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Wednesday, 24 October 1973
Page: 1406

Senator MURPHY (New South WalesAttorneyGeneral and Minister for Customs and Excise) - I move:

That the Bill be now read a second time.

As the Bill has been explained in detail in the House of Representatives, I ask for leave to have my second reading speech incorporated in Hansard.

The DEPUTY PRESIDENT (Senator Prowse)- Is leave granted?

Senator Webster - Mr Deputy President,may I ask the Leader of the Government in the Senate the principle on which he decides whether he will read a second reading speech or whether he will incorporate it in Hansard? Yesterday we had read the second reading speeches relating to half a dozen Bills which did not appear to be of any great interest. The Leader of the Government would know that this measure will have enormous impact on the community and I feel that when a Bill is of great importance it is appropriate that the second reading speech be read in the Senate.

Senator MURPHY - The principle seems to be clear: If we are introducing into the Senate for the first time a Bill such as the Law Reform Commission Bill or the Northern Territory Supreme Court Bill, naturally the second reading speech is read in full. But if a Bill is being transmitted to the Senate from the House of Representatives and there is no material alteration to the way in which it was presented in the other place, it is the practice not to read it. But if the honourable senator would like me to read the second reading speech I will do so.

Senator Webster - If I had my way I would have the Minister read it, but that may not be the wish of the Opposition.

The DEPUTY PRESIDENT- Order! I want to make it clear to the Senate that Senator Webster is refusing leave to have the speech incorporated in Hansard.

Senator MURPHY -I do not think the honourable senator is going quite as far as that, but he has indicated a view and I will accede to his request. By this historic Bill, Parliament is being asked to establish an Industries Assistance Commission. We propose to extend to all Australian industries a system of assistance which, for the last 50 years, has applied only to manufacturers, through the Tariff Board. The Bill puts into effect the proposal outlined in the GovernorGeneral's speech last February. It implements an important plank of the Australian Labor Party platform. This Bill is based on a report by Sir John Crawford entitled 'A Commission to Advise on Assistance to Industries' which the Prime Minister commissioned in March and which Sir John provided in June. The Crawford report was made public shortly after it was received, and all who have read its lucid pages will realise the very great contribution Sir John has made to this very difficult matter. The Government takes this opportunity to express its appreciation and admiration for this further service rendered by a truly great public servant, whose quality and calibre allows him to be of service to the Australian Government, whatever its political persuasion.

The fundamental purpose of the present system of advice on assistance to manufacturing industry has been to allow public scrutiny of the process whereby governments determine the different amounts of assistance to be given to different industries.

The Board is an independent statutory authority which has an advisory function only. It has no executive role. The essence of the Tariff Board system is that it makes public inquiries and public reports on questions of assistance for industry referred to it by the Government. The Government proposes to extend this system to industries in other sectors of the economy because it believes the system has, over a long period, proved its value to successive governments in an important and difficult area of government decision making. The first and most important reason for establishing the Commission is to allow public scrutiny of the process whereby governments decide how much assistance to give to different industries. This scrutiny is necessary because of the highly selective nature of the process. Measures which assist particular industries constitute forms of economic discrimination which, at least in the short term, can be to considerable advantage to the industries assisted and to the disadvantage of those who pay for the assistance, namely, other industries, consumers, or taxpayers. Such a process must be independent and impartial, and seem to be independent and impartial.

The Crawford report indicates that tariff assistance to manufacturing industries totals several thousand million dollars a year. Assistance to the rural sector involves several hundred million dollars a year. The Government has increasingly made public inquiries, public scrutiny and public reports the basis for major policy decisions. It is important to appreciate fully what the phrase 'public inquiries and reports' will really mean under this proposal. It means wide advertisement, in newspapers and by circulars, of matters referred to the Commission. It means public hearings, at which interested parties can support or oppose industries' claims for assistance, lt means prompt availability of those hearings. It means the systematic collection and analysis by the Commission and other organisations of information relevant to the Commission's inquiries. It means that most of this information should be available for public scrutiny during the course of particular inquiries. And it means that the Commission should be able to call disinterested expert witnesses. Finally, it means public reports which explain in detail the reasons for the Commission's recommendations. In short, the words 'public inquiries and reports' denote a deliberate, orderly and widely accessible system of communication between the Government, industry and the wider public.

The application to all industries of the advisory system which has long been accepted for manufacturing industries is necessary in the interests of fair dealing and open dealing. It is necessary also because it can contribute to a better use of" the nation's resources. By this I mean a use of resources more attuned to the commonly accepted objectives of government policy. There are several reasons why the Industries Assistance Commission should be able to make a unique contribution in this area. The first stems essentially from the fact that the Commission will be a single institution, with the responsibility for advising on the assistance which should be given to industries in all sectors of the economy. It will therefore be very conscious of the need to develop a rational and consistent approach towards all industries.

This Government has inherited a complex, confusing and inconsistent collection of measures which discriminate between individual industries- particularly as between primary and secondary sectors of the economy. In many cases, the total amount of the assistance afforded particular industries is obscure, and its effects are even more obscure. We propose to substitute a deliberate, systematic, and comprehensive program of public inquiries for the rather random, haphazard, and sometimes informal and superficial process of investigation of the past.

A second reason why the Commission can contribute to a better use of the nation's resources stems from its status as an independent statutory authority. The Commission will be able to develop and pursue a long term program of inquiries, free from day-to-day political pressures. This in turn has very important implications for the amount and quality of" its information and for the depth of analysis which the Commission can undertake. This of course includes analysis of the effects of its recommendations on the use of resources in different industries. For example, industries which are comparatively wasteful in their use of resources and which impose a significant cost on the community can be systematically examined through public inquiries, and obliged to justify any special assistance they receive from the government by demonstrating the benefits they bring to the community. The Commission will be obliged, through its public reports, to explain why it considers that certain industries should receive more assistance- than others.

I propose now to consider some of the more important clauses in the Bill and the reasons for them.

Clause 2 1 states that the functions of the Commission are to hold inquiries and make reports in respect of matters affecting assistance to industries and other matters that may be referred to the Commission. This clause covers any industry, whether in the primary, secondary or tertiary sector of the economy. It is therefore the clause which gives effect to the Government's wish to extend the present advisory system for manufacturing industries based on the Tariff Board. Together with clause 23 (2)- which allows the Commission to consider all possible forms of assistance for a particular industry- clause 2 1 provides the basis for systematic analysis of the structure of industry assistance in Australia, and thus for evolving a more coherent and rational policy by the Government towards industrial development.

Clause 22 provides certain policy guidelines for the Commission which place the work of the Commission firmly in the framework of general economic management.

The guidelines will also help those making submissions for assistance from the Government by providing a basis for them to relate their claims to the public interest. They also make clear the need for Australia's assistance policies to recognise our international trade obligations.

Clause 23 contains several very important provisions, including one which states that the Government shall not take any action to provide assistance to a particular industry until it has received a report on the matter from the Commission. This so-called 'mandatory provision' is a more restricted version of a similar provision that has been in the Tariff Board Act since 1921. It is an essential safeguard to the integrity of the system. It ensures that all groups which may be affected by a change in the assistance afforded a particular industry- those who stand to lose as well as those who stand to gain- will have an equal opportunity to express their views at a public inquiry. It will be apparent that the reference to the Commission of questions relating to assistance for individual industries cannot be optional. If some industries- particularly those which stand to lose most from public exposure of their claims- can avoid the process of public inquiry the fundamental purpose of the Commission will be frustrated.

There are several important qualifications to the mandatory provision which should be noted. First, although the provision obliges the Government to seek the advice of the Commission on all questions of assistance to individual industries, it does not oblige the Government to accept that advice. Like the Tariff Board, the Commission is to have an advisory role only. The ultimate responsibility for deciding what courses of action to take and what policies to adopt resides with Parliament. Secondly, the mandatory provision relates to questions of assistance to individual industries in the primary and secondary sectors of the economy, but not to industries in the tertiary sector. A large proportion of tertiary activities are either in the public sector, and therefore the direct responsibility of the Federal, State, or local governments, or are naturally sheltered from the overseas competition or the instability of overseas markets which prompts most of the claims for assistance from primary or secondary industries. Some tertiary enterprises may seek special assistance, and it will be open to governments to refer such requests to the Commission for advice. This Government intends to do so. The extent to which it can do so early in the life of the Commission will depend in part on prior commitments it has given the Commission, such as the current 6-year review of the tariff. Thirdly, the mandatory provision does not restrict the Government's freedom to make changes of policy such as the recent 25 per cent reduction in tariffs, to negotiate changes in levels of assistance for the purpose of international trade agreements, or to extend preferential treatment to developing countries. And finally, it does not restrict the Government's capacity to provide urgent temporary financial assistance to industries for periods not exceeding 12 months.

Another important provision in clause 23 allows the Government to take action on assistance to a particular industry if the Commission has not reported by a date specified in the reference. This provision enables the Government to set a date by which the Commission must report, which accords with the Government's own priorities in planning the development of an industry. Consequently, the existence of the mandatory provision cannot cause any unreasonable delay in Government decisions on particular industries nor can it impair the Government's planning role. No restraint is placed on the right of the Australian Government to seek advice from other expert bodies.

In practice I would expect there to be few cases indeed of conflict between the Government's priorities in relation to the timing of advice from the Commission, and the Commission's capacity to provide advice in accordance with those priorities. As pointed out in Sir John Crawford's report, it is possible, as the Tariff Board has begun to demonstrate, to program the Commission's inquiry work several years ahead. The absence of long term and co-ordinated programming of references to the Tariff Board in the past tended to increase the average time required by the Board to prepare its reports. The fact that one Minister will have responsibility for referring matters to the Commission, and that there now exists a permanent inter-departmental committee to keep him informed well before the event on matters likely to be referred to the Commission, should introduce much greater stability into the work of the Commission and greatly reduce uncertainty about the length of its inquiries. This greater opportunity to program ahead means that the Government will have a continuous record of the expected completion dates for particular inquiries and hence of the priorities which the Commission allots to each element of its total work commitment. With this knowledge and its capacity to specify when the Commission's report on a particular matter is required, the Government can avoid the possibility of having its ability to act on questions of assistance to particular industries impaired.

The only other clause on which I propose to comment is that which allows the Commission to inquire into certain matters on its own initiative, clause 24. This clause, like the mandatory provision, is central to the concept of the Industries Assistance Commission, and has a parallel in the present Tariff Board Act. In essence, it allows the Commission to initiate inquiries into, and report on, industries whose assistance has been unchanged, or unreviewed, for at least 6 years. It is a safeguard against the indefinite continuation of assistance to particular industries long after it is needed. It is necessary because structures of assistance, like some of the activities they support, can become obsolete.

The Tariff Board was established in 1921 and it has been an important and respected source of advice to 21 of the 28 Parliaments which have been elected since Federation. In replacing the Tariff Board with the Industries Assistance Commission, this Parliament will therefore be taking an historic step.

It will, I believe, be a step applauded by this and succeeding Parliaments, and by the people of Australia, because it extends a principle that we all approve in general, if not always in particular cases. This is the principle that favours claimed from the Government and through the Government from the Australian public should be publicly examined, and favours granted by Government should be publicly justified.

I commend the Bill to the Senate.

Debate (on motion by Senator Cotton) adjourned.

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