believes in a viable aircraft industry. However, he has yet to recognise that there is a need to establish an industry of this kind for Australia. The 'Australian Defence Review' which has just been issued states at paragraph 31:

Where the cost makes production in Australia uneconomic, opportunity should be sought for Australian industry to participate in a coproduction or reciprocal purchasing arrangement with the overseas supplier. The extent to which these opportunities are converted to contracts will depend very largely on the enterprise and competitiveness of our industry. The Government has Already negotiated with the United States and, to a lesser extent, the United Kingdom and other large suppliers of defence equipment, such opportunities for Australian industry.

If negotiations have been carried out on that basis what surprises me is why the bill is not larger, and why the Government Aircraft Factories and the other 2 main Australian producers are not getting the volume of work which would satisfy them and keep them going.

I have referred to the example of Italy where the Italian Government and Italian air force have a hard fisted policy which we might well adopt. Also I have referred to Sweden. While it is true that Australian air force specifications have to be met, it seems to me that what the Swedish Government has proposed to Australia might be considered. At least the Minister should be able to tell us why the Swedish aircraft is not going to be accepted or why other types may not be accepted.

Let me come back to the point that was made by Mr Abbott, the Manager of the Commonwealth Aircraft Corporation, about assistance to the industry. This has been mentioned here before, but I mention it again. What the Government ought to bc doing - because certainly a Labor government will do it - is to make sure that financial assistance is provided when we have the ability to produce aircraft of the type required for the market here. The Government should make sure that these aircraft can be properly and easily produced. I refer to something which is perhaps more basic than that. For many years we have been producing highly sophisticated defence requirements, including aircraft. 1 think we are just settling down to acceptance of the notion that we might be suited to produce such equipment. Our private manufacturers now are going out to see to what extent they can sell smaller aircraft to adjoining countries. It seems to me that we ought to be rethinking the sort of rat race psychology in which we are engaging and we keep buying aircraft which are just off the production line.

In this connection I want to mention an important statement made by Sir Henry Bland in September 1970, some time after he retired from his important post as Secretary of the Department of Defence. As honourable senators know, before he held that position he was the Secretary of the

Department of Labour and National Service. Sir Henry talked about the sophisticated requirements that we have in Australia.

The ACTING DEPUTY PRESIDENT (Senator Cant) - Order! The honourable senator's time has expired.

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