Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

[by video link] At the outset, I would like to recognise the outstanding contribution which Senator Kitching made to this inquiry, and I commend her for that. I echo her sentiments with respect to the outstanding job which the secretariat undertook in preparing this report. For those who are interested in looking at it sometime, it is a good compendium of different views on the future of manufacturing in our country.

So where do we agree? In the first instance, we certainly agree about the importance of manufacturing to our country. I am far more optimistic than Senator Kitching and the members responsible for the majority report about the current status and the projections for our manufacturing industry. All the evidence suggests that the federal government's Modern Manufacturing Strategy has actually been successful in supporting critical parts of our manufacturing industry and addressing some of the concerns which Senator Kitching referred to. We are also on the same page with respect to the importance of research and development and also vocational educational training. Again I would say to the Senate that there are many, many initiatives, which have been extraordinarily successful, to promote both of those areas in a targeted and proportionate way.

It is at that point that our views diverge. Whereas the majority report members—the Labor Party and Senator Patrick—believe in an increasingly government driven, interventionist approach to promoting manufacturing, Senator Bragg and I, being the dissenting members, believe that the far better approach is one which is targeted and proportionate in this respect.

I want to touch on three areas which caused us substantial concern and led us to write such a strongly worded dissenting report. The first is the centrepiece of the majority report, which is the establishment of what can only be called a mega manufacturing industry fund. A $15 billion manufacturing industry fund is the centrepiece of the majority report. In relation to the reasoning which supports this key recommendation of the majority report, can I just say that the reasoning in the majority report is inconsistent. In paragraph 5.2 of the majority report it is stated:

The opportunity exists for Government to establish a framework for manufacturing without running the risk—

without running the risk—

of favouring specific sectors or business models.

Yet then, at paragraph 6.9 of the majority report, it is stated:

The committee supports a range of incentives and stimulus measures including the provision of equity, co-investment, direct government investment, and facilitating private sector investment, including by superannuation funds—

Hence there's a gross inconsistency that goes to the heart of this key recommendation from the majority report.

The reasoning then culminates in key recommendation 2, which provides:

The committee recommends that the Australian Government establish a Manufacturing Industry Fund to provide a range of co-investment incentives to the manufacturing industry in conjunction with the private sector.

Mr Acting Deputy President, I say: instead of looking to subsidise private sector enterprises, look at the barriers to investment, growth and job creation and address those barriers instead of taking money out of the hands of Australian taxpayers through a government siphon provided to the private sector.

There is a material issue going to the heart of this majority report, and I ask those Labor senators who are supporting this initiative with respect to this mega manufacturing fund: why can't the particular venture attract equity investment or debt support? Why does it need government support? If the private sector will not invest its equity in a venture, nor will commercial lenders advance sufficient debt funds, why should the government risk taxpayers' money? In our view, the focus should be on government policies which drive productivity and remove barriers to private sector investment.

The second concern I want to raise in relation to the majority report goes to superannuation funds and the role of superannuation in our economy. In recommendation 3, the majority report refers to the establishment of:

… a Superannuation Task Force to explore, develop and recommend structural changes and possible incentives-based programs and regulations to increase the level of Australian superannuation fund investment in Australian manufacturing industries, particularly those with an export focus.

Senator Bragg and I strongly disagree with this recommendation. Superannuation funds should make investments in the best financial interests of the Australians who own those funds. The purpose of superannuation is to provide for the retirement of the Australians who work to earn those superannuation funds, not to support some collateral purpose, however well intentioned. Any initiative which does not recognise this fundamental principle should be rejected. Government should not use superannuation funds as a potential pool of capital to be mobilised to achieve government policy objectives, however well intentioned. The proposed task force and what it might lead to in practice is scant on detail. Phrases such as 'structural changes' and 'possible incentives based programs and regulations' are cause for substantial concern. At best, they may result in the distortion of decision-making processes to try to achieve a public policy aim which is collateral to the purpose of superannuation. At worst, they could drive, or mandate by regulation, investments which may not be in the best financial interests of members who own the superannuation. It is their superannuation, not the government's.

The third area of concern is in relation to a number of recommendations relating to industrial relations matters. Whilst most of the language is vague and general in nature, it is cause for substantial concern that it signals an intention for a far more centralised and interventionist industrial relations approach. If I can give one example: there is a proposal here that the Australian Building Code 2016 be reviewed. That building code is absolutely essential to underpinning the rights of Australian construction workers, subcontractors and small businesses to freedom of association on Australia's construction worksites. It is a source of great concern to Senator Bragg and me that the Australian Building Code 2016 is being proposed for review. We are extremely concerned that that signals that a future Labor government would be concerned with removing some of the protections against those members of, in particular, the construction division of the CFMMEU who have not conducted themselves in accordance with Australia's industrial relations laws. That causes Senator Bragg and me a great deal of concern. I seek leave to continue my remarks later.

Leave granted; debate adjourned.