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Thursday, 15 December 1983
Page: 3896

Senator JACK EVANS(3.29) —I guess that one of the great Australian sports is pulling down tall poppies. The Broken Hill Proprietary Co. Ltd is the tallest, the largest and, in its own terminology, the biggest Australian poppy. Therefore it gets more than its share of criticism. It earns some of that criticism. I believe it is entitled to it. But it is also entitled to some credit because it is not only a monopoly power but also a great pioneer in this country. For many years it was perceived by most Australians as a backbone industry, as a vital industry and as a very fundamental industry of Australia. I think therefore that the people who helped to build it over the years are entitled to some recognition and some credit for the great industry that they have built. The people I am talking about are not just the directors, not just the managers and executives; they are also, of course, the workers, the people who have been in there with the picks and shovels and tools, helping to create this great Australian enterprise. But, as previous speakers have indicated, for some time BHP has been given a fair bit of assistance by all Australians, through our taxation, tariff and quota systems. It was perhaps inevitable that one day BHP would come to the Australian Government and say: ' Even that is not enough. We are still suffering because of a number of factors, both international and local. We need even more help'. This package of legislation represents that 'more help' that BHP has sought.

One of the things that disenchants many people is that BHP came to this new Government and held a gun at its head. I do not believe that anybody could deny that. It was evident in the way that straw promises were advanced of billions to be spent by BHP and threats were made that the alternative, if support were denied by the Government, was that it would simply fold up its camp and walk away, leaving the Government to pick up the tab for the massive unemployment and disruption of industry that would follow. So there was no question that BHP was able to apply extreme pressure to the Government to reach the agreement which has resulted in these Bills.

The measures themselves teach us something about the so-called virtues of protection in this country. My understanding, and I believe that of most people, is that the principle of protection is one of helping an industry to become established. One perhaps helps it, particularly if it is a pioneering industry, to grow up. One helps it to grow through the infant stages so that ultimately it will be able to compete on the world scene, in international markets. BHP has grown up and it is time that it stood on its own feet. It is a big boy now but still seems to need help to walk. As a result, the Australian taxpayers will be paying out some $70m per annum-because of the inability on the part of BHP management to create a product that can compete on world markets. We do not blame the Government for giving the proposed assistance. We do not believe that it had an option, given the threat of job losses at a time of massive unemployment, but we believe that it should recognise that, just as BHP had Australia by the short and curlies, the Government also had a weapon in its hand when these negotiations took place. We do not believe that it used that weapon to extract enough control on BHP's future actions, enough guarantees and assurances concerning its future activities in this country.

Certain problems arise from this package. They include the inherent contradiction involved in giving protection to an industry in order to make it more efficient. It is not impossible to resolve that contradiction. The Japanese experience should teach us that government assistance can help to initiate industries which ultimately will become efficient and competitive, which do end up contributing to increased employment, economic growth and higher living standards. We can take a leaf out of that book. Unfortunately, however, Australia seems to have become saddled with a series of industries such as BHP which continue to be a drain upon it, which ultimately contribute to the economy as would a cross between a leech and an albatross. I think the Australian Financial Review put this extremely well in an editorial on Friday, 12 August:

But can we be certain that it-

the reference was to the agreement--

will guarantee the radical restructuring of our steel industry so desperately required?

It went on:

Indeed, how can this occur if BHP continues to be sheltered from the winds of international competition? For decades we have heard the argument that continuing aid is required to enable Australian companies to get to a grown up stage. BHP . . . is still having trouble walking.

Another problem that arises from this agreement which has been reached with BHP is the need for the Government to be prepared sensibly and accurately to monitor BHP's affairs and books. I believe that it will be essential that the Government have access to all of that information, in the same way as does a director or shareholder of any company. Let us face the fact that this Government is in no less a position in regard to funding than is any manager or shareholder of BHP and should be entitled to the same substantial privileges as they, or a director , would enjoy.

A third problem that needs to be addressed is that, through the Steel Industry Authority, the Government will have to ensure that productivity gains are made and that they are real gains. The benefit of this payout to BHP should be the creation of an efficient and internationally competitive industry, not just the pouring down the drain of more money for purposes of bare survival. We want to see BHP right up there amongst the world leaders in the steel industry, not begging for handouts year after year for the next 10 or 20 years. The formula that is provided in the legislation does give some incentive. It does provide the Government with the opportunity to reduce its contribution to BHP. Therefore , there is certainly an incentive for the Government to ensure that BHP prospers under the formula.

Workers and unions are often blamed for Australia's poor general economic performance and our relative inability to sell manufactured products overseas. It is fair to suggest that when we look at the steel industry management must take some of the blame. A contrast can be drawn between the domestic iron ore industry's performance over the last couple of decades and that of the steel industry, which represents the next stage in the process. While the iron ore industry has grown and blossomed, has been thriving, the steel industry has suffered as a result of the actions and decisions taken by its captains, which have helped to scuttle the boat. The legislation before us is simply a means of helping that boat to stay afloat. However, the Australian Democrats hope that it will provide an example of how government assistance can help to make an industry efficient. We hope that the Government will keep BHP under the microscope. We believe that it should play a bigger role in the planning of the whole Australian economy, particularly in key industries such as the steel industry. But the assistance that the Government gives should be in the form of helping to phase in these industries where that will be beneficial to the Australian economy and helping to phase other industries out. Over the next five years the steel industry must be closely monitored, must be kept under the microscope to ensure that it is a growth industry and not a potential phase-out industry. If it is a phase-out industry, the crunch decision must be made before it bleeds Australia dry. We do not believe that the market mechanism should reign supreme, but neither should we endlessly support industries that can make no long term contribution to increasing our communal wealth.

I would like to conclude by posing a couple of questions to the Minister for Industry and Commerce (Senator Button). I am a little uncertain, from reading the Bills, whether the Steel Industry Authority will have the power to control or influence imports of steel. We think that is a vital question, not just for BHP but for all steel users in Australia. What sorts of powers are to be given? What sort of ultimate control and influence in regard to steel imports whether direct or indirect, will the Steel Industry Authority have? Secondly, will the bounty formula result in the Government reducing imports with the object of increasing BHP's productivity and thus, of course, reducing the bounties that the Government must contribute to BHP? That again would obviously be in the Government's interest but certainly may not be in the interests of the steel users of Australia. If the Minister would answer those two questions-he was absent momentarily when I asked the first question, which was will the steel industry--

Senator Button —I heard it.

Senator JACK EVANS —He got that. In general, let me make it quite clear that the Australian Democrats support these Bills. They are an inevitable development in this industry. We see that the Government has no alternative but to bring forward these Bills.