Steve Irons (Swan, Liberal Party) Share this | Hansard source

I rise to speak on the Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014. In the context of our significant national debt and a large deficit that needs to be repaired, and with evidence that the Australian TCF industry has adjusted to Australia's low-tariff regime over recent years, this bill provides for the end of two government programs one year earlier than presently scheduled and resulting in savings of $25 million. These two programs are the Textile, Clothing and Footwear Small Business Program and the Clothing and Household Textiles Building Innovative Capability Scheme—BIC. The programs were designed to assist the industry's transformation to an innovative sector that can compete and thrive in a low-tariff environment.

These savings were announced in the budget, and I note that when I last checked with the minister's office he had received no negative feedback or concern from any stakeholder group since the announcement, so I would have thought this would have been a fairly uncontroversial measure that would save the budget bottom line some money and contribute towards balancing the budget. In my electorate there is a lady who has created a series of textile, clothing and footwear organisations, and she has not contacted me or, it seems, the government, to express any opinion on the changes. Many of her activities now have an overseas focus so I would suggest that the businesses are becoming more adjusted to the tariff reductions and more focused on the opportunities of international trade. Current projects on her website seem to focus on Chennai, India and Hong Kong. I also note that, when I last checked, there had been no comment or public statement on the website of the Council of Textile and Fashion Industries of Australia.

There seems to be broad community acceptance of these changes. I was surprised to hear the shadow minister say that the Labor Party would be opposing the legislation, but I think if we were introducing a tariff they would oppose it. The Labor Party is about being opposition for opposition's sake at the moment. I did not hear the shadow minister name one group which supports his position. He spoke about people writing to him and contacting him but he did not mention the name of one group or company. We heard a lot of pious arguments from the shadow minister, but I do not remember hearing these arguments in 2009, when Pacific Brands cut 1,850 jobs. They were silent. Where were they then? I think the Labor Party is really out there on its own on this one, but I see that the member for Melbourne is going to be speaking on this bill, so he will oppose it. He would oppose the introduction or the deletion of a tariff; he will just be going along with the Labor Party.

The rationale behind the two programs that are being closed a year early was some encouragement for business to adapt during the long process of tariff reductions for clothing textile and footwear items. Tariffs for this sector were at one point very high. The most drastic decrease in tariffs happened between the early 1990s and 2000, when tariffs for clothing dropped from around 55 per cent to 25 per cent. Remember, the Labor Party were in government in the early 1990s when the tariffs started being reduced. Between 2000 and 2004 tariffs on textiles, clothing and footwear—or TCF—varied from five per cent for textile yarns to 25 per cent for clothing, finished textiles and household textiles. During that time footwear attracted 15 per cent whilst footwear parts attracted a 10 per cent tariff. In 2003, the Howard government initiated a Productivity Commission report into the industry and the tariffs. In response to the Productivity Commission's recommendations, provisions were made to reduce tariffs further to 17.5 per cent for clothing, 10 per cent for footwear and 7.5 per cent for footwear parts. The clothing tariff was maintained until 2010, when that tariff fell to 10 per cent. Now the clothing tariff will fall to five per cent in January 2015, to match footwear. The tariffs are expected to rest at this point, as there are no further decreases planned.

As the CEO of the Australian Chamber of Commerce and Industry said in an article in The Age in 2009, Australia needs access to markets and it can never win a tariff war. The reductions have opened the door to other agreements while still maintaining a small TCF industry in Australia that has found its niche. After the lowering of tariffs in 2012-13 the TCF industry accounted for 10 per cent of total manufacturing output in Australia. The industry currently employs approximately 40,000 people.

The Textile Clothing and Footwear Small Business Program is in its ninth funding round, so it has been around for a while now. This program focused on the smaller businesses and aimed to provide grants of up to $50,000 to assist in an enterprise culture. The Building Innovative Capability Scheme was aimed at larger businesses and focused on grants for research and development. As funding for this program is based on activity conducted during the prior financial year, registrants can be assumed to have already spent substantial funds in 2013-14 in the expectation that much of this will be reimbursed in 2014-15. Such reimbursements will be made in the coming financial year to fulfil these obligations. But we did hear from the shadow minister, who just left, that these obligations would not be met. I am here to tell him that these obligations will be met, so he can take that argument of his speech as well. After this the scheme would discontinue.

The early cessation of these grants is made possible in part due to changes in consumer attitudes within Australia. Increasingly Australian consumers are moving towards supporting sustainable clothing options over cheaper imported labels which are mass produced using sweatshop labour. This change suggests that the ongoing success of Australian textiles, clothing and footwear manufacturers will not be decided by grants or tariffs on imports but rather by the choices consumers make. It is an important point I am making. The government cannot and should not be relied upon to make industries, TCF or others, successful through the introduction of protectionist policies or by the continuation of expensive grants programs. A company with a high-quality product that is responsive to its customers will succeed regardless. I will provide examples of many Australian textile, clothing and footwear companies that are already proving this already later in my contribution.

The Department of Industry suggests that successful Australian manufacturers have generally moved from producing commodity goods to manufacturing specialised, value-added goods that are differentiated by design or innovation. This sentiment was echoed by the former CEO of the Council of Textile and Fashion Industries in Australia, TFIA, Jo Kellock, in an interview in 2011. She noted that the survival of Australian manufacturers was dependent upon their ability to present consumers with higher-quality and longer-lasting products than those sourced cheaply overseas. A fantastic example this is Cue, the family-owned fashion label that manufactures 75 per cent of its products in Australia. I must admit that I have seen some of those items hanging in my house; my wife is a big fan of the Cue product. Undoubtedly a factor in Cue's success has been its ability to provide consumers with an Australian made, ethical option that is of higher quality and is longer lasting than the products offered by its competition.

There are a number of other fashion brands and manufacturers who have capitalised on the shift in consumer attitudes and are successfully producing Australian-made products that consumers want—from school uniform producers such as A Plus schoolwear and BuxWear to fashion stalwarts Collette Dinnigan, Carla Zampatti and Manning Cartell to iconic Australian brands such as Akubra and RM Williams. These successful Australian manufacturers and labels are working to provide consumers with a range of high-quality, Australian-produced goods. It is promising to that see the TCF industry body and so many Australian companies are successfully adjusting their business models to remain profitable without government intervention.

As I mentioned earlier, there has been no objection from the TFIA regarding the cessation of these grants. I suspect this is because the council continues to accept the need for the industry to evolve rather than be reliant on government handouts. In a press release on 25 September 2013, the TFIA outlined that the policy priority for the textile and fashion industry should include saying no to government welfare and yes to education and an end to 'over-regulation in the textile and fashion industry'. That might be news to the Labor Party, the Greens and their speakers, but that is what the industry policy requirements are aimed at.

If the peak industry body is focusing on innovation and adjusting to global trade, why is the Labor Party supporting archaic policy options and opposing this bill? Once again it appears to be opposition for the sake of opposition. In fact, if the Labor Party really wanted to support the TCF industry, they would consider the words of then CEO Richard Evans from 2013 when he called for an 'abolition of taxes that increase the cost of doing business, reducing global competitiveness'. The abolition of the carbon tax would do that, granting relief to the entire industry, but those on the other side of the chamber refuse to budge on that.

Earlier this year the Abbott government, through its free trade agreement with Japan, attempted to curtail one of the biggest problems encountered by the Australian TCF industry when attempting to export products overseas—high tariffs. In addition to the phased elimination of tariffs of up to 10.9 per cent on 20 of Australia's priority textile exports, Japan has agreed to a single transformation origin rule. This is the first time Japan has agreed to such a liberal approach on textiles in an EPA. Australia exported around $1.1 million worth of these products to Japan in 2013.

In some respects the initiative shown by past governments, both Liberal and Labor, to implement policies of tariff reduction has paved the way for the two free trade agreements achieved this year. A high-tariff nation could never have signed these deals, which will benefit the whole Australian economy. The Korea-Australia Free Trade Agreement will create at least 15,000 jobs between 2015 and 2030 and add $650 million annually to the Australian economy once in force. On entry into force, 84 per cent of Australia's exports by value to Korea will enter duty free, rising to 99.8 per cent on full implementation of the agreement.

One in five jobs in Australia are linked to trade. To complete two agreements with major trading partners in Asia is only going to provide more opportunity for our local exporters and service providers and create more local jobs. The Japanese agreement was a world first. It is the first time Japan has signed any trade agreement with a major agricultural country; Australia is the first agricultural country to sign an agreement of this kind with Japan. That has never been done before and it puts our beef, dairy, wine, fruit and horticulture producers at a major competitive advantage.

There are also benefits for the car trade. This is great news for my electorate of Swan, which is a motor vehicle trading centre in Western Australia with many Japanese cars. Together, these two agreements will also mean that business services firms across Australia and in my electorate will be able to have access to Korea and Japan that they have not had before. Accountants, architects, lawyers, engineers, financial planners and environmental planning professionals, as well as international education providers and telecommunications professions will all be able to undertake work in Korea and Japan.

Services are 70 per cent of our Australian economy and our services industry developing further working relationships with these two huge Asian economic leaders will create further jobs. Building stronger trading relationships in Asia is critical to Australia's economic future and the Abbott government is committed to further developing our trading relationships around the region and globally. The coalition promised the Australian people at last year's federal election that we would get the budget back under control and put a stop to Labor's growing debt and deficit disaster. The disaster they left the Australian economy and the Australian people with.

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