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Wednesday, 28 November 1973
Page: 2225

Senator JESSOP (South Australia) - Firstly, I would like to remind Senator McLaren that I rose to my feet before he did and I decided to defer to him to allow him to speak first. The honourable senator did so in typical fashion. His speech was an attempt to denigrate senators from South Australia on this side of the House. He tried to delude the people of Australia into believing that the Redcliffs project will be placed in jeopardy if this Bill is not passed in its present form. That is a lot of absolute nonsense because anyone who has any common sense will realise very quickly the truth of what Senator Cotton said yesterday- that the Government can introduce a Bill to this place requesting money for the Australian Industry Development Corporation to expand on its present base. I think it is quite irresponsible for Senator McLaren to suggest that the Opposition, without giving any proper consideration, should support a Bill that has been rushed in here. As far as I am concerned I will not be a party to such a suggestion.

I think it is fair to suggest that not many people really understand the AIDC as such. Senator Maunsell reminded us earlier in this debate that the Corporation was conceived by a previous Liberal-Country Party government under the ministerial guidance of Sir John McEwan to provide assistance to companies which wished to expand their activities, which were unable to raise sufficient finance or, in fact, in some instances required expertise. The whole concept of this Corporation was to enable such companies to approach the Corporation for help in this regard. It is fair to emphasise that this help would not be forthcoming unless the company made an approach to the AIDC for assistance. I think that this partnership between government and private industry is an ideal arrangement which has contributed a great deal to the mutual development of Australian industry.

But the proposal that we have before us at the moment is quite clear. The Government wants to effect radical changes to this concept by extending the functions of the Corporation. The Bill sets out that the functions of the Corporation will include securing 'to the greatest extent that is practicable, participation by Australian residents in the ownership and control of companies engaging in any such industries or activities'. The Bill will enable the AIDC to initiate projects by intruding into industry without being asked and it will be able to retain shares it acquires in such companies. This is a far-reaching change in the concept of this Corporation. It is not surprising to me that a Labor government would want to use this body as an instrument for socialism and no one can convince me that the proposed expansion of the AIDC is not a blatant attempt to socialise industry in Australia. Under the present charter the Corporation cannot be used to nationalise industry.

Senator Little - It is a conscription Bill; it is conscription of capital.

Senator JESSOP - The honourable senator is quite right. The constitutional implications of this legislation- I will deal with this in more detail later in my speech- are far-reaching. The charter as we know it at the moment, provides that industry cannot be nationalised. The Corporation is not subject to government direction at the moment. According to the charter the Corporation has to avoid becoming or remaining in a position in which it is able to control or manage the affairs of a company to which it provides assistance. It can maintain only minority holdings in firms in which it invests and it is obliged to be rid of its equity holdings in a company as soon as practicable. This is a sure safeguard against a government take-over.

The Bill removes all these obstacles. I recall what was said by Mr Wiltshire, the President of the Australian Industries Development Association, on this matter. He said that should this new Act be passed it will:

.   . specifically empower the AIDC to invest in or to form or participate in the formation of a new company, and to carty on any business or activity concerned with manufacture, processing, treatment, transportation or distribution of goods; or the development of natural resources including the recovery of minerals.

Mr Wiltshirealso said:

There are to be no limits to the AIDC acquiring ownership and control of industries. The AIDC will therefore be able to divert all or part of what it raises into government ownership or control of industry, in what will be in essence an under-cover operation.

There will be no requirement that the details of its activities be made known publicly or to the Parliament apart from certain information related to the National Investment Fund. This could lead in simple terms to undercover nationalisation and socialisation of industry.

This Bill must be the dream of every socialist sitting on the Government benches. It provides that the Board of Directors appointed, as I understand, by the Minister will include the Secretary of the Department of Secondary Industry and the Secretary of the Department of Minerals and

Energy. The Government therefore will have direct access to the Board of Directors and in addition it will be in a position to influence the Board decisions. In addition, a resolution signed by 5 members of the Board will constitute a resolution of the Board, provided that three of these are part time directors. This means that decisions of the Board may be taken without the knowledge of the executive chairman or the Government representative.

Under the existing charter the Corporation operates on a limited scale in the general field of merchant banking in fair competition with private enterprise. However, the new proposition will extend its range of activities considerably to bring it into direct competition not only with merchant and investment banks but also with life insurance offices, unit trusts and superannuation funds for the general public, savings banks and building societies, none of which has the special privileges that will be heaped upon the Corporation under the proposals before the Senate.

There are 4 areas of special advantage provided in this Bill. First of all there is the proposed capital subsidy of 10 per cent on subscriptions to the development bond divisions of the National Investment Fund. This will compete directly with unit trusts. Secondly, there is the intended exemption of the Corporation from Federal and State stamp duties on its lending and borrowing documents and probably on its bills of exchange, promissory notes and market operations. This new measure would bring the AIDC into direct competition with a wider range of institutions, all of which are required to pay various Federal and State government duties.

Thirdly, this proposal aims at changing the 30/20 rule of the Income Tax Act governing the investment of assets of life insurance offices and superannuation funds, thereby providing a captive source of income for this Corporation. Apparently it is intended that funds invested in the proposed superannuation and retirement fund and in savings divisions of the National Investment Fund will not be subjected to the various restrictions applied to other organisations relating to investment and taxation. These 4 advantages would place the AIDC well ahead of existing private organisations working in this field and performing similar functions. Therefore, it is unfair. I find these proposals offensive as they will place this government instrumentality in a position of privilege. In point of fact they provide for acquisition of control over various industries without the approval of Parliament. In addition, the AIDC is provided with an open ended commitment to subsidise earnings and underwrite losses of a sector of the community in the form of subscribers to development bonds without regard to needs or means, and finally because of their inevitably damaging impact on the instrumentalities which pioneered the fields in which the Corporation is now to intervene.

It is important to stress to the Senate that this Corporation is not accountable to Parliament. I raise the question of the constitutional implications of this Bill. In section 5 1 ( 1 ) of the Constitution rests the power on which the Commonwealth has the authority to legislate the Act and the amending Bill. This section states:

The Parliament shall, subject to the Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to ( 1 )

This is the paragraph I am concerned about.

Trade and commerce with other countries and other among the States.

This seems to me to introduce some dangerous implications. It suggests to me that the Government could quite properly become involved in intra-State matters. For a proper appreciation of the political implications of the proposals for amendment in this Bill it is important to remember the wide scope of interpretation which has already been given to this section by the High Court. I think Senator Byrne would agree. Was it the case of the Airlines Bill in 1946 where this was evidenced?

Senator Byrne - And there was the new corporation power, which is now being used.

Senator JESSOP - There is evidence that this has been widened to include the matters to which I have referred. It is particularly important to remember that a law within a Commonwealth incidental power is not required to have the same subject matter as that contained in the main grant of power as enunciated in that section to which I have referred.

One of the dangerous implications of this Bill is that this Commonwealth power could conceivably extend to intra-State matters. I think it is quite conceivable that with the wide scope of this section of the Constitution and the incidental powers, the Commonwealth could control nontrade, non-commerce and also non-interstate matters provided it could be shown that the regulated matter assisted the exercise of or was an appropriate means to the grant under section 5 1 ( 1 ). I wonder whether this could lead to the Corporation conscripting people to some of its enterprises. For example, it might want to establish a solar energy plant in the middle of Australia. It might find it difficult to attract people up there to work. So far as I know there is nothing in the Constitution that says it would not be able to conscript people civilly. The only section I can see which refers to that is section 51 (23a), referring to the provision of maternity allowance, etc., where in brackets after dental services it says:

But Dot so as to authorise any form of civil conscription.

I know that is a far reaching sort of matter, but it occurred to me that that would not be beyond the realms of possibility. There are other constitutional implications associated with the Bill that are extremely dangerous, and it seems appropriate that a more detailed examination of them should be made. I think the Democratic Labor Party has proposed a very sensible amendment. While referring to the constitutional implications of the Bill, I refer to the appointment of Professor Colin Howard as a legal counsel to the AttorneyGeneral recently. I shall quote from an article in the 'Age' of 16 November 1973. It is interesting to observe this comment.

As Constitutional adviser to Senator Murphy, Professor Howard can be expected to take a strong line on the need for the Government to fully exploit the Constitution when legislating. He does not say it in so many words, but he will be exhorting his masters to have a go.

I think that in this particular Bill the masters are certainly trying to have a go. I notice that in common with Senator McLaren, Dr Cairns has become over-emotional about the passage of this Bill, although Senator Byrne read the answer to a question in which he had no objection to this being referred to the appropriate senate committee. For him to suggest that the Redcliffs petro-chemical project in South Australia would be threatened is a lot of absolute hogwash.

Senator Young - He would not know, Senator. He was just playing politics. But he was very quiet about the brandy tax.

Senator JESSOP - Senator Youngis perfectly right in pointing to the blatant political exercise that is being carried on in an attempt to create an over-emotional reaction in South Australia and pointing also to the blatant attempt to blackmail honourable senators on this side of the House into voting for the Bill in its present form. I noted very carefully the telegram that was sent to us today. I also noted that in South Australia the Liberal movement voted with the Government. This is very significant because either it has some socialistic leaning- it seems to me to be supporting the Labor Party against the Liberal-Country League in South Australia so often that it makes me believe that it ought to join the Labor Party -or it has not the sense or the intelligence to read the Bill thoroughly and recognise it as a blatant piece of socialistic legislation.

I support the motion, so thoughtfully drafted by Senator Byrne, to refer this Bill to the Senate Select Committee on Foreign Ownership and Control for a detailed examination of the implications of widening the scope of this Corporation. Although this will necessitate a delay in the passing of this legislation it will provide, very importantly, the people of Australia and honourable senators with a much needed critical examination and with evidence from all sectors. In this way we will be able to make an informed and properly considered judgment of the matter.

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