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Tuesday, 7 December 2004
Page: 65

Senator RIDGEWAY (4:03 PM) —I also rise this afternoon to speak to the Textile, Clothing and Footwear Strategic Investment Program Amendment (Post-2005 Scheme) Bill 2004 and the Customs Tariff Amendment (Textile, Clothing and Footwear Post-2005 Arrangements) Bill 2004. The TCF industry is a critical one, as we all know, and the Productivity Commission dealt with this particular issue. They reported on it in 2000-01. Australia's 5,000 TCF firms have generated a turnover of some $9 billion and provided factory based employment for at least 58,000 Australians. The commission also noted that there is also the equivalent of as many as 25,000 full-time employees engaged in outwork.

As the Productivity Commission report pointed out, TCF manufacturing in Australia covers a diverse range of activities, including early stage processing of leather and natural fibres; the production of textiles; the transformation of leather, yarns and textiles into clothing and footwear; carpets and other fabric products for the home and office; and technical textiles such as shadecloth, medical and sanitary products, filtration products and insulation materials. The report also noted how important the TCF sector is in certain states and, more particularly, in regions accounting for six per cent of all value-added production and nine per cent of total employment in Victoria's manufacturing sector. There is also significant TCF production in regional centres such as Albury-Wodonga, Wangaratta, Geelong, Bendigo and Devonport.

The report of the Productivity Commission review of TCF assistance was released last July. The government considered the commission's recommendations and in November last year the minister, the Hon. Ian Macfarlane, announced that there would be a five-year pause on tariff reductions from 2005 for the TCF industry and that that would be followed by a gradual 10-year program of tariff reduction. Tariffs will be maintained to the 2005 level until 1 January 2010; however, in 2010 the 10 per cent tariff on cotton sheets, woven fabrics, footwear and carpets, and the 7½ per cent tariff on sleeping bags, table linen and footwear parts will be reduced to five per cent. The 17½ per cent tariff on clothing and finished textiles will be reduced to 10 per cent in 2010, and this 10 per cent tariff will be reduced to five per cent in January 2015.

Essentially, it is all being done to enable the industry to adjust to the new tariff arrangements, and the government has announced that a $747 million assistance package will be implemented. Of that, the package includes $500 million for an extension of the TCF Strategic Investment Program to 2010; $100 million for an extension of SIP for the clothing and finished textile sectors to 2015; $50 million for a 10-year structural adjustment program to assist displaced workers; $50 million for an import credit scheme; and, lastly, $25 million that is set aside for a 10-year grants based program for small business.

This is an issue that I have been following for many years. I have certainly been involved in inquiries and I have met with people in the industry. The Australian Democrats believe that the strategic investment program is a valuable industry support mechanism. It has had a positive effect on the industry as it has adjusted to major tariff reductions in the last 10 years. The extension of the scheme for a further five years does have unanimous support in this place. The Democrats, though, have expressed our support for the extension of the program, and we would be very pleased to vote for legislation that would achieve that as an outcome.

However, the Australian Democrats do not support making this extension conditional upon a further program of tariff reductions. We support the position that has been put forward by the TCFUA—that is, that the federal government is seeking to force the industry to accept tariff reductions as the price of further industry assistance, despite there being no evidence that this will result in benefits to Australians. We do not believe that it is necessary at this point in time. We believe that a more suitable approach would be to extend the SIP until 2009 and then review the need for a further round of tariff cuts post 2010 close to that time. Guaranteed tariff reductions that will not come into effect until after this round of SIP funding expires do not need to be included in this legislation, so we see that, really, as an anomaly.

The Democrats' industry policy states our belief that manufacturing and industry have been undermined by an array of government policies, including the reduction in tariffs, the restrictions on the research and development tax concession, the cuts to industry assistance programs, an unsympathetic tax system and a failure to engage in strategic industry and regional development planning. The Democrats believe that the fundamental problem is this government's, and previous governments', blind faith in market solutions and untrammelled competition policy.

We do support the freezing of any further reduction in tariffs and reducing them only if our trading partners are doing the same. As stated in a submission to the Senate Economics Legislation Committee's inquiry into these bills, this industry has experienced substantial employment losses over the past decade. That is no secret, and I think we are all well aware of that. Policies that seek to decrease tariffs further when our trading partners are not following our lead—in my mind at least—exacerbate the problems that currently exist.

The TCF industry has been vocally lobbying on these bills. Representatives from the big end of the TCF town have negotiated this package with the government, accepting a program of tariff reduction and the need to know exactly the terms under which this will happen over the next 10 years. It seems to me that this will enable them to strategically plan their investment and development activities to develop niche areas and expand their export activities to ensure the long-term sustainability of their own particular part of the industry. They are understandably concerned about certainty and the need to base their future capital investment decisions on the fact that they are being guaranteed reimbursement through the SIP. They have been particularly concerned about the timing of the bills and were keen to see them progress through the parliament even before the election. These firms are unlikely to be affected by the proposed tariff reductions. One of the lobbyists that I met with put this to me: `The tariff reductions are so small I could lose more than that each day based purely on currency fluctuations.' For firms the size of the firm that person represents this is certainly true, and I think we ought to keep this in mind in how we deal with these bills and with issues for the future concerning this industry.

The vocal lobbying on these bills has come from firms that represent only a small percentage of the total industry—fewer than 500 of the more than 4,000 firms that engage in the TCF business. The remainder of the 4,000 that I talk about are smaller firms. They range in size from very small to medium sized enterprises. These firms do not get the benefit of the strategic investment program. Given that this is a scheme that reimburses major capital investments, these firms do not spend enough money to get any money from the SIP pool. When it comes to fairness, we ought to keep that in mind. It seems to me that when you talk about tariff reductions they will be disproportionately affected by these cuts. Smaller margins and the volumes of production render them much more sensitive to fluctuation in tariff levels, and the potential for job losses in their case can be significantly high. The TCF Union—I think rightly—has lobbied hard in the names of these smaller firms, arguing that, while the SIP is unanimously supported, coupling this scheme with mandatory tariff reductions probably is unnecessary and will disproportionately affect those firms at the small end of the industry, with a potentially devastating effect on employment especially in regional areas like the ones I mentioned earlier.

I understand that, on the one hand, business owners and employers within the industry are keen to have some certainty in turn, and that is understandable. They have accepted a program of tariff reduction and the need to know exactly the terms under which this will happen over the course of the next 10 years. This will enable them to strategically plan their investment and development activities to ensure their long-term sustainability. On the other hand, employees of the TCF industry are justifiably concerned about the real prospect of job losses under these new arrangements. They also raised the question about whether or not the structural adjustment program will provide enough incentives for transitions where there are job losses.

The National Secretary of the TCF Union has also expressed serious concerns about the government's proposed amendments to the program—that the reduction in funding of SIP will possibly see the loss of up to 30,000 jobs in the TCF sector by 2010. A significant loss of jobs over that period of time ought to be a cause for concern for all Australians. As I mentioned earlier, the government has promised $50 million for a 10-year structural adjustment program to assist displaced workers as part of its plan for post-2005 arrangements. The government's media release describes this as a program to `offer case-by-case help to workers who are affected by large plant closures'.

At first glance, this would seem to be insufficient for what is likely to be a major program of labour market adjustment. If, for the sake of argument, we were to accept the TCFUA's figure of the loss of 30,000 jobs as a result of these changes to the industry, that $50 million figure would essentially amount to $1,667 per newly jobless worker over the course of the next 10 years. I believe the government has failed to prove that the transitional assistance component of its proposed changes to the assistance scheme is sufficient to help employees develop and adapt their skills or to retain or find new jobs. Again, that ought to be cause for concern.

I also want to mention the issue concerning the Homeworkers Code of Practice. During the inquiry into this bill the committee heard disturbing and heartbreaking evidence about outworkers in the garment industry working terrible hours for very little pay and under dreadful conditions. We heard about a woman who receives $7 an hour to sew swimwear and who sometimes has to work up to 16 hours a day to support her family. These conditions are having a terrible impact on her health. We also heard the story of an outworker in the fashion industry who has made ladies blouses for at least the past 15 years. She used to receive $11 per garment but in the last five years she has received only $5.30 per garment, and the work has become more complicated. For instance, for some of the garments—not that I would know much about these things, not purchasing blouses—she has to join as many as 13 pieces together. She usually starts work at six o'clock in the morning. If there is the stress of an urgent order, she has to start work when she wakes up at three o'clock or five o'clock on that day.

We fight hard to ensure that all Australians have a decent working environment, and it is disgraceful that there are people in this country who are treated so very badly by their employers. There was a report into outworkers in the garment industry in 1997, before I came to the Senate. In the years since that report came out the government has done virtually nothing to implement any of the recommendations to make life better for garment workers. It is a disgrace that we still hear stories about the continued and systematic of exploitation of outworkers in the TCF industry. The Australian Democrats believe that all participants in the TCF industry should sign up to the FairWear Homeworkers Code of Practice or an equivalent code of practice and end the exploitation of outworkers in this industry. This should be a mandatory condition to receiving SIP funding under this legislation.

I want to conclude by expressing my extreme disappointment in the opposition. I believe that, desperate to prove some form of economic credentials in the wake of their recent election loss, they sold out on their key principles to their constituents, not so much to the union but to the potential 30,000 people who would presumably support them and who may well be out of work. I believe that, if they had stuck to their guns and insisted that the tariff reduction provisions in this bill be de-linked from the extension to the SIP program, there was leverage to negotiate with the government to pass that part of the bill that we all agree on and to delay the tariff reduction component until a later date. I think it is fairly clear—the writing is on the wall—that they have decided to let this get through. No matter about all the passionate speeches we have heard in this place about this issue over the past year, all of the effort that went into the committee inquiry and report has pretty much come to nil.

I sincerely hope that the anticipated outcomes of this legislation are not as dire as some of us might fear. If they are, I think we have only ourselves to blame because the inquiry was pretty clear in elucidating many of the issues. The policy response does not seem to be commensurate with what we had on the table and is certainly not with what we have before us on this occasion.