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Wednesday, 11 September 1985
Page: 431


Senator COONEY(11.25) —The Snowy Mountains Engineering Corporation Amendment Bill deals with the machinery by which the Snowy Mountains Engineering Corporation will function hereafter and the scope of its future operations. Senator Archer touched on this when he said that until now the Corporation had been successful. He is concerned about its future. He hopes that it will continue to operate at Cooma and is concerned that in the future it will not have the motivation and the will to get ahead that it has had until now. The lack of motivation he perceives the Corporation to have he believes will be overcome by selling it to its members.

One difficulty with that proposition is that since the Corporation was set up by a coalitiion government in 1970 it has operated very well. Only in the years 1983-84 and 1984-85 has it not made a profit. The evidence is that the Corporation has been very successful. Until recently it has made a profit and has provided skills and experience to Australians and to people overseas who are looking for Australian services, and has provided them very well. Now, along with similar interprises around the world, it has had a downturn in profit. In fact, it has made a loss.

This has become a debate about privatisation and what should happen to corporations which have been conducted by government. When a question arises as to what should happen to them in the future it is answered by saying that there should be privatisation. That is the issue opened up by Senator Archer. The debate is not so much about the machinery and the scope of the Corporation but about how it should be conducted in the future. The issue of privatisation opens up questions such as the areas in which government enterprises should and should not operate, whether a government enterprise should be restricted to accommodate the activities of private enterprise, and whether it should surrender an activity to private enterprise and allow private enterprise to acquire the will and the ability to run the organisation.

I do not think Senator Archer said that but he certainly put the proposition that if a government enterprise suffers a downturn and there seems to be a lack of motivation amongst those running it, it should be privatised. In a sense, that is a matter of creed. That is the question he proposes. Whether government enterprisis should be sold to the private sector is a matter of creed. In other words, it is a self-fulfilling wish: If an enterprise can be privatised as a matter of course, as night follows day, it will be more successful. But does that follow? That is the question with which we will be struggling today and no doubt over the next months and years we will debate it.

The other issue this Bill raises is whether the Government has an obligation to facilitate the development and preservation of the skills and experience needed for the well-being of the community. The coalition Government in 1970 said that governments have that obligation. The Government of the day under Mr Gorton introduced a Bill which set up this Corporation. Another question in this area is whether private enterprise has any obligation and, if so, what obligation to facilitate the development and preservation of the skills and experiences needed for the well-being of the community. It is a question of whether private enterprise has that obligation just as government does. My submission is that that question should be answered in the positive. Just as government may have a duty to facilitate, set up, maintain and develop skills and experience in the community so that that community can function well at all levels, so has private enterprise a similar obligation. It has to be noted that during the 1970s the government conducted this Corporation. It, rather than private enterprise, preserved the skills and experiences that had been established during the operation of the Snowy Mountains scheme.

The Bill before us proposes to amend the Snowy Mountains Engineering Corporation Act 1970. The Corporation was set up under section 6 of the principal Act. It had to carry out certain functions which are expressed in section 17 of the Act. As I said before, the original Bill was introduced by a coalition government. The Minister for National Development, Mr Swartz, introduced the Bill. In doing so he spoke of the great skills and extensive experience of the engineering staff which was then, and had been for some years prior to 1970, involved in the construction of the Snowy Mountains scheme. Mr Swartz said that the people involved in the investigation, design, scientific services and supervision of that project-that is the Snowy Mountains scheme-had `more than paid their way in effecting major savings in the cost of the works'. He went on to say:

In recent years-

he was talking about 1970--

they have been in a position to provide similar valuable services towards the problems of major engineering projects in Australia and overseas. Fees from such services already amount to $3 million a year--

that was in March 1970-

It is this important component of the Snowy which we propose to retain. The specialist staffs will form the basis of the engineering consulting corporation.

In my view, Mr Swartz expressed a very sound proposition based on sound policy and philosophy. That philosophy is still as sound now as when it was proposed by Mr Swartz on behalf of the coalition Government in 1970. To put his speech into context, the Minister said that it was not his Government's intention to `set up an organisation which will compete directly in all fields with Australian engineering consultants'. He said:

. . . most of the jobs the Snowy will undertake will be those which up to now have been done by foreign consultants or will be in fields not adequately serviced by Australian consultants.

The Corporation was set up in that situation and was successful. The present Bill ensures that that success will continue in the future as a flagship for Australian science, engineering ability and the skills and experience in Australia. Hopefully it will also be a profitable flagship.

The Corporation was set up primarily to preserve in Australia those skills which had been built up in this country through the Snowy Mountains scheme. Those skills included skills in engineering, design, the provision of scientific services and construction. It is fortunate for Australia that that Corporation was set up because too many skills have been lost to Australia during the 1970s and 1980s-for example, skills in ship and plane construction, manufacturing industries and trade. It is necessary for Australia's economy, for its social well-being and for both the present and future generations that skills be maintained in Australia and increased. This Corporation has been a very significant institution in maintaining that skill and experience in Australia which is so essential for its development. In 1970 it was clearly recognised that the government had a responsibility to maintain those skills in this country.

Besides maintaining skills, the Snowy Mountains Engineering Corporation was a profitable exercise until 1983-84. I think Senator Archer acknowledged this. He cited quite generously, I think, the position that it held in the overall list of world institutions in this area. The Engineering-News Record of 1 August 1985 listed the top international design firms. The top 10 international design firms were those with foreign billings totalling $50m or more. The next 22 were those firms with foreign billings totalling $30m a year. The next 30 were those firms with foreign billings totalling $20m to $29.99m a year. The ninth of those firms with billing totalling $20m to $29.99m a year was the Snowy Mountains Engineering Corporation. It was numbered 41 in the overall list of international design firms attracting foreign earnings.

It is to be noted that it was not the only Australian firm in those listed. Another Australian firm, Rankine and Hill Pty Ltd, a private company, was listed 154 in the overall ratings. That is very creditable too. That illustrates two things. First, it illustrates that the government Corporation can operate successfully in world competition. It also illustrates that the Corporation did not block at all the efforts of a private company, Rankine and Hill, which also operated in the same area. They both operated successfully.

In 1970 the Snowy Mountains Engineering Corporation was set up by a coalition government and thereafter traded successfully and profitably up to, but not including, the year 1983-84. I think it is likely that it will not have traded profitably in the 1984-85 period. The trend in the markets within which it operated reversed in that period when it started to experience its downturn. Not only operations carried out by the Corporation but also operations generally in this area were not so profitable in that period. Something had to be done. The Bill presently before the Senate is the machinery which the Government intends to use to do something about it. The Minister for Housing and Construction (Mr West), in introducing this Bill in the other place, said:

This Bill provides for the restructuring of the Snowy Mountains Engineering Corporation to put it on a more commercial footing and to allow it to participate more effectively in the international engineering market.

The Bill does this by increasing the area within which the Corporation can operate. It enables the Corporation to help involve the Australian engineering industry as a whole in overseas work. It enables the Corporation, with approval from the Minister, to enter into legal relationships with other entities. For example, it can form companies with other entities. This is to encourage and make possible the participation of Australian engineering companies as a whole in projects, including overseas projects. The Bill makes it possible for the Corporation to obtain managerial assistance from sources outside the public sector. So the Bill enables a wedding of the private and the public sectors. It does not advance some hard and fast policy but says what can be the most effective conglomeration of institutions in order to see that Australia is well served at home and abroad. In effect, the Bill aims at preserving the professional skills and experience built up in the Corporation, following on from those engendered by the Snowy Mountains scheme and, at the same time, making the Corporation a profitable commercial entity.

It is true, as Senator Archer has remarked, that advice was sought from a management consultant firm when difficulties were experienced. The firm of Peat Marwick Mitchell Services was engaged to see how this Corporation could be made more commercial. It is in this light of advice received from that company that this Bill has come before the Senate. The arguments against this Bill, and indeed against Bills of this nature, and in favour of privatisation, include the proposition that the work of such a corporation should be left to private enterprise, that the Government should not bolster such a corporation with loans and guarantees, and that the purpose of the 1970 Act has now been accomplished and should no longer be kept in operation or, as Senator Archer said, the Corporation should be privatised or at least people within the company should be given the opportunity to obtain shares.

I wish to set out some criteria which I regard as pertinent in the light of those arguments. These principles can be debated not only in this debate but also in the coming months. Certainly these arguments should be examined. The first is that the Government should be loth to support enterprises which make a loss and which do not perform a service to the general community justifying that loss. That is certainly not the case with this Corporation, which has been most worthy in all senses. Secondly, there is no inherent vice in a government enterprise which could appropriately be conducted by the private sector. This again is illustrated by this Corporation. It is a corporation that could have been conducted in the private sector, but it has in fact been conducted by government in a way that has made it successful. I am sure that it will continue to be successful in future as a result of the amendments contained in this Bill.


Senator MacGibbon —That does not mean that it has been successful.


Senator COONEY —It has been successful up to now.


Senator MacGibbon —Oh, come on-three years of losses.


Senator COONEY —Many a private enterprise organisation has losses, too. One does not look at a particular corporation or institution within a confined time scale. One looks at it over its whole period of operation. If one looks at this Corporation over the whole period of its operations, it has been very sucessful indeed and deserves the chance that this Bill will give it of returning to commercial success in the future. It continues to be successful in maintaining engineering and other skills of which I have spoken, and it will maintain those skills in future. If given a chance, it may return to profitability. In fact, the evidence to that effect is there. In other words, there is no natural law against governments carrying on businesses that are capable of being carried on by the private sector. If the evidence shows that a particular institution, organisation or corporation no longer functions correctly and should not be kept alive as a commercial proposition or for some other reason, certainly consideration should be given to it, but it should not be abolished simply because it is conducted by government. There is no creed, law or natural proposition that an entity should be abolished simply because it is run by government.

The third proposition I put is that government should encourage private enterprise, but in a context where both it and private enterprise have a responsibility to the overall community. Again, that is the sort of thing this Bill will enable to happen. The next proposition is that government in particular but also the private sector has a responsibility in maintaining and developing skills and experience in Australia consistent with the requirements of the community. Australia does have requirements for engineering and designing skills-the sorts of skills which this organisation in Cooma provides and which hopefully, private enterprise will also provide. That is a significant factor to take into account when deciding what to do with this Corporation.

Government should not abandon a successful enterprise on the sole ground that the private sector has acquired the ability and will to perform it. It is said that people in this enterprise could take it over. Perhaps they could; perhaps they could not. It does not follow that because they have the ability to do so they should do so when government has conducted it so successfully for so long. To hold otherwise would be to accept as immutable a principle that government should surrender its enterprises whenever a private individual exhibited an ambition and ability to carry out their functions. As a matter of philosophy that should not be the case. There is nothing against it if the occasion invites that situation, but when that is not the case the occasion should not be jammed up, switched round and made to fit into a strait-jacket simply because a particular creed or philosophy is abroad. Privatisation should not be seen as a self-evident creed. If in any particular instance privatisation is to be instituted, that should be done only after proper evidence of social, economic and general community benefit in doing so. So far in this debate no evidence has been presented to show that this successful Corporation should be left in any other state than is presently suggested by the original legislation and by this amending Bill that is now before the Senate.

A central issue in deciding whether a government should initiate an enterprise or continue with it is the service it provides to Australians as a whole. This Corporation has a proud history in that regard. Overall, if the Snowy Mountains Engineering Corporation is measured against these criteria, then it appears as a highly successful organisation that is more than worthy of preservation. Since 1970 it has served this country well, both at home and overseas. It has served as Australia's engineering flagship abroad. It has given the nation foreign earnings, and has kept in this country skills and experience which otherwise would have been lost. The Corporation has not set up a monopoly. It has not put aside private enterprise, as has been shown by its actions in respect of Rankine and Hill Pty Ltd, of which mention has already been made. Generally, given the Corporation's record, it is entitled to be given the chance to continue to flourish-a chance that will be given by this Bill. In those circumstances I commend the Bill.