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Thursday, 9 December 1976
Page: 3738

Mr Jacobi asked the Prime Minister, upon notice:

(   1 ) Will he set up a Royal Commission to investigate the cost of steel production in Australia in view of the inability of Australia's only steel producer, Broken Hill Pty Co. Ltd to contain its production costs, as is evidenced by submissions it has made to the Prices Justification Tribunal and the Industries Assistance Commission.

(2   ) Has the price of steel in Australia increased at a greater rate than for other industrialised countries, and is this adversely affecting the price of consumer products within Australia as well as the prices of our exported manufactured goods.

(3)   Can he say whether BHP has been increasing its domestic steel prices in order to be able to sell steel on world markets at a substantial discount.

(4)   Will he also authorise an inquiry into the accounting procedures employed by BHP to ascertain whether procedures are being used to disguise the fact that Australian users of BHP steel are subsidising BHP's exports of steel, and whether BHP is asking public assistance to maintain its steel operations so that the company can divert its funds into new investment in the rnining industry.

Mr Malcolm Fraser - The answer to the honourable member's question is as follows:

(1)   No. Such a royal commission would substantially duplicate the work of the Industries Assistance Commission and the Prices Justification Tribunal.

(2)   A comparison of international steel prices submitted by BHP to the IAC iron and steel inquiry shows that between 1966 and 1976 the rate of price increases of BHP products (measured in terns of Australian dollars) was greater than that of Australia's major steel trading competitors. This reflects the generally faster growth in Australia's cost structure and, in particular in wage costs since 1972, and also to some extent the economies gained by certain overseas producers, particularly in Japan, from the installation of new, larger scale plants. These increases in steel prices have affected the prices of domestic consumer goods and exported products to some extent. Steel prices are, however, only a segment of total manufacturing costs, which also reflect the very large increases in labour costs since 1 972.

(3)   There is no evidence that BHP has been increasing its domestic steel prices in order to be able to export at a substantial discount. All price increases since 1973 have been subject to scrutiny by the Prices Justification Tribunal and this includes a check that an equitable share of the company's production costs is allocated to its steel exports.

(4)   No. Both the PJT and the IAC have authority under their respective Acts to require such information from companies as is necessary for them to arrive at their findings or recommendations.

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