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Monday, 10 April 2000
Page: 15534

Mr ALLAN MORRIS (12:47 PM) —It is with pleasure that I speak to the report: Of material value?: inquiry into increasing the value added to Australian raw materials that has been tabled just now by the Chairman of the House of Representatives Standing Committee on Industry, Science and Resources. I think this report is a useful and important addition to the work of the parliament and in terms of the development of the country. At the outset I want to place on record my appreciation to the committee secretariat, ably headed by Paul McMahon, and the secretary of the inquiry, Mr Russell Chafer. I join my chairman in expressing our appreciation to Mr Paul Bellchambers, who has been on secondment from the department. To add a word about that, the use of departmental secondees to committee inquiries of this parliament is extremely valuable. This must be the fifth or sixth time I have been involved in such a case, and I have always found it to be a mutually beneficial exercise. They bring to the inquiry a lot of internal expertise and often the jargon and the mind-set, but they usually go away with a different perspective, and it certainly helps match up our inquiries with the way things are seen by departments. I thank the administrative staff, Gaye Milner and Lisa Kaida. Often we leave those thankyous to the end and miss them out, so it is important they be put up-front to make sure they are said. As we all know, without the staff, these inquiries would be of much less value.

This is a valuable inquiry but it is not the first on the subject of adding value to resources. The topic has been around for a long time. It has been a matter of concern in the community, in the parliament and in governments for a very long time. This inquiry may well be different, because we have tried to take a different approach, recognising that inquires have been held previously, yet we still do not seem to have made the progress we would like to have made. The idea is to do a first report which lays out an analysis of where we are up to as a country, looking across various industries—primary industry, minerals and so on—and looking across the broad landscape and seeing what we are doing to lay a base for the next stage, which will be a detailed examination of some case studies. These will hopefully go into much more detail and perhaps meet the gap left by other inquiries, because normally an inquiry has to cover both and it is often perhaps too general. What we are trying to do here is to give the generalities at the start and then go into details of the drivers and the impediments of successful and unsuccessful resource value adding exercises. The ones we undertake next are with aluminium and magnesium—two extremely important metals. Aluminium has obviously been successful in its primary role, and magnesium is still developing. The wine industry, of course, has been a massively successful exercise for this country, but dairy and grain not quite so much. So by looking at those areas we hope we can give governments, the community and the parliament a much better insight into how we can improve, because improve we must. As a country we have valuable resources but, unless we can maximise those benefits to the country as a whole, eventually those resources run down; they do not last forever. How we value those and how we use those is extremely important.

One of the issues that came up in the early stage of the inquiry was: what do we mean by value adding? (Extension of time granted) If we look at Bureau of Statistics assessments and those of other organisations, we find that there are a number of different instruments to measure value adding, and that there is quite some dispute as to what is meant by value adding. It is very difficult to get an apples and apples comparison. Part of the reason is: how do you value, say, resources? How do we take into account the iron ore in the ground as the start of an industry which ends up with the iron ore being exported? Technically, in all the measures we use the ore is not valued; effectively, it comes out at zero value. The value added to the product of that industry when sold looks on the surface to be very high. But, on the other hand, if you take a dairy farmer who has got a massive investment in his dairy farm, the value that he adds to that investment eventually looks quite small. So it is difficult to find a way to get over that; to be able to compare, say, a mining industry with a high-level processing industry in a way which is absolutely accurate. I think you will find that in this area people will debate the different issues and argue for particular measurements. But the reality is we do not have one which we can say fits all. That will be a cause of concern for us in the years ahead because it seems the various interest groups use the measures that best suit them.

I should point out, by the way, that the discussion of that issue in chapter 2 is well worth examination. I hope we can get some responses to that chapter. If people give us more input we may go into that in a bit more detail and perhaps eventually make recommendations as to a more effective way. We will not get a perfect way, but there may be a more effective way.

This report particularly looks at how we are going in the world, and the fact is that in many areas we are doing very well. For example, with alumina we feature very highly; we are one of the world's best converters of bauxite into alumina. But at the same time we do not do all that well with aluminium. We seem to work at various levels of the various chains. Probably the most disturbing things are the national comparisons of how we perform in the various sectors. We find that 2.9 per cent of Australia's economy is in agriculture, forestry and fishing—which, by the same, is the same as Canada—whereas the percentage for Japan, the United Kingdom and the United States is between 2.1 and 2.3. In other words, their sectors in those areas are smaller. That is partly because we export more than we use ourselves. But, switching to manufacturing, we find that 14 per cent of our economy is in manufacturing, compared with Japan, 28.7 per cent; the United Kingdom, 24 per cent; and the United States, 20.3 per cent. So there is a very serious gap between how much of our economy is taken up with manufacturing and how much is taken up with other activities. It is clear that we are much bigger in mining and quarrying than comparable countries.

It is that inconsistency in our economic structure and balance that we hope to address. I would recommend that all members with an interest in this area encourage their constituents and the companies and organisations in their electorates to look at this next stage, and the case studies and the issues raised in this report, and provide a bit more information. This report is only as valuable as the eventual input we get. I recommend it to the House.

Mr SPEAKER —Does the member for Forrest wish to move a motion in connection with the report to enable it to be debated on a future occasion?