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Thursday, 1 December 1983
Page: 3161

Mr BARRY JONES (Minister for Science and Technology)(12.36) —in reply-This has been a bipartisan debate. I thank honourable members on both sides for their support.

Mr Hand —The honourable member for Denison must be a socialist.

Mr BARRY JONES —The honourable member for Denison is receiving some unexpected support from an unusual quarter. Before I talk about general matters, let me refer to some of the specific matters raised in the debate. The honourable member for Berowra (Dr Harry Edwards) asked whether it was possible to use management and investment company funds to buy interests of existing shareholders in eligible businesses; in other words, to enable the classic mother-in-law to be repaid. The short answer to that question, alas and alack, is no. Before he suggests that we have been unduly restrictive in drafting clause 31 (2) of the Management and Investment Companies Bill, I advance two reasons for the position we have taken. First, allowing MIC funds which have attracted a tax concession to be used to buy existing shares in eligible businesses is considered to be too open to potential abuse or rorting. It would be difficult to prevent MIC funds being used to make relatively low risk investments in existing companies. We are aiming by this Bill to assist growth and new business opportuntiies. Secondly, MIC shareholders are not prevented from using other funds, that is, funds that have not attracted a tax deduction, to purchase the interests of existing shareholders in an eligible business. Therefore, they can alleviate the position of entrepreneurs with debts of the sort mentioned by the honourable member.

Another matter raised by the honourable member for Berowra was whether MIC funds could be used in companies involved in mining equipment and process technology. If these companies are undertaking manufacturing activities, they are covered by the provisions of clause 29 (6) (a). If this is not the case, the provisions of clause 29 (7) would still permit the Management and Investment Companies Licensing Board to allow an investment if the Board was satisfied that the provisions of clause 29 (6) (f) applied, that is, that the company is substantially involved in utilising innovative technology, is export oriented, is internationally competitive and has the potential for rapid growth and for creating significant skilled employment in Australia.

The honourable member for Ryan (Mr Moore) commented favourably on the Australian Industry Development Corporation's investments in the Australian Biomedical Corporation Ltd. I had the pleasure of launching ABCL at a Press conference here in Parliament House earlier this year. The ABCL is a genuine sunrise industry. My Department recognised the opportunities for Australia in this area and commissioned the business plan on which ABCL is based. The company will soon be marketing a number of products developed by medical research workers in Australia. The AIDC's investment in ABCL and other projects such as Interscan demonstrates its commitment to developing new technology-based industries in Australia. Essentially it is a taxation measure. Clause 7 (3) provides that members of the board are to be appointed on the basis of their knowledge of or experience in industry, finance, commerce, marketing and management or a field of technology. Further, I must emphasise that investment decisions in eligible businesses will not be taken by the licensing board. They will be taken by the management and investment companies.

The honourable member for Higgins (Mr Shipton) expressed concern that the amendment to the Income Tax Assessment Act is not yet before the House. I assure him that it will be brought forward by the Government early in the autumn session. Essentially it will carry out the claw-back provisions that are referred to in the report of the Espie High Technology Financing Committee. It is fairly clear what the substance of the Bill will be. The honourable member for Higgins was also concerned about the powers of the Licensing Board. In expressing these concerns he seemed to equate the Board with the bureaucracy. A careful examination of the Bill reveals that this is not the case. The decision on licences will be taken by an independent, eight-member Licensing Board reporting to me. Only one member of this Board will be a bureaucrat.

Finally, I make some very brief references to other contributions. The honourable member for Bradfield (Mr Connolly) asked why there is a 15:1 gearing in the AIDC legislation. The Government has decided to retain a fixed gearing ratio as a matter of prudential control. However, it recognised that the previous ratio of 8:1 was extremely conservative compared with other financial institutions and decided that a ratio of 15:1 would assist the AIDC to meet its expanded role while maintaining a sound prudential position. Further, on the question of whether equity investment is a way of nationalising industry, it has to be stressed that the AIDC is encouraged to take an equity where necessary to help develop efficient industries. This was the case under the McEwen legislation. This may support the view strongly held in the Liberal Party that members of the National Party are just rustic socialists, admittedly of a very unsophisticated nature.

Dr Harry Edwards —No comment.

Mr BARRY JONES —'No comment' says the shadow Minister. However, the AIDC is still required to act on a commercial basis and review its equity holdings regularly with a view to diversifying where it can. Also the AIDC cannot 'take over' an enterprise. It must retain partners except for temporary reasons and it must not acquire a controlling interest where this is held by Australian residents except to prevent foreign takeovers.

I am exhilarated that we have been able to get this package of three Bills through today. They are complementary. All are tremendously significant. In the couple of seconds remaining I say that I am very much preoccupied with the fact that overseas Australia has no reputation at all as a supplier of manufactured goods. It is not that we have a bad reputation; we have no reputation at all. We should recognise the enormous significance of brand names. When we buy a Volvo or Mitsubishi car, a Canon camera or a whole variety of branded technological devices it means something. Nobody ever buys coal by a brand name. Nobody says: 'I have to buy half a tonne of Cessnock coal' or 'I must have some iron ore that comes from a particular area'.

Dr Harry Edwards —They are standardised commodities; it will never change.

Mr BARRY JONES —That is precisely the point. We will develop a reputation only when that reputation is linked with quality control. Only then will we start to penetrate world markets in selective areas. That was confirmed by the experience I had in Korea last week. I will not have time to tell the House about it. The Koreans have adopted the fast track in quite an astonishing way. I am more sceptical than ever about the conventional economic wisdom and the idea that we can not pick winners and losers after going to the Hyundai shipbuilding works. Conventional economic wisdom in 1972 told the Koreans that they should get back to the trees because there was no possibility of setting up a shipbuilding industry. By 1983 that shipyard is the first in the world. They have built it up from a zero base. I thank the House for its support and I look forward to a speedy passage of these Bills.

Question resolved in the affirmative.

Bill read a second time.