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Wednesday, 21 May 1980
Page: 3037

Mr Peter Johnson (BRISBANE, QUEENSLAND) - During 1980 long-term policy decisions for the major manufacturing groups of textiles, clothing and footwear will be under consideration by the Australian Government. It is critical that these decisions be approached in a manner that fully recognises the social and economic importance of these industries to the Australian community. I have long been a supporter of maintaining an industry base in Australia that reflects the diverse employment needs of the Australian workforce, and ensures that the opportunities for the application of Australia's human energy resources are not wasted. It has become fashionable recently in some quarters to attack strategies taken by Government towards manufacturing in Australia. These critics point towards mechanostyle theories to develop fanciful solutions that bear no relevance to the real world in Australia or other developed economies.

In approaching the question of industry policy for Australia it is essential that the realities of both labour and product markets be recognised. In terms of labour market considerations, the free trade pundits conveniently overlook the very nature of the labour resources to which their policy advice relates. One rarely hears the manufacturing critics acknowledging the transitory nature of labour services. The recent Flinders University Bulletin of Labour highlighted the importance of this fact for policy consideration and noted:

Whereas a tonne of coal will still be there tomorrow if not mined today, a man-hour will not be. The man might still be there but his unused labour is forever lost.

Similarly, the realities of product markets are frequently ignored with the theorists assuming various patterns of behaviour in trade and commerce that bear little relationship to the real world. The forthcoming decision on textiles and clothing has seen the re-emergence of many of those old misunderstandings compounded by the selective arguments of special antimanufacturing interest groups. One can only hope that the ill-informed arguments being advanced by the theorists against the textile, clothing and footwear industries are exposed for what they are worth before irreparable damage is done to these industries and other manufacturing industries through inappropriate long-term policy decisions in the near future.

By way of example I refer to a number of common misconceptions distorting the theorists' viewpoint as to policy considerations desirable for Australia's textile, clothing and footwear industries. Firstly, these industries are not open to their painless withdrawal from the Australian manufacturing sector. They are extremely important providers of job opportunities, providing direct employment for 120,000 Australians, and indirectly, through linkages to other industries in the economy, an estimated 200,000 additional jobs. With 10 per cent of manufacturing employment in total and 25 per cent of all female positions in Australian manufacturing, the industry is vital to continuing employment opportunities. Make no mistake, the nature of the job skills, education, sex and age characteristics of these persons mean that other alternative job opportunities are virtually non-existent The tightness of the current job market makes their plight even more difficult and the potential for wasted human energy a greater threat. Enthusiasm of the free trade theorists for scaling down our textile, clothing and footwear industries would lead one to believe that Australia is out of step with other countries in terms of their attitude towards these industries. However, the facts are that major developing countries such as the United States of America, Canada, the United Kingdom, France and Germany protect their industries to a far greater extent than the protection that is provided to the Australian textile, clothing and footwear industries. Under the special conditions written into world trading arrangements for the textile and clothing trade, quotas are applied through the multi-fibre arrangement to ensure that growth in these industries in the major developed countries continues to occur. Australia has one of the highest per capita import levels of textile and apparel products of all developed countries and in fact on a per capita basis it imports twice the European Economic Community level, three times the United States level and six times the level of imports of Japan. I seek leave to incorporate in Hansard an article written by Peter Costigan on an interview with the Prime Minister (Mr Malcolm Fraser) which appeared in the Melbourne Herald of 13 May 1980.

Leave granted.

The document read as follows-


From Peter Costigan

Canberra.- The Prime Minister, Mr Fraser, has hinted strongly that the Federal Government will not reduce current levels of protection for the textiles, clothing and footwear industries.

In an interview, he strongly defended the existing levels of protection for the three industries which he claims are more efficient than many people accuse them of being. 'I know of textile firms which have tried to export textiles to low wage-cost countries. They have been told they can't because it is totally reserved for the domestic market, even though they were competitive, ' the Prime Minister said. 'I have known firms which have wanted to get distributors in certain countries and have not been able to do so. That is, in fact a protective device. 'These countries have wage subsidies and export subsidies of a kind we have never practised and I hope never will practise in Australia. 'There is other evidence in the quantity of sensitive goods- textiles apparel and footwear- that we do in fact buy from developing countries. 'We buy more on a per capita basis than Japan, North America and Europe, and that is a measure, in a very real sense, of the openness of our market. 'So, in this kind of world, there is no way Australia can open markets and say, "Everyone else can come in here and sell whatever they can, without any restraints". 'That would devastate industries and be quite unfair. So what we do has to be balanced through the Industries Assistance Commission's advice, but that is all that it is. 'Governments have to make the decision. We try to take a balanced approach.'

Government departments are now studying the final IAC report on the textiles, clothing and footwear industries and cabinet is expected to make a decision soon on whether or not to continue the currently high tariffs and tight quotas applying to all three.

In addition to his strong defence of the current levels of protection for the three industries, Mr Fraser defended Australian protection levels generally and maintained that there had already been major restructuring of Australian industry in line with the Crawford report. 'When you take the totality of protection, I think Australia is one of the lowest protected countries in the world, simply because we have stuck with tariffs and quotas and that is about it, ' he said. 'On top of tariffs and quotas, a lot of other countries have embargoes, levies, levelling devices, quarantine arrangements that aren't quarantine arrangements and voluntary restraint agreements that aren't voluntary because if you don't sign it you won't be allowed to trade at all. ' We j lust haven 't operated in those ways. ' If you are able to put countries on a proper protection ladder and estimate how protected each country is, giving a proper weight to all these devices, I think we would find our markets among the most open in the world. '

Asked about the Crawford report, Mr Fraser said a large portion had already been implemented. 'When people talk about restructuring, they often forget the enormous restructuring that is taking place all the time, ' he said. 'Take what's happened in the dairy industry a few years ago- 12 or 15 years ago- there were nearly 80,000 dairy farmers. Today there are about 30,000. That has involved a massive restructuring. 'And the same sort of thing has happened in many Australian manufacturing industries, especially, again in the sensitive textiles, apparel and footwear industries. So the market forces cause a restructuring. 'Governments get into difficulties when they create policies which prevent those market forces from working. Then your economy gets rigid and you get attached to certain industries which are uneconomic and are not competitive. 'So you get capital labour and government locked into industries through various support mechanisms. That is what has happened in Europe where today they probably have the best part of $25,000 million a year in wage subsidies or export subsidies. 'We have not embarked on those sorts of policies and I don 't think we should. '

Mr Frasersaid there had been 'confusion' over recommendations by the Paris-based OECD and the Crawford Report that governments should adopt positive adjustment policies.

He said: 'In Australia those terms have been used to suggest that governments should have policies which say industry should invest, or that people should invest in this industry rather than that, with governments taking a much more interventionist role and the market place having a much less important part to play. 'In fact, when the OECD talks of positive adjustment policies, they are in very simple terms saying that governments should keep out- that governments should stop interfering, that governments should allow the market process to work. 'When they talk of positive adjustment policies they are saying governments should stop their wage subsidies, governments should stop their special intervention, governments should stop their special cheap money for industries which aren't competitive, governments should end all the special programs designed to prop up the uneconomic- in other words, let the market forces work. '

Mr Peter Johnson (BRISBANE, QUEENSLAND) -I thank the House. The textile, clothing and footwear industries are also accused of being inefficient and of giving rise to substantial price increases at the expense of the consumer. Yet productivity improvements within these industries have been substantial with the textile industry recording the highest rate of increase in measured productivity of any industry group in the manufacturing sector.

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