Judith Troeth (Victoria, Liberal Party) Share this | Hansard source

I will leave that matter to be proved by the Hansard record. Nevertheless, Senator Campbell indicated that Australia had a very low output of research and innovation. It is well known that 98 per cent of research and innovation takes place overseas. Australia is a small country; it is a small player on the world stage. For instance, we interact in two per cent of world trade. But, over the last decade, we have supported Australian industry to seize opportunities offered by changing global markets. So, in May this year, the Prime Minister and the Minister for Industry, Tourism and Resources, Mr Ian Macfarlane—who would have to be the best industry minister that this country has ever produced—released the $1.4 billion industry statement entitled ‘Global integration’. That will strengthen research and innovation by helping Australian businesses identify opportunities and integrate into global supply chains. We are a small country with a population of 20 million, most of whom are engaged in the workforce. We need to seize our best opportunities overseas and interact on a global stage because we simply do not have the domestic market to have the economy of growing that those opportunities will give us—therefore we will be more competitive in the rapidly changing world economy.

I would like to talk to some extent about the Howard government’s support for manufacturing. Unfortunately, the Labor Party and the unions talk down Australian manufacturing and its prospects, but we are working very hard to build a sustainable future for Australian marketing. The industry statement which I recently spoke about will not only help the industry secure a place in the global economy overseas but also build and boost productivity here. We have a focused and disciplined approach to economic management, which gives us the money to do that in the first place and, because inflation and interest rates have both been low during our term of government, we have had a very positive climate for industry growth.

One of the former manufacturing industries, which is not what it used to be, is the automotive industry. We are now investing $7 billion into the automotive industry, plus another $1.4 billion into the textile, clothing and footwear sector through our long-term industry plans. Previously, both of those industries operated large-scale plants which produced a car, a pair of socks or a T-shirt from go to whoa. Australian industry is rapidly becoming accustomed to the fact that our best position for manufacturing lies in manufacturing components and aiming at the high-end niche market end of manufacturing. It is a bit like the $10 T-shirt argument. We will never compete with cheap textile, clothing and footwear. We must concentrate on the end of the market where we do best—that is, the middle- to high-end of the market, which produces high-quality goods which can then retail for high prices.

The plans which I spoke of for those two industries have been carefully targeted by providing incentives for innovation and investment. Over the time we have had that strong economic management we have achieved some impressive results. Senator Campbell does not like figures, so I will not bore him with too many of them, but manufacturing industry value-added in 2006-07 was $98 billion in real terms, representing 10.3 per cent of GDP. That is sourced from the ABS. If that is not a healthy manufacturing industry, I would like to know what is. Manufacturing exports, which are referred to in another part of Senator Carr’s notice of motion, are growing strongly. They have increased by an average annual rate of 5.2 per cent since May 1996. Again, that is a very healthy growth rate.

Total manufactured exports, on an industry basis, rose by $10.2 billion to reach a record $85.3 billion in the 2006-07 financial year. Over the same period, exports of what are called ‘elaborately transformed manufactures’ rose by $1.7 billion to reach $28.5 billion. As I said, we have a relatively small economy and a relatively small population, but to reach those figures is outstanding.

I am not particularly laying this at Senator Campbell’s feet, but Labor’s claim of 100,000 job losses in the manufacturing sector is absurd. It is true—and I would be the last one to dispute it—that the manufacturing sector has been undergoing restructuring, but since May 2006 employment in the sector has only contracted by 20,000 jobs. It relates back to what I said earlier: compared to 20 or 30 years ago we manufacture a different type of good. We manufacture things into which a great deal of research and development has gone. We do not simply do the primary processing of our primary products like wool. We are now able to use those to operate in a niche market which brings us the best possible return for our dollar.

I need hardly remind Senator Campbell that during Labor’s term in office almost 40,000 jobs were lost in the manufacturing sector between November 1984 and May 1996. In the May 2007 quarter—that is the time for which I have the most recent figures—22,000 jobs were created in the manufacturing sector. So our policies must be working. In the financial year 2005-06, research and development in the manufacturing sector represented almost 39 per cent of Australia’s total business expenditure on R&D. Again, if our policies were not working, and small, medium and large businesses were not taking up those opportunities, those figures would not represent the record of $3.9 billion as they do. I think we should be congratulated.

By comparison, I would like to dwell on what the opposition have put forward so far. They have been talking about a manufacturing network, which I believe is a pale imitation of the government’s $352 million Australian Industry Productivity Centres. Labor proposes to establish new manufacturing centres that will improve the performance of the manufacturing industry. As I said, it is a poor copy and a pale imitation. For a start, our Australian Industry Productivity Centres are not limited to manufacturing as Labor’s are—rather, they are aimed more broadly at industry. We ensured that key industry associations were brought on board, rather than ignored as they were in the Labor proposal. In fact, industry was consulted before our new industry policy was developed back in 2006.

As expected, there is a strong element of central planning in what Labor proposes but our productivity centres will not be proposing a single, one-size-fits-all. We believe in democracy from the bottom up and the firms themselves will be able to determine how best to address their own issues. By comparison, Labor would tell them how to run their businesses. I believe Labor would also marginalise manufacturing within government to a department with a narrow scope and without clear linkages to other departments, which would certainly have improved matters.

I was delighted to see in recent government announcements that there is no doubt that we have promoted government collaboration with industry, with initiatives from the education, trade, agriculture and industry portfolios. For instance, there is no doubt that the Higher Education Endowment Fund, which is shortly to come before the Senate, will provide a great deal of money for research and development of the highest order in Australian universities so that they, in turn, can produce R&D for the manufacturing industry, which will place Australian firms fairly and squarely on the same wavelength as many firms overseas.

Not only that; we have introduced significant changes to the R&D tax concession. In 2001, there was the 175 per cent premium and the tax offset, and now beneficial ownership has been removed for some of those firms. So more companies spend more on R&D.

In 2004-05 the R&D tax concession assisted 5,830 companies who were performing $7.8 billion of research and development. That is an all-time high. There is no doubt that that concession has driven strong growth in business expenditure on R&D over the last five years.

So I think small business is cooperating in R&D. Larger businesses are also producing R&D, but it is the global picture that I would like to concentrate on. As a member of the OECD, the government has strong linkages with other countries where we have made significant contributions. For instance, Australia and Finland co-led the OECD Knowledge-Intensive Services Activities and hosted the report launch in Sydney in 2006. Australia led a workshop on R&D tax concessions in 2005 and Australia actively collaborated on the development and measurement of innovation indicators. The industry department has ongoing innovation policy activities with Chile, most recently in July 2007. I note that Chile has now picked up the innovation. That is an intermediary program being supported by this government.

Finally, I would like to draw attention to the collaboration on innovation which we have with New Zealand. That is part of the regular coordination of innovation across Australian states and territories and the Commonwealth. We also have the work of the Australian Innovation Research Centre, and we can see its role growing through engagement with policy and research leaders across the world. I am simply delighted that what we are doing is obviously bearing great fruit.

To go back to the automotive industry, there is no doubt that the automotive industry is going through some challenging times, with restructuring and job losses occurring in many parts of the world. Australia is not immune from these pressures, as we have seen from recent developments, but we are achieving some very positive results. In 2005-06, automotive exports reached a record $5.2 billion. That included $1.76 billion in components exports, the area that I mentioned before, and $3.44 billion in vehicle exports. Furthermore, in 1990, under federal Labor, the percentage of local production exported was seven per cent. In contrast, under the Howard Liberal government, the percentage of local production exported in 2006 was 38 per cent, and our support for the car industry is strong.

Our Automotive Competitiveness and Investment Scheme will provide more than $7 billion to the year 2015 to help the industry become more internationally competitive. This is the thing about our policies: we are not using the quick fix. We try to plan ahead so that industries and sectors of industries have ample time to plan their production levels and the manpower that they will need over the coming years—and it is not two or three years; 2015 at least gives them time to plan. We have given Ford Australia a $52.5 million grant, enabling it to develop the next generation Falcon and to design and engineer a pick-up truck platform for the global market. We have given a $6.7 million grant, with matching funding by the Victorian and South Australian governments, to Holden to introduce safety and fuel management improvements and further reduce greenhouse gas emissions on Commodore vehicles, which I am surprised Senator Milne did not pick up on. As well, there is a $7.2 million supplier capability development program.

There is also an Automotive Industry Strategic Action Group, to work on a coordinated approach to secure more international work and access to global supply chains for the Australian components sector. This is what we should concentrate on—not just on developing manufacturing in our country for the sake of the domestic market. We have to look globally. We are a small player; we need our workers and our industries to be internationally competitive and to reach those very high standards which are undoubtedly being reached by overseas countries. There is no reason why, with the high education standards in this country and the will to do it by the government, we cannot do it. I believe that we are looking forward to a very strong manufacturing future, which completely belies the tone of Senator Carr’s motion.