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Tuesday, 13 March 1973
Page: 529

Dr J F CAIRNS (Minister for Overseas Trade and Minister for Secondary Industry) - in reply - In closing this debate may I say how much I appreciate the statements by the right honourable member for Richmond (Mr Anthony) who was the Minister for Trade and Industry in the previous Government on his acceptance of this Bill and his understanding of the work of the Export Payments Insurance Corporation. The Bill is a simple one. It seeks to increase the contingent liability of EPIC from $500m to $750m. I assure members of the Opposition as well as Government members who have spoken in this debate that their remarks about other ways in which EPIC might be improved, expanded and strengthened will be carefully noted. I expect that in the relatively near future we will be amending the legislation to increase the scope and effectiveness of EPIC. The suggestions that have been put forward in the debate tonight will be carefully taken into account when that course is adopted.

The honourable member for Wentworth (Mr Bury) began bis speech by saying that the subject of the debate was important enough not to draw in the world monetary situation. I suppose 1 would agree with that view, but the leading speaker for the Opposition, the right honourable member for Richmond, who is the Leader of the Country Party, spent the greater part of his speech drawing in the world monetary situation and deploring the effects of revaluation. So it was hardly likely that, that lead having been established by the Opposition, the subject could be ignored thenceforth. I suggest that the honourable member for Wentworth settle with the Leader of the Country Party how debates ought to be conducted in the House.

The right honourable member for Richmond spoke about the fast growth of EPIC and argued that it should be faster. I contrast the arguments of the honourable member for Wentworth and the honourable member for Balaclava (Mr Whittorn) who were worried about the growth of EPIC. One of them said that $750m goes far enough. So again we have differences of view on the Opposition side which I suggest ought to be reconciled. I leave Opposition members to reconcile those things between themselves. I agree with the right honourable member for Richmond when he says that EPIC should grow faster; it will grow faster. The honourable member pointed out that the exports credit agency in Britain insures 36 per cent of British exports which is more than double the percentage that we insure in Australia. This is because the British economy is more geared to exporting, is more sophisticated and has had more development. It is time that we caught up with Britain rapidly. The Government will encourage industry to insure with EPIC to a greater extent.

The right honourable member for Richmond accused the Government of being dedicated to the task of sabotaging the export industries. I do not think any responsible person in this country would accuse a government of being dedicated to such a task and I am very surprised that the right honourable member can use language like that. He spoke of the effects of revaluation, but revaluation was not something that the Australian Government gladly chose. It was a course that was forced upon the Government. The world monetary system, as the honourable member for Eden-Monaro (Mr Whan) said, is still in the melting pot. The Australian dollar cannot be expected to chase the American dollar all over the globe. Had we not taken the action we did to stabilise the Australian dollar we simply would not have been left in an unaffected situation.

Had we not appreciated the Australian dollar in relation to the American dollar and in relation to some other currencies, it is quite obvious that the American Government would have taken additional steps in relation to the Australian dollar. They were pointed out by the honourable member for Eden-Monaro. Opposition speakers who simply look at appreciation as something that we had a free choice about, who believe that if we had not appreciated there would have been no other consequences and that the United States would have done nothing about our meat exports or our other exports into that country, completely fail to understand the situation. The appreciation of the Australian dollar was an action which protected Australia against the consequences that otherwise would have come, and these are things that are so frequently not understood by the theoretical analysts of the situation as well as by ordinary political speakers. No-one would choose to change currency values unless there was very strong reason for it and the effects of it can be quite clearly identified although they will take quite a long time to work out.

The right honourable member for Richmond spoke about the effect in imposing losses upon Australian industries. Let us look at the rural industries first. Wool, meat, wheat and sugar prices have gone up to almost record levels and it was not so long ago that the honourable member for New England (Mr Sinclair) was on this side of the House deploring the effect of high wool prices in encouraging the use of substitutes and making clear that wool prices could go too high. Now the appreciation of the Australian dollar has offset that and has reduced the competitive effect of substitutes on Australian wool, and the growers of wool, meat, wheat and sugar generally are in a very satisfactory situation today notwithstanding the revaluation. The people who are suffering the most from the effects of that side of the economy are not the producers of these commodities but the consumers in Australia who have to pay fantastic prices for meat, for example. I sometimes wonder where the demands of the rural producers will end. The price situation of those 4 commodities ought to be enough to satisfy anybody under existing circumstances.

The Government has taken immediate action in the formation of an interdepartmental committee which has established criteria to assist primary industries. The cases of those industries has gone to it and where it was considered fair and reasonable proper assistance has been given. This applies particularly to fresh and canned fruits. Now, where is the damage? I point out that there are benefits of appreciation which very considerably offset the damage that might be done. The Government has taken a comprehensive view - not a one-sided view - of this and I suggest that it might be a little better if on this question members of the Opposition like the right honourable member for Richmond were prepared to take a little less one-sided view as well. He looked at the manufacturing industries and he mentioned a Sydney photographic firm. It is a firm of very great enterprise-' in fact remarkable enterprise. It has managed to export as much as 60 per cent of its output. The honourable member said that within 12 months the employment of 700 people in that company will be in danger. To that statement I say, yes if nothing happens. The Government is well aware of the position of that company. I have recently had lengthy discussions with its managing director.

We are doing 2 things about this. One of course is the establishment of the interdepartmental committee that has been considering the position of secondary industries. As soon as we know what should be done action will be taken, but the Government is not simply going to proceed to hand out public money without properly examining and investigating the circumstances. Yesterday it was announced that the Government will continue the export incentive scheme for another 12 months after 30th June this year. That is about IS months from now. That scheme will cost $96m gross and about $55m to $60m net. It is a very considerable amount of money to provide to industry as an assistance to export. The right honourable member for Richmond mentioned that this assistance was only for a year. It is for IS months. In the meantime the Government will examine the situation and arrive at a plan. If this is satisfactory the plan for a subsequent scheme of export incentives will be announced this year so that industry will have ample warning of what the situation will be. But again I emphasise that the Government will not easily and loosely hand out as much as $96m a year to manufacturing industries unless it is satisfied that it is essential to meet the purpose to which it is directed. We are extending the present scheme for IS months because we believe that industry is in some condition of uncertainty. We will not pull the rug out from underneath it at short notice. No responsible government would do that. But at the same time we will not simply go on with the scheme unless we are satisfied - I submit that previous governments associated with the scheme were never satisfied - that the scheme is achieving its purpose. I think that the Government is doing a considerable amount to deal with the situation.

The right honourable member for Richmond said that we need to encourage exports. I believe that. I believe that the great economic problems and crises in Australia have been caused by a deficiency of exports and export earnings. We need a long term plan to ensure that these crises are avoided. If one looks at manufacturing industry one can understand the argument about exporting. Australian industries that export are well known to be the most efficient industries, because experience in exporting brings them into contact with new ways of doing things. They can innovate and develop more effectively. We know that in the case of large scale production the industries need a larger market than Australia can provide. In order to obtain that market they need to enter into exporting. These are all reasons that justify the importance of exporting.

The right honourable member for Richmond talked about the necessity for extending export into buyers' credit. He talked about the necessity for lower rates of interest so that Australia can be competitive. All this is valid argument. The Government has put into the hands of an interdepartmental committee the job of recommending what might be done about an export bank. As the honourable member for Eden-Monaro (Mr Whan) has suggested, this could well be closely associated with EPIC. I am sure that before this year has gone very far we will be proposing an amendment to this legislation or new legislation to answer the need that the Leader of the Country Party suggested there is for increased buyers' credit. I have noted the points made by the honourable member for Curtin (Mr Garland), the honourable member for Canning (Mr Hallett) and the honourable member for Balaclava (Mr Whittorn). These points will be taken into account in subsequent action by the Government.

Question resolved in the affirmative.

Bill read a second time.

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