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Thursday, 30 September 1971
Page: 1768


Mr GRASSBY (Riverina) - 1 entirely endorse the principles in the Bill now before the House but I am at a loss to understand the fragmented and restricted nature of the legislation. 1 was interested to hear the remarks of the honourable member for Isaacs (Mr Hamer). I do not think he meant to do it but to my way of thinking he pinpointed the essential weaknesses in the legislation: He said it was legislation designed to help the export of manufactured goods. He indicated that at the present time manufactured goods account for some 20 per cent of our exports. The point that occurs to me immediately is that the primary sector accounts for SI per cent of exports, but they are not in fact covered by these provisions for buyer credit.

The honourable member for Isaacs said that in the mid-1970s $6,000m should be the level of our exports if we are to maintain our living standards and momentum in the economy, and he said that we would have to achieve this by relying on manufactured exports. I wish him luck on that, but 1 very much doubt it. We know very well that the mineral situation, which is certainly 100 per cent foreign controlled, is not the answer to export problems in the immediate future and in this century. We know that there are great difficulties facing manufactured goods in competitiveness with the rest of the world. It is my assessment that we will be relying on primary industries from now to the end of the century for the bulk of our export income. As I say, let us by all means make the effort in both the primary and secondary spheres, but this is precisely the point at issue at the moment, as far as 1 am concerned. Here we have a piece of legislation which deals with only 20 per cent of our exports and ignores 5 1 per cent of our exports.

The honourable member for Isaacs also make some other very interesting comments. In fact, he made a stricture on the Australian economy when he said that incentives to develop in the United States of America, Japan and even Ireland are much better than the incentives given to our industry. I hope I have not misquoted him. He is quite right. In fact, the effort and incentives that are provided and the facilities that are made available in the tiny Irish nation have in fact resulted in a performance twice that of ours in economic terms in recent years. Surely this is a challenge to all of us in Australia, when we find that we have been left behind in recent years to that degree. 1 hope that the stricture will go home to those who deserve it.

Credit is the essential of world trade at the moment. Credit means time to pay; the terms of payment. It will determine who will buy and in fact who will sell. The United States has recognised this because it established the Commodity Credit Corporation under Public Law 480. In fact, this has been done basically to promote United States primary exports. But under this American law the United States has moved into our own region of the world, - our own neighbourhood, and it has made sales on the basis of 20-year terms, a 5 per cent interest rate and local currency transactions. This has all been done under this United States Public Law 480. The United States trading agencies, and the people who produce, have received a tremendous amount of help from the operation of that law. Here we have the most powerful nation in the world moving into our own region and trading most vigorously and on the basis of credit. The result is that these people in the United States have taken from us - I am not saying unfairly; they have done it with their vigour and with government assistance - markets that we should have had for wheat. They have taken from us markets which we could have serviced with rice. I mention just 2 commodities as examples. They have done that because of their utilisation of credit facilities.

Here we are with a piece of legislation which is designed to do a very laudable thing, as my distinguished colleague the honourable member for Melbourne Ports (Mr Crean) has pointed out. Under this legislation we are to provide facilities for buyer credit. That is excellent. But surely, when we examine the legislation and the second reading speech of the Minister for Trade and Industry (Mr Anthony) we find that what it does is to put the Export Payments Insurance Corporation and the Commissioner in a straitjacket. The Government says: 'If you want to get out of that straitjacket you may go to the Minister for Trade and Industry and/ or the Treasurer and/or another Minister who may be involved, and perhaps ultimately to the Prime Minister'. I will return to that in a moment.

It is pretty obvious at the present time that the Export Payments Insurance Corporation, although it has proved useful, has, in the term of its operation, not really been given its head and has not really been of such value to our export industries as it should be. I can well remember the Government virtually declaring black all of the transactions which the Corporation desired to conduct with Indonesia for a particular period of time. The Government said: 'No, you cannot underwrite transactions in Indonesia because the country is too unstable.' So, for a significant period, we did not in fact attempt trade penetration there. It might be said that there was instability and there were risks. Of course there was instability, and of course there were risks, but other people took them and they arc reaping the benefits today. Certainly they may have had some losses, but when w« look at Indonesia, which is our closest neighbour, we find that we are fifteenth on A* list of trading and participating countries there.

Yet here we are talking about our own region of the world; the region in which the Government makes some assistance available; the region into which Australian people as citizens and individuals, through organisations such as Community Aid Abroad, put funds to help raise living standards. We are involved in the region because it is our region; it is our future. We are a part of this region, whether we like it or not. Yet when we look at our trading patterns we find that they have been inadequate and that the role played by (he Export Payments Insurance Corporation has not been adequate because of the restrictions which have been placed on it. So the questions that must be asked are: Why the timidity? Why the restrictions?

Let me look quite specifically at what those restrictions are. The Bill and the Minister's second reading speech indicate that the credit term sought must be in excess of 5 years or necessary to match foreign competition. The next restriction is that the Australian content of a loan must be 65 per cent but that in some cases it could be 50 per cent. If it could be 50 per cent, why specify 65 per cent? There must be a guarantee for more than 80 per cent of the loan. But when one looks at the Minister's second reading speech one finds that in certain circumstances the guarantee can be less. Why specify 80 per cent? Then it is provided that it has to be a minimum loan, after the down payment, of $200,000. Again a restriction has been imposed. But then it is stated that the minimum loan could be less.

Then we have the fact that trading banks have agreed to participate in the scheme. That is jolly decent of them. They have agreed to participate and the Government hopes that they will continue to participate. Whether they participate or not, it is the Government's duty to ensure, if it has a scheme which it wants to implement, that it will use its instrumentalities, if others fail to participate. There is no need to apologise for that, yet there is an apology there. Finally, having pointed out all these restrictions contained in the Bill and expounded by the Minister in his second reading speech, we find that he has an escape clause. He has created this elaborate straitjacket, then in bis second reading speech he says:

The Bil) provides (hat the Commissioner of SP 1C may refer to the Minister for Trade and Industry, for his consideration, particular cases which do not meet all the eligibility criteria. The responsibility for referring such cases to the Government will therefore rest with EPIC.

Let me pause there for a moment. The Government has imposed all these restrictions, but what it is saying is that the Commissioner, if he has a case that does not seem to meet the criteria, may then take it up with the Government. The Government has told the Commissioner that this is his book of rules, but it is saying that if it does not seem adequate he can come back to the Government and discuss a particular case with it. Let me quote again what the Minister said will happen if the Commissioner decides to do this. He said:

Every case so referred will be considered on its merits by the Minister for Trade and Industry and the Treasurer, in consultation with other Ministers if necessary.

Surely this is a clumsy procedure. Surely this is a bit of timidity which is quite unnecessary and which in fact will shackle the Commissioner and the Corporation. I cannot see any advantages but I can see many disadvantages in the way this Bill has been put together. I am sure that the Commissioner will hesitate to go through all that tortuous routine and if he decides to put up a case he may do so as a matter of form and say: 'I will write to the Minister and to the Treasurer and they can write back and say no. I will have done my duty and that is all there is to it.' I can understand him taking this course because he has been told *You are hobbled to this extent so do not get out and gallop'. I feel that an explanation is warranted as to why we should have this clumsy piece of legislation and the timidity contained in it.

What a tragedy it is that this Bill is restricted to capital goods. What a tragedy it is when we have the great wool industry in trouble. The wool industry is our greatest single earner of foreign exchange. It has been and it still is. Yet here we have in the national Parliament a piece of legislation designed to help all the other industries in the manufacturing section only but there is no assistance for the biggest single export earner. I ask honourable members: Does this appear to be reasonable at a time when New Zealand has an offer on wool of 115 days credit. This is a very significant improvement on the 15 days under our incredible 'auction' system. Under our system that is the normal time given but the New Zealanders have said We have got the wool to sell so we will extend credit facilities'. Good luck to them but I am concerned about our own industry.

The honourable member for Melbourne Ports referred to the value of the Corporation in promoting exports of greasy and processed wool. This is so important at this time because we have a product that is not selling under the ramshackle system which we still continue to operate. Therefore it should be of major concern to the Government and the Corporation that there are buyer credit facilities for wool. We are in the situation where the Japanese and the Indonesians are showing initiatives in cotton processing and cotton utilisation. This is an industry which suits their economy and they are right next door to us engaged in this industry on that basis. Again, good luck to them from their point of view but where are the initiatives that we are taking in this matter? There are no initiatives. At the present time in South-East Asia there are I think, 5 new flour milling projects of considerable capacity. There are 3 in Indonesia. We are concerned with none of them. We are just not there. Once again we are at the end of the international trade queue or at any rate at that level behind other countries. The Corporation could be used as an instrument to facilitate the sales of his major export commodity. The Corporation could ensure that there is initiative in processing and utilisation in neighbouring countries. Again I ask: Why not? Why has this not been included in this Bill? Why is there this restriction? What is the reason for this timidity? I think the answers should be forthcoming. I am sorry that the Minister for Trade and Industry who introduced this measure is not here to give the answers. He is missing and so are the explanations.







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