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Wednesday, 11 September 1985
Page: 429


Senator ARCHER(11.14) —I wish to speak to the Snowy Mountains Engineering Corporation Amendment Bill 1985. Having read the Hansard record of the debate in the other chamber and having read most of the information concerning the history, development and operation of the Snowy Mountains Engineering Corporation, one can only come to the conclusion that the Corporation is a very great organisation. Since its inception the Corporation has performed many functions. It has produced many great works. It has achieved considerable international recognition and has been officially rated No. 60 in the top 200 international design firms in the world. It has been a top participant in an age of top development in civil engineering works. In Mr Doug Price, the Corporation has very much a top Australian and a top engineer. I wish to acknowledge him very generously. Considerable maturity and enormous experience reside in the Corporation. It is one of the really strong cores of highly specialised engineering talent in Australia and, in fact, in the world. The 1983-84 report indicates that 27 states or foreign countries were subject to assignments of SMEC during that year. However, by reading the legislation, the explanatory notes and the annual report of the organisation, it is clear that everything is not ideal. The report, in fact, spells out some of these things quite clearly.

I have made a thorough investigation to assess whether there are any advantages that the authority has in being a government controlled authority. I have looked at how it would be differently operated were it not for government participation. I have looked to see whether the government association has been used to gain better prices for the work that has been done, to secure contracts that would not otherwise have been available or to secure skilled technical staff who may not otherwise have been available. I have looked to see whether the Government has not been the heavy hand on the shoulder of the authority and whether it may not be holding it back. I have looked to see whether there have been special requirements on the Corporation that would not be required of a non-government sector. I have looked at the borrowing aspect, the terms and conditions of employment, superannuation, severance and matters such as that, as well as the various management practices.

The Minister for Housing and Construction (Mr West), in another place, seemed to demonstrate some of the handicaps of the association very thoroughly. At page 1871 of Hansard he listed six areas that require change. The first change was to:

remove existing restrictions on the range of engineering activities open to the Corporation;

By requiring that that now be changed this clearly indicates that there have been handicaps and obstacles. The second change was to:

include in the statement of functions a specific reference to the government's intention that the Corporation shall, as far as is practicable, involve Australian organisations in the performance of overseas work and promote overseas the interests of the Australian engineering industry;

I think that to include the words `as far as is practicable' only demonstrates that it is now allowing the opportunity for this to be done with overseas firms but to be done, as may be said, with a wink and a nod. The third change was to:

allow the Corporation, with ministerial approval, to form companies or other legal arrangements where this is necessary to assist the progress of involving Australian engineering companies in joint ventures overseas and for other commercial purposes;

Again, we are demonstrating clearly that these sorts of constraints prevent the Corporation from operating in a manner in which similar firms do. It also demonstrates the necessity that is being found of having other people with other skills to co-operate in these sorts of works. Apparently it is now found that it is necessary to include private sector firms to assist in building up the viability of the Corporation's operation in other places. The fourth point was to:

replace the present `corporation sole' by a five-member board of directors, to give the Corporation access to a range of management talent from the engineering, marketing, finance and trade union sectors;

That in itself is a reflection on the operation of the Corporation. It is a quite regrettable reflection, but it indicates that the existing operation is not satisfactory. The fifth point states:

ensure that the Corporation acts in accordance with sound commercial principles.

Again, that is a direct reflection on how it has been operating. Finally:

update the financial provisions of the Act to accord with current Government policy regarding statutory authorities.

That is another financial matter to which the Minister had to draw attention in the debate in the other place. There is no doubt that the Corporation has operated very satisfactorily for a number of years. It did extraordinarily well in the great days of construction of civil works but there now seem to be problems in two areas. Firstly, as I have already said, profitability seems to be very questionable, for a variety of reasons. Secondly, the Minister seems to have difficulty in making an assessment of whether the corporation is profitable, unprofitable, or will be profitable, because each time he mentions it he refers to it in slightly different terms.

It would be more desirable if we could be given some forecast of progress. It seems that the Minister was rather reluctant to make projections on this basis. I wonder sometimes whether it may just be a lack of motivation, or inertia, that has produced the uncertainty. There is certainly no lack of capacity to achieve in the organisation. There is no doubt that Australia needs the Snowy Mountains Engineering Corporation. We need it as a strong, free, vital and fully profit-oriented operation. How do we get that? On the present basis I cannot see that the amendments before us today are likely to change anything in the basic philosophy and motivation of the business. On the present basis we are backing the Corporation into a corner. It cannot be deficit funded indefinitely in spite of the solid performances it has had previously.

On the basis proposed, the people of SMEC face almost certain closure of the business they operate in the not too distant future unless there is a really substantial change in the motivation and operation of the Corporation. We need to look only at such matters as redundance liability, which will almost certainly arise again in the 1984-85 figures. From the last annual report, it seems that the figure is now approximately $25,000 for every employee who leaves, and there have been substantial reductions from 600-odd to 300-odd. This leaves us with a contingent liability in the order of millions of dollars if SMEC continues to wind down and I hope that it does not.

My view is that an opportunity to become involved in their own business, through their own private ownership, may provide the added stimulus for all the Snowy Mountains officers to participate in the organisation, management and profitability of the Corporation. I would like to see an opportunity for this to happen. I have been told that some staff are concerned that if the structure is changed the headquarters will move from Cooma and that on that basis, any such suggestion should be opposed. Clearly there is no need for that to happen. Cooma is very much the home of the Snowy Mountains Engineering Corporation. I hope that it always remains there. The Minister's approach was singularly unconvincing. One way in which the Snowy Mountains Engineering Corporation could be encouraged to become more commercial is by enabling the staff to buy all, or at least some, of the enterprise. The Opposition opposes the legislation.