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Thursday, 1 December 1983
Page: 3151

Mr BRUMBY(11.42) —It is indeed a pleasure to rise to speak in support of these three Bills, the Industrial Research and Development Incentives Amendment Bill, the Australian Industry Development Corporation Amendment Bill and the Management and Investment Companies Bill, which are before the House today. The Bills are, in my mind and in the Government's mind, enormously significant in terms of the future direction of Australian industry and particularly high technology industry. The large number of speakers listed in this debate demonstrates the importance of the legislation. I shall keep my remarks reasonably brief.

Prior to the 5 March Federal election this year, the Australian Labor Party released a very detailed policy paper entitled 'Reindustrialising Australia'. I refer in particular to the policy stated in that paper on manufacturing industry . We said on page 8 of that paper:

More than 60 per cent of the export earnings of Japan, France, Sweden and Italy are directly attributable to intellectual skills (research, design, invention, products innovation) and less than 5 per cent of Australia's. Their skill based earnings will grow. Ours will contract, reducing our capacity to generate more wealth so as to maintain and develop our living standards. The new technologies are high risk areas. We cannot promise success in any of them. We can, however, guarantee economic regression if we fail to take up the challenge.

We went on to say:

A priority for a Labor Government will be the identification of the 'Sunrise' industries for the 1980s and 90s, and--

most importantly-

the channelling of investment to them.

These three Bills today in total provide those opportunities for support in industry in general and, in particular, support for high technology industries.

I want to make some remarks particularly about high technology industries and their place in our economy. In doing so, I rely to a great degree on an enormous amount of work that has been done in this area by my colleague the Minister for Science and Technology (Mr Barry Jones), who is well acknowledged as a great leader in this area and who is showing us all the great importance of technology to our society. There is no question that Australia is now a post-industrial economy where services, under a variety of definitions, comprise somewhere between 50 per cent and 75 per cent of the total labour force.

Indeed, the history of our nation over the last 90 years shows that between 1891 and 1981 employment in farming and mining has fallen from 33.3 per cent to 7.4 per cent. But because that fall has been steady and protracted it has not been a cause for alarm and, of course, neither did we starve. Farmers have been able to adjust to those changes over a generation or so. But we have been slow as a nation to learn that there has been a paradigm shift in our economy away from a shaky, industrial base to an equally shaky, post-industrial one. The minerals will no longer carry the lucky country-an expression that has been used to describe Australia-as shifts in world markets indicate. In 1970, we had 1.69 per cent of total world trade. By 1980 that figure had fallen to 1.18 per cent.

We should examine also in the context of this general area and in the context of these Bills how technology affects and changes work. In 1980, the report of the Committee of Inquiry into Technological Change in Australia, which was entitled 'Technological Change in Australia', was presented to the Parliament in four large volumes. The Myers report, as it was known, sank somewhat like a stone on its day of publication. In more than 1,500 pages, the report, which was on technological change, devoted only a single sentence to the critical issue of the impact of technology on employment. Paragraph 4.57 of that report stated:

The Committee . . . does believe that the available historical evidence shows that technological change has in the long term created wealth and employment and that future technological changes will continue to have that effect.

That was the sole sentence in that 1,500 page report. There was no further elaboration or, indeed, historical analysis. Amazingly, the report made absolutely no reference at all to foreign ownership of high technology and the role of multinational corporations as the primary agents of technology transfer in Australia. The issues of ownership and control of technology were totally and completely ignored. So, too, was the development of a global economy and the international division of labour. The significance of miniaturisation in microelectronics and its role was not referred to at all.

The computer revolution, based on the principles of miniaturisation, has certainly overturned our whole relationship between the value of inputs and outputs in a manner for which there has been no precedent in our known economic history. At this stage in our history we are showing clearly that the value of inputs are falling while the value of outputs are rising. In addition, computerisation and telematics make the location of economic activity less relevant. Information transactions can be carried out anywhere in a different city or continent far from the producer and, importantly, far from the end user.

Robotisation will also make enormous inroads into employment and process work in the 1980s. In Japan, the Nissan company requires only 67 production line workers to manufacture 1,300 cars a day. In 1984, the Kawasaki company will open the largest machine tool factory in the world at Florence, Kentucky. It will employ six people. I repeat: That will be the largest machine tool factory in the world. In 1985 the Japanese will open the first completely automated factory with no labour force at all.

It has been said that, in the United States of America, certain union leaders have made the comment in general terms that if we robotise in our factories we might stand to lose 75 per cent of the work force. However, if we fail to robotise we lose 100 per cent because the firm goes out of business. I think the fears we have in our community are justified, particularly the fears that those people who lack specific work skills have that the impact of technology will cost them jobs. Equally there is absolutely no comfort in the view that rejecting technological innovation will preserve jobs. It certainly will not. We cannot rely on an obsolescence-led recovery. It is therefore up to the Government and up to this nation to provide leadership and scope so that we are able to develop in those areas where we have been so seriously lacking in the past. As it might have been said by one famous author: Technological change may destroy jobs; lack of technological change will destroy jobs absolutely.

A related factor to these Bills and to other aspects of technological change is to look at the question of education and skills. If Australia is to be successful in supplementing its traditional industries with high technology ones it will need to adopt a fundamentally different attitude to the education of our work force and the development of our skills. In Japan the attitude to skill acquisition and development is reflected in the fact that, at the age of 17 years, 88.1 per cent of Japanese people are still at school compared with only 31.7 per cent in Australia. I repeat those figures: In Japan the figure is 88.1 per cent; in Australia it is 31.7 per cent. In 1950, 3.5 per cent of Australia's labour force entrants had degrees or diplomas. By 1980 that figure had doubled to 7 per cent. But Japan had less than one per cent in 1950, rising to 39 per cent in 1980. In percentage terms that is an increase of 4,000 per cent. By comparision, I repeat: Australia's increase in percentage terms was 100 per cent .

South Korea's rise is even sharper. The mean skill base in Australia is undoubtedly declining at a time when that of the world in general and the Pacific rim in particular is rising. That means that our blue collar workers in particular are disadvantaged. Our white collar workers are also disadvantaged but somewhat less so. By way of further comparison, in the United States of America there are pro rata three times as many young people studying science as there are in Australia. Of these 28 per cent go on to take out PhDs, compared with only 5 per cent in Australia. We need certainly and essentially to revolutionise the level of technological skills in the Australian work force as a matter of urgency.

It is relevant also to look at how we compare in the overall economic and world scene. We have a population of about 15 million people. We have one of the richest natural resource bases of any nation. We have abundant cheap energy and a very strong agricultural base. Our gross domestic product in 1980 was $140 billion, or $9.59 billion per one million of population. By comparison, the Netherlands has a population of 14 million, which is 93 per cent of Australia's population. It has very limited access to raw materials other than some North Sea oil and gas. However, its GDP in 1980 figures was $169 billion, or $12.07 billion per one million of population. Its GDP was 26 per cent higher than that of Australia.

The case of Sweden is even more notable and striking. It has a population of 8. 3 million, very limited raw materials and a very short industrial working week of only 30.2 hours. Nevertheless, its 1980 GDP of $123 billion represented 88 per cent of ours. That figure represented $14.8 billion per one million of population, 54 per cent higher than that of Australia. Sweden has penetrated world markets, including our own. It has done it with brand names. Just some of them which immediately come to mind are Volvo, Saab, SKF, Ericsson, and Electrolux. The Swedes sell us $5 worth of finished goods for every $1 in raw materials that we sell to them. It is true, of course, that Sweden is close to the European market and relatively close to the United States, but I think the important point to be drawn from that is that equally Sweden has to compete with those markets-those very developed markets-at much closer hand.

In the period between 1955 and 1980 there was a striking change in the per capita order of GDP in the technologically advanced world. The resource rich nations such as the United States, Canada, Australia and the United Kingdom fell in ranking while resource poor nations such as Switzerland, Sweden, Denmark, the Netherlands, Japan and Singapore rose extremely rapidly. The major factor in the rise of the resource poor nations has been the proportion of export earnings directly attributable to intellectual input: Invention, research and development , product innovation, design, patents, royalties and copyright. More than 60 per cent of the annual export earnings of Japan, France, Sweden, the Netherlands and Italy depend on 'brain based' industries, while Australia's figure in comparison is less than 5 per cent. The skill based earnings of our industrial contemporaries will grow. Ours will contract-of that there is no doubt-unless we have a fundamental change in economic direction.

The three Bills before us-the Industrial Research and Development Incentives Amendment Bill, the Australian Industry Development Corporation Amendment Bill and the Management and Investment Companies Bill-are all a start, a very important start, in redressing the fundamental manufacturing and industrial base in Australia. I hope that in my comments I have emphasised the absolutely essential and fundamental need for this nation to address these difficulties. We as a government started to do that. We are honouring our commitment to the Australian people in our manufacturing and industrial policies, but I emphasise that given the scale of the problems we face this is just a start. We have a long way to go, and not just in the area of taxation incentives for high technology industries; we still have a long way to go in the education and skills area. I know that we as a government will work wholly towards achieving the necessary objectives, with the interests of the Australian people at heart.