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Thursday, 4 May 1989
Page: 1790

Senator CHANEY —I refer the Minister for Industry, Technology and Commerce to the closure in Adelaide of Australia's biggest agricultural machinery maker, John Shearer Ltd, which has cost 300 jobs and brought to an end that company's manufacturing activities after a period of 125 years. Is the Minister aware that the company, which was making very considerable losses that had, under new management, been turned around to a profit, said that the April economic statement decision to end the bounty on manufactured agricultural machinery and a two-week strike followed by an unsatisfactory Industrial Commission ruling were the reasons for the closure? Does the Minister agree that the decision to end the bounty 20 months ahead of its scheduled expiry was taken purely for cost-cutting purposes? Does he further agree that this unilateral action runs contrary to and makes a mockery of his often asserted need for predictability and certainty in industry policy? Will the Government agree to apply the bounty not just to stocks as at 12 April, but also to firm orders held by companies on the basis of prices quoted assuming the continuing bounty?

Senator BUTTON —The answer to the last part of the question is no. The Government gave some consideration to whether the cessation of the bounty should apply in respect of stocks and it decided that stocks held on the floor, as it were, should continue to be subject to the bounty but that work in progress should not. There were very practical reasons for that which had been experienced before when bounties had been brought to an end. That was the reason for the decision.

Generally, I am fairly well aware of the history of John Shearer Ltd. The company has been under financial strain for some years. In the past three or four years it has lost some $15m. No dividend has been paid for three years. The press release issued by John Shearer-I do not have it with me-adverted particularly to the industrial relations problem to which Senator Chaney referred. No doubt that has been a problem for the company and I will refer to some other views on that in a minute.

The performance of the agricultural equipment industry in terms of, for example, exports, has been dismal. That is due partly to the very fragmented structure which that industry has inherited. Senator Chaney would be familiar with a company like Chamberlain John Deere Pty Ltd from his State which was supported by bounties for a long time. Nonetheless, in spite of that support it went out of business in terms of its tractor production and was not able to blame the Government at the time for that failure.

John Shearer has received substantial assistance from the Federal Government, however, in various ways. It received $70,000 under the heavy engineering development program. In the period in which it was making losses, it received $1.3m from the Industrial Research and Development Board for the redevelopment of a new product. It received $748,000 in bounty in 1987-88 and $1.1m in 1986-87. As I understand it, sales have declined further in 1987-88. I do not agree with the view which has been expressed that the cessation of the bounty was a major cause of Shearer's closure or even led to the decision to close.

As to the industrial relations issue, I draw the honourable senator's attention to a comment in today's Adelaide Advertiser. The editorial states:

The Industrial Relations Commission yesterday ordered the company to resume past practices while the issue-

of compulsory union membership-

was negotiated-

a basic move in any dispute. Whatever may be felt about closed shops, Mr White-

that is the manager-

should recognise that the unions behaved properly in resuming work.

As for the bounty, Shearer has known for four years that it would be removed. When in April the date was brought forward, Mr White sought exemptions from the Industry Minister, Senator Button, for existing orders. This was quite reasonable. But it takes patience for such a request to be studied.

Such a request has been studied, although Senator Chaney foreshadowed my response to Shearer in his question. I have indicated the position of the Government on that issue.

Senator Chaney —You are saying no?

Senator BUTTON —Yes. The editorial continues:

It seems that Shearer, or its parent company Arrowcrest, has another agenda. The key might be found in a recent announcement by Massey-Ferguson that it has made a prices `breakthrough' with a harvester made in its factory in Brazil.

The removal of the bounty is in line with the aim of making Australian manufacturers more efficient to fight off imports. If this means rationalisations, this industry is well placed for amalgamations, with the various firms having individual specialisations that could combine well.

It continues in that vein.

Senator Chaney also asked whether this was an example of what I meant by continuity in government practice. The answer, I regretfully say, is no. The decision was made on the basis of overall economic considerations. It was made in light of the view that the bounty had done very little to help this industry rationalise, to help it improve its export performance, to help in terms of the mergers that would take place and try to overcome the process of fragmentation. The Government has in mind to do some other things with this industry which might help with those processes which are a better form of intervention than the bounty.

Senator CHANEY —Mr President, I ask a supplementary question. I thank the Minister for his reply and particularly for his frank admission at the end of the answer that the decision is not really consistent with industry policy as he has advocated. I ask the Minister: in light of the fact that the company concerned had been turned round, had been restored to a profitable situation, had, since takeover, gone from employing 190 people to employing 300 people and had $5m worth of orders on its books, placed on the basis that the bounty would be available, what assurance can he offer manufacturers in Australia, who enter into arrangements on the strength of plans and proposals put down by this Government, that the same unilateral action will not be taken in respect of bounties, tariffs and other industry plans?

Senator BUTTON —Every assurance, Mr President. As I have explained, in my view there were quite exceptional circumstances in relation to this industry.