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Wednesday, 7 June 1989
Page: 3509


Senator BUTTON (Minister for Industry, Technology and Commerce)(10.36) —The Government does not accept the amendment. In saying that, I do not want it to be believed or understood that there are ideological grounds, if you like, for saying that the Snowy Mountains Engineering Corporation (SMEC) should remain in public ownership forever. Because it was once appropriate for it to be in public ownership does not necessarily mean that it should always be in public ownership. That is a matter for examination from time to time on the basis of the facts and the circumstances of the organisation.

The Government would say that the Snowy Mountains Engineering Corporation (Conversion into Public Company) Bill, providing for a corporatised structure of SMEC-if that is the right expression-is appropriate at present because SMEC still fills an important flag carrier role. Its reputation both in Australia and particularly internationally has been an important one in that regard. It has already assisted a number of Australian engineering organisations to obtain a foothold overseas. What we have seen in the last few years in this country is something which just was not there perhaps five years ago. We have seen the development of big consulting engineering firms in Australia such as Kinhills, Rankines and MacDonald Wagner which, in time, will probably fill the same sort of function in international markets as SMEC has done traditionally.

SMEC is a national asset with 85 per cent of its work overseas-a higher proportion than any other private sector consulting firm at this stage of Australian history. It is an exporter of overseas services, providing significant export income for Australia. It has an outstanding reputation for excellence and in that context currently there is still a role for it to play in government ownership. That is not to say that SMEC has been without difficulty. Senator Lewis and I have had occasion to discuss this issue in the Senate. SMEC has recently returned to profitability and it is expected to resume paying a dividend to the Government this year. As far as the Government is concerned, there will be no more capital advances made to SMEC of the kind which were necessary in previous years and there will be no cost to the Government in retaining ownership of the organisation. However, in this transition phase from a period of great difficulty, which started with the downturn in 1982, SMEC has been restructuring its operations and, in our view, it should be allowed to continue that process and show a record of profits.

In the amendment moved by Senator Lewis to the motion that the Bill be read a second time, in terms of the possible sale of SMEC, the Opposition has homed in on the possibility of a management buy-out which may or may not be feasible at present. But what is lacking in that suggestion from the Opposition of a management buy-out is the possibility of competitive bids for SMEC. If one were about to sell it one would hope for competitive bids for the organisation, including the possibility of a management buy-out. By implication that suggests that the Opposition, in pursuit of what I suspect to be an ideological gismo, grabs at the management buy-out possibility because it does not see the likelihood of competitive bids at this time. For a variety of reasons the Government has determined on the course which is embodied in this Bill as being appropriate at present. For that reason we do not support the amendment moved by the Opposition.