Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

This bill amends the Textile, Clothing and Footwear Investment and Innovation Programs Act 1999. The purpose of the bill is to close the Clothing and Household Textile (Building Innovative Capability) Scheme, otherwise known as the BIC scheme, and the Textile, Clothing and Footwear Small Business Program on 30 June 2014. That is one year ahead of the original time intended for closure of those two programs. The closing of the programs one year early would provide some $25 billion of savings to this government but at a detrimental cost to our TCF industries—our textile, clothing and footwear industries. It is just another example of this government turning its back on the manufacturing sector in Australia. I note from the second reading speech of the parliamentary secretary that he provided no justification or explanation whatsoever as to why the two programs were being terminated a year earlier than intended.

The BIC scheme is a $22.5 million program that supports innovation and development of sustainable and internationally competitive manufacturing and design industries for clothing and household textiles in Australia. Payments for BIC grants are retrospective. They are based on investment decisions firms have already made to improve their operations. The final program eligibility year is 2014-15, with final payments to be made in 2015-16—that was the intent. Grants are available for research and development, including innovative product design activities, innovative process improvements, market research and some industrial property rights.

The TCF Small Business Program provides grants of up to $50,000 for projects to improve the business enterprise culture of TCF businesses. Funding of $2.5 million is available per year over a 10-year program period which commenced in 2006-07. In 2012-13, total funding of $2.58 million went to 74 innovative TCF businesses under the TCF Small Business Program. Grants are available to TCF small businesses that have fewer than 20 employees but with a minimum turnover of $100,000 per annum and that have not received grants or qualified for assistance from other TCF programs. TCF small businesses must provide a minimum cash contribution to the project of 25 per cent of eligible expenditure.

The most recent employment statistics on the TCF sector released by the ABS would suggest that some 44,200 people are employed in this sector. In addition there are many more who work from home as outworkers or subcontractors, with some estimates putting the figure of those who work at home or as subcontractors at up to several hundred thousand across Australia.

The programs enshrined in this legislation were implemented to foster the development of sustainable and internationally competitive manufacturing and design industries for clothing and household textiles in Australia. While the savings in this bill would provide some $25 million, the cuts will have a significant detrimental effect on the TCF industry and on the manufacturing sector more broadly, much of which supports the industry in indirect ways. This decision is hardly surprising from a government that is cutting more than $2.5 billion from industry and innovation programs, leaving industry minister Macfarlane presiding over a department with not much to do and too few resources to do it with.

The regulation impact statement for this bill states that the early closure of these programs does not have any regulatory impact. This is a deceptively benign assessment of an amendment that we know will have far-reaching and detrimental impacts on Australian industries. Firms have already written to members of the opposition, seeking our urgent assistance to reason with this government and stop these deleterious cuts. These firms have made significant investments in Australia on the basis of these programs. To cut the programs one year earlier than the commitment that was enshrined in the original legislation will have a disastrous effect on the industry. These firms have made investment decisions and invested heavily in their businesses on the basis of grant funding being available in current and future years.

BIC scheme grants are retrospective, and the costs in innovating must first be borne by the manufacturer for one to two years before any subsidy is received. Because the scheme works that way, the usual taunt by those opposed to industry assistance, that this is 'corporate welfare', could not be less true. The BIC system is a model of effective innovation—that is, it brings together industry experience, entrepreneurial flair, design talent and appropriate technology at the enterprise level. The firms that receive these grants are agents of revival not only in TCF but in the wider manufacturing industry.

Australia's future beyond the resources boom will depend on the development of advanced manufacturing—on high-tech knowledge-based industries producing goods for niche markets, not in high-volume industries producing goods for mass markets. The firms receiving these grants fit exactly that description. So the belief that TCF is 'old' manufacturing is simply ignorant.

Terminating the program one year earlier completely undermines the significant investment that firms have already undertaken and the research, development and innovation expenditures that they have planned for future years. Early termination sends yet another message that Australia is an unreliable place in which to do business. If the schemes are prematurely curtailed, as announced in the budget, these firms' investment plans—and Australian jobs in the TCF industries—will undoubtedly be in jeopardy.

We know that companies may have to wind back investment or, worse, may not be able to maintain their current operations, should these cuts get passed by this parliament. We know that these cuts could lead to yet more jobs lost in Australian manufacturing. Cuts to this program are yet another example of the Abbott government's flagrant disregard for Australia's manufacturing industries. It is another direct attack on Australian small businesses. It is an attack on Australian jobs.

The TCF industry has been under pressure from overseas competition, and globalisation generally, for some time. That comes from a combination of factors, including cheaper labour in other countries, and the reduction of tariffs, which, I understand, went from 25 per cent to 17.5 per cent in 2005, then to 10 per cent in 2010, and now to five per cent in 2015. More recently, the high Australian dollar has added to the difficulties, as have the free trade agreements with several countries in which tariff rates were further reduced or, in some cases, totally eliminated.

As a result of all those changes, the Howard government embarked on a program of support for the TCF industries, and committed substantial funds to that support, and I commend the Howard government for doing so. That support enabled these industries to continue to operate and to develop the niche markets that I referred to earlier.

But the industry's problems continued and, in March 2008, the Rudd government announced a review of the TCF industry. The review was carried out by Professor Roy Green in consultation with an expert advisory panel. Professor Green's report, entitled Building innovative capability, was released in September 2008. The review found that Australia's TCF industry had remained competitive in a high-exchange-rate environment through the restructuring and innovation that had taken place over the last decade or so. The review also noted that, at the time—and I am referring to 2008-09—the industry contributed over $5 billion in industry value-added value to the Australian economy. Despite increased competition from overseas suppliers and commercial pressures from large retailers, the review considered that Australia's TCF industries have a promising future, but this can only be achieved through a concerted effort to differentiate their products

… through an emphasis on factors such as uniqueness, product quality and design, branding, quick response and new approaches to supply chain management …

It is clear from that review that there is a future for this industry in Australia, but that future depends entirely on the support provided by government.

That support was committed to again by the Rudd government in 2008 and was meant to continue. With that support, the industry would be able to compete with the overseas competitors and would be able to adjust so that it could develop the niche markets and expertise that we do have in Australia. And there is no question that we do have expertise with respect to that sector in Australia.

I note that the Council of Textile and Fashion Industries of Australia also believes that there is a future for that industry in Australia, but that there needs to be some changes made. I want to refer to two matters to which they refer—areas where they would like to see the government intervene. Firstly, is a level playing field in tariffs and other trade barriers that are imposed on Australian industry. With regard to both of those matters, I note that they are calling for a much more level playing field so that they can in turn not only be competitive here in Australia but be able to export their products overseas.

They also call for something that has been raised in recent times by several sectors in the community with regard two matters. One is better labelling—and that is an issue that I understand has been raised across a whole range of products that we import into Australia. Right now there is an inquiry taking place in respect of food imports. The Council of Textile and Fashion Industries of Australia also wants the better labelling provisions to apply to textiles, clothing and footwear that is brought into this country.

I can well understand why. I think there is widespread sentiment in the broader community by people who would like to purchase Australian-made products. They will only do so if they know that what they are buying is an Australian product, and that comes down to clear labelling. The sentiment for supporting Australian industry is sufficient in the wider community, I think, to make a difference to the operations of many of the Australian businesses. But consumers need to know that the product they are buying is indeed an Australian product and not something that is claiming to be Australian when it is not.

There is an additional component to clear labelling that is of real concern. It relates to a matter that was raised publicly only in recent months. I understand that there have been products brought into Australia which, as a result of the chemicals used perhaps in bleaching or washing them in overseas markets, have a carcinogenic effect. Some of those products have now been withdrawn from the Australian market. Australian consumers have every right to know where products are made so that they can also make judgements about whether they have confidence that those products are made in a safe way for them to be able to wear.

Again, these are matters that I believe should be carefully assessed by the government and responded to. They have a dual effect: firstly, there is a health affect and, secondly, there is the effect of supporting Australian industries simply by having much clearer labelling systems.

The other matter that concerns me with regard to these issues is that if we put more pressure on our TCF industries then they will in turn have to put more pressure on the workforce within those industries. This is a workforce that is already one of the lowest paid in Australia and a workforce that is often made up of home-based workers who are working at very low rates. By putting more pressure on them, not only are we driving down their ability to make an income but if they refuse to work for the very low rates that in turn it leads to more of these products being made overseas in factories which are quite often using what we could describe as 'exploited' labour.

Only a year ago, in April 2013, we saw 1,129 people lost their lives at the Rana Plaza factory in Bangladesh. Factories like that would appear to operate in many other places in the world, where they not only have people working under terrible conditions but in many cases where they use child labour. We are simply pushing more of that work into those areas by not supporting the industries that are currently operating here in Australia. The current programs that are being terminated by this government—the industry assistance programs—were put in place for very good reasons and are, indeed, making a difference and enabling those industries to remain viable. By cutting those programs we are simply going to make the job of those industries to remain viable much more difficult.

This is a negative move by the Abbott government. It is another example of this government turning its back on industry. It is another example of cost-cutting for no better reason than simply to balance the budget, without considering the overall impacts. And it is another example of short-sightedness where, for what I believe is the relatively small amount of money that the government is going to save from these measures—$25 million—the loss to the economy in this year and in future years will exceed that figure many, many times over.

For those reasons the opposition will oppose this legislation.

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