Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014. This bill amends the Textile, Clothing and Footwear Investment and Innovation Programs Act 1999 and closes the Clothing and Household Textile Building Innovation Capability Scheme and the Textile, Clothing and Footwear Business Program on 30 June 2014. I am sure many businesses will be disappointed that the government is making this cut. We must always remember that a subsidy for one industry is a tax on another industry. We need to look at the budgetary situation. The interest repayments on the debt now cost this nation $1 billion every single month. So every single month this government has to raise taxes or borrow money and send it overseas to pay the interest on the debt. This is the difficult budgetary situation that this government finds itself in. Sometimes we must make hard decisions, even if they are unpopular, when we know they are right for this country.

Before I came to this place I was involved in the Australian textile industry and I have seen how that industry has shrunk over the years. When I started work in the 1980s, the import duty on fabrics at that time was around 35 per cent. I have seen that come down over the years. I have seen businesses close down and people who had to relocate to other jobs. That has caused some harm but overall I understand that that has been in the best interests of our country. Yes, there has been some harm but the government is here to make tough decisions in the best long-term interests of our country.

The good news for consumers is that the tariff on clothing is now down to 10 per cent and at 1 January 2015, a little over six months away, that tariff will fall down to five per cent. Over the past 20 years we have seen the price of clothing come down and that has benefitted the least well off in our society. To make clothing less expensive gives consumers more dollars in their pockets to spend on other things.

Our footwear and clothing industry will face some difficulties in future. Much of this industry has moved away from production and into design and management. There are a couple of risks: firstly, the GST threshold we put on imports. A consumer is able to buy online a product from an overseas retailer, import that into Australia and avoid the GST, but if they bought the same product from an Australian retailer on line they would pay the GST. So this becomes a negative tariff against a local Australian company. This is something we cannot allow to continue as online sales continue to increase. We cannot give overseas companies a tariff advantage by placing virtually a negative tariff on Australian companies. Australian companies are forced to pay the GST but overseas companies are able to avoid it.

The second issue facing our fashion industry is the very high retail rents in this country. I am very pleased to know that the Productivity Commission is having an inquiry into this matter right at this very stage. If we are saying that it is bad to protect industries, that we are not going to protect our fashion industry, that they need to stand on their own two feet, by the same token we cannot protect our retail shopping centres from competition through zoning laws. That is what we have been doing and that is why retail rents in this country are substantially higher than anywhere else in the world. That cost simple flows on to the price of goods and makes consumers pay more. I have seen a few examples of this in my electorate of Hughes. I have seen the Orange Grove shopping centre, a shopping centre mainly of clothing retailers, actually closed down by the previous the Labor state government because they were in competition with other retailers in Liverpool—closed down and driven out of business while prices stayed high for consumers and retail rents stayed up. It is great for the retail property owners but a bad deal for small business and a bad deal for consumers.

I have also seen this happen in my electorate in what is known as the Warwick Farm Homemakers Centre. This is where Woolworths took one of their smaller competitors to court, and we had in the courtrooms of this country a platoon of barristers and QCs and legal beagles arguing about whether a retail shop was allowed to sell babies clothes. It is this kind of protectionism that is driving prices up and stifling innovation and investment in this country.

The third issue that we need to look at to make sure that we have a very viable fashion industry going forward is our competition law. I am very glad to see the Minister for Small Business at the table. We have our inquiry into competition laws in this country underway and I am sure that many of us are looking forward to the outcome of that inquiry and how we can update our competition laws to make sure they provide competition in the best interests of consumers in the decades going forward.

But there are issues for our fashion retailers. One of the real concerns I have for our fashion industry and fashion retailers is the overconcentration in our retail sector. There have been rumours and talk about a merger between our last two major department stores, David Jones and Myer. I hope that the ACCC will send a very strong message to both of those companies that they would consider that merger anticompetitive. If I am a young fashion designer, I need as many retail outlets as possible to take my product to in order to get them to stock my product on their floors so that I get a foothold in the market. But if we only have one major department store, that opportunity will simply close down for many of those young fashion designers. If they have only one company to deal with, one major department store, they will be at the mercy of an anticompetitive system—as we see today with many food manufacturers supplying our two major grocery chains. I hope that the ACCC will send a very, very strong message that they would consider any such mergers between our two remaining department stores as anticompetitive.

Also with our fashion industry, we are not going to help them in the long term through tariff protections and government handouts. It would not matter what rates the tariffs are. Since we have started to reduce our tariffs, it has coincided with a period unique in world history, where China has become the workshop of the world. For many designers and footwear, even if the tariff rates were 100 per cent here in this country, we would still not be able to compete against the low wages and the economies of scale of some of the clothing manufacturers in China and other places throughout South-East Asia.

Therefore our fashion industry needs to look at developing niche markets. Rather than trying to have tariff barriers to protect us from overseas competition, companies here in Australia need to look into what niche markets they can get. With a growing Asian middle class, what products can we actually make in Australia, products of very, very high quality, and sell at the upper end of the market into Asia and to Europe and to North America? That is where the future must be for our footwear and our clothing industries.

We must remember that 98 per cent of the world's economy lies beyond our shores so those firms are actually in the industry today and, rather than looking at supplying Australia, as governments we want to encourage them to look beyond our shores. That is why, although this program is being cut, the coalition has extended the Export Development Grants Program for companies—the clothing and footwear industries, for example—to take advantage of that grants program and look to expand their products and to go offshore and market their products to the world.

There will be some companies disappointed in the termination of this program, but this is one of the things we need to do because of the unfortunate budget situation this government finds itself in. Our fashion designers and our fashion industry have a strong future. The coalition is looking at the issues that they have to address in the years to come and taking action on areas of competition and retail rentals with the Productivity Commission inquiry. I commend this bill to the House.

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