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Wednesday, 28 November 1973
Page: 2217

Senator BYRNE (Queensland) -The Australian Industry Development Corporation Bill and the National Investment Fund Bill are being dealt with, by decision of the Senate, in a cognate debate. I was addressing myself to them when the Senate adjourned yesterday evening. The purport and objective of the Bills is fairly well known but it might be worth recapitulating for the benefit of those who want to put the matter in complete context. The Australian Industry Development Corporation Bill is designed to extend the charter of the Australian Industry Development Corporation to enable it to take on activities which up to this time have been denied to it under the existing charter. The extended charter would enable the Corporation to initiate support for industries irrespective of whether any industry of its own initiative came to the Corporation. Possibly the National Investment Fund Bill is the more important of these 2 Bills because it is as a result of the provisions of this proposed statute that the funding of the Australian Industry Development Corporation will be established and made possible. Therefore, it is quite appropriate that the National Investment Fund Bill be considered at the same time as the Australian Industry Development Corporation Bill is considered.

The proposal for the AIDC is that it should have an extended charter. It is also proposed, under the complex of Bills, that revenue be directly available to the AIDC to support proposals and enterprises which the Government considers warrant financial support which may not otherwise be available. The National Investment Fund Bill is a means of agglomerating investment capital in Australia, particularly from indigenous sources, for funding the AIDC to buy into and support existing enterprises and to fund the operation and extension of new enterprises. The means by which this is to be done is by the AIDC selling bonds related to particular divisions of the Fund which would sponsor particular enterprises. These funds could come from a number of sources. They could come from the coercive diversion of funds from life insurance offices and similar bodies and from the sale of bonds to people who would receive a 10 per cent return on their investment- $100 subscribed immediately becomes $110. From the accumulation of such funds the AIDC would have a working capital which it may use to support Australian industry in the ways which I have suggested.

The principle behind these Bills is a reflection of the national concern about the divestment from the Australian nation of many of its resources. Due to the shortage of investment and speculative risk capital in Australia it has been found necessary to attract capital from overseas, and that capital comes in either by way of loan or by way of equity investment to purchase beneficial ownership or part of beneficial ownership in Australian enterprises, with the resultant passage of ownership and control from Australian hands to foreign hands. The concern for that process is commonly shared by all Parties in this Parliament. Perhaps no Party has shown a greater concern about this type of operation than has the Democratic Labor Party. The DLP moved to have established a committee of this chamber to investigate the whole matter of foreign ownership and control. That is why we are especially interested in the provisions of this Bill. While there is a national concern about this divestment of Australian ownership and control and while a formula must be discovered to try to halt this process, the question is whether these cognate Bills accomplish this in a way which is commercially, financially and socially practicable and acceptable. It would be possible to do this in many ways- ways which those who have experience in this field might find totally unacceptable and ways which might prejudice the ordinary ebb and flow of business. On the other hand, those ways might embody social principles and philosophies which would be alien to the views of the Australian people.

I present this proposition on behalf of the Democratic Labor Party: There is this national concern. The Government has introduced these Bills which purport to present a formula by which the process can be halted and by which there can be a buy back of the Australian interest and an accumulation and diversion of Australian capital into Australian enterprises, particularly those which are exploiting our national resources. We have to be careful of the actual implications of these Bills. We think that they are of vast consequence and wide ranging in their implications. The considerations which Senator Cotton put in the course of his scholarly address on this matter yesterday indicate that there is a widespread concern in many fields that however well-intentioned the proposition may be the Bills may have implications which range far beyond the implications projected by the progenitors of the Bills. They contain wide ranging implications which are causing grave concern in the commercial community and which, therefore, must attract the attention of this Parliament.

To allow these Bills, with these vast implications, to go through without adequate scrutiny would be, I think, a derogation of the duty of this chamber and would show a complete lack of responsibility. It is not sufficient that honourable senators be advised of the nature and content of these Bills, of the far reaching implications to be drawn from them or of the commercial repercussions; more than that is required. The Bills are of such complexity and of such commercial and financial profundity that few senators, without expert advice, would be able to arrive at a definitive decision and conclusion as to whether the Bills would be acceptable to the Australian Parliament. In the time that has been available since the Bills were introduced, I would not consider myself equipped to handle them in the way in which they should be handled. I think I would be prepared to deny that any senator is adequately equipped to give them the consideration and the in-depth examination which Bills of this nature warrant. For these reasons, the Democratic Labor Party having considered the matter very seriously, will propose an amendment to each Bill. In relation to the Australian Industry Development Corporation Bill the motion is:

That the Bill be now read a second time.

I move:

Leave out all words after 'That', insert 'the Bill be referred for inquiry and report, as soon as possible, to the Select Committee on Foreign Ownership and Control, which is hereby authorised to consider the Bill '.

In relation to the National Investment Fund Bill I foreshadow that at the appropriate time in relation to the motion that the Bill be read a second time I shall move:

Leave out all words after 'That', insert 'the Bill be referred for inquiry and report, as soon as possible, to the Select Committee on Foreign Ownership and Control, which is hereby authorised to consider the Bill'.

The Democratic Labor Party was in the forefront of the activity to have the whole question of foreign ownership and control of Australian assets considered by this Parliament. This matter does not lie purely within the responsibility of the Government. This matter is so important, it is so critical for Australia at this period of its development and it is so critical for Australia, when new techniques are now available for the development of resources, that the Parliament should be adequately informed on this matter. The Senate Select Committee on Foreign Ownership and Control was established on 10 December 1971. It had a number of terms of reference. I shall read out two, which are most relevant to the Bill. The Committee was asked to consider: the best method of mobilising Australian capital resources and attracting their commitment to national development; the best method of reconciling the inflow of overseas capital for Australian development with the retention of Australian ownership and control.

The personnel of that Committee was drawn from all parties. In the initial stages of the Committee 's inquiry the personnel was: Senator Withers, Western Australia, who is at present Leader of the Opposition and who was Chairman; Senator Murphy who is at present AttorneyGeneral and who was then Leader of the Opposition; Senator Cant, Western Australia; Senator Guilfoyle, Victoria; Senator Maunsell, Queensland, and myself. That Committee met on a number of occasions and decided that it would take the inquiry in segments and that the first segment to be taken would be the segment in relation to finance. We thought that the basic situation to be considered in Australia was a monopoly of Australian financial resources and the mobilisation of those resources to effect the purposes which it was the desire of this chamber, of the Committee and the whole of Australia to achieve. Having considered and taken extensive evidence in that area the Committee brought in an interim report in October of last year, I think it was.

I think I should read what is referred to in that report and what was recommended virtually unanimously by the Committee, subject to a general qualification which was inserted by some of the Committee members. On page 12 of the Committee's report paragraph 10.5 states:

The Committee is of the opinion that the Australian Resources Development Bank and the Australian Industry Development Corporation are both performing important tasks. However, at this stage of their development, due to causes beyond their control, their role is far too insignificant to be considered a major force in the capital market. The Committee recommends that the activities of both these two bodies be either expanded further, or other special purpose organisations be established which should be free of direct government intervention and possess flexibility in their operations.

The recommendation was carried by the whole Committee, although a reservation was expressed by Senator Cant and Senator Murphy. The relevant part of that reservation is as follows:

We do not agree with so much of the interim report as is based on the assumption that the philosophy and policies of the present Government will continue to operate in Australia.

I mention that in fairness to the honourable senators, although it is not particularly relevant to what I am saying here.

The point I am making is that that Committee saw the need for the Australian Industry Development Corporation, and also saw the necessity for the expansion of its activities and the range of its interest and participation. That was an all-Party Committee. Having read the second reading speeches delivered in another place when these Bills were presented, it would appear that no reference was made, unless I have not seen such a reference, to the deliberations of the Committee or to that recommendation. However, I could stand corrected on that matter. If what I say is the case, it is to be regretted because, after all, if this chamber sets up a committee which investigates a matter and which takes very wide ranging evidence, it would only be appropriate, if a government is then bringing in legislation either in terms of any of its recommendations or in the face of them or contrary to them, that reference should be made to the report of such a committee.

However, the committee visualised that there should be an extension of the activities of the AIDC or that some independent organisation should be set up. The Government may have introduced this legislation in terms of such a recommendation. Our concern, which is expressed in one of the terms of the Committee's inquiry, is that a proper formula should be discovered to find out how Australian participation can be increased, extended and developed. We are concerned at the response in the commercial community that has now come to the Bills which we are discussing. Very grave concern has been expressed as to the commercial implications of the measure. Very grave concern has been expressed at another level as to the social implications of the measure. Those who very strictly adhere to the policy of completely uninhibited free enterprise would see in these Bills some major danger to the operation and existence of that system. Others do not see it in the same light and with the same degree of emphasis, but within the business community genuine fears are expressed -

Senator Cotton - And some apprehension, too.

Senator BYRNE - Yes there are genuine fears and, as Senator Cotton reminds me, apprehension as to what could be the ultimate commercial and financial consequences within the present structure of a commercial and financial society. I shall, if I have time to do so, read out a few of the suggestions which the Committee made. Perhaps that is not necessary. But there has been a general concern. Matters have been mentioned as being likely to have very grave repercussions. I refer to such matters, for example, as the effect of the operations of these Bills if they are given the scope which the drafting permits on a reasonable interpretation. It could result, for example, in a very grave interruption of the normal and normally accepted processes of the capital market in Australia. We in Australia so far are rather unsophisticated in the operation of the capital market. Merchant banks and things of this nature are of only recent origin in this country; they are not very sophisticated. The area is still sensitive and we are subject to all sorts of international financial pressures to which our sensitive market will respond. Men in commerce and industry are very deeply concerned that the full operation of the AIDC and the National Investment Fund in this field might very well disturb the capital market.

Then very deep concern is expressed by insurance companies and other bodies similarly situated which will be required to pay a certain proportion of their moneys on a percentage basis into the National Investment Fund. They say that will have very severe repercussions within their own industry, that it will have very severe repercussions in those areas which traditionally have received the financial support of moneys held in those hands and received from those sources. Comments such as those I have outlined, of course, cannot be lightly disregarded. These people are skilled and accomplished in that field. If they see a danger and a possible disturbance in this area of their participation- I am not speaking of their selfish participation; I am speaking of the role they play by the nature of their organisation and the functioning of their societies and their companies- then it is a matter for serious consideration by this chamber.

There is another body of opinion which is extremely concerned that on a reasonable and acceptable interpretation of some of the powers which are laid down in one of the other Bills there could be by various means a substantial transfer of public ownership. These may well be matters that are not within the contemplation of those who framed the legislation but which in their hands or in the hands of others may well be used to effect purposes completely beyond the present contemplation of the Bills which are before the Senate. These are matters of very great concern to the country, to business, and to the economic stability of Australia. It may well be that other methods, other formulae, which do not have these overtones and cause apprehension and concern, may be discovered which would substantially giver effect to what is the commonly held desire of the Australian people, namely, that as far as possible we should maximise Australian control and ownership of our resources and at the same time not deter the investment of foreign capital in Australia. There may be another formula which could give effect to both of these aspirations and desires without the necessity for Bills in this form which create these dangers, fears and genuine apprehensions.

It is for that reason that the Democratic Labor Party feels that the Bills should be considered at leisure and that the most expert advice that is available should be available to the Senate so that the Bills can be examined, firstly, against the propositions which were presented to the Senate Select Committee on Foreign Ownership and Control. They could then be examined as to whether, in an acceptable form, they carry into operation something like the recommendations brought forward or whether some acceptable alternative should be discovered. The Senate committee had before it the expert evidence of Sir Alan Westerman who presented an extremely well prepared and, as one would expect, an extraordinarily competent paper. Sir Alan was interrogated on this matter, as were other witnesses. He obviously had in mind the need- this view is commonly shared- for the extension of the activities of the AIDC.

I do not know- perhaps nobody knows- what other advice the Government has had in the

E reparation of this legislation. We do not k now- I do not know- the extent to which it consulted business in relation to the extent to which the implications that I suggest may be implicit in the operation of the legislation may actually occur. I do not know whether the Government has gone to the business community and taken its advice in the areas in which it is likely to be affected. If it did not seek this advice, this would mean that a series of Bills which can effect a fundamental change in the commercial and financial structure of Australia- let us have no doubt about that- are sought to be passed through this chamber, this chamber being denied that expert body of advice, evidence and counsel to which I think it is entitled and, as a matter of fact, which it has an obligation to receive in the circumstances.

If these Bills are referred to the Senate Select Committee on Foreign Ownership and Controlas the amendment which I have moved and as the amendment which I have foreshadowed to another Bill suggest should be done- that Committee can do now, in relation to the Bills, what it has done in relation to the general propositions. It can call expert evidence. It can invite various representatives of all elements of the business community and others to come forward and give their views as to what would be the implications of this legislation in an interpretation by governments of today or in future. The Committee can again call Sir Alan Westerman before it. He again can give the Committee the benefit of his advice and counsel as to how he sees the operation of these Bills, what he visualises will be the way in which effect will be given to them, the purposes to be achieved and, more particularly, the dangers that may be implicit in them if the ends apparently set out to be achieved are either departed from or used in some other way. Therefore it seems appropriate that the Senate, in particular, should assume responsibility in this matter and should approach the whole question with the very greatest seriousness.

I have had occasion in the last fortnight to refer to the mass of heavy and important legislation which has come before this chamber. I did that in another context. When we consider the weight, seriousness and the sheer number of the Bills which the Senate is being asked to considerBills that affect the constitutional position in Australia, Bills that affect the social order in Australia, Bills that affect domestic relations in Australia, Bills that affect the national health scheme and things like that- and matters, such as the Trade Practices Bill, that concern the commercial life and the trade union life of Australia, it must be realised that these things are of such moment that to try to deal with them ad hoc in the quick rush towards the end of a session would be unthinkable and indefensible. That proposition particularly applies to these Bills.

In moving this amendment I assure those to whom I am addressing my remarks that we of the DLP do not approach this Bill in any atmosphere of implacable opposition. After all, I, as a member of the DLP, was a party to the recommendations of the Senate Select Committee on Foreign Ownership and Control, as were Opposition senators who sit on my right and Government senators, and it was felt that there was some need for a body such as the AIDC to be set up- even in an extended form and perhaps with a stronger financial structure- to achieve a purpose. Our attitude in moving this amendment and in foreshadowing another amendment is that we must examine the Bills in depth and in time. One thing can be achieved. It is useless to try to bring in this legislation and to impose it on the community unless it is done in an atmosphere of total commercial confidence. I do not mean that commerce and industry will necessarily accept the propositions at all. What I mean is that at least they want a reassurance that while the proposition is not acceptable in a particular sense, in the general sense they are not likely to be faced with vast and wide interpretations of it that ultimately will create a situation which they cannot contemplate and which, if they did, they would fear.

Therefore, if we have this examination- and we will invite industry representatives to come forward and present their propositions- we can create a national confidence that this is a body which is desirable in a different form or with a different charter or with certain limitations or circumscriptions. If that is so, I think perhaps a real contribution will have been made to what we want to achieve, that is, to try to preserve the maximum ownership of Australian resources in Australian hands and to mobilise Australian capital for that purpose, but all within the framework of the protection of those who today conduct the commercial and industrial life of Australia. In that way those engaged in commercial and industrial life shall not, by the operation of a piece of legislative machinery, be put in the position where they have virtually to be eased out and destroyed in their commercial or industrial enterprises. If that were to be the end result of this, it would be a disaster, and my Party certainly would not accept any legislation which was capable of such an interpretation or which in its operation might have such effect.

I addressed myself to this matter yesterday, and therefore, I do not wish to speak any longer on it. I have presented one amendment to the

Senate and outlined another, and I commend them to the Senate. I merely wish to say one thing. In the House of Representatives today a question was directed to the Minister for Overseas Trade (Dr J. F. Cairns) by Mr Hurford, an honourable member for a South Australian seat. I will read a part of Dr Cairns' answer. He said:

Because of the level of funds available to the Corporation it must have first regard to basic developmental projects. I would not say that the wine industry is a basic developmental project in fact or in terms of the AIDC's very limited powers to act according to the present law, which is of course affected by what the Senate is doing. The Senate is proposing to refer the AIDC Bill and the National Investment Fund Bill to the Senate Select Committee on Foreign Ownership and Control for inquiry and report. I believe the Democratic Labor Party senators are genuine in their attitude. I think they wish to have the Bills very closely examined by that Committee and given that view I am quite prepared to see that examination made.

There is then a reference to the members of the Opposition which is not completely relevant.

Senator Cotton - That is a strange reversal of form in the Minister.

Senator BYRNE - Yes. Of course, the Minister is anxious to get the Bill passed, but I am sure that he sees the wisdom of the procedure which we have suggested. We announced yesterday, through the Press, the amendments which we were to propose. One has been moved and the other has been foreshadowed. I have little doubt that in response to that, Dr Cairns is seeing the wisdom of this type of procedure, because I am sure he would sense, as we sense and know, the concern now felt in the commercial community.

If the legislation is to have any real effect within the community, it has to be legislation that is reasonably acceptable. Therefore, in view of Dr Cairns' statement, I hope that our amendments, which I understand will be supported by the members of the Liberal Party and the Country Party, will now find acceptance from members of the Government. If that is to be the position, it is not necessary for me to plead the cause any further. I commend to honourable senators the amendment which I have moved and the one which I have foreshadowed and will move at the appropriate time, and trust that the amendments will find a quick and successful passage.

The ACTING DEPUTY PRESIDENT (Senator Marriott)- Order! Is the amendment seconded?

Senator Little - I second the amendment Senator MAUNSELL (Queensland) (5.17)- The Australian Country Party, of course, has a great deal of interest in this legislation. The Australian Industry Development Corporation, as we all know, was set up by the previous

Government. One of the persons instrumental in setting it up was our former Leader, Sir John McEwan. It was set up for the purpose of mobilising Australian finance in order to obtain as much Australian equity as possible in Australian enterprises. This refers particularly to the development of our mining resources and our resources generally. We all know that the development of these resources requires a great deal of finance, and in the past Australians have not shown a great deal of interest in what we might call long-term developments- in other words, where a return cannot be expected for some years.

There has been a need in this country to have some instrument to mobilise this finance and also to obtain loan funds from overseas. It is interesting to note that even when the overseas companies come to Australia to develop our resources, a great deal of the finance which is found comes from the loan market and not from subscribers. Consequently, it was necessary for us, if we were to assist our industries in acquiring equity in these developments, to have an instrument that was capable of borrowing overseas and assisting in maintaining Australian equity. We also believe, as does the Senate Select Committee on Foreign Ownership and Control to which Senator Byrne referred, that the AIDC should be broadened, particularly in the direction of obtaining more finance and also of being able to obtain it locally in the Australian market.

We find from the evidence presented to this Senate Committee that many of these overseas companies that were bringing funds into Australia to develop our resources were raising much of their money on the local market whereas the Australian Industry Development Corporation was able to raise only a certain amount in Australia. When we see the contents of the Bills presently before the Senate we realise that there are great dangers in what may be the purpose of this Corporation in the future. It is interesting to note that when the former Government set up the AIDC there was an expert board of directors to operate the Corporation and to give expert advice. These people included Mr Bunning, a business man from Western Australia, Mr Leonard, who is well known as the Manager of Ampol Petroleum Ltd, Sir George Fisher, who for many years was the Managing Director and Chairman of Directors of Mount Isa Mines Ltd, a most successful mining operation, Sir Colin Syme, formerly of the Broken Hill Pty Co. Ltd, Sir Charles McGrath of the Repco Company and chairman of some 20 other companies, and Sir John Dunlop of the Bank of New South Wales.

The expertise that these people were able to bring to this Corporation must have been very valuable. Of course, they were able to decide which enterprises were really risk enterprises and those enterprises that may be too risky to become involved in. Up to date I doubt whether the AIDC has had any real failures in any companies in which it has invested or for which it has been a vehicle in assisting Australian industry to mobilise equity. I certainly would not be so opposed to this Bill if I felt that the expertise that this kind of people can present was allowed to continue because certainly none of these men would be in favour of public or government control of industry. But I am afraid that the way in which the Australian Industry Development Corporation is now proposed to be set up, it could become an instrument of the Government to gain control of industries throughout this country. I believe that in those circumstances we must have a very good look at it.

I am very interested to know how the Corporation will obtain its finance. I am under the impression that perhaps some of our finance companies, the merchant banks and the life assurance offices will be forced to put some of their money into the AIDC and that it, having advantages in taxation in other ways, will be able to operate most advantageously in competition with these companies. I do not think that that is good for the financial structure of this country because where we have a number of companies at the moment operating in competition we could reach a situation in which we have one great government monopoly. I have talked to members of the Liberal Party. We all agree that the sensible thing to do is to follow the lead of the Australian Democratic Labor Party in the amendment that it proposes to move and to let the Senate Select Committee on Foreign Ownership and Control have a really good look at this matter. It can bring in expert advice and it can allow people with an interest in this field to come before the Committee and explain to it the areas in which they have fears or to express the thoughts they wish to advance. So the Australian Country Party and the Liberal Party will support the amendment. As I am a member of the Senate Select Committee on Foreign Ownership and Control, I feel that I have said enough at this time. When the matter comes before the Senate again I will then be in a position to know how my Party will act and how the Opposition will act.

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