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Thursday, 26 May 1983
Page: 1042

Dr HARRY EDWARDS —by leave-The Minister for Science and Technology (Mr Barry Jones), for whom I have a high regard, spoke today rather more moderately than is often his wont. Only yesterday in this House he took his customary swipe at the alleged failings of the previous Liberal-National Party Government in research and development and science and technology. On 11 May, he said:

One of the major reasons for Australia's failure in the last seven years has been the sabotage--

Hear that, 'sabotage' he says-

by the people opposite of Australia's intellectual and research and development base.

The Australian Industrial Research and Development Incentives scheme is primarily concerned with fostering research and development by private enterprises. I am not one of those inclined to hark back to the dismal years of Labor's previous stint in power from 1973-75. But, unlike the Minister, I was in the Parliament then, in opposition, and what I saw was truly the sabotage of Australia's private research and development base. It was under the Whitlam Labor Government that Australia's research and development effort was brought down. That is not just my say-so. It is pictured in the figures of the Australian Bureau of Statistics in its publication No. 8105 which contains figures for research and development expenditure by private enterprises given in constant 1979-80 prices-that is, adjusted for inflation. The figures in the document are as follows:

Year $m 1973-74 409.8 1976-77 215.6 1978-79 226.5 1981-82 220.6

They show that in 1973-74 private enterprises' expenditure on research and development was nearly $410m which was typical of the decade of the 1960s and early 1970s. But then it practically halved-to $216m by 1976-77. At pages 227 to 230 of the May 1979 report of the Senate Standing Committee on Science and the Environment on Industrial Research and Development in Australia much the same point is made, namely, that the continued fall in private research and development was 'a lingering response' to the Whitlam Government's sabotage of Australia's manufacturing industry from 1973 to 1975 via the massive expansion of government spending of that period-up 46 per cent in the one year 1974-75-and hence rampant inflation, the halving of the prevailing export incentives, the abolition of the investment allowance, and record industrial disruption, not to mention the 25 per cent across the board tariff cut that Mr Barrie Unsworth reminded us of the other day. That is what brought down private research and development activity in Australia.

I concede that since 1976-77, as ABS figures show, the increase has been minimal. The Minister has referred to it as being virtually static. The causes are many and complex. But what the Minister will learn, when he has had a bit of experience of real life and real government, is this: It is a darned sight easier to knock a hard won thing down than it is, having knocked it down, to build it back up again. That is why there has been this lag. Therefore, I suggest that from now on we cut out this talk of sabotage, look to the future and get on with the job that has to be done for this country. Meanwhile, I draw attention to the fact-it is recorded in the other statement that the Minister tabled-that direct government spending on research and development and science and technology increased under the previous Government from 1978-79 to 1982-83 at a real rate of 3 to 4 per cent per annum. From 1978 to 1980 there was an actual doubling in money terms for research and development grants. It will be interesting to see whether under this Minister and this Government that rate is kept up. The Minister was lucky that, in the recent mini-Budget exercise the Labor Party razor gang, the Expenditure Review Committee, did not reach his Department in the time available. I wish him luck.

The report tabled today relates to 1981-82 which was an atypical year for the Board and a disappointing one from the viewpoint of my predecessor, the Honourable David Thomson, who laboured hard to upgrade and streamline the system during 1980-81. The Minister for Science and Technology foreshadowed some further changes to the scheme. I could suggest some others but the princpal point I want to make in these few minutes available to me is this: The Minister said that it is his party's policy to extend the powers of the Board to enable it to invest in enterprises by way of equity participation. I am very hesitant about that-although it is typical of the Australian Labor Party approach of large direct government funding with more substantial government intervention. That is the normal line of its thinking. But what I want to stress is that the Minister has had in his hands a report by an eminent committee of the Australian Academy of Technological Sciences, referred to as the Espie report after its distinguished Chairman, Sir Frank Espie. In this report is a ready-made blueprint for immediate action in one major way. I know there are other ways to promote not only research and development but also the very growth of new high technology industry. It is a program to get fledgling new high technology companies through the difficult start-up and early growth phase so that they can then become enterprises and industries with sales volumes of many millions, indeed billions, of dollars, with very significant employment effects.

There is a ready made blueprint here with an initial pricetag on it of a mere $ 20m per annum via tax deductibility for money subscribed as venture capital. Half that program-$10m-would be of inestimable value. It has been worked out by a committee of practical down-to-earth people headed by Sir Frank Espie of CRA, Bougainville and Westpac fame. Now this Minister at the drop of a hat will regale us all with the urgency, the priority and the overriding importance of action in this area. I agree with him that it is important, that Australia is lagging in this context in a quite frightening way.

Mr Barry Jones —Yes, absolutely.

Dr HARRY EDWARDS —The Minister agrees. But what does he do? The other day, flourishing the report, he came into this House and said: 'I hope I shall be able to say something about this very early in the spring session'. He hopes to be able to say something-for goodness sake, why can we not have some action? It is many times more important that this action be taken than all the heavy-handed legislation on taxation or the mini-Budget last week that the Parliament has been concerned with.

I want to put clearly on the record that it was my predecessor, or perhaps more correctly the Minister's predecessor, the Honourable David Thomson, striving to find ways to build up research and development and high technology industry in this country, who among other initiatives, commissioned the Australian Academy of Technological Sciences, specifically through Sir Ian McLennan and then Sir Frank Espie, to come up with an evaluation of the issues and what could be done. That is, what could be done in a practical way-not all the air, froth and bubble with which the Minister so often comes forth, but real practical way in which Australia can get some significant new high technology industries in place; to use a phrase that my colleague the honourable member for Moreton (Sir James Killen) would appreciate, to get some starters actually to the gate with a real chance of winning in the high technology industry race.

My former colleague the Honourable David Thomson initiated that action over two years ago. If the Comittee's report had become available a year ago I can safely aver that the tax incentives that the report recommends to help launch high technology industries, with a limited role for government as catalyst but no government involvement at all-I stress that-in the key area of picking commercial winners and losers, at which governments are notoriously very bad, would have been in pace by now.

I put this to the Minister and to the Government, without detracting from the significance of the Australian Industrial Research and Development Incentives Scheme which, indeed, ought to be enlarged, but the priorities of which should be somewhat more directed towards smaller high growth, high technology enterprises: The priority at this moment-I am keen to put this to the Government before its Budget considerations-should be to fund this Australian Academy of Technological Sciences program, the Espie report proposal for tax incentives, along with the complementary measures which that report proposes. The real issue is whether the main emphasis should be on developing a private rather than a public sector predominantly venture capital market.

Middle Australians had an object lesson from the mini-Budget last Thursday as to what the Hawke Labor Government is all about. They may well also come to learn-and if it so turns out, it will be to their cost-that this Labor Government is not about entrepreneurship and free enterprise. Yet-I emphasise this to the Government-the economic growth and rising living standards that the Government is so anxious to achieve depend above all on entrepreneurship, innovation and enterprise, and implementing this report of the Academy of Technological Sciences is twice as important-nay, many times more important-for raising the living standards of Australians than all the macroeconomic chopping and changing of last Thursday night's mini-Budget.