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Thursday, 21 March 1985
Page: 694

Dr THEOPHANOUS(4.48) —The Bounty (Commercial Motor Vehicles) Amendment Bill seeks to continue a bounty in relation to commercial motor vehicles, and the reasons have been made clear by previous speakers. They relate to the fact that time is required for a response by the Government to the report of the Industries Assistance Commission on this matter. This debate provides an opportunity for honourable members to consider some aspects of what is happening in the area of commercial motor vehicle manufacture and, more broadly, as to the overall industry policy to be adopted by the Government so that some direction may be indicated. Previous speakers have ranged over these matters and I also intend to touch upon some of those aspects. There is a clear need for something to be done in respect of commercial motor vehicles. One honourable member who has raised this matter in the Labor Caucus, and who will be speaking to this Bill some time later, is the honourable member for Kalgoorlie (Mr Campbell). I know that he has studied this matter in greater detail than has any other member of this House. I am sure that he will be presenting a case for Australia seeking to preserve and in fact strengthen the commercial motor vehicle industry.

The industry's record in the last few years has not been good. For example, total registrations of heavy commercial vehicles fell from roughly 52,000 in late 1980 to 48,000 in early 1983. More worrying still is that the importation of small trucks and prime movers has increased dramatically and is now completely overshadowing the production of locally assembled vehicles. Between 1978 and 1983 the share of local production fell by almost 50 per cent. How do we come to grips with these problems? Interestingly, and one might say unusually, in this case the IAC has recommended that the bounty be removed and be replaced by a tariff of 25 per cent.

I note that the previous speaker for the Liberal Party, the honourable member for Mayo (Mr Downer), believes that in this case we should not accept the IAC recommendations. That is interesting because the usual liberal procedure is to embrace IAC recommendations enthusiastically. He said that the industry itself has alternatives. Yet in his speech he went on to attack the industry in a variety of ways by saying that it had not been moving forward sufficiently in restructuring and rationalising itself. He was trying to blame the wages policy of this Government for the industry's problems. Listening to the honourable member for Mayo speak in those terms, one would think that he had totally forgotten the industry policy and the developments in this country over all the years of the Fraser period. I think it would be a fairer approach on the honourable member's part if he were to accept responsibility for what happened over that long period when there was hardly any action in that area, rather than simply try to contend that the higher level of wages is the cause of the industry's problems. I will come back to that subject later.

Another thing that the honourable member for Mayo totally ignored in his comments was that in the two years that we have been in government we have totally changed the previous Government's approach to industry policy. We have a completely different approach which is planned and rational. I know that when the honourable gentleman was involved with the Chamber of Commerce he did not particularly like the planned approach. He believed that everything could be left to the so-called free market forces. That sort of nonsense, if I may say so, was Liberal philosophy masquerading behind the wall of the Chamber of Commerce, and this tends to happen a lot in this country. The Associated Chambers of Manufactures of Australia has a different view, and the Metal Trades Industry Association Inc. has a different view again from that of the Chamber of Commerce. The advice one is told to accept on industry policy depends on what group of businessmen one talks to.

The honourable member for Mayo suggested that we should leave everything to the free market, laissez-faire approach. If we were to do that we would end up with the incoherent industry policy that existed under the previous Government. This policy basically tried to allow things to operate in terms of the so-called laissez-faire market, but as soon as something went wrong the industry was allowed to race off to the Government to ask for more assistance. So a series of ad hoc assistance measures was developed while at the same time there was no overall comprehensive planning relating to industry policies. The previous Government's attitude was simply to leave it to market forces but as soon as the market failed it gave a bit of assistance here and a bit of assistance there. The previous Government had no general comprehension as to what was needed in industry planning.

The Australian Labor Party, in its important annual conference last July, adopted unanimously a platform for the restructuring and revitalisation of industry in this country which is based on an approach opposite to that which I have just outlined. It is based on an approach which involves planning, consultation and putting into place mechanisms whereby the industry, the unions and the Government come together to discuss what is important and what is needed in terms of industry development.

We have put into place various mechanisms relating to a whole range of industries. These mechanisms relate not only to the Australian Manufacturing Council but also to the various industry councils. Each of these bodies has representatives from the companies and from the union sector as well as input from independent experts. This approach is working. It is providing a planned and rational concept of what we need to do, not only at the level of manufacturing industry as a whole, but at the level of the specific industries that we want to develop. It is in that context that we also have to look at the whole question of what constitutes the rational development of industries. Two criteria were established and stated quite clearly in the platform of the Labor Party at its annual conference. They are, firstly, that we shall support industries which have export potential. I refer to industries with the potential to use the skills that we have generated in this country to develop those industries and to export their products. Secondly, I refer to import replacement, not across the board but in those areas where we have an advantage and where we can show, first of all, that there is a sufficient internal demand for a product and, secondly, that we have the skills to develop those sorts of industries. I believe that the heavy commercial motor vehicle industry meets those criteria. I shall quote specifically from the ALP platform. It reads:

. . . promoting the establishment and strengthening of those sections of industry for which substantial domestic demand exists or is projected to exist for which there are substantial employment prospects and which have the potential to develop to be relatively domestically and internationally competitive.

On that point, I should say that the word 'competitive' is thrown about a lot in discussions on industry policy. But the ALP platform refers to relative international competitiveness. I think that is correct because when we have discussions on industry policy there are often absurd comparisons made in terms of what is and what is not competitive. For example, we have been told that in order to be competitive we ought to cut Australian wage levels to a level approaching those of the poorest of the South East Asian nations. That is what some people mean by being competitive. If that were to be the view of, for example, the United States of America or of the countries of western Europe and if those countries were to adopt such an approach in order to be competitive, we would have a massive reduction of the standards of living in most of the industrialised world. Countries such as the United States, Canada and those of western Europe have all rejected that concept.

In fact, being competitive in the context to which I am referring means that we can compete in terms of the production systems that we put up. We need the most modern production systems and a skill base which is competitive with other nations. To be competitive in industry nobody is suggesting that one has to reduce wage levels to those of the poorer nations of South East Asia and elsewhere. That would be an absurdity. It would be politically unacceptable and in fact is something which the Opposition clearly has not thought out. What was advocated in the so-called Liberal document on industry policy? It advocated a return to the days when everything was supposedly achieved by the laissez-faire free market, and it blamed all the ills and problems of industry in this country on the accord and the wage indexation system.

If it were not for the co-operation of the union movement under the accord, the substantial pick-up that has already occurred in industry development would not have occurred. The co-operation of the union movement has not been merely in the stabilisation of wages, but in several other areas such as stabilisation of costs and the introduction of modern processes of production. That co-operation has come as a consequence of the accord, not from throwing out all co-operation and consultation as the Opposition would do. In addition to going back to this outmoded philosophy, it was proposing to abolish the Australian Manufacturing Council and the industry councils. In other words, it was going to abolish all of the consultative mechanisms which bring together workers, employers and government specialists to work out the planned and rational approach to industry policy which I have outlined.

To say all these things is not to suggest that more could not be done. Of course more could be done. In fact, there are still problems but there is no question that the situation has been turned around from the terrible recession which we were in and which affected the manufacturing industry in particular. One of the most important things to do is to encourage new fixed capital investment in manufacturing. There are two aspects to this matter. One of them the Opposition does not care to consider, and that is the question of how to move capital resources from the unproductive speculative area in which they are often placed nowadays into a productive area, especially manufacturing industry. Opposition members have been talking in the last few days in this House about taxation reform and how they are happy to have it, but there has been no reference at all as to how the taxation system might be reformed so as to discourage speculative investment and to encourage investment in manufacturing industry. I will not go into details at the moment, but we ought to be thinking, as we approach the taxation summit, in terms of not only what we will do for individual taxpayers but also what we will do to affect the industry structure of this country through the taxation system. The taxation system has important consequences for manufacturing.

Unfortunately, except for the last few months, fixed capital investment has been falling, especially in the last two years of the Fraser Government. We have to turn that situation around. I seek leave to incorporate in Hansard a table which demonstrates the way in which new fixed capital investment has been falling both in the basic metal products area and in the fabricated metal products area, the two key areas of manufacturing.

Leave granted.

The table read as follows-





1981-82 1769.4 490.7 492.9 473.8 387.1 82 1982-83 1393.8 301.6 236.0 214.3 184.4 83 1983-84 705.1 169.0 139.4 84





1981-82 391.1 104.8 98.8 119.3 79.8 82 1982-83 406.1 125.1 91.8 92.8 66.1 83 1983-84 324.6 95.8 75.9 84

Dr THEOPHANOUS —I thank the House. It is important that we take up the question of manufacturing investment, especially in fixed capital expenditure. Unless we do so we face the prospect of reverting to the cycle of the early 1980s under the previous Government when manufacturing investment was falling. I appeal to the Government and to the Minister for Industry, Technology and Commerce (Senator Button) to put forward proposals on how we might, in looking at the restructuring of the taxation system, look at specific proposals which may help assess industry development. I believe that sections of business, especially the Australian Chamber of Commerce and the Metal Trades Industry Association of Australia are very keen to incorporate in the taxation debate some discussion of specific assistance measures to industry through the taxation system. I ask the Government to look at the possibility of more specific assistance measures to industry. I suggest that we go back to the platform that I referred to earlier and try to identify those areas of industry where we have an advantage in export potential and where we have the skills and sufficient local demand to produce those goods here. If we identify those areas of industry, we may be able to encourage them by looking at industry specific measures. The honourable member for Mayo advocated bringing back the across-the-board investment allowance which was not directed towards manufacturing industry. The cost of that would be between $1,000 million and $2,000 million in the next two or three years. At the same time the Opposition is saying that we should cut the Budget deficit. This is part of the incoherent program it put up at the last election.

We should be sensible about this. Let us see whether in fact we can encourage specific proposals which will assist the development of specific industry areas through the planning process instead bringing back some vague investment allowance whose dominant benefit was not in manufacturing but in other areas, including those where not enough production and employment was generated. If we want to do something about manufacturing, I urge the Government and the union movement, which is already looking at this matter, and the Metal Trades Industry Association, to put forward proposals.

Mr DEPUTY SPEAKER (Mr Millar) —Order! The honourable member's time has expired.