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Wednesday, 20 May 1970

Debate resumed from 19 May (vide page 2374), on motion by Mr McEwen:

That the Bill be now read a second time.

Mr WHITTORN(Balaclava) [4.8J- Mr Deputy Speaker, yesterday when we were debating the decision made by the Government recently to establish an Australian Industry Development Corporation I said - and 1 should reiterate perhaps a little - that the Minister for Trade and Industry (Mr McEwen) in his second reading speech mentioned that some 15 Australian companies each year were being taken over by overseas interests. The implication in that statement is that Australian companies may be taking over other Australian companies also. But this was not mentioned.

So, last Saturday, I made it my best endeavour to obtain the information from at least 5 stock exchanges throughout Australia. I mentioned that, during the part of my speech which I delivered yesterday. I proved to my own satisfaction that what the Minister has said was not correct. In other words, in the last 7 years 50 Australian companies have been taken over by overseas interest. That is an average of 7 companies a year. But in the same 7 years 217 Australian companies have either merged with or been taken over by Australian companies. In other words, I believe there has not been the research and economic analysis that this problem justifies. The decision is a complex one and the Parliament does not have the information to justify the decision.

In fact, the Prime Minister (Mr Gorton) yesterday when he was welcoming the Prime Minister of Canada made some very timely remarks, I thought, about the fact that Canada itself was giving consideration to setting up its own Canadian Development Corporation. How right the Prime Minister is. This is so true. But the fact remains that a decision was made in 1965 by the Canadian Government to set up what it calls a report of the task force on the structure of Canadian industry. This was headed in 1965 by a Mr Watkins, and the report is called the Watkins report. This report was presented to the Parliament in 1968. In other words it had taken 3 years for the Canadians to complete research and economic analysis. The report was then presented to the Canadian Parliament in 1968. Even in 1970 the information contained in the report indicates that the Canadian Parliament is unwilling to introduce a Canadian Industry Development Corporation. This is the type of research and analysis, as I mentioned yesterday, that the Australian Government should have carried out and that we in the Parliament should be able to read about. I can read the information formulated by the Canadians but I cannot read the information formulated by the Australians. So I repeat what I said yesterday, that I cannot see the justification at this stage for setting up this Corporation.

I believe my comments are supported by the remarks of the Minister for Trade and Industry in his second reading speech. In the first paragraph of his speech he said:

Australia has made dramatic progress in industrial development in the past decade.

This in itself would indicate to me that there was very little need for intrusion by a government into the affairs of private enterprise. There may be factors associated with the establishment of companies that the Government should have a look at. There may be factors that private enterprise should consider before the Government intrudes. These factors could easily be ascertained and established by the Government on the one hand and by private enterprise on the other, sitting around the table and making the points, so far as the Government is concerned. I said yesterday, and I repeat today, that this subject of the establishment of an Australian Industry Development Corporation apparently was discussed by Cabinet in 1967. In that year Cabinet rejected the need for a government controlled corporation of this type. In fact, the report sent to the Australian Resources Development Bank, which is a bank comprising a consortium of all banks in Australia, including the Government controlled Commonwealth Bank, was to the effect that Consolidated Revenue - that is the taxpayers funds - could not be used for the purpose of instituting private enterprise ventures. At that time - 3 years ago - it was the intention of the Government to keep out of this sort of venture. I believe it is unjust in saying that changes made since 1967 justify the intrusion by governments into these affairs.

The first paragraph of the Minister's second reading speech augments what I am trying to say. We were told in his second reading speech that the loans negotiated by the Corporation will not be guaranteed by the Commonwealth. I ask honourable members to appreciate the fact that this Corporation will be established initially with funds of $25m, with the possibility of its funds being increased to $100m. This amount of $25m - or SI 00m, whichever you like - will come from taxpayers money, from Consolidated Revenue. I fail to see how a government can establish a corporation of this type unless the corporation is responsible to the Government and the Government indemnifies any losses made by it. In other words, I see no safeguards in the Bill. In his second reading speech the Minister mentioned no safeguards to ensure that losses made by this Corporation would not be offset from Consolidated Revenue, that is, from taxpayers money. The Bill provides that the Corporation shall report to the Minister and after a certain time the Minister shall table the report in the Parliament. I feel that the Corporation must be responsible to the Parliament by reason of these 2 facts: Firstly, that money comes from Consolidated Revenue, and, secondly, that the Corporation shall report to the Parliament as well as to the Minister.

There is not a private enterprise organisation in Australia today that would establish itself with SI 00m unless and until it had done a tremendous amount of research into and analysis of the market possibilities of its operations. But we find ourselves setting up a corporation with capital funds of SI 00m without this research and without this analysis. 1 believe that the Corporation, when it goes overseas to raise funds, will be asked: 'What guarantee is there of indemnity against losses?' The answer of the officers of the Corporation automatically will be: 'This is a government instrumentality, set up by the Government, backed by the Government from Consolidated Revenue. The Corporation reports to the Parliament itself. Therefore obviously any losses will be guaranteed by the Australian Government.' Any losses by the Corporation which were not guaranteed by the Australian Government would put Australia's overseas financial standing in a ruinous situation. Therefore it is inevitable that the Corporation's affairs must be guaranteed by the Commonwealth Government.

We were told originally that the internal borrowings of the Corporation would be kept to a minimum. However, the Bill does not establish the fact that internal borrowings - that is, Australian borrowings - will be kept to a minimum. It says in clause 7(4):

.   . the Corporation shall seek to borrow moneys principally outside Australia.

The words 'shall seek' and 'principally' make me suspicious of the real intentions of the Corporation in relation to borrowings.

Mr Sinclair - They will be controlled by the Reserve Bank.

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