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Tuesday, 9 May 1972
Page: 1422

Senator KANE (New South Wales) - I move:

That the Senate, at its rising, adjourn until tomorrow at 2.55 p.m.

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

The need to initiate immediately such legislative and administrative measures, either alone or in co-operation with the States, as will impede, delay or prevent the transfer of the beneficial ownership of shares in Australian public companies to non-Australian ownership, until the report of the Senate select committee appointed to enquire into foreign ownership and control of Australian commerce, industries, land and resources, has been presented, or, alternately, until the Government has announced the terms on which and the conditions under which equity in Australian public companies may be acquired by non-Australian interests.

The purpose of the motion is clear. Firstly, it seeks Government action to secure an interim freeze on all company takeovers involving foreign capital until either the Senate Select Committee on Foreign Ownership and Control presents its report or the Government has announced the terms on which, and the condition under which, equity in Australian public companies may be acquired by non-Australian interests. The public concern about the whole question of takeovers, including foreign ones, has been stirred, firstly, by the recent Thomas Nationwide Transport Ltd bid to take over Ansett Transport Industries Ltd and, secondly, by the International Telephone and Telegraph Corporation's bid to take over certain Australian food industries. As the Australian Democratic Labor Party sees it there is a real danger that, unless a freeze is imposed pending Government action, foreign firms and corporations will endeavour to achieve substantial holdings in Australia before action is taken to prevent them doing so. In other words, by the time the stable door is closed the horse could well have bolted.

If I may, I wish to refer to the Canadian experience, lt will be recalled that Canada first became interested in the inroads of foreign investment back in 1957, as a result of a royal commission on Canada's economic prospects. Over the next 15 years little if anything happened. Finally a report known as the Grey Report was given to the Canadian Government. I wish to quote briefly from that report. Firstly, in its opening lines the report states:

The high and growing degree of foreign, and particularly US, control of Canadian business activities has led to a Canadian industrial structure which largely reflects the growth priorities of foreign corporations.

It goes on to state:

These developments have made it more difficult for the Government to control the domestic national economic environment. They have also influenced the development of the social, cultural and political environment in Canada.

The interests through which international business exercises its power are known as the multi-national enterprises or the MNE. An example of this is the International Telephone and Telegraph Corporation's actions of recent fame. It will be recalled that at a recent Senate inquiry in the United States it was revealed that this giant conglomerate first of all set out to try to prevent the election of the Allende Government in Chile. Let me say here and now that neither I nor any of my colleagues has any brief for the Allende Government - it is a Marxist Government.

Senator Mulvihill - It is a military junta.

Senator KANE - That is right. But let me say also that we have an even lesser brief for foreign companies which attempt to use their economic power to destroy governments. It seems to me that if the ITT were permitted to develop its bridgeheads here in Australia to dangerous proportions, which it could well do, there would be no guarantee that it would not attempt to do in Australia what it attempted to do in Chile. Let me remind honourable senators that, first of all, ITT attempted to prevent the election of the Allende Government - although we do not like that type of government, nevertheless it was democratically elected - and, having failed to prevent that Government's election ITT set out then to destroy the Chilean economy as a means of destroying that Government. So I say that the International Telephone and Telegraph Corporation is a company with which Australia ought to be well concerned.

Let me now .turn briefly to a further section of the Gray report, which reads as follows:

The book value of US foreign direct investment increased from approximately $7.5 billion in 1929 to S70.8 billion in 1969. Sixty-two of the top 100 US corporations have production facilities in at least six foreign countries and 71 of the top 126 industrial corporations for which information is available are reported to have one-third of their employment abroad, lt is estimated that about 80 per cent of all US foreign direct investment is accounted for by some 200 firms (e.g. General Motors, Chrysler, Ford, Singer, Esso, ITT etc.). About 100 non-US firms comprise the major MNEs of the rest of the world (e.g. Nestle, Shell, Lever Brothers etc.)

The report further states:

Even on the basis of very conservative estimates it seems clear that MNEs will continue to grow and become increasingly powerful institutions. It is estimated by one observer that the annual value of output in foreign markets by MNEs will rise from the present level of about $300 billion to over $2,000 billion by 1990 and account for half the free world GNP, compared with some 15 per cent in 1969. The worlds economy will be dominated by 300 or 400 super MNEs. It will not be unusual for an MNE to have one million employees.

Finally, I think the following is worth quoting from the report:

There is another point worth noting in this connection. If MNEs were to develop to the point where they become the major organisers of production in the world, they would undoubtedly be a major power. But power responsible to whom? At the moment this power is wielded largely by national governments responsible to their electorates. In a world dominated by large and powerful MNEs to whom would non-elected boards and management of multi-national enterprises be responsible?

It is for these reasons that we urge the adoption of the motion before the Senate. As I said earlier, unless the stable door is closed we feel that the horse may well have bolted by the time the Government does come down with its decision on this matter.

I would like to refer very briefly to the Concrete Industries (Monier) Ltd $ 18.6m takeover offer only last week for Rocla Concrete Pipes Ltd. As honourable senators will know, Rocla Ltd manufactures concrete pipes. Concrete Industries (Monier) Ltd is 49.9 per cent owned by Redland Holdings of the United Kingdom. If successful this bid will result in Redland Holdings of the United Kingdom owning 41 per cent of the new company. This is more than sufficient to maintain a controlling interest. At present Rocla is 97.5 per cent Australian owned and has interests in Britain and South Africa. This company is in the forefront of technology in the concrete pipe industry. Rocla processes are used under licence in more than 20 countries, including Canada, France, Holland, Italy, Japan, West Germany, the United States and Hungary. There appear to be 2 reasons for the proposed takeover; firstly, to gain access to Rocla's pipemaking technology, and secondly, to circumvent possible tougher legislation on restricted trade practices which is now under review by the Government.

It seems to me that in the case of the threatened takeover by ITT of Australian Frozen Food Industries Ltd, the Government could assist Australian Frozen Food Industries by means of the Australian Industry Development Corporation. As I understand the position the AIDC was established to help maintain Australian equity in Australian enterprises. The only departure from existing AIDC policy would be that the Corporation would be assisting an industry already developed instead of one being developed. As I see it, the AIDC has been largely inactive since its inception in October 1970. I understand that it currently holds S3 3m of the taxpayers' money for purposes of fostering and developing ownership in Australian industry. I think that the AIDC could well be invoked to assist Australian Frozen Food Industries at this time.

I commend my proposal to the Senate. I believe it is appropriate at this time to take legislative action, as suggested in my proposal, either alone or in co-operation with the States so as to impede, delay or prevent the transfer of the beneficial ownership of shares in Australian public companies to non-Australian ownership until the report of the Senate Committee has been presented, or alternatively until such time as the Government lays down conditions under which equity in Australian public companies may be acquired by nonAustralian interests. For those reasons I commend the proposal to the Senate.

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