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Tuesday, 15 September 1987
Page: 93

Mr PROSSER(5.39) —I wish to speak tonight about four areas that affect my electorate-investment, industrial relations, employment and training and the pesticides residual level that we are experiencing with our beef exports. On the first, it is common ground among economic commentators that present levels of investment are inadequate and remain at the lowest level at which they have been for the past 4 1/2 years. The outlook for private expenditure in capital equipment is depressing to say the least. In 1985-86 gross private fixed capital expenditure on equipment fell by 5.7 per cent in real terms and in 1986-87 by a further 3.9 per cent. The Australian Bureau of Statistics forecast no real increase in business confidence in the coming year, and said that it is likely to remain at its present levels and negative in real terms.

We need to look at why there is a lack of investment in the areas of which I have spoken. The first point to be raised in that regard of course, concerns high interest rates. Despite falls recently in interest rates to around 15 per cent our interest rates still remain high compared with those of our competitors. Interest rates here are 5 per cent higher than those in Canada, 4 per cent higher than those in the United Kingdom, twice those in the United States of America and nearly five times those in Japan. Quite honestly, the J-curve is not working; it has not stimulated investment in the small business and industrial sectors in Australia.

Uncertainty in the value of the Australian dollar is another factor affecting investment in the manufacturing sector. We were told quite some time ago that we would be competitive if we had a lower dollar value. Let us look at what really happened to our dollar. Between January 1985 and now our dollar has fallen by something like 49 per cent against the yen. Our other major competitors suffered a similar fate so we did not really get any of the economic advantage that we were told we would get. Not only that, but our manufacturing sector that we were told would benefit from this devaluation did not get a competitive edge, particularly in the Japanese market. Let us look at examples among our overseas competitors. The United States dollar in the same period devalued against the yen by 43.5 per cent. In Canada the dollar devalued by the same amount, 43.5 per cent. In New Zealand the figure was 25.3 per cent and in Brazil it was 94 per cent. One does not need to ask who is gobbling up our iron ore export markets to Japan and markets for other commodities. Brazil would have to be near the top of the list of those doing so. The figure for South Africa was 43.4 per cent and that for the United Kingdom was 19.1 per cent. So much for the great competitive edge we were told we would get with the devaluation of the Australian dollar.

Lack of investment in industry is a major reason why we are not back on the road to recovery in the manufacturing sector. One needs to look at the real incentives to invest in the manufacturing sector in Australia. We need to look at the losses that the Labor Government would have sustained through high interest rates. Let us consider a company that borrows $1m. If interest rates were at 10 per cent $100,000 would be tax deductible. At an interest rate of 20 per cent, $200,000 is tax deductible. In effect, the Government misses out on another $49,000 of company tax at the higher interest rate. The investment incentive is still there in the property sector. High inflation diminishes the repayment of the capital debt and inflation in capital growth assists the property market. There is no real incentive to invest in the manufacturing sector. I believe that we need a positive program to get people to invest, employ people in the manufacture of Australian goods and stop the import of goods.

In regard to industrial relations, the two-tier wage fixing system clearly has not worked all that well. The second tier trade-off has disadvantaged those companies that have run an effective and efficient business. The Government says to those companies that they need to trade off work practices; but when they have never engaged in work practices clearly they have nothing to give. Other companies have gained the benefits for whatever reason. They may have had sloppy management which has given away incentives over time. We need to get back to a system in which employers and the employee unions do not race off to the Australian Conciliation and Arbitration Commission to let it set a figure. Clearly there needs to be a better way of doing things.

The Government has not delivered the goods in restructuring our industrial relations system. Until it does we will not see any positive signs of a turnaround in the business sector. Employer groups, to a certain extent, bear some of the blame because they do not represent all employers. All too often the small business sector is disadvantaged by award rates and conditions struck on major projects. The small business sector pays the price. We need to reintroduce a system where it is worth while employing people and worth while small business being involved in that area.

Concerning unemployment and youth training: our unemployment level still stands at 8 per cent. Youth unemployment is at an unacceptably high figure of 22.7 per cent. Despite the Government's recent report, the training programs for youth remain inadequate. The apprenticeship system that we have today is not working. No plans have been set afoot to correct those imbalances. Quite clearly, businesses are not employing people because it is not worth their while. In many instances in my business, families and parents have asked me to employ their children and they have said they would subsidise the balance of the wage. Of course, that is not permitted and it is not on. Perhaps it reflects the fact that people genuinely want their children to have a job and training and we do not have any system in place which allows that. Perhaps we should return to the way the old craft unions used to work, in that apprentices paid for their training. That seems to have gone out the window. It is the case that the employer pays a hell of a price for the privilege of employing apprentices. We need to get a system where it is worth while people and companies employing the youth of this country. If we do not correct that imbalance we will never solve our long term problems.

In regard to pesticide levels: in the south-west of Western Australia, particularly in relation to our meat exports in recent times, rural properties worth many millions of dollars have been placed in jeopardy by the use of pesticides on farming properties over the years. Since the problem first came to light about three months ago little has been done to resolve it. This problem is threatening one of my State's major exports. Meat processors in my area in Western Australia meet the highest health standards in the world. At this stage they appear to be taking the blame for this problem which was caused by a lack of foresight by State and Federal governments.

The problems of pesticides should be well known by the Deputy Secretary to the Department of Primary Industries and Energy in Canberra, Mr Noel Fitzpatrick, who, for a number of years, was the Director of the Department of Agriculture in Western Australia. Urgent action must be taken to devise methods to correct this problem now. As well as beef, the south-west of Western Australia exports fruit, vegetables, mutton and lamb, all of which could be affected by the pesticide levels in the soils. These problems affect the electorates of Forrest, Brand and O'Connor. The problems stem initially from the growing of potatoes. Many years ago this was a major crop throughout the entire area. In fact, in years gone by over half the land was cleared for the production of potatoes. The Government must be prepared to bite the bullet and undertake a massive education program of property management for farmers as well as seeking solutions to neutralise the residue in the soils. We should not leave the problem until it becomes another major rural crisis for Australia. Our State Government recently provided over $600,000 for assistance to farmers. At this stage, the Federal Government has been surprisingly quiet.

I get back to the point that each of these industries has an effect on my electorate and probably on many electorates in Australia. The problems are those of investment, industrial relations, employment and training, particularly for our youth, and protecting the markets we have. I am disappointed that the present Government has not tackled adequately any of those problems. We need to get proper investment in what I call the dinky-di area of employing people-the manufacturing sector. We need to take away the disincentives to invest in those areas. If a major manufacturer invests in an export industry and the dollar floats wildly, what happens to the markets that he has just spent millions of dollars on to capture? This problem needs responsible economic management from a government that I do not believe is offering that choice to the business sector.

Debate (on motion by Mrs Harvey) adjourned.

Sitting suspended from 5.51 to 7.30 p.m.