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Thursday, 21 March 1985
Page: 700


Mr CAMPBELL(5.26) —In rising to support the Bounty (Commercial Motor Vehicles) Amendment Bill 1985 I would simply observe that the lead time for the industry is probably of the order of 12 months and I think that the industry will need at least that much notice if it is to make rational decisions. I am concerned about the sterile nature in which the whole debate on this subject in Australia is conducted. The truth of the matter is that those who put forward the free trade arguments are as barren and sterile in their capacity as those who put forward the protectionist argument. There seems to be no middle ground. I would include the Industries Assistance Commission in this narrow field. I think a perusal of its reports will show that it does not realise that nothing happens in isolation, that everything that happens in our economy is interdependent.

In the 10 minutes that I have to speak I would like to address myself to a few of the problems as I see them. If we are talking about fixed capital investment in the industry, and there is certainly a need for that, one of the first things we have to do is do away with, is the nonsense of State protection. I venture to say that there are many noble, brave and honourable members here who will quail in their seats at the thought of taking on that thorny issue. Unless we do away with individual State protection there will be no upturn in fixed capital investment for the simple reason that for a market our size no company could possibly afford it. That, I might add, is the reason we have seven local motor vehicle manufacturers in this country whereas the United States of America, which is the world's biggest market, has three.

The honourable member for Mayo (Mr Downer) waxed lyrical about the rationalisation of industry. He said that he did not see why we could not apply what had been done in the motor car industry to the truck industry. I think this demonstrates a lack of understanding. We are per capita the world's greatest users of heavy trucks. Our conditions favour the use of heavy vehicles. Our road conditions have led to the development of a certain type of truck. These trucks, as the honourable member for Streeton (Mr Lamb) said, are very largely custom built. We therefore do not lack a competitive advantage. It is worth noting that the heavy trucks that are flooding into this country are not coming from Japan, although I am sure that will happen in the future. They are coming in from Europe, principally from Germany and Sweden. Many of these trucks are manufactured by Scania, Volvo and Mercedes-Benz. These companies are certainly taking advantage of a dirty float to some extent. Probably more importantly, they are prepared to land their trucks here at marginal cost. These companies have geared themselves up to tackle the very substantial United Kingdom market and they are doing so very successfully. If one goes to the United Kingdom one sees the roads full of these vehicles. As these companies have geared themselves up to make right hand drive vehicles, it is obvious that they will unload their spare capacity on the Australian market. I suggest that there is a very large element of marginal costing in the pricing of these vehicles.

It is also worth noting that these vehicles are brought in as completely knocked down units. Australian components are not used, not because they are not efficient or price competitive but simply because Australian manufacturers are not even allowed to tender. I might add that the reason Rockwell is no longer producing components in Australia is not that it could not make the right product or it was not price competitive but simply that in many cases it was not allowed to tender. That ridiculous situation could have been addressed. We needed some device to make sure that transfer pricing did not take place and some device to make sure that open tendering was occurring.

There are ways in which I think we could improve our industry. I am sure that there are things that need to be addressed. Companies such as International Trucks and Kenworth Trucks Pty Ltd make fine products which all have a 55 per cent plus Australian component. One must remember that no diesel engines are made in this country, so it is very hard to get much over that content in money terms. These companies have suffered from many aspects of government policy. Let me just dwell for a few minutes on what happened in the case of International.

Some time ago the previous Government had to make a decision on Army purchasing. The Army wanted the all-singing, all-dancing Mercedes-Benz truck. That truck was bought in preference to a local product. I know the argument that International originally did not tender and that in the interim International went broke. The new managers came forward and said: 'We must tender for this vehicle'. International put forward a tender but it was not considered. If the Mercedes-Benz truck was better it was only marginally better and the International truck had been proven in Australian conditions. It had the other interesting asset of being 40 per cent cheaper, but that was not considered. It was actually cheaper than the imported vehicle. What happened with that decision? We spelt the demise of truck design capacity at International. We struck it a very heavy blow. That is a sad thing. It just goes to show how these things are interrelated.

We are now faced with the same decision once more when the Army is looking at one and two tonne truck replacements. We find that the Army has basically two trucks on its short list. I do not think Willys will be seriously considered. We have the Gelandewagen of the Mercedes-Benz group and the Land-Rover. Land-Rover is putting forward a six-wheel vehicle of two tonnes capacity which is Australian designed. It is a unique vehicle. If it is accepted by the Army it will go into production in Australia. It has a ready market throughout this area and, I suggest, throughout our neighbourhood, particularly in the comfortable off-road passenger transport market-a booming market. If the Army is allowed to buy the Mercedes-Benz for whatever reason, that truck will not be produced in Australia. Leyland, which is the principal in the United Kingdom, has guaranteed that if that truck is bought by the Army all orders will be fulfilled from Australia. That has to be considered in the interests of Australia and not necessarily in the interest of the Army. I say at this stage that I am feeling a little bitter as I learn more and more about the submarine tendering process we have just undergone.

The Industries Assistance Commission report will seek to reduce the duty on the completely knocked down vehicle to the same as that of the completely built-up unit. Let me spell out a couple of the ramifications of this. In Western Australia, where we have a very dynamic Minister for Transport and a good technical capacity in our Metropolitan Passenger Transport Trust, we have developed what is probably a world leading capacity for the conversion of diesel engines to natural gas. We have been forced into this situation because of the irrational and outrageous decisions of Sir Charles Court, who was at one time Premier of the State. He locked the State into a take or pay contract for which it simply could not find the capacity.

With Western Australia's ability there is a very good chance that we can build buses in Western Australia to supply Asia, where there is a horrendous pollution problem caused by diesel fumes in the cities. People who have been to those cities will be able to vouch for that. Natural gas burns very cleanly and would, no doubt, make a very big contribution to reducing that pollution. If we apply the same duty to chassis imports, we will increase the cost of a bus chassis by in excess of $10,000. That will make us very uncompetitive. Coupled with that, the IAC in its wisdom appears to me to be abolishing the 2 per cent preference where products are not made in Australia. Again, Western Australia has identified an eight-inch section aluminium extrusion that is not made in Australia and which it wants to buy. Incidentally, 98 per cent of it is made from bauxite from Western Australia. This will simply price us out of the market. What will happen-I prophesy this-is that we will transfer this manufacturing sector to New Zealand. New Zealand has taken the step of reducing its tariff from 45 per cent to 10 per cent. In the case of the British preference, which New Zealand still has, it has reduced the tariff to zero. There is already some evidence that the New Zealanders are gearing up to build bodies in New Zealand and ship them whole to Australia. We must remember that New Zealand goods have no tariff to overcome in entering Australia. I accept that this is how it should be. I do not want to disturb that relationship, but I do not think it is wise to put these contingent millstones around the neck of our own industry.

In this situation in which we make these ad hoc decisions and do not take a national overview of the results of our decisions we find ourselves simply flopping from crisis to crisis. One of the solutions advocated by the honourable member for Mayo was the introduction of across the board investment allowances. I can cite the ridiculous situation in which investment allowances were paid on heavy tractors that were made overseas. The manufacture of heavy tractors, for instance, is an area in which we could be very efficient in Australia. In Western Australia now two heavy tractors are made which are very good. We as a government should be setting out to make sure that there is not a proliferation of heavy tractor manufacturers but that there are perhaps one or two to satisfy our own requirements. It would not be necessary to pay the 20 per cent investment allowance for those imported machines. I certainly would oppose very strongly any attempt to reintroduce that. That gives just one example of the narrow thinking of some people who I guess one would say come from the two bob each way section of the Liberal Party-the section which wants free trade, the protection of its own interests and, of course, lower deficits, which they apparently think we can engender by giving handouts to their friends.

If we in Australia were to pick out those things we do well and support those things we could have viable export industries in Australia. We can cast our minds back to 1948 when a decision was made to produce an American car. The then General Manager of General Motors-Holden's Limited had left the company and was strongly advocating that we produce an Australian car. If we had done that at that stage we would have produced a car ideal for the conditions we have in Australia. I suggest that it would have had a higher than normal ground clearance, it would have had a very big radiator and it would probably have been in the forefront of air-conditioned cars. We would have had a ready market for this car in countries such as Saudi Arabia, South Africa, India and perhaps even some of our closer neighbours. But we missed that opportunity. We never gave ourselves the opportunity to produce anything more than America's second best. I believe that that was one tragedy for this country.

What worries me is that we do not seem to learn. I put in this category not only the Liberal Party and the National Party, whose performance has been pathetic, but I must say with some concern that I am worried that my Party is going to go down the same road. I say very strongly that we must pick out areas of excellence in Australia. We must pick out the things we do well and concentrate on them. If we do not we will not succeed; we will always be a bit part manufacture and we will always be an expensive manufacturer. That is not the way to engender the jobs we are going to need.

My background has been in the primary sector and I know that the primary sector cannot provide the jobs Australia will need in the future. We have to have a viable secondary industry. We have to make sure that that is a secondary industry we can afford and one that pays its way. I am sure that that can be done. There are many areas in which we have expertise. I give just one example: We are today the world's best producers of diamond drills; we make the best diamond drill equipment in the world. This is not surprising because we probably have the greatest need for that equipment. Yet we find ourselves competing in overseas markets against companies-mainly the Americans-putting forward a product that is 80 years old. Such products are completely written off and that Americans can afford to under cut us. We need a government with vision to extend to a company marketing such a product enough margin in the way of assistance to get its products on to the market. Once we are on the market and established, the productivity of those machines will sell them, but it is very hard to sell productivity to a foreign buyer until we can demonstrate it.

I also make a point for which I expect I will not be thanked. I believe that Australia's future and its survival as a sovereign country rely very much on our ability to look after ourselves. We must have self-sufficiency. I do not believe, like the Halfpennys and some other people in this world would have us believe, that we should make everything. That is a nonsense situation but we must be able to make the key stuff. It is only when we have that independence that we can shuffle off the shackles that are currently binding us to the United States of America and other countries. I say in passing that I believe we are becoming more a colony of the United States and Japan than we ever were of the United Kingdom. We must develop a self-sufficiency of our own. That means that we must have quality products. We must still have access to overseas technologies and be very keen to take them to our bosom and develop them further. When we have done that we will be a sovereign country that can stand up and support our allies but not be a sycophant; a country that can make a contribution to world peace by saying, as a sovereign self-sufficient friend to our allies: 'We think you are making a mistake'. Let us make no mistake about it; in our present condition we are supplicants and at a great disadvantage. I quiver every time I hear us making the same grovelling noises to our ally, as Margaret Thatcher has recently been making on the part of the United Kingdom. The future is there. It can be done in this country but it will not be done if we do not take an overview and work in a concerted way towards overcoming these problems. If we do not have a manufacturing sector we will not survive as a nation. We will go on existing as we are, as half a dozen grovelling little States.