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Tuesday, 13 May 1980
Page: 2159

Senator WALSH (Western Australia) - The Opposition notes that the Bounty (Ships) Bill 1980 is to be debated cognately with the Ship Construction Bounty Amendment Bill 1980. The second Bill is consequential to the main Bill, the Bounty (Ships) Bill, which provides for the payment of a bounty of 27½ per cent of construction costs on ships between 150 tonnes and 1 , 000 tonnes or for fishing vessels in excess of 2 1 metres in length. That rate of bounty will be payable until mid- 1984. It will be phased down to 20 per cent by the middle of 1986. For ships above 1,000 tonnes, a bounty of 29½ per cent will be payable until the end of this calendar year. Thenceforth the same rate of bounty will be paid as is applicable to the smaller ships. The bounty rates are comparable to those recommended to the Industries Assistance Commission although the Bill provides for a more extended period of payment of a maximum bounty. It also provides for a bounty of 20 per cent on significant modifications to ships costing in excess of $400,000.

The Opposition is not opposing the Bill but there are a number of what I think are rather disturbing features or inconsistencies in Government policy in this area. The first element is that no bounty is payable on ships built for export. I would like to know the economic rationale for that decision. If it is believed that on resource allocation grounds the industry is worthy of supporting to that extent the argument ought to be at least as strong when applied to ships built for export as to ships built for the domestic market. Another anomaly- although it is not covered in this Bill it is part of the Government's ship building policy- is that a 25 per cent tariff is imposed on ships built weighing less than 150 tonnes or fishing vessels of less than 2 1 metres. A comparable level of protection is provided for the small ships andthe medium sized ships. But when one type is by tariff and the other is by bounty it follows obviously that the price to the purchaser of a small ship is inflated by Government intervention whereas the price for a purchaser of a larger ship for which bounties are applicable is either held at free market levels or arguably put at somewhat below free market levels because of Government intervention.

The other matter raised by Mr Hurford in the debate in the House of Representatives last month and which was not answered by the Minister for Business and Consumer Affairs (Mr Garland) because no reply was made to the second reading debate as the Government moved the gag was whether the imported component of a ship built in Australia will qualify for payment of the bounty. Mr Hurford 's interpretation of the legislation was that it would. The point was not clarified. I trust that it will be clarified as it is very important. It looks as though Senator Chaney will reply this evening. If, as Mr Hurford believed, a bounty is payable on the imported component of a ship, it follows obviously that the effective level of protection is highly variable and that the effective level of protection rises as the imported component of a ship goes up. Theoretically there is virtually no ceiling on the possible effective level of protection. A vessel can be constructed with 90 per cent imported components. If it is, the effective rate of bounty would be ten times that which it was supposed to be. Obviously I think it would be generally agreed that it would be quite indefensible to pay a bounty which made no allowance for discounting or deducting the imported component of a vessel. I understand, for example, that some sophisticated fishing vessels are equipped with very expensive electronic equipment, all of which is likely to be imported. I invite the Minister for Aboriginal Affairs (Senator Chaney) to clarify that point which his colleague in the House of Representatives failed to do. Despite the reservations that I have expressed which point to some quite serious anomalies and inconsistencies in the Government's ship building policy, the Bills are not opposed by the Opposition.

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