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Monday, 8 May 1989
Page: 1978

Senator CHANEY (Leader of the Opposition)(3.36) —The extensive statements which have just been either read or tabled in the Senate represent the Government's response to a great deal of community concern and scientific community outrage about the state of science in Australia. If the statements illustrate anything, it is that the squeaky wheel gets the oil, and that politicians tend to respond when ideas are popular. I do not think there is any doubt that over the past two years this issue has impacted on the popular imagination.

I suspect that when the history of the Minister for Science, Customs and Small Business (Mr Barry Jones) is written, it will be recorded that his greatest contribution to the advancement of science in Australia was his labelling of the scientific community as a bunch of wimps. It is fair to say that that accusation on the part of the usually very non-abusive Minister represented his frustration at his failure to get the sorts of resources for science that he thought were necessary, and he was expressing the frustration that he must have felt at the quiet approach of his basic constituents, the scientists themselves. He was certainly very successful in changing their attitude to public presentation. I must say that in the period I have had renewed responsibility for shadowing the Minister for Industry, Technology and Commerce (Senator Button), which is less than a year, I have been struck by the very forceful way in which the scientific community has presented itself and put forward its views. Therefore, I congratulate the scientific community-not just the officers and scientists from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) but also those from the Academy of Science, universities and various other bodies-which has, I think, with a very proper degree of vigour drawn attention to the important issues that these statements address. It is very important to remember that these statements are being made at a time when, within the last few days, CSIRO has been asked to produce another 500 retrenchments.

Senator Button —Not asked; offered.

Senator CHANEY —It was offered. The Minister broke in to say that this was offered; the CSIRO was not asked. I can only say that that indicates that those who are controlling CSIRO are in a position where they have to put the organisation under very considerable pressure. I am sure that many senators who have been keeping in touch with the scientific community would know just how much the pips are squeaking in some divisions of the CSIRO, which are concerned with dealing with the basic industries of this country. They would realise the pain that is felt at the need to offer up another 500 positions and the financial difficulties that that involves, because the offering up of those positions means that those officers have to be paid out, so there is no immediate financial relief. Indeed, in a sense it compounds the short term financial problem. The pain that has been felt within the CSIRO with respect to that and indeed the refusal, as I understand it, of the head of one division to do as requested, bear out the stresses and difficulties that are being faced. I do not think the Minister at the table would deny that we are in a period of massive dissatisfaction among scientists, again not merely scientists within the CSIRO.

Of my own personal sample I would say that that massive dissatisfaction is not the dissatisfaction of unthinking people who are being forced into a process of necessary change-that is often the basis of objections in our community to changes in government policy and, in particular, to reductions in government expenditure-but rather that a significant proportion of those who are complaining are people who are doing valuable and world class work and who see that work being severely impeded by the financial strictures of recent years. After all, we have seen some very nice things said about the Australian Science and Technology Council (ASTEC) in these statements. ASTEC is a distinguished body and has made a very distinguished contribution over a long time. It certainly did so during the period of the Fraser Government. Under the distinguished chairmanship of Professor Slatyer, the Australian Science and Technology Council was a major influence on government. Senator Collins, when Professor Slatyer was mentioned, interjected with some complimentary remarks and put them in the context of his approach to uranium. I speak from memory now but I think it was under Professor Slatyer's chairmanship that some key reports were made during the period of the previous Fraser Government which were pivotal in determining the policies which were adopted by the Government. There was great respect for the opinions that were put forward by ASTEC and Professor Slatyer as its leader; and they were not opinions which were simply gathering dust on bookshelves but were acted upon.

Within the last week this distinguished body, which has been acknowledged in these statements as having a continuing function, the previous chairman of which has been appointed to be the premier scientific adviser to the Government, has come out with some very sobering remarks on the state of science in Australia. Again I suppose the Government can say that these statements today are an attempt to meet that deficiency. But let me remind the Senate that perhaps the humorous line that was contained in the statement of the Prime Minister, Mr Hawke, which was just read by Senator Button, is at the bottom of the second page where the Prime Minister used these words:

Since coming to office my Government has pursued a consistent science and technology strategy.

The broad view of the scientific community would be that to the extent that there has been a consistent strategy it has been in two streams. One stream has been actively to encourage and increase private research and development through the taxation system. I will have more to say about that soon. The Government can point to some improvement in that regard. But the other consistent stream has been a gradual tightening of the funding situation so that there have been real losses in resources in this area. The pressure which has been put on the system is one which has been reported on, as I say, within the last week by ASTEC in terms which give rise to a lot of concern. I do not have time to quote in great detail from the report entitled The Core Capacity of Australian Science and Technology. On the first page, after listing the core capacity which is required, ASTEC reports:

There are worrying deficiencies in Australia's ability to pursue these activities at a proper level. Concerns have been expressed about the adequacy and sources of research and development funding, the deterioration of buildings and equipment, the adequacy of our scientific and engineering workforce, the paucity of good research management practices, the meagre attempts to increase selectivity and concentration of effort in research, and the consequent effects on research productivity.

On the next page it goes on to say:

We consider that the present distribution of resources and capabilities is inappropriate for these future needs, largely as a result of historical developments.

I interpolate that that sort of statement from ASTEC indicates a need to shift resources and that accounts for the Minister's affirmation of the earlier comments I read out. ASTEC points out-I again quote from page 2 of the report-that:

Efforts to develop the S & T capabilities in the private sector need to be continued, but we strongly advise that this should not provide reasons to allow Australia's investment in public sector R & D to diminish.

That last point is very important and goes to the continued existence, vitality and health of the CSIRO. The fact of the matter is that one of the mistakes which has been made by the Minister for Industry, Technology and Commerce, who is at the table, and by the Government is that, in seeking a more active research and development approach in Australia in areas of high technology and manufacturing industry, there has been some forgetfulness about the fact that in the forseeable future we will continue to rely to a very significant extent on our major export industries which are the rural and mining industries.

It is important to remember-again I want to put this in the context of what has been said by ASTEC in this most recent report-that in 1987-88 our rural exports were in excess of $15 billion and our mining exports were in excess of $16 billion. So in excess of $30 billion is involved in those fundamental basic primary industries which are so heavily and, in many cases, very efficiently and effectively supported by the activities of the CSIRO. ASTEC points out, again in that same report entitled The Core Capacity of Australian Science and Technology, on page 3 that:

Publicly supported research is broadly comparable with that of other countries, in terms of its size (relative to population) and objectives. It will continue to form a larger proportion of Australia's total R & D effort for as long as we continue to rely on primary products to provide a large proportion of our export income.

That passage is very important. The fact which is contained in that statement has not been taken account of properly by the Government over these recent years in its treatment of the CSIRO. The truth is that because of the nature of some of Australia's major industries the sort of work which is done by the CSIRO is absolutely essential and will not be done by other bodies. In other words, it is not possible to shift a lot of that research out into the private sector. What is required is for us to ensure that the CSIRO continues to undertake that research; that it continues, as it is doing at the moment, to attract matching funds where possible from the industries which are concerned; that it attracts funds from the private companies which have an interest and so on; and to up the contribution of funds from other than the taxpayer. To do that the Government is required to be more sympathetic and practical than it has been over these last five years with respect to the public funding element. I made the point a little while ago that it is all very well to say that we will solve some of the CSIRO's financial problems by cutting staff. But the fact of the matter is that staff cuts in themselves create fresh expenses, tie up resources and may inhibit the CSIRO from carrying out basic functions.

One division of the CSIRO which has been very ready to come forward, to publish accounts and the costings of what it is doing and the economic, social and environmental benefits flowing from what it is doing is the division which deals with entomological research and development, that is, the Division of Entomology. I commend for the attention of honourable senators and, indeed, for public attention the account which is contained in that document which was published in August 1988 on the range of work which is undertaken and the direct economic benefits which flow from that work. We should then consider the wisdom or otherwise of putting the economic squeeze on the work of that division-I simply use that division as an example-at a time when it is out earning very significant amounts of external revenue to supplement the revenue which is put in by government.

In the last lot of figures which I saw, the funds for 1988-89, it was shown that that division attracted non-taxpayers funds in excess of $6m, and that ranged from rural research funds through to contributions by private companies, that is, companies in the private sector which are doing work to which the division can contribute. The document to which I have referred which reports on the division's work shows the great range of things which are being done. These include biological control of crop and pasture, lucerne aphids for example, a saving of $1.5m a year; integrated control of orchard mites, a saving in spray costs of $140 per hectare; and protection of underground cables from termites, a saving of $2m to $5m per year. The list, again, is too long for me to read into the record. But I want to mention the fact that this same division has worked on the biological control of water hyacinth and has been able not only to contribute to the freeing up of waterways in Australia but also to make a major international contribution to the clearing of waterways in New Guinea and in Africa.

These are the sorts of things which are being done by a division on a relatively small budget attracting a high contribution from the non-government sector and producing very direct and measurable benefits for the Australian economy. The division makes the point that its research is market-oriented, that it solves problems in key agricultural industries and that in Australia the value of crops and horticultural plantings exceeds $7 billion a year. Pasture and native grasslands support animal production and dairy industries with a combined value exceeding $8 billion a year, timber production is worth more than $2 billion a year, and so on. These are massive figures we are dealing with. The CSIRO has a unique capacity to increase the productivity and to reduce the difficulties of those industries. I see that the Democrat senator from South Australia is perhaps going to take part in the debate. No doubt he will be able to speak on many of the areas in which he has expertise. I am sure that he would join with me in saying that if work can be done by the CSIRO which controls and limits the need to apply chemicals, and which contributes to the use of less toxic chemicals, then these are very valuable contributions not only to Australia but also to the rest of the world. These are the sorts of things which are being done at CSIRO and which one cannot see being readily replaced by commercial activity.

My simple point is that this key organisation servicing the great trunks of exports on which we are forced to rely, and on which we will continue to rely, in my view, for many years, has been put under enormous stress and difficulty by the Government. The failure of Minister Jones and those Ministers with economic responsibilities in the areas of the economy to which I have referred to ensure that there are adequate provisions for CSIRO will be long remembered and long suffered by this country.

To return to the ASTEC report on the core capacity of Australian science and technology, the sorts of criticisms which I have raised are just some of the concerns which are addressed by ASTEC. Let me touch on two things which raise points which I wish to deal with in this, what is essentially only a preliminary reply to the major statements which have been put down today. On page 7 of the report it is said:

. . . the key question facing the Government is whether allocating more money to public sector research and other industry incentives has had or will have a major impact on the competitiveness of industry . . . The Government needs to address the means by which a better environment for innovation can be established in which firms can take advantage of indigenous and imported research and development, but more importantly can confidently develop and market innovative goods and services.

I asked Minister Button in Question Time today when we would get the assessment by the Bureau of Industry Economics of the impact of the 150 per cent research and development tax deduction. It is a matter to be regretted that we have not yet had access to that report, yet the Government has decided to extend the benefit. On the face of it, one would always have to welcome the granting of another $1 billion of tax concessions to industry for the purpose of promoting research and development. On the face of it, that seems a sensible thing to be doing. But $1 billion is a very large amount of tax revenue forgone. I believe that when we are dealing in amounts of money of that sort it is important that not just the Government but also the Parliament, the public and industry itself have the capacity to assess what the real benefits of those concessions have proved to be.

If we look at recent figures we find that in 1985-86 the deduction gave rise to revenue forgone of $140m. In other words, we were giving tax relief of $140m. By 1986-87 it was $170m. By 1987-88 the cost was around $200m. In that time, private sector expenditure on research and development increased from about $646m in 1984-85 to $1,069m in 1986-87. So there was a $423m net increase in expenditure in the two years to the end of 1986-87. But the cumulative cost of the tax concession was $310m over that two-year period. Clearly, there is a bigger benefit in terms of extra research than the actual amount of the tax concession. But one might have hoped for a larger multiplier. One might have expected that some of that increase would have occurred without the tax concession, in any event. In this speech I urge upon the Government the earliest possible release of the Bureau of Industry Economics report.

The other point which arises from the quotation which I gave from the ASTEC report is the question of the better environment for innovation. It is my own very strong view that we will not get that sort of take-off in manufacturing, the sort of translation of basic scientific research into research and development, product development and new, elaborately transformed manufactures in this country unless the Government is far more successful that it has been to date in transforming the general economic environment within which industry works. In a sense, things like management and investment companies (MICs) and tax concessions are attempts to overcome the disadvantages which Australian firms suffer in trying to move into vital areas if we are to reduce our dependence upon primary industry, including mining, and if we are to take advantage of the great growth areas of world trade, 70 per cent of which takes place in manufactured forms.

If we are to persist with an economic environment in which Australian firms have to pay interest rates of 18 per cent to 20 per cent while their competitors pay interest rates of 3 per cent to 4 per cent, or perhaps 10 per cent; if we are to continue to have an environment in which labour and capital productivity is stagnant or reducing-as the current Organisation for Economic Cooperation and Development (OECD) figures suggest is the situation in Australia; if we are to continue to have a situation where our unit labour costs rise at a much faster rate than that of our trading partners; if we are to continue to have an economy where there are inbuilt inefficiencies on our waterfront, in our coastal shipping, in much of our transport systems-in other words, if we are to continue to have an economy in which there is not a genuine capacity on the part of Australian industry to compete, then we will continue to have the sorts of circumstances that each of us comes across so regularly.

The clever Australian whose research has shown that there is some splendid new product to be made promptly has to go offshore to make it. I can think of so many examples of that situation, and I suspect that each of the honourable senators in this chamber could also do so. Why does an Australian designer of mining drills, which have a market throughout the world and which are seen as technologically superior, have to go to a high labour cost country like Japan to manufacture the product that he has created through his own research and development, through his inventiveness, cleverness and capacity to be better at thinking through the problem than foreign competitors? He does not go to a low labour cost country; he goes to one of the highest labour cost countries in the world, Japan, because he knows that he will get his product produced to a high quality and to a standard which is required in a timely way without so many of the stupid difficulties which afflict the productive process in Australia.

There is no room, in this great plethora of paper that we have been given about the improvement of our basic scientific capacity in this country, to forget that in the end a lot of what is being sought by the scientific community does have to be demand driven. We remove that demand by removing the capacity of Australian producers to produce in a way which is economically competitive with the rest of the world.

I hope that the measures which the Government has announced-those measures cover some of the areas of complaint, such as the extremely poor remuneration of postgraduate students, and I welcome the fact that those postgraduate students will be offered a wage which will be a little more competitive than the wage that they have been offered recently; and improving the equipment of some of our basic institutions in the scientific area-will contribute to a situation where bright Australians see a scientific career as something which is attractive to them.

The final condemnation of the state of science and of the attitude to science in this country is that those areas of knowledge which require the application of a high degree of intelligence are often those areas of study which are easiest to get into. The qualification marks are very low because there is a low demand for the courses. I know that many scientists are very rueful about the fact that their courses are the easiest to enter for the simple reason that there is a low demand and, therefore, they do not have the brighter students competing for the places. I think that is a tragedy because undoubtedly science requires its share of people of very high intelligence. One has only to mix with the scientific community for a short time to see how many people have produced magnificent results because of their splendid minds. I do think that the drift away from science, which is recorded in so many of the criticisms which have been put forward over recent years and which has been a matter of such concern to the scientific community, is the proof positive that we as a community have not responded in a rational and sensible way to the future needs of our country in this area. I commend the Government to the extent that it has done something to remedy the gross failures of its first six years in office. In this its final year of office I guess it is desperate to buy off a little of the criticism that has so roundly surrounded it over this last 12 months.