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Thursday, 18 April 1985
Page: 1362

Mr DOWNER(11.38) —I join my colleagues in expressing some reservations about the Bounty (Injection-moulding Equipment) Amendment Bill, in particular some of the comments made by the previous speaker, the honourable member for Parkes (Mr Cobb). I do not wish to take up the time of the House by covering ground already covered fully by my colleagues, but I say from the outset that the injection-moulding equipment industry has been the subject of seven separate reports over the last 10 years; very nearly one report every year. Since 1979 the industry has received a total of more than $5m in government assistance through the bounty scheme alone and now it is going to get an injection of a further $2m through that bounty. It also has the additional benefit of assistance by way of a 15 per cent tariff on imports of injection-moulding equipment.

Despite all of this assistance, it is an industry which has seen its total local employment drop from 349 people in 1980 to 82 people in February 1984. I understand total employment has declined even since then.

In 10 years the industry has contracted from four manufacturers to just one-Battenfeld (Australia) Pty Ltd. It is an industry which in recent years has seen a very substantial increase in import penetration. The simple fact is that the domestic industry has failed to compete and failed to perform.

In spite of this record, the Government, through this Bill, is asking the Parliament-and, of course, the people of Australia-to extend the assistance still further. Let us hope that this investment by the Australian community will, at least on this occasion, be fruitful. Towards the conclusion of its 1984 report, the Industries Assistance Commission stated:

. . . the company--

that is, of course, Battenfeld-

will have to meet or better the prices of imported machines and thus buy its market share. The recommendation for a four year bounty is intended to help the company achieve that condition by passing the bounty on to users. It is not intended to be a means of allowing the company to make larger profits, subsidised by Australian taxpayers.

That sentiment of the Industries Assistance Commission is exactly right. The bounty should not be used just to prop up profits; it should be used by the company to invest and build itself up.

The Commission report goes on to emphasise that if the company does use the bounty to improve its market share, the company is likely to see an overall increase in employment, a reduction in costs and, ultimately, the ability to operate with the recommended long term assistance only.

It is to be hoped that the IAC's optimism that this may happen will be confirmed over the next four years, but, even if it is not, under no circumstances should the bounty be extended beyond 1989. The community should not be forced to continue to prop up a company, or an industry in general, which is not efficient. Certainly, Battenfeld, the sole beneficiary of this assistance, has expressed the view that it can perform more effectively, and its commitment is quoted at some length in the IAC report.

I note with some concern, however, that Battenfeld believes that it could reduce production costs through the introduction of the latest technology, but apparently its capacity is limited. Its competitors overseas have a sound record on introducing new technology, and that is one of the reasons they have done so well at the expense of Battenfeld in Australia.

Experience within Australia, and of course overseas, shows that those companies and industries which are able to adapt to new technologies, which are able to plan and incorporate new methods, are the companies which will continue to show growth and expansion. Battenfeld has stated in its submission to the IAC that it has not made great use of the latest technology, and it made exactly the same point in 1983 in the Temporary Assistance Authority inquiry. I would strongly urge Battenfeld to utilise the next four years, with the help of the bounty assistance, to become familiar with the latest technologies in its industry and to incorporate them into the production process.

Battenfeld has stated its objectives. The IAC has supported those objectives and believes they are achievable. At considerable expense to the taxpayers, the Government has also decided to back the firm. I want to make it perfectly clear, however, that this assistance-I include in that the tariff assistance-should not be regarded as something which is indefinite. If Battenfeld cannot restructure and revitalise over the next four years, the taxpayers cannot be expected to support a lame duck. If Battenfeld does perform in that period, as the taxpayers no doubt hope it will, I look forward to seeing it make a contribution to the community without assistance for the rest of this century.

Battenfeld's capacity to succeed, of course, will be inhibited by the Government's highly regulated labour market and its passion for the economically irrational concept of full wage indexation. It will be inhibited by the excessive burden of Federal and State taxation and charges, by high transport costs born out of an anachronistic system of monopolies and by that web of government red tape and regulations which adds so substantially to business costs.

From the rhetoric of the Minister for Industry, Technology and Commerce, Senator Button, we have been led to believe that he understands these inhibitions. But let us stop for a minute and look at the reality. The reality is that the Department of Industry, Technology and Commerce has a record in a number of areas of what could only be described as very substantial inefficiency.

One example of this inefficiency which is relevant to Australia's sole manufacturer of injection-moulding machines is in the field of anti-dumping measures. In 1983 the Government revised the anti-dumping Act with a view in particular to accelerating anti-dumping procedures, and that was a general concept which I supported. We now learn from industry that these changes have complicated the anti-dumping procedures considerably, thereby hindering any form of assistance that anti-dumping should provide to industry.

The evidence required from companies for Customs officers to act on dumping complaints is Kafkaesque in its complexity. Profit and loss accounts for every division of the plaintiff company and profit and cost analyses of every order received are required. Where companies are selling through a distribution network of different companies, full details of pricing at each level of distribution are required for each contract. Other voluminous information on forward orders, stocks, returns on investments, market shares, ability to raise capital, and so the list goes on, dating back 18 months, is also required. All this information has to be provided to the Department of Industry, Technology and Commerce within 45 days.

The fact is that if a company such as Battenfeld is threatened by dumped products, and honourable members know only too well that the practice of dumping has grown almost exponentially in recent years, it has to wade through quantities of paperwork which can only be described as staggering. It is alarming that the Government, for all its rhetoric, has complicated and not simplified the anti-dumping procedures. It has done so to such an extent that 80 per cent of anti-dumping applications are now rejected; yet two years ago only 30 per cent were rejected. It is clear that the reason for this is the growth of bureaucratic obfuscation and not a decline in dumping practices on world markets because all the evidence shows that dumping is increasing and not declining.

This sort of incoherence in government policy is becoming increasingly apparent throughout the area of industry policy. The Government, in this field as in so many other fields, has lost any sense of direction. It has also done so in the area of temporary assistance. All honourable members will recall that in 1983 the injection-moulding industry was the subject of a Temporary Assistance Authority inquiry. I hope temporary assistance will not be sought again in this industry because as it is, it is getting enough help from the taxpayers. If assistance is sought the industry will face substantial bureaucratic delays. As with anti-dumping provisions, the Government modified the processes and criteria for receiving temporary assistance, yet instead of making the process more efficient it has become bogged down again in bureaucracy.

One company, a manufacturer of empty gelatine capsules called Ely-Lilly, lodged an application for temporary assistance on 10 November 1983. The reference was not sent to the Industries Assistance Commission until 25 October 1984, nearly a year later. It had languished in the bureaucracy for 11 1/2 months. The IAC acted expeditiously and reported on 7 December of that year. Subsequently, the Department considered the report and was about to submit it to Cabinet when the company involved-Ely-Lilly-said it could no longer sustain production and announced the closure of its operations. That occurred over a year after it had applied for temporary assistance. If there is a better example of bureaucratic inefficiency, I would like to hear about it. That is an example of how the Government is making all the more difficult the development of industry policy and the growth of industries in Australia in a very difficult international environment where there is a great deal of dumping.

There are many other examples of this sort of delay and those sorts of problems. These issues are not minor; they are central to the administration of Australian industry policy. At present, that policy is being administered slowly and inefficiently, with no sensitivity for the problems of the private sector. It is in this environment that the injection-moulding industry has to try to thrive. I very much hope that it can, particularly without the indefinite continuation of bounty and tariff assistance which is imposing such a substantial cost on the community.