Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Industry) Share this | Link to this | Hansard source

I move:

That the Senate:

(a)

acknowledges the critical place of manufacturing in the Australian economy, particularly its contribution to business research and development, innovation and exports;

(b)

understands that innovation is the key to enabling Australia’s manufacturing sector to compete in a challenging and rapidly evolving international marketplace;

(c)

condemns the Howard Government for its failure to sustain the high rates of growth in manufacturing exports and research and development achieved under the former Labor Government; and

(d)

calls on the Howard Government to show leadership on this critical issue, end the blame game and work with the states and territories, industry and the research community to build a comprehensive national innovation system in Australia.

This motion essentially outlines the concerns of the Labor Party and the position that we have argued strenuously up and down the country. We acknowledge, as we always have: firstly, the critical place of manufacturing in the Australian economy, particularly its contribution to business research and development, innovation and exports, and that innovation is the key to enabling Australia’s manufacturing sector to compete in a challenging and rapidly evolving international marketplace; and, secondly, that the government can, either by its actions or its inaction, dramatically affect the capacity to develop an innovation imperative which will enable those in this country to work in a partnership between both its manufacturers, in terms of the owners of businesses, and its workers within those industries, and to work with government and the research community to ensure that Australian industry is able to prosper into the future.

The third point of my argument is that it is quite clear, beyond any reasonable doubt, that the Howard government has failed to heed the innovation imperative. It has presided over a slump in the rate of growth in research and development spending. Therefore, I would argue, it has also directly contributed to the decline in manufacturing exports.

Finally, it is my argument that national leadership is the key to our sustained prosperity. If we were to stand alongside Australian industry, if we were to believe in it, if we were to be optimistic and confident about the future, and if there were the right policy settings in place, we would be able to see a significant improvement in the position of Australian manufacturing. So I condemn wholeheartedly the Howard government’s failure to show the national leadership that is required, particularly when it comes to industry and innovation policy and, more specifically, to promoting a vision of a thriving Australian manufacturing sector.

I also condemn the Howard government for failing to even participate in the National Manufacturing Forum, which was a high-level forum convened by all the states and territories comprising industry groups, experts in varying fields and unions, which made recommendations about how to take Australian manufacturing forward into the 21st century. Further, I condemn the Howard government for allowing Australia’s national innovation system to languish, to become a forest of red tape, a forest of lantana with gaps and duplications aplenty.

Under the Howard government, Australia’s innovation pulse has grown faint. When I go up and down this country, manufacturers—particularly international firms that are working in the international environment—tell me that when they talk to their parent companies all too often the view reflected back to them is that there is no serious commitment by the Australian government towards manufacturing. There is a view abroad that this country is governed by a Liberal Party that has essentially turned its back on manufacturing. In mid-November 2006, the Prime Minister was celebrating the 20th anniversary of the ‘Australian Made’ logo. In a report that appeared on the ABC on 5 December 2006, the Prime Minister was asked to comment on the prospects of Australian manufacturing. The report said:

Prime Minister John Howard was there to mark the occasion and reflect on how his government intends to support those who, in dwindling numbers, are making things in this country.

John Howard is reported as saying:

There will always be some who believe that globalisation has been allowed to go a little too far and there will be others who believe that as a consequence, Australian manufacturing in particular is not getting a fair go.

He went on to say:

I don’t have a ready answer to the resolution of that tension.

That sums up the government’s approach to manufacturing. They do not have a clear vision of the future, they are stale and out of date and they essentially live in a world which is well past. They are a government that essentially have a static view on what is a dynamic industry. As a consequence, we are faced with a situation where the government are unfit to meet the challenges of the future.

Like the leader of the Labor Party, Mr Kevin Rudd—who hosted the national manufacturing roundtable on Monday—I take the view that there is cause for optimism for manufacturing in this country. In coming to the leadership of the Labor Party, Mr Rudd made his position crystal clear. He said that he did not want to be a Prime Minister of a country that does not make things anymore. That was not some sort of stunt or ideological posturing; it was a clear statement of values and belief. The abiding goal of the Australian Labor Party is to ensure that we as a nation pass on to our children a country that is in a better condition than the one that we inherited—one that is fairer, stronger and more self-assured. A stronger Australia is an Australia in charge of its own destiny—that is, a country that takes advantage of its opportunities and that makes its own luck. I believe, and I am sure this is a view that is very widely shared within this country, that a thriving manufacturing sector has real opportunities in this country and certainly will be a key part of a stronger Australia under a Rudd Labor government.

Manufacturing is 12 per cent of the Australian economy. In South Australia it is 15 per cent and in my home state it is 14 per cent. Manufacturing directly employs over one million people and a third of those are in Victoria. Manufacturing could employ many more people today if the growth in exports and in research and development achieved under the previous Labor government had continued under the Howard government. Manufacturing currently accounts for $75 billion of exports and, without this contribution, Australia’s ballooning current account deficit would be looking even worse than its current woeful state.

Despite the Howard government’s neglect, Australian manufacturers continue to innovate and to compete in a very tough international environment. Take, for instance, the case of Australian Defence Apparel in Bendigo, which is now exporting textiles and ballistic protection vests to Vietnam. AstraZenica’s factory in North Ryde is the only one in the world that is certified to export products to Japan without a further quality check when they arrive in that country. And of course ResMed, the manufacturer of medical devices which address breathing sleep disorders, now operate in over 65 countries worldwide. In recent years, Australian manufacturers have been selling solar panels to China, landmine detectors to the United States and fast ferries to Japan—not to mention the Australian food and wine industries, which are world renowned for their innovation in production and packaging, or our global suppliers of mining and mine safety equipment.

It is unfortunate that coalition ministers, while rightly enthusiastic about the innovative services sector, have so little understanding of the importance of manufacturing. They do not seem to understand that many service sector jobs are reliant on manufacturing. They do not seem to understand that Australian manufacturing adds value to the resources—both mineral and agricultural—that they are so fond of talking about. I bet that there are few coalition ministers who would be able to tell you that manufacturing accounts for almost 40 per cent of Australia’s research and development. The fact is that manufacturing is a critical source of technical knowledge and of process and organisational innovation. You only have to think of ‘just-in-time’ and ‘teamwork’ to understand the impact that manufacturing innovation has had on the rest of the economy as a consequence of the innovation that has occurred in those processes. However, it is disappointing that so few in the government seem to be aware of the importance of manufacturing business and that they are the most likely to be the innovators in this country. It is a sad and sorry state that we hear so little from this government about the importance of manufacturing.

When you look back over the 12 years of the life of this government and at the issue of industry policy, you can see just how terrible the neglect has been. The Productivity Commission made the point that manufacturing plays a major role in the Australian economy, with levels of output and employment considerably exceeding mining and agriculture combined. Manufacturing continues to be the dominant source of technological innovation in the business sector. More recently, KPMG’s international survey of manufacturing executives, Globalisation and Manufacturing, considered whether it is important for developing countries to retain a manufacturing sector. It concluded:

... the answer is yes. The continued importance of manufacturing as a source of wealth in developed markets should not be underestimated.

In today’s world Australia simply cannot compete globally on the basis of cheap mass production. Instead, Australian industry needs to be smarter than its competitors. Elsewhere in the developed world, there is a real sense of urgency about the need to improve competitiveness and innovation. All around us—in Asia and in Europe—our international competitors have been increasing their R&D spending at incredibly rapid rates. This government does not share the same sense of urgency about our competitive and innovation position. Anyone who understands manufacturing in the 21st century understands that innovation is vital. Labor has a very strong record of achievement in this area. Labor understands the importance of change in the manufacturing industry to enable the industry to move up the value chain. Labor understands the importance of innovation to ensure the long-term sustainability of the manufacturing industry in this country.

On Monday we were privileged to be joined by former senator and Labor industry minister, the Hon. John Button. At the beginning of his speech former Senator Button relayed an anecdote about the Prime Minister, which I cannot repeat in its full glory because of the standing orders. It went back to 1998, when former Senator Button happened to be at the same function as the Prime Minister. The Prime Minister approached him and said that he felt that the Labor government had really understood innovation. Mr Button’s response—which, as I said, cannot be repeated here, so I will paraphrase it—was that it was enlightening to know that the Prime Minister had at least acknowledged that the Labor government did appreciate the importance of these issues and that the coalition had no idea when it came to innovation policy.

It is quite clear that there has been a major breakdown in the development of industry policy under this government. It is quite clear, in our performance in exports and research and development, that this country is slipping internationally. This government has halved the R&D tax concession. As a consequence, we have seen a collapse in the Australian private sector R&D effort. It has taken the better part of this last decade to recover to the position we were in back in 1996. Expenditure did not recover in real terms until 2002-03. As a proportion of manufacturing value added, the recovery took until 2003-04. Between 1995 and 2001, Australia was one of only three OECD countries to reduce its tax subsidies for R&D, while 12 countries increased the level of support. Since then, a number of countries have increased their support for R&D through their taxation systems, including New Zealand and the United Kingdom this year. In 1999 Australia ranked seventh in the small and medium business tax subsidies in R&D, but it had dropped to 14th by 2006. For large firms, Australia stood at No. 6 in 1999 but it is now down to No. 11.

The reduction in Australia’s relative support for business R&D comes at a time when the internationalisation of research and development is actually growing. International comparisons indicate that our position is moving in exactly the opposite direction to that of our competitors. It is particularly instructive to look at what is happening in China. China is doubling its research and development expenditure every seven years. We are seeing a situation here now where China has committed to lifting its research and development expenditure as a proportion of GDP to 2.5 per cent by 2020. China is now the second-largest source of expenditure on R&D in the world.

Unlike the Howard government, Labor understands that complacency is not an option. That is why Labor says that a national government must sit down with industry, roll up its sleeves and ensure that Australia can maintain a position of its own choosing in the international marketplace and not a position foisted on it by others. That is why it is absolutely a matter of urgency that national leadership be demonstrated, that we build upon the prosperity that we currently enjoy, that we ensure that that prosperity is sustained and that the growth in Australian manufacturing R&D increases rather than decreases, as it has done under this government.

The average growth in manufacturing R&D spending has fallen from 16.6 per cent under Labor to only five per cent under John Howard. Over the last five years, the average annual growth in manufacturing exports has fallen from almost 15 per cent under Labor to less than two per cent. As a result, Australia’s productivity compared with the United States has retreated and has lost virtually all the relative gains of the 1990s. This country is facing serious challenges. As a society, we are facing serious challenges. We need to apply a whole-of-government approach to ensure that we develop a national innovation system and that opportunities are seized rather than our relying upon an outdated view of the importance of manufacturing. Labor has made a number of commitments to ensure that that occurs. Labor has already committed $500 million for a green car program.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Ha!

Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Industry) Share this | Link to this | Hansard source

I see my colleague from Victoria casts some aspersions about that. The automotive industry in Victoria constitutes two per cent of state GDP, and it is 2½ per cent in South Australia. This senator, who represents the state of Victoria, seems to think it is humorous that some 60,000 families in this country are facing this sort of challenge. And what is the government’s response? It is: ‘We will do nothing. We made arrangements in 2002 and we have to do nothing into the future.’

We have made it very clear that other measures are also required. We have made commitments to boost our national research and development and to ensure that our industries are able to be well resourced and supported by a Commonwealth Labor government. We have indicated that we will commit $100 million to a national network of manufacturing centres to help small and medium sized manufacturers to find new ideas and new technologies that will help them innovate and become more productive. Mr Sid Sidebottom, the ALP candidate in Braddon, has made a particular point of lobbying to ensure that opportunities are pursued in Northern Tasmania to build the capacity of manufacturers in the seat of Braddon. (Time expired)

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I walked in here and saw Senator Carr with his prepared speech and the lectern and I thought that we were finally going to hear something from Senator Carr in relation to Labor’s industry policy. About the only thing that I gleaned from his speech was that, while he was attacking the government’s commitment to manufacturing, he spent about a minute talking about a number of successful manufacturing exporters who have been exporting successfully under the auspices of this government. What an extraordinary way to attack the government—by talking about the government’s successes! In 20 minutes, did we hear one thing from the Australian Labor Party about a policy? Did we hear one word from Senator Carr about what the Labor Party’s policy will be? We did not.

I will take the chamber to a quote from Doug Cameron on 24 April 2005 regarding the China free trade agreement. This was a time when I think Senator Carr was the shadow minister. Doug Cameron said:

If you’ve got a policy, if you’ve got values, if you’ve got principles, why don’t Labor stand up for them? And this is the problem of Labor over the last 12 years. They don’t simply have any values and principles that manufacturing workers can see.

That was Doug Cameron talking about one of his own. I would have thought that there would be some factional alliance there, wouldn’t there—loosely or very tightly?

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Senator Brandis interjecting—

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I would be surprised?

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

He knocked off Senator Campbell.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Yes, that is right, but we will not talk about that. Poor Senator Campbell. So, in April 2005, Doug Cameron, who will be Senator Cameron, actually nailed you, Senator Carr, in relation to your lack of policy. The soon-to-be Senator Cameron will be absolutely devastated with your speech today—platitudes and no policy. They are incapable of forming a policy.

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

They don’t have any.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

That’s not true, Senator Nash; they have all our policies.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

That is right. Indeed, these centres that Senator Carr is bandying around as some new policy—a $500 million policy—just replicate our productivity centres. So at least the Labor Party is consistent. At least Senator Carr is consistent. The Labor Party actually take everything—and we have just had further confirmation of that. Rather than the claptrap that we heard earlier, I will give the chamber some of the actual statistics in relation to manufacturing. Senator Carr, if you get out your pen and jot some of these statistics down, I think you will be a lot wiser at the end of this 20 minutes.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Maybe not wiser, but better informed.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

That is right. That is probably a better way of putting it. I want to go through some of the key manufacturing statistics, so get your pen ready, Senator Carr. You are just sitting there looking a bit glum—though I can understand that. When you are without policy, you would look as glum as you look, my friend.

For the manufacturing industry, value-adding in 2006-07 was a record $98 billion in real terms, representing 10.3 per cent of GDP. Total manufactured exports rose by $10.2 billion in 2006-07 to reach a record $85.3 billion. If you want the source of these statistics, Senator Carr, just ring my office afterwards and I am sure they will be happy to help you. Over the same period, exports of elaborately transformed manufactures, or ETMs as they are otherwise called, rose by nearly $1.7 billion to reach $28.5 billion. Capital expenditure on investment in manufacturing capacity is running at record levels, having risen at an annual rate of 3.3 per cent from 1996 to 2006 to now be $14.4 billion per annum. 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, with total expenditure increasing by 12 per cent to a record of almost $3.9 billion.

As Senator Carr travels around the country, he is simply not being truthful about this. Despite what Senator Carr has been saying, manufacturing exports have increased by an average rate of 5.2 per cent since May 1996. Senator Carr is the same shadow minister whose party over some 13 or 14 years sat around idly while 40,000 manufacturing jobs in this country were lost. In the last quarter there were 22,000 jobs created in the manufacturing sector. I am disappointed that Senator Carr is leaving the chamber.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

He cannot bear to hear this.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

It is very disappointing. There may of course be a good reason for that, Senator Brandis. His colleague Senator Conroy in May 2005—around the same time as the Doug Cameron quote that we were talking about earlier—said, ‘For sheer breathtaking hypocrisy, it is hard to match my good friend and Senate colleague Kim Carr.’ We know that he had his tongue firmly in his cheek when he was talking about Senator Carr being a good friend!

I want to now turn to some of the matters we are addressing in relation to certain sectors. For example, in the textile, clothing and footwear sector, we have $1.4 billion through a long-term industry plan. In relation to the automotive sector, there is a comprehensive package. As you would know, Mr Acting Deputy President, this sector is facing some challenges at the moment. But, having said that, let me say that the automotive sector is achieving some very positive results. In 2005-06 automotive exports reached a record $5.2 billion, including $1.76 billion in components exports and $3.44 billion in vehicle exports. In 1990, under federal Labor, the percentage of local production exported was seven per cent. I want my colleagues to listen to this: seven per cent was the percentage of local production exported in 1990. In contrast, under the Howard-Costello government, the percentage of local production exported in 2006 was 38 per cent.

Our Automotive Competitiveness and Investment Scheme continues to provide the long-term security that is required by industry. We are providing more than $7 billion through to 2015 to help the automotive industry become internationally competitive. It is the largest assistance program in the history of the industry. On top of that, as honourable members will be aware, and indeed as a result of the hard work of the member for Corangamite and the Liberal Party candidate for Corio, Angelo Kakouros, the federal government stepped in to assist the workers at Ford. This was done in a variety of ways, but part of this was a $52.5 million grant for Ford Australia to enable it to develop the next generation Falcon, and a $6.7 million grant with maximum funding provided by the Victorian and South Australian governments for Holden to produce safety and fuel management improvements. There is also a $7.2 million supplier capability development program as part of the ACIS package. The federal government stepped in. My understanding is that nearly $20 million was put into Ford in Geelong to assist the workers down there. The government is quite rightly proud of that, and Mr Stewart McArthur and Mr Angelo Kakouros should take great credit for it.

I want to now turn to probably the most extraordinary part of Senator Carr’s platitudinous speech. In May this year the Prime Minister and the Minister for Industry, Tourism and Resources, Mr Macfarlane, released this government’s industry statement, titled Global integration: changing markets, new opportunities. The industry statement provides $1.4 billion, which is money on the table—no platitudes, as we saw from Senator Carr, the great interventionist. When he was reappointed as shadow minister for industry, horror was expressed in the financial pages of this country’s press. Senator Carr is industry’s living nightmare. Industry, rather than welcoming him—as he tried to convince this chamber today that it did—is actually scared stiff of this man being industry minister.

I want to go through and detail the extent of the $1.4 billion package that the industry minister and the Prime Minister released in May. It is about strengthening the policy platform for Australian industry. It is about ensuring that the strength of industry and manufacturing in the sector is both retained and expanded. I will go through it now. The package includes $254.1 million for the Global Opportunities program, which will help Australian firms win work in global supply chains and major projects. So what do we hear from Senator Carr? We hear that nothing has been done to encourage Australian exporters and manufacturers. He has already died on his own sword, because he made that comment and then detailed, obviously to impress someone somewhere, an example of very successful exporters. Why you would attack the government and then talk about successful exporters is quite frankly beyond me, but he managed to do it. The package also contains continued support through Austrade for export opportunities arising from the Australia-United States Free Trade Agreement, and $351.8 million for Australian industry productivity centres, which will help firms review their business performance and capitalise on new market opportunities. Senator Carr’s only policy was to come out with some convoluted program that he tried to differentiate from the government’s. But, when you look at it, you will see that the program he is putting in place is just a direct replica. So, with his apparent convoluted process, if you get down to it, he is just repeating what the government is doing. Why he would be talking about wasting $500 million when they will already be in place is beyond me.

There is $90.3 million for the Commercial Ready Plus program, which will encourage additional research and development in small firms; $20.1 million over five years to encourage technology transfer through the new Intermediary Access Program; $21.5 million over four years for the development of a National Nanotechnology Strategy; $36.2 million over four years to develop niche manufacturing industries based on nanotechnology; $89.2 million over 10 years to develop and maintain an online registration system for both the Australian business number and state and territory business names; $14.3 million over two years to extend the Building Entrepreneurship in Small Business program for another year; and $54.2 million over four years to support R&D in the food-processing sector.

This is a government that has delivered. This is a government that is committed to the manufacturing sector. This is a government that is committed to Australian industry. The statistics I read out before are proof of the success of that. What do we have as an alternative? Possibly two months out from an election, we have a shadow minister with a prize opportunity to talk for 20 minutes on his own motion—with a lectern and a prepared speech—about what the Australian Labor Party will be doing for the manufacturing sector if they are elected to government. The best he could give us was about 60 seconds. As I said before, he was repeating policy that he lifted directly from this government.

I have already mentioned Doug Cameron’s view of Senator Carr. In 2005, when Senator Carr was the shadow minister—just in case someone has switched on their telly—Doug Cameron said:

If you’ve got a policy, if you’ve got values, if you’ve got principles, why don’t Labor stand up for them? And this is the problem of Labor over the last 12 years. They don’t simply have any values and principles that manufacturing workers can see.

This was a direct whack at the then shadow minister, Senator Carr. I think he was the shadow minister under that other extraordinary success of the Australian Labor Party, Mr Latham. I think Mr Beazley might have dropped Senator Carr and then, quite remarkably, Mr Rudd brought him back in. Speaking of remarkable occurrences, I would like to quote from some very enlightening newspaper articles about this time. On 12 December 2006 an article in the Canberra Times said:

The decision to allocate industry to the socialist left’s Kim Carr is also baffling. Though he has experience of the portfolio (under Crean and Latham), Carr has hardly distinguished himself as a thinker or an effective media and parliamentary performer—

Ain’t that the truth! We had another example of that today—20 minutes of that. The article continued:

… qualities which will be crucial to winning support for Rudd’s plan to save Australia’s manufacturing base.

Indeed, his reputation as an ideologue has already ensured Carr will get a cool reception from peak employer and industry bodies.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Who said that?

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

This is the Canberra Times, not always known for its support of this—

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

You know what John Cain said about Senator Carr, don’t you?

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I don’t actually, but I would very interested to hear what he said.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

In his memoirs he said that Senator Carr, when a political adviser, single-handedly destroyed the Kirner government.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

Senators, when you have finished your private conversation perhaps Senator Ronaldson would like to address his comments through the chair.

Michael Ronaldson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I would normally be reluctant to take interjections, Mr Acting Deputy President, but there was an interjection and I thought it would be rude to interrupt the minister at the table.

Sinclair Davidson from RMIT University said in the Age on 12 December 2006:

The appointment of Senator Kim Carr of the Victorian Socialist Left to the shadow industry portfolio needs to be seen in this light. Nobody has ever accused “Kim il Carr” of market fundamentalism. Indeed, he has been an implacable foe of all things “market”.

…            …            …

Rudd is promising a new direction in industry policy—not the discredited industry policy that leads to high tariffs, protectionism, and hidden taxes on consumers. So while Rudd is telling us that tariffs are discredited, he is reappointing the man who campaigned for that very policy at the last election.

We have a couple of people there who are great supporters of Mr Latham—Senator Carr and, of course, Senator Faulkner, the National President of the Australian Labor Party, who we know is very, very close to the disgraced Mr Latham.

In the Australian of 13 December 2006, Alan Wood said:

Then we come to senator Kim Il Carr, as his colleagues call him (after North Korea’s erratic leader). Carr is Rudd’s new Shadow minister for industry, actually another political retread from Latham’s shadow ministry, where he held the same shadow portfolio.

In those days Labor’s manufacturing policy was all about big handouts of taxpayers’ money to industry, a 10-year plan for manufacturing and similar paraphernalia of government interventionism.

So far Rudd has spent most of his time telling us what his promised new policy for manufacturing isn’t. It isn’t about tariff protection, it isn’t about picking winners, it isn’t about industry welfare, and so on. What is it about?

I am afraid that Alan Wood will be none the wiser after Senator Carr’s performance in this chamber today. I repeat: two months out from an election he had 20 minutes—with his lectern and with a prepared speech—to tell the Australian people what the Australian Labor Party will do for manufacturing if they are elected to government. It was a wasted opportunity. It was an appalling speech. (Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise today to comment on this general business motion moved by Senator Carr. It is an important opportunity to talk about Australian industry policy and the place of manufacturing within the context of Australian industry policy. Unfortunately, with the great deal of hyperbole from the last speaker, the opportunity has been lost to talk about what can be the future of manufacturing in Australia.

I would like to begin by informing the Senate of a statement from Alan Atkinson as a foreword to the book The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century. He said:

We need transformation—a wave of social, technical and economic innovation that will touch every person, community, institution and nation on earth. The irony is that this transformation is still viewed as an economic cost when it is in fact an enormous economic opportunity, an opportunity that we are now being increasingly forced to recognise.

That is where I would like to begin today. We have an enormous opportunity in Australia to make that change and transform the Australian economy away from what we have now—which is a resource dependent economy—to a brains based and service economy. To many if not most observers, the Australian economy could not be going better. But much of the nation’s economic prosperity is merely a veneer. Our most fundamental vulnerabilities relate to our use of and our overreliance on the bounty of natural resources with which Australia is endowed. The three clearest expressions of this economic vulnerability are the interrelated problems of our high greenhouse gas emissions, our looming domestic oil shortage and our ongoing economic dependence on natural resources. In fact, there are many analysts around the world who have argued that nations which have huge amounts of natural resources are the ones which in fact will not prosper in the long run because it is easy for them to use their natural resources and not have to rely on innovation, creativity and value-adding and just continue to export.

It is to those interrelated problems of greenhouse gases, domestic oil shortage and the economic dependence on natural resources that we have to turn our minds. To solve these interconnected problems, federal and state governments need to develop a wide range of strategies in a coordinated way. Some will be regulatory levers, some will provide economic inducements, some will impose economic penalties, but all will create new economic opportunities. Critics might argue that governments should not intervene but should leave the transition to a low-carbon, oil independent and low-resource-use economy to the free market. But government driven measures are needed because the present distorted marketplace is failing the environment. In Sir Nicholas Stern’s ringing indictment:

Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.

Throughout the 20th century, it was assumed that economic growth could be pursued with little consideration for its environmental consequences and that any pollution or resource scarcity challenges would be solved by technological advances or by simply going out and finding more. At the start of the 21st century, climate change and oil depletion have delivered a reality check. The silver lining of climate change is that it does give us the opportunity to reconsider the way that we live. We know that we have to change. We know that we have to rethink the economy so that it operates within the earth’s ecological limits if we are to avoid the collapse of human civilisation.

What is less well understand is that it is this transformation that will give us the opportunity to create enormous economic benefits in sectors hitherto neglected and to make changes which can make us happier, healthier and more secure in the knowledge that our children will inherit a world that is a joy to live in. There is an emerging consensus that nations and corporations that fail to understand this imperative will lose competitive advantage, while those that grasp the new opportunities that it offers will prosper.

That is what the Greens are doing with the strategy that I have outlined in a document that I produced called Re-energising Australia, which looks at the following issues: (1) how Australia is going to address climate change, (2) how we are going to provide a sustainable economy into the future and how we are going to have industry-wide and economy-wide transformation so that oil depletion does not become a major shock in our economy and (3) how we can address the fact that we have hollowed out the manufacturing sector under the Howard government. Contrary to what Senator Ronaldson had to say, that is in fact the case. The figures show it. The erosion of manufacturing has left Australia with a large and expanding trade deficit in manufactured products. In the mid-1990s, it was $43 billion per annum. In 2003-04, it had risen to $87 billion. This erosion leaves the Australian economy vulnerable, especially if overseas buyers begin to reduce their purchases of greenhouse-gas-intensive fossil fuels.

Australia needs to make its economy more robust by rebuilding its manufacturing base with industries that have low environmental impacts and high levels of value adding. These industries could include such expanding industries as environmental management, energy efficiency, renewable energy and fuel efficient vehicles. This is the opportunity that the Greens see for Australia. Instead of hollowing out the manufacturing base, signing up to free trade agreements that in fact transfer jobs overseas to low-wage economies and setting low standards which mean that we lose manufacturing here in Australia to our overseas competitors, what we need to do is invest heavily in innovation and education. In fact, as I have argued many times here and in Tasmania for years, Donald Horne said that imagination is the raw material of the future.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Donald Horne? That boring old failure.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You may refer to Donald Horne in that way, Minister for the Arts and Sport. That you should say that of Donald Horne just reaffirms to people what the coalition thinks about the arts. I will say that again: I believe, as Donald Horne has said, that imagination is the raw material of the future. As business strategists like Kenichi Ohmae have said, we have to accept—the developing and developed countries alike, such as Canada, Australia and the OPEC nations—that natural resources are no longer a key to wealth. As long as you have an economy which is natural resource based and you hollow out the manufacturing sector, as a price taker you are extremely vulnerable to global mass commodity markets.

As the Australian Manufacturing Workers Union has said, Australia has to sell 6,500 tonnes of iron ore to import one plasma TV. That says it all in terms of where the Australian manufacturing sector has got to. As long as the shiploads of coal keep going overseas, the shiploads of raw materials keep going out of the country in the volumes that they are and as long as people are getting good prices for those because of the booming economies in China and India, people will be congratulating themselves and saying: ‘Isn’t the economy doing well? Look at our surplus.’

But the point is that it is not sustainable into the future. There will come a time when Australia’s coal is not going to be purchased overseas because of the increasing impacts of climate change. We are already seeing other economies which are resource constrained moving to much more sophisticated economies. They are building much more efficiency into their manufacturing sectors. When the Prime Minister announced this week that the APEC aspirational target was a 25 per cent reduction in energy intensity by 2030, the Chinese must have been laughing. In their 11th Five-Year Plan they intend to reduce energy intensity in the Chinese economy by 20 per cent by 2010. These countries recognise that competitive advantage comes in trying to minimise the resources that go into every unit of production and that they need to value-add every unit of production.

I have been warning since I got into the Senate that the Australian car-manufacturing sector would go out the back door because we do not have high vehicle fuel efficiency standards in this country. But, no, the government kept rejecting the notion of tying government funding and subsidies to fuel efficiency. Instead of that, they just keep on giving the subsidies—$60 million to Ford and so on. Then China set a mandatory vehicle fuel efficiency standard so that Australian cars would be rejected from China because they do not meet Chinese fuel efficiency standards. So while the US car industry is in collapse because they are building big six-cylinder gas guzzlers, the Chinese and the Europeans are dividing the world vehicle market between them, the Europeans going for the very high end of the luxury vehicle market—still hybrids, still high-fuel efficiency, but at the luxury end—and the Chinese and the Japanese are going for the middle and lower ends of the vehicle manufacturing market. And the government is still sitting around failing to introduce mandatory vehicle fuel efficiency standards and failing to use the procurement capacity of government to switch over the government car fleet. Indeed, if you look at the taxi fleet around the country and the overall vehicle fleet in Australia, you find that it is nowhere near as advanced as the vehicle fleets in other countries because the taxis and the second-hand market get their cars from the government vehicles in the second-hand market. So if governments would take a lead on fuel efficient vehicles we would see that spread through the whole economy.

The same goes for appliances. As long as we do not have high standards we are never going to compete. I have that as my own experience in Tasmania with Tioxide, a paint plant. They argued that they would not meet high environmental standards because it would put them out of business. In fact refusing to make them adhere to higher standards meant that they did not invest in upgrading their capital. They allowed their plant to run down because they were allowed to and they opened up a greenfields plant in Malaysia. Had we insisted that they invest in upgrading their plant and equipment that would not have happened.

There is an enormous opportunity in Australia. Our competitive advantage is in our intellectual capital and renewable energy. We have some of the best brains in the world in the solar energy sector, in particular in the University of New South Wales, ANU and so on. We have got competitive advantage because of innovation and creativity. We should be nurturing that in this country by bringing in a policy framework which leads to the rollout of energy efficiency and renewable energy in the domestic, commercial and large industrial sectors and of course in all aspects of our economy. Imagine the jobs that could be created in Australia if we decided to make Australia the world’s best practice in terms of renewable energy, energy efficiency and vehicle fuel efficiency. We would see a whole range of new jobs. The wind energy people have put out a statement showing the number of jobs that they expect could be created if we went into large-scale investment in renewables. The great thing about the solar sector and the wind sector is that solar thermal plants, wind plants and so on are in rural and regional Australia where the jobs are needed. We could get out of irrigated cotton, for example, and put that land into solar thermal power generation. People do not lose their land, they do not lose their livelihood; they have a change from growing irrigated cotton, which is unsustainable, to going into producing solar thermal power. They are the sorts of innovative changes that could occur around Australia if this government showed some leadership.

But you also have to invest in education. If you want to have a sophisticated economy with innovation you must invest in education and in the arts. You need a major investment in education and the arts, and under this government we have seen the university sector run down across the country. The US free trade agreement and other free trade agreements have left us with the arts sector also vulnerable because of loss and lack of local content.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Mr Acting Deputy President, on a point of order: I am sure the honourable senator did not mean to mislead the Senate. However, in making the claim she just made she did neglect to point out that arts funding under the Howard government has increased by 65 per cent.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

I appreciate that but it is not a point of order, Minister.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am aware that it is not a point of order. You just have to move around the arts community to see how frustrated they are—

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

We are frustrated with state Labor government cutting their funding to the arts.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We all know that the entertainment and arts industries can have more relevance to economic growth in a post-industrial society than traditional forms of manufacturing. That is obvious. I agree with you that some state governments have underfunded the arts. We need an investment in our symphony orchestras around the country. You only have to look at the relationship with China where they do have a longstanding appreciation of the arts. We could send our orchestras on trips and goodwill visits and so on and we could have real exchange, real jobs, real dollar investment in expanding the knowledge and service based sectors of our economy. But you are not going to get that unless you get a major investment in education, and I am talking about public education from preschool right through to tertiary.

This is one of the major problems in Australia. Not only have we gone back to riding on the sheep’s back by turning ourselves into a quarry and digging everything up, or cutting it down, but also we have underfunded public education. We have left our young people with horrendous debts because of HECS fees. We have hollowed out manufacturing by chasing cheap wage economies overseas. Well, now is the opportunity to change. We cannot keep on importing oil. We cannot keep on selling ourselves short by digging everything up and sending it overseas. We have to ask: what sort of nation do we want here in Australia; what sort of economy do we want?

Let us make the transition from a resource based economy to a brains based economy. Let us make the transition while we do have a surplus because we have benefited from high prices in the resources sector. Why not invest that surplus in education, in creativity, in the arts and in dealing with climate change and oil depletion? We can invest in commercialising a lot of the technologies which are out there and ready to go. Origin Energy has sliver cells ready to go. It needs $100 million but it will have to look offshore. Vestas has left Tasmania; it has gone offshore. Solar Heat and Power has gone offshore—I could give you a list of companies in the renewable energy sector which have gone offshore.

The Greens have also developed an initiative whereby we would train a lot of energy auditors to look at energy efficiency across the country. We would invest a large amount of money in upgrading residential housing across Australia so that everybody had solar hot water and insulation, and over time that would be paid back. It would be an investment of the current surplus in the nation and in the jobs associated with rolling out energy efficiency technology in particular, and upgrading the housing stock. It would also be a way of addressing energy poverty because energy prices will go up with carbon pricing. If you improve the homes in which people live, you make sure that energy poverty does not bite in the way it is about to.

There are opportunities. I suggest the minister avail himself of the opportunity of reading ‘Re-energising Australia’, which talks about re-energising the nation in addressing climate change and oil depletion, massive investment in public transport and massive investment in infrastructure through such initiatives. That would make life better in the cities. We would have cleaner air. We would have more competitive cities because we would not have the loss of amenity by being stuck forever in traffic jams in places like Sydney, for example. We would have healthier populations because people would walk more. There are a whole range of reasons why massive investment in upgrading infrastructure in our cities, particularly public transport, is an excellent idea.

There are a range of initiatives which the government can take up by way of regulation and investing the surplus, which would create jobs in manufacturing in Australia, rather than see some of our best brains have to leave the country in order to see their technologies rolled out. The classic one, of course, is Australia’s first solar billionaire, who had to go to China to make his billions. He could not do it in Australia because we do not have the policy settings to deliver the energy revolution that would boost manufacturing in this country.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

A prominent philosopher once said that events tend to occur in history twice, that the first time is tragedy and the second time is farce. Unfortunately, the approach this government has taken in the development of our manufacturing sector will lead us to a position in the not too distant future where we are going to be faced with a farce which will cost the Australian workforce dearly.

Let us look at what the Fraser government left this country in 1983, after seven years in office, when the current Prime Minister, John Howard, was Treasurer of this country. He left double-digit inflation and double-digit unemployment set against figures that were substantially lower than they are now. Both of those were a legacy of John Howard’s treasurership of this country but, more than that, they left us a manufacturing industry in a state of crisis. It is not often spoken about, but not long after Labor came to power in 1983, BHP announced it was going to close its steelworks, that it was going to get out of steelmaking, and we had crises in a number of other manufacturing sectors, many of which were generated out of the Fraser government talking up the resources boom that did not happen and manufacturing companies redirecting their efforts into that resources boom.

I would remind people that in 1977 the state of manufacturing in this country was so perilous that the MTIA, the forerunner of the AiG, went around this country, in conjunction with the metal unions, holding forums in every state of Australia, with workers protesting about the state of manufacturing and its imminent collapse. That was 30 years ago under the Fraser government. The circumstances at the moment are exactly the same. Manufacturers, primarily through the AiG, and unions, including through my own union, the metal workers, have been consistently raising concerns about the lack of direction in our manufacturing sector, the narrowness of the Australian economy and the perils of basing our future wealth on the resources sector.

It would not be so bad doing that if we were insisting as a nation that in exchange for those resources we were getting a trade-off, that there was value-adding to those resources before they were shipped out of the country or that we had a hand in developing and manufacturing out of some of those resources into the global marketplace. But we do not. We simply dig it up, stick it on ships and send it overseas and then we bring it back as imported, manufactured goods.

Senator Ronaldson was quoting figures about manufacturing. What Senator Ronaldson did not tell the Senate about is the growth of imported manufactured goods into this country. What we are doing in terms of exports has been far outweighed by our absorption of imported goods, and this is causing difficulties in our trading relationships. But that side of the equation is never spoken about. In 1983, we were faced with a crisis in manufacturing in this country. What did the Labor government do under minister John Button? It initiated a number of industry plans.

Kay Patterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Patterson interjecting—

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It put in place a steel industry plan which created a set of circumstances, Senator Patterson, where we still manufacture steel in this country. We still manufacture steel in this country as a result of that plan. It implemented a car industry plan. It implemented the TCF industry plan, which meant that we continued to manufacture footwear and textiles in this country.

Kay Patterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Senator Patterson interjecting—

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You are a senator from Victoria, Senator Patterson. You go around Victoria and tell workers in the textile industry in Bendigo and Ballarat and other areas of Victoria that those regional areas are not entitled to earn a living. You go and tell them. You are their representative. You go around and tell them that they are not entitled to earn a living from that industry.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator, I am sure you meant that through the chair.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I meant it through the chair. I am sorry, Madam Acting Deputy President, but Senator Patterson was interjecting continuously while I was making my remarks. Not only did the Labor government at the time implement those industry plans; it put in place a manufacturing council. The manufacturing council did a stocktake of all our manufacturing industries—a collaborative effort between the workforce, the industries and the manufacturers—and developed strategies for improving that manufacturing base. In addition to radically restructuring the way in which we produced goods in this country by abolishing demarcation practices, by introducing flexibility in the workforce and by increasing productivity, which was not done without pain, that process also radically helped create a situation where, in the early nineties, our export of manufactured goods started to grow.

The proof of the pudding is in the eating. I do not want to be quoting a lot of figures as others have done in this debate, because it simply confuses people at the end of the day and the figures do not really mean that much. But if you want to get the message of what has happened, it is in one simple set of figures. Between 1983 and 1996, our manufactured exports grew by 14.8 per cent. Between 1996 and 2000, they grew by 5.1 per cent. Between 2001 and 2006, they grew by 1.8 per cent. So all of the effort, all of the energy, that was put in in the eighties to lay the foundation for a more diversified economy, to lay the foundation within which our manufacturing industries could grow and thrive, has been nullified over the life of this government.

This government does not have and has never had a belief in the manufacturing sector. We have been living, as everyone knows, on the resources boom. No-one knows how long it will continue. We did not expect the terms of trade to collapse by 10 per cent in 1986 but it happened, and it happened overnight. Workers had to take a wage cut as a result of it. Workers had to take a wage cut because the terms of trade had collapsed. We will be essentially facing the same set of circumstances again in the years 2010, 2011, 2012 or whenever it is likely to come along. Something that we have to be concerned about is the narrowness of the Australian economy. It is an investment, which is in the national interest, to ensure the economy is diversified. The only way in which you can diversify it is through our manufacturing sector.

I am not one who sees China or India as being threats. I believe that, if we handle it properly, if there were some creative thinking in this country, it could be a real opportunity for our manufacturers to position themselves as part of the supply chains to both those countries, to select key niche areas in those industry sectors. We have the expertise and the skills to be able to play a role, to do that effectively and, as a result, to substantially boost our manufacturing involvement in the global economy. So we should not necessarily see them as a threat; we should see them as an opportunity.

But this government does no thinking at all about what it should be doing in that area. One of the problems is that we have a department of industry that is simply a service department. It is like Centrelink. It hands out buckets of money and industry grants to various companies for various programs which it has had running for a long period of time. I am not arguing that some of those programs are not worth while; they are worth while. But I think some of them are quite dubious in terms of what they deliver; nevertheless, if some companies get a benefit out of it then obviously they are worth while. But the department is a policy-free zone when it comes to thinking strategically about the future.

I have consistently sat at estimates hearings and questioned officers of the department about their ideas for the development of various industries and what they were doing in terms of innovation in certain sectors. You hardly got a murmur out of them about their ideas in that area. It is partly because the real thinking about what happens in manufacturing occurs in the Treasury department; it does not occur in the industry department at all. If there is going to be growth in the manufacturing sector in this country, then we have to seriously look at the way in which the current department of industry is structured and restructure it to ensure that it not only delivers the program but does some critical thinking in terms of strategies and ideas for the future of manufacturing.

Manufacturing is critical. If we are going to be part of the global economy, it is critical for us to grow our manufacturing sector. Innovation is one of the key areas of doing it. What has happened to innovation? If you look at our expenditure on R&D, I think we are in the bottom third of the OECD countries. We are below a number of developing countries on our spend on R&D—I think it is about 0.67 per cent as opposed to what is argued should be the level, around 2.5 per cent. All of the European countries are growing their expenditure on R&D while we have been going backwards, because we do not see the significance of being able to position ourselves in the marketplace. If we want our companies to operate in the global economy and operate effectively, then broadband service is going to be critical. We have been hearing the debate in this place about broadband for a number of months now. I just hope the Minister for Communications, Information Technology and the Arts has got it right—I do not think she has—because the significance of that decision in our capacity to play a role in the global economy is going to be of very great substance to our economy, and to the ability of companies to operate real-time in their positions within the global chain.

Other speakers have mentioned the number of companies we have in this country who have very significant opportunities opening up to them. I know of one little company in Victoria that is making biodegradable packaging out of cornstarch—an enormous product. What has it had to do? It has had to take its manufacturing to Europe because it cannot get the support of the infrastructure here to operate effectively. Now, that is only one. We had a company up in Lismore called Permadrive that developed a way of harnessing the braking power in trucks. I have actually sat in a truck with no engine in it and been driven up the street of Lismore as a demonstration of how it could operate. They got a contract with the American army. Has the Australian Army bought their product? No, it has not. But the American army has seen the value of it. I understand that company is struggling to survive because we are not prepared to put the effort into ensuring that they survive in that marketplace.

What did we do as a government? I tell you what we did—two representatives of the company were on their way to Detroit to negotiate the deal with the American army, and we made a decision and withdrew the Austrade commissioners out of Detroit. The two representatives turned up there and there were no Austrade commissioners; they had been taken home as a money-saving exercise. They had to go back to Los Angeles to do the negotiations where Austrade still had a representative. That is the sort of thing that occurs because there is a lack of strategic thinking about what we need to do to be able to succeed globally in manufacturing. We need to adopt policies that will position our manufacturers in the global marketplace and where they are able to build collaborative arrangements with China, with India and with other countries, who are the emerging engine rooms of production at the current moment.

We have made a lot in this country about the free trade agreement with America, in particular about what that was going to mean for Australian companies in getting access to government procurement in the United States. I have not heard—and I have asked a number of people—either industry or government get up anywhere and tell us of one contract that an Australian company has won to supply goods or services to government in the United States since that agreement was signed. I do not think we are likely to hear about one in a very short period of time, because that is a process that is guarded zealously. We in fact suffer from the reverse in this country. We have a predisposition for our officers involved in government procurement to get overseas as quickly as they can. The purchases are overseas because they get a holiday at the end of it—well, it is seen as being a holiday.

I think we need to look seriously at our procurement policies. We ought to ensure at the end of the day not that we are giving an unfair advantage to our companies but that our companies have a fair opportunity of being able to participate in bidding for government procurement. Government procurement in this country, if you take state and federal governments, is worth something like $50 billion a year, which I would suggest is a significant basis upon which you can grow manufacturing companies and get companies into the global marketplace with new products, new goods and new services. But we do not use it strategically or wisely in terms of how it can become a driver of development of our industries.

As I said, this issue is not a new issue. It is an issue that has been the centre of debate certainly for the workers I have represented as a union official over many years, and the people I still try to represent as a senator in this place. It has been an issue of debate about what the role of manufacturing should be in the Australian economy. It has always become an argument on whether it did or did not get resources adequate for growth, and it has always lost the debate to either the agricultural sector or the mining sector.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Senator Brandis interjecting—

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It might be humorous to you, Senator Brandis. You come from a mining state. I am sure you are happy to survive on those resources. But I actually have to give great credit to the Beattie government because at least they have seen the potential for those resources to run out in the longer term and they have set about strategically positioning Queensland as a base for manufacturing. Their manufacturing has been growing and they have been putting resources into helping small manufacturers to develop their products, to get the research into place, to get the resources to actually do the research and to build their opportunities for growth and innovation. But it is not only happening here; the Irish have done it. The Irish have been smart enough, whilst they have been milking the European Community, to invest two buckets of money—€750 million in each of them—one to ensure that their indigenous companies invest in research facilities and the other to ensure that researchers of the highest quality return to work in those facilities to build the base of their manufacturing sector. Because they know that, at the end of the day, the European stuff, including pharmaceuticals, will run out and that it is a finite position. They have to build the basis of their indigenous companies if in fact they are going to survive in the longer term. Australia has never taken the view much beyond getting bucketloads of iron ore onto the ships and getting it overseas as quickly as possible to make short-term profits— (Time expired)

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

Senator Campbell made a great issue at the start of his speech of not using figures and ‘figures only confuse people and mostly they are the wrong ones, anyway,’ and then proceeded to use several figures to prove his own case, which I thought was rather a strange thing to do. But he did make a claim that Australia only produces approximately two per cent of the world’s research innovation and output. The fact is, Senator Campbell—and you should have acknowledged this—that Australia is only a small player on the world stage.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Madam Acting Deputy President, I rise on a point of order. I do not want to interrupt Senator Troeth; she is entitled to put her point in this debate, but I do resent people misquoting figures that I did not even use. I never mentioned ‘two per cent’. I said in my contribution that R&D was 0.67 per cent—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator Campbell, you now have that on record.

Kay Patterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Madam Acting Deputy President, it is inappropriate for a senator to interrupt to clarify and to say they have been misrepresented. It is inappropriate and if Senator Campbell does that in the future, I ask you to direct that he do it at the end of his speech.

The Acting Deputy President:

Senator Patterson, thank you for your advice. Senator Campbell, there is no point of order.

Judith Troeth (Victoria, Liberal Party) Share this | Link to 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.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to be able to speak to Senator Carr’s motion, which gives us the opportunity to turn our minds to the importance of the place of manufacturing in the Australian economy. The motion gives us the opportunity not only to do that but also to compare the position of the two major parties on the future of manufacturing in Australia. As we know, the manufacturing industry is an essential component of any modern economy. The stronger and more developed our national manufacturing industries are, the stronger and more competitive our economy will become.

The manufacturing industry is particularly important to my state of South Australia. We have significant investment there in our manufacturing industry, particularly in the defence industries and, of course, the automotive industries. I am very proud to host both of those industries in my state. As of May 2007, nearly 90,000 people in South Australia were employed in manufacturing. Manufacturing accounts for over 15 per cent of the South Australian economy. In the electorate of Makin, for example, 10,400 people, or almost 17 per cent of the workforce, are employed in manufacturing. In the electorate of Kingston, at the other end, the urban part, of the state, nearly 12,000 people, or 20 per cent of the workforce, are employed in the sector. So what happens in manufacturing really matters, not just to the whole of Australia but particularly to my state and to those electorates I mentioned, because in those electorates a number of families are suffering greatly from the out-of-control cost-of-living increases—

Julian McGauran (Victoria, National Party) Share this | Link to this | Hansard source

Senator McGauran interjecting—

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Senator Boswell interjecting—

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

Order! Senator McGauran and Senator Boswell, would you please lower the volume of your conversation.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Madam Acting Deputy President. I was mentioning that the families who live in electorates like Makin and Kingston are suffering from out-of-control cost-of-living increases under this government. Families in those electorates are disproportionately affected by the housing affordability crisis. As I mentioned earlier today, 77 per cent of families renting in Kingston are paying more than 30 per cent of their income in housing costs. For those reasons it is very important that we address the future of manufacturing in South Australia, particularly in the electorates around Adelaide.

Unfortunately for Australia, long-term trends show manufacturing declining as a share of the Australian economy. Over the last decade, under the Howard government, the growth of exports and the amount of research and development spending, both of which are critical for sustaining competitiveness, have fallen. Labor is committed to facilitating growth within manufacturing because we know its importance with regard to not only innovation, exports and global integration but also the security of Australian families and the wellbeing of the Australian workforce.

Under the Hawke Labor government the objectives of industry policy changed from a primarily inward focus, concerned with the protection of industries, to an outward focus. I mention that because it illustrates that, despite what those on the other side say, Labor has always had a modern view of how the manufacturing industry should be progressed in this country. That was ably demonstrated under the Hawke Labor government, which took the approach of encouraging Australian industry to become internationally competitive through increasing exports, improving technological innovation, enhancing skills and developing an entrepreneurial culture. Through that innovative, visionary approach the Labor government was able to achieve high rates of growth in manufacturing exports and in research and development. Unfortunately, Australia under the Howard government was not able to sustain that growth.

Under Labor, manufacturing exports grew at a rate of 14.8 per cent per year, but under the Howard government that rate has fallen to just 1.8 per cent per year. Labor, however, are very optimistic that we can improve the rate of manufacturing exports again, as we will show leadership for industry and we have a plan for what needs to be done—unlike the Prime Minister, who has a plan for not much else except what to do in retirement. Labor believe that governments can and should have an impact on the health of Australian industry. Governments can have an impact through action or inaction. After 11 years of inaction at the hands of the current government, Labor are ready to take action to support Australian industry.

Despite the significant decrease in Australian manufacturing, it still accounts for more than one million jobs and $75 billion worth of exports a year. Manufacturing is responsible for almost 39 per cent of business expenditure on research and development, which is the most of any sector. Labor recognises how important this is and has taken an active role in planning for the future of manufacturing in Australia, with the view that manufacturing is a vital driver of innovation. A focus on innovation is essential to the very survival of manufacturing in Australia. That is why Labor says that innovation policy is industry policy.

Currently there are, I understand, some 169 separate Commonwealth and state programs intended to assist Australian industry to become more innovative and competitive. With such fragmentation and duplication it is very difficult for organisations to find what they need and to get help to be more innovative. Manufacturers just want to make things in the best way possible. They do not want to be bogged down in endless paperchases to get government assistance and advice. A national strategy and national leadership are desperately needed, and the Howard government has failed to provide either. Federal Labor, if we have the opportunity, will change this through the introduction of industry innovation councils. They will build partnerships amongst all participants in the supply chain and develop long-term strategic approaches to improving productivity. We will also establish a government department to provide innovation leadership by bringing together the key policy areas of innovation, industry, science and research.

A Labor government will sit down with the states and territories, companies, trade unions and workers to create a coordinated national industry policy that will guide us into the future together. Instead of playing the blame game, which this government is an expert at, Labor will show leadership, accept responsibility and take us forward. Labor has already begun that process, with Labor leader Kevin Rudd hosting a national manufacturing roundtable earlier this week. The roundtable brought together stakeholders and experts critical to the future of Australian manufacturing. Our roundtable included representatives from industry organisations, the labour movement, successful manufacturing businesses, research and innovation agencies, and economic and finance advisers and experts. It was an opportunity for everyone involved in manufacturing to come together to discuss the various challenges to and opportunities for Australian manufacturing in the future. Under the leadership of Mr Rudd and Labor’s shadow ministers, businesses were able to sit at the table with Labor and share fresh ideas to address the challenges so that we can take Australian manufacturing into the future with confidence.

There was agreement at the roundtable that government does play very important roles in a number of areas critical to successful manufacturing, and the foremost for the healthy future of manufacturing in Australia is the provision of affordable, accessible and appropriate education, training and skills development. The Howard government has not put adequate effort into those areas since its election in 1996, more than a decade ago. Australia and its workforce are a lot poorer because of the government’s hopeless, visionless and leaderless attitude to education and skills development. Even four-year-olds have been given a raw deal, with more than one-third of four-year-olds not receiving any pre-primary education at all. According to the OECD’s Education at a glance report, Australia spends just 0.1 per cent of GDP on pre-primary education, which is particularly concerning when our competitor OECD countries spend an average of 0.5 per cent of GDP.

At the other end of the scale, tertiary education institutions have been significantly underfunded. In the Howard government’s first budget they received a huge funding cut of more than $800 million—a budget cut they are still attempting to recover from. It is only now, when the skills crisis has really struck home and industries are pleading for assistance and the electorate has begun to notice the effects of the skills crisis created by this government, that the Howard government has done anything to address the education and training of Australians to the extent we need them to be skilled in order to ensure our manufacturing industry is vibrant and successful in the future.

The government has created the Australian technical colleges—30 of them—in an attempt to deal with the crisis. But those colleges will, unfortunately, be a drop in the ocean in lessening the skills gaps in Australia’s workforce. It is another example of too little too late from this government. Enrolments at the ATCs are still too low. At the ATC in Kingston, in my state, enrolments are still around the 100 mark this year. In 2010 Australia will face a shortage of more than 200,000 skilled workers. At that time the ATCs will produce their first qualified tradespeople. The graduation rate will not decrease the skills shortage by 50 per cent or even 10 per cent because there will only be approximately 10,000 graduates.

Instead of wasting taxpayers’ money on those colleges, the government should have provided additional funding to the whole education sector, including the TAFE sector. You have to ask, as many of us here have asked the government many times and as many in the education sector repeatedly ask: why did the government determine to spend millions of dollars on a relatively inefficient system of technical colleges instead of investing in the structures that were already there—the universities and the TAFE colleges across the country that have demonstrated through their long history that they have the ability to educate and train people thoroughly and quickly? Why did we have to set up a parallel system of ATCs?

If we have the privilege of being elected to government, Labor will create an education revolution. It is a centrepiece of our policy going forward into the forthcoming federal election. As part of that, Labor would like to acknowledge the contribution made by the TAFE workforce in developing the knowledge and skills of Australia. In cooperation with unions, industry and state and territory governments, Labor will take a national approach to improving the professional skills and status of TAFE teachers, through the development of their contemporary and industry related skills.

Labor will address the emerging and ongoing skills shortages as a matter of high priority. Australia’s skills base can only be secured through a sustained commitment to providing training opportunities for more Australians. But that task cannot be left to governments alone. We should encourage more businesses to increase their local training programs, rather than continuing this current government’s only solution, which seems to be to increase temporary skilled migration. Labor believes that Australia’s skills needs will only be secured through lasting solutions, such as expanded education and training opportunities, complemented by a balanced skilled migration program with an emphasis on permanent migration.

To enable Australian industry to develop, innovate and grow, industry requires support to undertake high-level training and to expand the qualification base of its workers. We will ensure that training strategies are linked to industry development policy. Recently, the Labor Party, under the hand of Senator Carr, released an excellent background paper entitled Fresh ideas for Australian manufacturing. That paper, which I commend to all senators, examines the importance and challenges of manufacturing in Australia. We released that paper because we truly believe that manufacturing is a key driver of innovation and is crucial in maintaining Australia’s prosperity beyond the current mining and resource boom. That paper outlines a number of new challenges to Australian manufacturing, including concerns about climate change, globalisation, the impact of the mining boom and, as other senators have already mentioned, the rise of China as an economic force, particularly in our region of the world.

Labor’s roundtable discussions earlier this week centred around those issues. Participants discussed ways in which to deal with them creatively, efficiently but, more importantly, urgently. Climate change was of course discussed at length, as it is the most important issue facing today’s society. If we do not take immediate action on slowing down and reversing climate change then every other issue loses significance. Nobody will be making anything if we do not have any water or renewable energy to put into the manufacturing process. We have a responsibility as well to protect our planet for the generations ahead. I am very proud to see that many Australians have recognised that the environment is paramount and overshadows every other major issue that we have facing us. Most Australians are doing—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I know there are only a couple of minutes to go before this debate concludes, but I would appreciate it if there could be some silence from senators in the chamber. Senator McEwen, I hope I have not cut short your time.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

As I was saying, Australians are doing the right thing in terms of climate change. But, unfortunately, simply doing things in the household is not going to be enough. Recycling, minimising water usage and reducing the amount of energy we use in our homes is not enough. Australian businesses need to join the party. More importantly, they want to. We saw that this week in the report about sustainability and industry that was released by the Chief Executive of the Ai Group, Heather Ridout. It is not often I get to quote Heather Ridout in a speech, but she made a statement that I agree with, for once. She said:

Companies clearly need more information on how they can improve sustainable practices, they need a better understanding of an emissions trading scheme, and they need better incentives, particularly for small to medium firms.

Business is crying out for leadership from a strong government committed to slowing climate change, not one full of climate change sceptics like the current government. The current government, as we know, has refused to ratify the United Nations agreement negotiated in Kyoto. Until recently, the Prime Minister was a climate change denier. It has only been recently, in the face of poor polls, that his scepticism has miraculously subsided and he has become an almost convert.

Government has refused to increase the mandatory renewable energy targets. Instead, we see this government’s obsession with nuclear power increase, and the government’s solution to the energy needs which are going to underpin manufacturing industry is to build nuclear reactors in Australia and to build the accompanying nuclear waste facilities that must go with them. It is a very impoverished view of what needs to be done to ensure that manufacturing industry in Australia is vibrant and growing and is sustainable into the future.

Debate interrupted.