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Tuesday, 16 October 1973
Page: 2174

Mr WILLIS (Gellibrand) - It is interesting indeed to hear the Leader of the Australian Country Party (Mr Anthony) refer to the Australian Industry Development Corporation Bill 1973 as being a giant step towards socialism. One might ask who took the first step. The. Corporation was, of course, introduced by the previous Government in 1970. If this is a giant step towards socialism, who will direct this giant step? If one examines the Director's report of the Corporation for the year ended June 1972 one finds on the Board of Directors such people as Sir Colin York Syme, the previous Chairman of the Board of Broken Hill Pty Co. Ltd; Sir Charles McGrath of Repco Ltd; Mr W. M. Leonard of Ampol Petroleum Ltd, and others of equal stature in the business world. These are the people who the Leader of the Australian Country Party says will lead Australia in a giant step towards socialism. This Bill has many advantages for the people of Australia but it is certainly a wild-eyed kind of accusation for the Leader of the Country Party to say that this Bill is a giant step towards socialism.

The Bill certainly will have benefits in that it will encourage the development of industry in Australia in a desirable way and it will certainly assist in the attainment of a greater proportion of Australian ownership of our means of production. The previous Government was in favour of both of those aims when it introduced the Australian Industry Development Corporation Bill in 1970 establishing that organisation. I should like to spend a couple of moments discussing the way in which the Corporation came into being. As I said, it was established in 1970. The idea was first floated, I understand, as early as 1963 by Sir John McEwen, then Leader of the Australian Country Party. He put a proposal to Cabinet concerning the AIDC in 1966. At that stage he could not convince the then Treasurer, the right honourable member for Lowe (Mr McMahon), that it was a worthwhile project. The right honourable member for Lowe, in his capacity as Treasurer at that time, then set about establishing a rival body which became the Australian Resources Development Bank. The Bank was eventually established in 1967. It was much narrower in concept than was the AIDC. Later in 1970, Sir John McEwen again floated the idea of the establishment of the AIDC and, at that stage, he had a receptive Prime Minister, the right honourable member for Higgins (Mr Gorton), who was enthusiastic about the idea. Together they convinced the then Government that this should be gone ahead with and the Australian Industries Development Corporation was established even though the ARDB existed and had been operating for 3 years. There was a difference in concept between the ARDB and the AIDC. When the AIDC was established it was said by many people to be simply duplicating the role of the ARDB. An article in Weekend Business Review' on 29 May 1970 by Dr Mark Doctoroff, a lecturer in economics at Monash University, pointed out the difference. It read:

It appears that the prime purpose underlying Mr McEwen's bill is to provide an additional source of financing and supplement the services offered by the banks. This is clearly an attempt to cater to the changing needs and requirements of expanding enterprises. The critics probably feel that existing financial institutions adequately and competently serve their market. If this is so then the AIDC - if it becomes a reality - will not be approached by enterprises wanting funds. Hence the banks and the ARDB will have little to worry about! If the AIDC is approached by many enterprises then it will contribute to the expansion of the economy which surely is in the interests of the banks and the ARDB.

The AIDC was established in 1970. It is an organisation which has assisted many enterprises which have found that other institutions did not cater for their needs. Many businesses have been grateful for assistance from the AIDC. One such organisation to which I shall quickly refer is Bursill Engineering Pty Ltd. On 14 December 1972 in an article in the Australian' the managing director pointed out that the AIDC had greatly assisted his company to become a successful exporter. The article stated:

Mr DonBursill, Managing Director of the company, believes AIDC involvement with his firm has advantages beyond the simple provision of capital.

We find that potential buyers overseas are increasingly recognising an IADC company' as a sound operation; one with which they can do business confidently'. . . .

The AIDC's reputation on world capital markets is good. At the end of last year it had raised 50m Deutsche marks, or $13m, in its first public bond issues overseas. Another indication of AIDC's reputation in Australia is that an advertisement for 3 project officers earlier this year brought 250 applications. So the AIDC has a good reputation overseas and within Australian business areas and the community generally. Although the AIDC was established and has been successful there was great contention within the then Government about the introduction of the Bill in 1970. I am grateful to the honourable member for Moreton (Mr Killen) for the information contained in an article in the 'Australian' a few days ago. He said that when the Bill was introduced in 1970 the 2 members of the Liberal Party who wanted to speak against it were struck off the list of speakers by Sir John McEwen. Nevertheless, the establishment of the AIDC has been very beneficial although the Opposition, then the Government was so divided on it when it was established.

Our proposal is to expand AIDC's role to enable it to carry out its function on a much wider scale. If the Opposition is in favour of industrial development and a greater measure of Australian ownership of industry it should certainly support this Bill. The Bill establishes 3 separate but inter-related compartments. There is, firstly, the existing AIDC which will continue to finance industrial development projects. Secondly, there is the National Interest Division which will finance activities which the Government wishes to sponsor in the national interest. Thirdly, there is the National Investment Fund which will be a general investment fund through which the ordinary people of Australia will be able to invest in Australian industry. The latter 2 parts are new creations of this Bill. The National Interest Division will assist the development of industry in ways which are not possible at present. These projects could be vast development schemes such as enriching uranium, or relatively minor matters such as assisting farmers to develop a processing co-operative. The National Interest Division will be financed by Government money or by AIDC, money which will be guaranteed by the Government. It is appropriate that in this section of its activities the AIDC should not use its own general funds without Government guarantee. This is because these' projects will be either vast projects requiring funds on a scale that the AIDC could not cope with from its own resources or projects which are risky commercial propositions but nevertheless of considerable national interest.

Of course, it is not a simple matter to determine what should or should not be supported, so accordingly there is provision for a national interest committee to be established to advise the Government on decisions to give support in such cases. This committee will not have an easy task and it could be said that there is a danger that the Government will be squandering money on hairy projects. However, in practice it is quite unlikely that this will happen. The procedure will be that where a matter of national interest is brought to the Government's attention, the Government can ask the AIDC to look at it and evaluate its commercial prospects. If it approves the project as one it would normally take on, it will go ahead with it. If, however, the AIDC decides it is too risky, the Government can call for a detailed report on it, have it evaluated by the national interest committee and, if the committee approves of it, either the AIDC will take it on with a Government guarantee on the funds employed or the Government will provide the funds. Thus any losses on national interest projects will be carried by the Government and not by the AIDC.

It is important, of course, that this division does not become a vast sinking hole for taxpayers' money. The evaluation procedures of the AIDC, with its considerable commercial experience, and the national interest committee should certainly ensure that projects entered into have been properly evaluated and their potential benefit to the nation weighed along with the prospects of commercial success. It is worthy of note that the national interest fund will be subject to audit by the AuditorGeneral. The AIDC when established by the previous Government was not subject to this. It could be argued that it is right and appropriate that it should not be subject to audit by the Auditor-General, but the National Interest Fund which will be operating on Government funds or Government guaranteed funds will be subject to audit by the Auditor-General. The National Investment Fund will be an assembly of separate funds called divisions. It will be financed solely by private funds. Those who contribute to a division will receive the benefits of ownership in the industry investments of that division. They will share the incomes, profits and capital gains. At present the AIDC gathers funds from overseas for investment in Australia. It can also on a limited basis raise funds in Australia with Reserve Bank approval. This will now be expanded to enable the AIDC to raise funds from overseas, as now, and also from local equity raisings from companies, life and pension funds and private investors. Those private investors could be ordinary people who want a convenient means of keeping their savings in a way that will keep pace with inflation, or they could be workers who want to contribute small amounts regularly out of their wages, retired persons looking mainly for the best income from their savings, younger people wanting capital growth, or private investors who currently buy stocks and shares.

There will also be a special kind of division of the Fund which will cater for participation by foreign-owned companies in the beneficial ownership but not control of Australian enterprises. The advantage of this arrangement will be particularly evident in resource development where foreign companies are interested in investing funds in order to have a connection with the sources of supply of raw materials. They could have such an arrangement through the Fund but they would have no say in the voting control of the project. To encourage domestic investment in the National Investment Fund there will be divisions containing savings plans similar to superannuataion and development insurance schemes and contributions to those divisions will be tax deductible within the $1,200 deduction now allowed for payment to superannuation and insurance. This should help to generate additional savings in the community and put them to a use which will be in the national interest.

Savings should be encouraged also by investment bonds. Subscriptions to them will not be tax deductible, but the Government will contribute $10 to the fund for every $100 invested in the bonds by individual residents of Australia. The extra income and capital growth from this Government contribution will flow to the individual investor and the Government's contribution will be returned to it when the bonds are redeemed. In addition, the 30/20 rule will be altered. As it stands now, life insurance companies receive special concessions by investing 30 per cent of their money in government securities. At least 20 per cent of it is in Commonwealth securities. This provision will now be altered to a 40 per cent requirement and the AIDC will qualify as a government agency which will be eligible for investment under that rule.

Whether this scheme is a success or not will depend on how the Australian people receive it. They have shown in public opinion polls that they are worried by the lack of Australian ownership of our industries. Various public opinion polls have pointed to the substantia] desire of people to have more say in the ownership of Australian industries. This Bill enables the Australian people to have a means of investment in Australian industries. This means of investment is not open to them at the moment. We hope therefore that they will be greatly encouraged by the passage of this Bill and by the widening of the powers of the AIDC. We hope also that they will invest their money in it and so ensure the success of the operation. I have referred already to those who say that this is a giant step towards socialism. This giant step will depend on what the people say. It will be a giant step, yes, if the people of Australia support this proposal. I say it will be a giant step towards the development of industry in an appropriate way and also towards greater Australian ownership. But this will be so only if the people of Australia support our action.

In opposing this Bill, the Opposition is denying to the Australian people a means not available to them at the moment to have a greater say in the ownership of Australian industry and also to enable the small investor to obtain capital growth and to share in the capital gains of our society. At the moment most of the shares held by people in this country are owned by a relatively small proportion of the population. The ordinary wage and salary earner does not own shares to any great extent and most of them own no shares at all. So, these people are denied this means of sharing in capital growth and the capita] gains which flow to a small proportion of the population. As a result of the widening of the powers of the Corporation, the Australian people will be able to obtain such capital growth and, at the same time, help to develop secondary industry in this country. They will be able to invest their money knowing that the development of industry in Australia will be carried out in a way which will bear in mind the national interest.

It does not follow that the more profitable investment is the one which is most in the national interest. One cannot deny the relevance of the efficiency and the profitability of various enterprises. But it does not necessarily follow that because these enterprises are the more profitable, therefore these are the ones which are most in the national interest. It may be that, in some cases, other capital should be diverted to projects which, although not so profitable, are greatly in the national interest. This Bill enables that process to be carried out by the AIDC. I commend the Bill to the House. I hope that the Australian people will support it when it is enacted. If they do, Australia will be a better country.

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