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Thursday, 22 May 1980
Page: 3160

Mr Humphreys asked the Minister for Industry and Commerce, upon notice, on 26 February 1980:

(   1 ) Has his attention been drawn to comments by the retiring president of the Australian Industries Development Association, Mr A. W. Hamer, that Australia's capacity to become a modern, thrusting and internationally competitive industrial nation is being seriously retarded because of the inability of governments to lift themselves above short-term and ad-hoc reactions to current crises.

(2)   Did the Vernon Committee, the Jackson Committee and the Crawford study group all urge the development of long-term industrial policy; if so, what are the Government's intentions in relation to this matter.

Mr Lynch (FLINDERS, VICTORIA) (Minister for Industry and Commerce) - The answer to the honourable member's question is as follows:

The comments to which the honourable member refers were made by Mr Hamer when presenting the 1978-79 Australian Industries Development Association Annual Report, and were directed equally at governments of both parties.

Our record since returning to office, however, speaks for itself.

On the broad front we adopted an overall economic strategy designed to re-establish the conditions for sustainable economic growth. By bearing down relentlessly on inflation through firm, but responsible, monetary and fiscal policies we have returned to a stable economic environment in which industry can take advantage of its development potential.

We also moved quickly to provide a considered statement of policy for manufacturing industry. The White Paper, published in May 1977, made clear our commitment to the role and future of manufacturing industry and drew specific attention to the changing environment facing Australian manufacturers. We stressed in particular the significance of policies to facilitate the development of a manufacturing sector which was more export-oriented, innovative, specialised and less dependent on Government support.

The White Paper, of course, does not represent an exhaustive statement of our approach to the long term development of Australian industry. It does, however, provide a framework against which ongoing policy development can take place.

In a period that has been characterised by the need to maintain the maximum possible restraint on Government expenditure, we have taken a number of initiatives designed to stimulate industry development and give effect to our policy objectives.

Immediately after our return to office for example we reintroduced the investment allowance; we have since extended its application for a further two years. This measure alone is estimated to cost $330m in 1 979-80.

In 1978 we introduced the Export Expansion Grants scheme, improved the Export Market Development Grants scheme and upgraded a number of the services available to Australian exporters. We have also improved and broadened the scope of industrial research and development incentives

As a consequence of these and other important initiatives, budgetary assistance provided manufacturing industry has move than doubled in real terms since 1975-76. In particular manufacturing was a major beneficiary of the 1979-80 Budget with direct assistance more than doubling to $3 1 8m and various tax incentives costing an estimated $267m.

In addition to budgetary measures, we have also taken the following initiatives: amended the IAC Act in relation to guidelines, report rules and temporary assistance procedures implemented sectoral policies in relation to certain important industries modified the foreign investment guidelines in recognition of our need for foreign capital whilst at the same time ensuring Australian participation in ownership and control initiated a new program of studies of mineral and other resources processing projects strengthened the approach to granting preference to Australian firms in Government purchasing

Coupled with responsible general economic policies which have resulted in our rate of inflation falling to below the OECD average, these initiatives have markedly improved the international competitiveness of Australian manufacturing industry.

There is general agreement that manufacturing industry is in better shape now than it has been for many years and this is reflected in a number of indicators: exports of manufactures have increased strongly, with their value in the nine months to March 1980 running almost 40 per cent above that of a year earlier output as measured by the ANZ Bank index of factory production, rose strongly in 1979 and in the three months to February 1980 was nearly 6 per cent above that of a year earlier capital expenditure by private manufacturing enterprises has continued to increase

Moreover, there are sound prospects for continued expansion of the manufacturing sector in 1980. Recent surveys, both Government and private, indicate that new capital expenditure and exports by manufacturers are likely to continue at the current stronger level.

It is important that the gains made are consolidated and that the prospects identified are realised. Our industry policies will therefore have an increasingly important part to play in the future.

The Government also acknowledges that movement toward our long-term industry policy objective will involve the achievement of a less complicated tariff structure based on gradual progress towards lower and more stable tariff levels.

However, the ability of the economy and the community to absorb change will continue to be an important factor in the Government's consideration of the extent and timing of any tariff reductions.

In this context we will continue, if necessary, to take special measures, of a recognised temporary nature, to support employment and ensure that movement towards our long term goals is not accompanied by economic and social disruption.

As was pointed out by the Crawford Study Group on Structural Adjustment, there are some industries which can face adjustment problems of a particularly severe nature. Accordingly the Report of the Group endorsed the Government's approach, which recognises there can be a need for policies for particular sectors of industry.

In developing our industry policy framework account was taken of several significant contributions to the subject of industry policy, in particular the Report of the Jackson Committee. With regard to the Crawford Study Group's Report, the basic objectives of its proposals are consistent with the Government's policies for manufacturing industry.

For its part, industry in general has responded positively to the more stable economic environment we have been able to provide.

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