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Thursday, 2 May 1996
Page: 227

Mr SERCOMBE(10.39 a.m.) —Australia, along with the rest of the international community, is experiencing extraordinary and rapid change. I do not believe it is an exaggeration to compare the revolution in the technological base of our society and economy with the industrial revolution of two centuries ago. I believe that, in a number of areas of economic and social life, the impact of the changes in our technological base are of greater significance than that particular revolution which transformed the world. I believe some of the implications are only dimly perceived at the present time.

I will use an analogy to illustrate what I believe to be the impact of technological change. The generations that saw electricity introduced obviously recognised that electricity would have a significant impact in relation to production processes. Nowadays, I think we can concede that the operation of modern cities is simply inconceivable without that technology. Similarly, our domestic and social arrangements and our family lives are inconceivable without that technological development.

There are numerous technological developments, such as the convergence of computing, communications and media technology, that are revolutionising and impacting on our world at the moment. They will continue to have an impact on the globalisation of our economic affairs and the reshaping of industries and employment patterns. Miniaturisation technology, fibre optic technology, which provide enormous bandwidths and digitisation, including digital compression techniques, will transform both our society and our economy.

Our manufacturing sector is becoming smarter. Yesterday—and please forgive me, Mr Deputy Speaker—the member for O'Connor (Mr Tuckey) entertained us with a joke about Toyota Taragos. Perhaps I could ask, given the advanced technology involved with manufacturing motor vehicles these days, what the difference is between the member for O'Connor and a Toyota Tarago. The answer is that the Toyota Tarago is a lot smarter!

World trade patterns are shifting dramatically to service exports and `knowledge intensive' commodities. Economies that can meet this shift are well placed in the emerging world. Such economies can grow at faster rates and reduce unemployment without the balance of payments constraints that affect our economy from time to time. Conversely, economies that are uncompetitive in these areas will face difficulties in sustaining economic growth.

It is sobering to reflect on the fact that the major differences between so-called rich and poor societies in today's world are different growth trends over the last two centuries rather than major differences in standards of living that existed between those societies two centuries ago. The lower income societies today are those which, because of European empires and other factors, failed to gain access to the great industrial revolution.

The implications for Australia of this at the present time in terms of our development, and given my contention about the significance of the changes in the technical base, are fairly clear. For Australia, the crucial structural issue is the creation of new and/or expanding industries, integrated into the rapidly growing sectors of the world economy to provide our growth and prosperity. Our problem has been that our exports have tended to be dominated over time by products with slow growth in terms of international demand and prices and the problem with our imports has been the opposite.

The former Labor government was making huge strides in addressing these fundamental issues. Since the mid-1980s, exports of high-technology products from Australia have grown strongly. They were growing at 26 per cent per annum. That is one of the largest growth rates in the world. In the area of elaborately transformed manufactures—the most rapidly growing area of world trade—Australia has, since 1985, continued to grow more rapidly in terms of volume and percentages than the rest of the world.

Australia is a very cost competitive place to carry out research and development and this fundamentally underpins the `knowledge intensive' industries to which I referred. It is 137 per cent more expensive to carry out industrial research and development activity in Germany and 157 per cent more expensive to do it in Japan.

This situation is not accidental. This situation that Australia now finds itself in requires appropriate policy, including incentives for research and development, incentives to commercialise public sector research and support for science and innovation in the budget.

Research by Melbourne's Centre for Strategic Economic Studies has demonstrated that a fundamental factor—not the only factor—in Australia's success in elaborately transformed manufacturing trade since the mid-1980s has been the industry specific policies pursued by the former Labor government.

For example, in the pharmaceutical industry—an industry which in many parts of the world is closing down—because of the operation of the factor F program by the former Labor government, according to the Industry Commission the following has been achieved for the Australian economy: $4.5 billion in extra exports; $709 million in additional R&D expenditure; and $800 million in additional investment. I stress that that is in an industry which is at the leading edge of technology but which in many parts of the world is closing down. Similar observations can be made in another leading edge area such as information technology through the former Labor government's partnerships for development program.

The signs, however, from the new government already in its short time are all somewhat alarming. The new government does not appear to understand the vital importance of some of the areas to which I have referred for this country's very future as a prosperous, growing economy. Reports in the press, particularly the financial press, have certainly convinced me of this government's intention to slash the factor F program in the pharmaceutical industry to which I have already referred and which is an important example of what can be achieved by cooperative effort between government and industry.

There have been convincing, consistent reports about the government's intention to slash the export market development grants program. In the 1994-95 financial year some 3,500 claims were processed under this particular scheme. Companies employing 600,000 Australians were the beneficiaries of this scheme and those companies generated $5.1 billion in exports.

Minister Moore has been quoted as saying that small business is not taking up this program, and there is an article to that effect in the Australian of 29 April. Clearly, he is not on top of his portfolio and he is misinformed, because something in excess of 70 per cent of the firms taking up the export market development grant are companies that employ fewer than 25 staff.

There has been consistent speculation in the press about the government's intentions to chop about $200 million off the research and development tax concession. Once again, Minister Moore has been saying how a lot of this activity generated as a result of those arrangements is `mere product development'. What an extraordinary observation for a minister for industry to make! It is `merely' the elaborately transformed manufactures that are transforming the manufacturing base of this country under the sorts of policies that this government has inherited.

Similarly, $124 million has been earmarked for cuts from the development import finance facility. That program has been remarkably successful in enabling Australian companies to export mainly services as part of our development responsibilities to other parts of the world. Ausindustry programs benefiting small, innovative companies have been clearly marked for the chop.

Because of those factors we have already seen so much negative comment in the press about this government's industry policy.

The Australian Chamber of Manufactures—scarcely a Labor Party front organisation—has been quoted as talking about `slash and burn' cuts. Mr Handberg of that organisation has expressed alarm that some of the most cost effective business assistance programs are to be axed.

The managing director of a Melbourne based transformer maker, Atco Controls, was recently quoted in the press as saying:

Industry has become world competitive but they—

`they' meaning the government—

haven't noticed.

What an extraordinary attack by the managing director of a successful Melbourne company. Others have already been quoted as describing this government's approach to industry policy as `ham-fisted', `illogical' and `stupid'. Even Minister Moore has been quoted as describing it as `dreadful policy'. He is dead right on that—it is dreadful policy. In the Canberra Times of 29 April a Mr Holt of the National Supplies Office was quoted as saying:

We're trying to grow our export performance. But we won't get that broad economic growth unless we help the smaller, innovative firms.

I say amen to that. Exactly!

It is instructive to look at just one other small group of economic statistics to point out just how fundamental the pursuit of growth policies is to the success and prosperity of this country. In 1970, in purchasing power parity terms, the east Asian economies were only 45 per cent of the United States GDP. In 1995, those east Asian economies were 20 per cent above the US GDP and by 2005 it is estimated that they will be double the size of the US economy.

So a government that does not understand the importance of its own role in actively promoting Australian participation in the growth areas of world trade is doomed to failure, which will have terrible consequences for Australia, given the sorts of historical dimensions I have tried to paint.

The government is failing not only in the industry policy area. It is also clearly failing in its understanding of social fairness—and not just in things like the foreshadowed changes to industrial relations but in important areas such as those related to industry. For example, the government has decided to close down the former government's program for outworkers in the clothing industry. The government has decided to change Australia's position in international forums to try to get some decent international regulation in these areas of exploitation.

On 17 April the Melbourne Herald Sun contained articles about women clothing workers being `commonly ripped off, intimidated and sexually harassed'. The Labor government was addressing the social unfairness inherent in so many aspects of that industry, yet this government has already terminated that action.

Mr Deputy Speaker Nehl, I take this opportunity to congratulate you on your election to the position of Deputy Speaker. Prior to my election to this parliament, I served two terms in the Victorian state parliament, so I have served under two Speakers of different political origins. I had the honour of serving under Dr Ken Coghill, the Speaker in the Victorian parliament in the last term of the Labor government. Dr Coghill was certainly a Speaker who understood and actively pursued—at some cost to himself—an approach which, from time to time, protected the legislature at the expense of the executive. Speaker Delzoppo, in more recent times, earned the respect of both sides of the House. I therefore bring some understanding of state political matters with me.

I am a strong believer in the view that our `horse and buggy era' constitution needs considerable attention to ensure that our system of government is equipped for the 21st century rather than the 19th century. I also bring with me some local government experience, both as a council officer and as an elected representative. So I have had some experience at all levels of government.

I want to acknowledge that a considerable amount of my experience was obtained by serving a political apprenticeship with my friend and colleague who is in the chamber, the member for Melbourne Ports (Mr Holding). Clyde was kind enough—some might suggest foolhardy enough—to have employed me for a considerable period in the 1980s, and I am very grateful for that. I want to put my appreciation to Clyde on the record.

I come to the parliament from the electorate of Maribyrnong. Maribyrnong is an electorate very much at the heartland of Melbourne's north-western suburbs. It is a very diverse electorate which covers a cross-section of metropolitan Melbourne—from the older, established suburbs such as Moonee Ponds and Essendon through to newer housing estates in St Albans and North Sunshine. According to the Australian Bureau of Statistics, it is the most ethnically diverse electorate in Victoria, and it is a particular honour to represent that diversity.

I want to also put on the record my appreciation and the appreciation of the electorate for the outstanding service provided to Maribyrnong by my predecessor, Alan Griffiths. Alan represented the electorate in this place with distinction for 13 years. I am sure we all wish him well in future endeavours.

I have talked about many matters today in a macro sense, particularly the future of manufacturing in this country, and that aspect is especially pertinent to my electorate. There are a range of opportunities that I am anxious to pursue and which I will be calling vigorously on this government to pursue.

The former Prime Minister put forward an extraordinarily attractive and innovative set of propositions about the development of Essendon airport as a high technology, multi-media centre. I believe that is an opportunity for Australia—not just Victoria or Melbourne—to put itself at the forefront of one of the most rapidly growing areas of world economic activity. I will certainly be doing what I can to persuade this government to honour and pursue those commitments.

One proposal which the Victorian state government, to its credit, supports is the establishment of an aviation, air and space museum at Point Cook in Melbourne's west. That is something which, in terms of the proposals being discussed with this federal government, I believe would transform opportunities in that part of Melbourne. So there are a range of areas I am interested in.

Defence industry is another area that I will be paying considerable attention to because of its importance to the west and north of Melbourne. The Anzac frigate program has been an extraordinarily important stimulant for activity in the part of Melbourne that I represent. I am looking forward to continuing to play a role in promoting those sorts of activities.

I also come here representing Australia's oldest and greatest political party, the Australian Labor Party. It is a party with a proud history, a party which Australians have turned to for leadership, particularly in times of national crisis. It is a party which I believe can be immensely proud of the last 13 years of government it provided to Australia. It was a government that positioned Australia, in all sorts of areas, for the very rapid, radical changes to the environment that we all live in, and I referred to that earlier in my speech. I believe that we will be back in power relatively quickly.

At a local level, I want to take this opportunity to acknowledge the very considerable efforts of people in my local area, the party members and supporters who assisted me in arriving at this place. It is always invidious to single out particular individuals, but Carol Sewart, Robert Mammarella and Paul Booth are people who worked extraordinarily hard and whom I ought to take the opportunity to acknowledge in this inaugural speech.

Most of all, and in conclusion, I want to acknowledge and thank my family for the support and love they have given me in enabling me to arrive at this particular situation. To my wife, Carmen, who is in the gallery, my children, Nadine and Rory, and my future daughter-in-law, Melissa, I thank you.

Thank you, Mr Deputy Speaker.

Debate (on motion by Mr Andrew Thomson) adjourned.