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Thursday, 8 June 1989
Page: 3634

Senator PANIZZA(12.12) —I rise to speak in this debate on the Subsidy Legislation Amendment Bill 1989 mainly because of the disruption that this sudden removal of bounty paid to Australian manufacturers of certain products has caused. To be more precise, the Bill amends the Subsidy (Cultivation Machines and Equipment) Act 1986 and the Subsidy (Grain Harvesters and Equipment) Act 1985. The situation concerning cultivation machines is probably more important, though I will briefly comment on grain harvesters as well.

In his second reading speech Senator Button said:

As outlined by the Treasurer (Mr Keating) in the April economic statement the Government is determined to ensure that fiscal policy is kept tight in order to maintain downward pressure on Australia's trade deficit.

After telling us that savings would be used to offset the cost of measures announced in the economic statement, which would assist families and pensioners, Senator Button went on to tell us:

In view of these strong budgetary pressures, the Government considers it would be inappropriate to exempt outlays associated with industry assistance and development. In the Government's view the most appropriate means of effecting the necessary savings in this area is to terminate the grain harvesting and cultivation equipment assistance schemes.

As I see it, the Government has once again seen fit to harvest an efficient rural industry to fulfil its ever-growing social welfare account, which is out of control. The Minister made a contradictory point when he said that the Government is determined to maintain downward pressure on Australia's trade deficit. I was under the impression that the best way to take off that pressure is to encourage Australians to buy Australian products and so lessen demand-in this case, demand for imported machines.

What better way is there to lessen that demand than to encourage Australian manufacturers of machinery which could be competitive in price, which is suited to Australian conditions and which is accepted already by Australian primary producers? I would like Senator Button to tell us exactly what he means and which way he wants to go. Does he want downward pressure on imports or does he want upward pressure by causing Australian products to rise in price? Surely, if the price of Australian machinery is kept down, we would be able to compete against overseas products. This would help the balance of payments and employment situations and the benefit would flow on to the factory workers and the suppliers of materials and components.

The Bill will result in savings to the Government of $19m in 1989-90 and $10.4m in 1990-91. In my opinion, the total savings do not justify the disruption to the supply of farm machinery and the employment losses in the manufacturing and distribution fields. In these days of micro-economic reform, I do not believe that bounties should continue forever. The cessation of these bounties was due by 30 June 1990. In view of the expected amount of savings and the disruption that this legislation will cause, I cannot see why the phase-out of bounties should not have been left to run its course.

I believe that there is a difference between a bounty for harvesters and a bounty for cultivation gear. These two products differ. The harvester bounty came into being because of a government bungle. There used to be no tariff on imported machines of a certain size-to be more exact, harvesting machines with a threshing drum greater than 48 inches. In the early 1980s Massey-Ferguson (Aust.) Ltd experimented with a power take-off harvester or header with a drum size greater than 48 inches-namely, about 60 inches. The company went to the Tariff Board and applied for a tariff. To my dismay and that of other Australian farmers, it was successful. Even though it had a machine that was suitable, Massey-Ferguson could not have hoped to supply all Australia's wheat farmers with harvesting machinery. The Government at the time should have looked at a bounty rather than a tariff. That tariff added up to $30,000 to the price of an imported good-sized rotary or conventional machine with a drum size of 60 inches. After lobbying took place between 1983 and 1985, that tariff was removed and a bounty was put on. This is what should have been done in the first place. When the tariff was removed, not all importers returned to the consumer the gain that was made. I welcome the end of the bounty on harvesting machines. But as I have said, the tariff should never have been imposed in the first place.

Let me turn to the amendment to the Subsidy (Cultivation Machines and Equipment) Act. A vastly different set of circumstances apply in respect of this legislation. Let me refer to the question of John Shearer (Holdings) Ltd in Adelaide, a matter which has been in the news in the last few weeks. As I have always said, and I know from first hand experience, Australian harvesting machines are far behind those manufactured in other parts of the world. But, on the other side of the coin, I believe that Australian cultivating machines far exceed any other product in the world. This is especially true when working soils in the medium to low rainfall wheatbelts around Australia. We should take into consideration that a lot of those lands have been cleared for upwards of 150 years, yet are still new in comparison to many parts of the world.

We had the case of John Shearer Ltd, a manufacturer of what I consider to be the best tillage machinery in the world, and certainly the best available in Australia. It outshines any imported gear. The Government cut the bounty on cultivation gear right in midstream. The bounty was to continue to 31 December 1990. The Government then announced in its mini-statement that this bounty would finish on 12 April 1989. We then had the Shearer debacle over the last couple of months. I suppose in one respect there has been good come out of legislation by press release in that it allows one to have a good look at it before it ever comes to this place. Honourable senators should know that rural producers did not operate in a good climate from the year 1985 through to 1988. This climate was not caused by any lack of rainfall but rather the economic climate around the world. Farm commodities were at a low ebb. We then had a turnaround at the beginning of 1988 which was mainly caused by the great improvement in the price of wheat and wool.

In those years to which I have referred, farmers, mainly wheat farmers, did not reinvest in new machinery. Hence, second-hand machinery was sought after and this lifted its price. In 1989 with a good crop behind us, a good wool crop as well, expectations of better prices for wheat in 1990-hopefully at around $A225 or better-and the encouragement from this Government, of which you, Madam Acting Deputy President, are a part, to grow more wheat in the season to come there was an upturn in demand for new tillage gear to sow the crop that is now going in despite the excessive wet weather around Australia. These manufacturers-this includes Shearers-had through their dealers full order books with contracts at a fixed price from the manufacturer to the dealer and a fixed price under contract between the dealer and the farmer. In most cases the dealer had taken machines off the farmers as trade-ins and again in most cases the dealer had sold them to someone else. In the middle of this-we should bear in mind that 12 April is the time the Australian wheat crop is being planned and farmers, in order to start sowing the crop, are waiting for the rains-the Government dropped a bombshell by removing the bounty. As I have already said, farmers had held off buying new plant for the past three years and the Government came in and removed this bounty at what one would call, in secondary industry, the re-tooling stage. It was very convenient for the Government to bring in extra income to itself.

In the case of Shearers and in the case of other manufacturers, they had to go back to the dealers and ask them for more money. The dealers in turn had to go back to the farmers and ask them for more money. I would say that the contracts were at a fixed price between the farmer and the dealer but not necessarily at a fixed price between the dealer and the manufacturer. Of course, a farmer, or a dealer for that matter, to add to the double confusion could have walked away from the whole contract. But with the wet season coming on the farmer, especially the farmer who had had his trade-in taken away and sold, would have to put up the money and shut up, to put it in plain terms. That changed after the Shearer fiasco. There was a case with enough problems already. The Amalgamated Metal Workers Union decided to have a strike-I am not exactly sure of the length of it-over nothing but compulsory unionism. The company then was returned to past practice; that is, compulsory unionism. Even the Adelaide Advertiser on 21 May 1989 made a mockery in its editorial of the plight of Shearer and its customers. I have a copy of that editorial and I will quote a section of it:

The Industrial Relations Commission yesterday ordered the company to resume past practices while the issue was negotiated-a basic move in any dispute. Whatever may be felt about closed shops, Mr White-

that is, the Chairman and Director, I believe, of Shearers-

should recognise that the unions behaved properly in resuming work.

What this editorial did not point out was that the unions misbehaved by being on strike for two weeks. The editorial continued:

As for the bounty, Shearer has known for four years that it would be removed.

This was because the Act came down in 1986 and contained a sunset clause. The company knew but it worked and budgeted for it to come off in June 1990 not 12 April 1989. Now, after negotiations, the bounty will remain until 10 June 1989. I believe that the Adelaide Advertiser gave a very cynical view of the whole show. As I mentioned briefly, a fall out occurred. It concerned Shearer. Things were brought to a head. Under this amended Bill the bounty, as I understand it, is to continue to 10 June 1989. Manufacturers will have to apply for their bounty by 10 July of the same year, that is this year. Three hundred jobs have been saved and Shearers is without compulsory unionism, at least for the present.

That means that the bounty on cultivation gear would have had only 12 months to go after 15 June. I consider that the Government, for what it will save, could have let it go to the dates set by the sunset clause. The Government could have let that subsidy continue until 30 June 1990 and would have recouped the cost many times over in the increased production which would have been gained by the new machinery which would have been available and which was so badly needed on the farms. Honourable senators should bear in mind what I have already told them: very little retooling and replacement of machinery by investment in new machinery was done in those three years. Once again the Government has regard to all except primary industry when it comes to cost cutting measures and it will probably never change.

In conclusion, I reiterate my disappointment at the decision of this Government to remove this bounty at such short notice when in fact the legislation was already due to run out on 30 June 1990. In such times of economic restraint I believe that the load should be shared around to all the sectors of the voting public and not only to the ones of our persuasion or to the ones with little voting strength, that is, the rural areas. This is the section of the population, as I have said many times in this chamber, that accounts for 85 per cent of Australia's export income. That figure will be rising with a downward pressure on manufacturing exports. This section of the population has only 10 per cent of Australia's voting strength.

Bearing in mind Australia's total export and import deficit, I thought that the Government would have kept any incentive for Australian manufacturers in place, for the time being anyhow. What are the alternatives? John Shearer is an Australian manufacturer making machinery that is suited to Australia, not a multinational manufacturing in Australia. We have had many multinationals manufacturing in Australia, such as New Holland, Massey Ferguson and a few others. Australia is only a minor cog in the whole system for them. When the multinationals withdrew from manufacturing in Australia and exported their farm machinery to this country from overseas, this was of no great concern to us, especially in relation to cultivation gear, because, as I have always maintained, their gear does not stand up to Australian conditions. John Shearer is probably the only real Australian manufacturer left, but the accent should be on keeping such companies manufacturing in Australia. I believe that there is a vast difference between how an Australian manufacturer should be treated and how a multinational manufacturer in Australia should be treated. The only alternative for Australian manufacturers-I have used John Shearer as an example-is to go overseas, manufacture under contract and export back into Australia. They would be away from compulsory trade unionism and disruptions. They would be taking detailed drawings and specialised jigs to manufacture in various parts of the world under contract and would then export back at a lower cost than they pay in Australia at present. No special personnel would be taken overseas, so the result would be a lessening of the demand for personnel of specialised machinery in Australia. Hence, their future is not so great.

I will not delay the Senate any longer. I will be supporting the amendments moved during the second reading debate by my colleague, Senator MacGibbon, and will support any amendments moved by the Opposition in the committee stage.