Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to 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.

Steve Irons (Swan, Liberal Party) Share this | Link to 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.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

What about cuts to the family tax benefit? Where was that?

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Swan has the call.

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

The cessation of these grants, no longer necessary due to the gradual phase down of tariffs and changes in consumer and company behaviour, is one small part in the coalition's program that aims to bring under control the debt and deficit left to us by a disastrous, shambolic Labor government.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

I thank the member for Swan for his comments. The Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014 will amend the Textile, Clothing and Footwear Investment and Innovation Programs Act 1999 to provide for the closure of the Clothing and Household Textiles Building Innovation Capability Scheme, the BIC scheme, and the Textile, Clothing and Footwear Small Business Program, which is known as the TCF Small Business Program, on 30 June 2014. I will not be supporting this bill. Let me explain why.

By proceeding with early termination the government has identified savings of $25 million from the 2015-16 funding allocation of the BIC scheme and the TCF Small Business Program, but at what cost? Government support has been provided to the textile, clothing and footwear manufacturing industry from many years. The TCF Small Business Program, which is aimed at small business, and the BIC scheme, which is aimed at medium to large businesses, were created to help the TCF manufacturing industry transition to a lower input tariff regime. Today I want to specifically speak about the impact of the early closure of the BIC scheme on Wangaratta and the electorate of Indi and in particular about the government's loss of trust to business.

As members of this House would know, TCF tariffs have been lowered in stages over many years. The tariff on clothing is now at 10 per cent and will fall to five per cent from 1 January 2015. The tariff on textiles and footwear is already five per cent and there are no plans for further reduction. Changes to tariff have had a major impact on the TCF industry in Australia, much of which takes place in rural and regional communities. I would like to take this opportunity to congratulate the industry on the tremendous job it has done in managing this change. I know it has not been without pain. Staff, owners and communities have all put their shoulders to the wheel.

The BIC scheme is aimed at fostering the development of a sustainable and internationally competitive clothing and household textile manufacturing and design industry in Australia. It does this by providing grants available on an entitlement basis for research and development, including innovative product design activities, innovative process improvements, market research and some industrial property rights expenditure. Grant payments are made in arrears for eligible activities conducted in the previous financial year. This is a significant point: grants are made in arrears. So businesses have already spent the money they claim for.

This proposal before the House today would close the TCF small business program and BIC scheme on 30 June 2014. The BIC scheme provides grant payment in arrears for eligible activities conducted in the previous 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 and 2015. It is very concerning that this will not be the case. Early termination is poor policy. It is retrospective. It sets a very bad precedent. Business acted in good faith. It sets a precedent that government policy cannot be relied on.

In Wangaratta, Bruck Textiles Technology, BTT, is a major employer and currently employs 200-plus employees. The R&D BIC scheme grant of an expected $500,000 to $700,000 supports between 15 and 17 jobs in the research and development program. I am told that this program underpins the core business of Australian Weaving Mills and its relocation to Wangaratta. The CEO of Bruck said to me:

We have already expended several millions of dollars in consolidating three businesses and co-locating all manufacturing activities in one plant in Wangaratta to take advantage of the scale economies and overhead recovery that this allowed. Obviously this makes good business sense, but it is a costly exercise and the only reason we went ahead was because the payback period became achievable by factoring in our expected returns from the BIC scheme. Of course, we have to undertake the necessary investment in innovative product development and process refinement to benefit from the scheme. But we were fully committed to doing so, confident in the knowledge that the BIC scheme would help us to position our overall business to be economically sustainable beyond the originally scheduled termination date for the scheme. But without its support it completely undermines the significant investment expenditure we had planned for our company.

He continued:

As it is, we have not received the full expected benefits from the scheme. In earlier years grant entitlements were modulated. Given that there was no modulation this year, which would suggest that the government did not pay out as much in grants as had been allocated for that year, on one hand it could be argued that companies have been short changed in earlier years and, on the other, that government has already made savings. Either way, the proposed early termination undermines the original intention even further.

Early closure will have an extremely deleterious impact on the industry overall and certainly in the case in Wangaratta it puts into serious doubt the ability of Bruck to maintain their intended level of manufacturing activity in Wangaratta. This is because, firstly it extends the payback period on the investment Bruck have already incurred—and this is something they can ill afford. Secondly, it will make future investment in innovation a more risky proposition for them.

The CEO of Bruck went on to say:

This one year window of support, which factors heavily in the business plan we are implementing, will make all the difference in our ability to maintain a sound manufacturing base in Australia!

The proposal before the House would close the TCF small business program and BIC scheme on 30 June 2014. It seems to me that the amendment before the House goes against everything that the coalition stands for, which is a serious claim to make.

Where is the support that we have been told the coalition offers for successful and innovative business? Bruck textiles is a world leader in textile and fabric research and innovation. Bruck produces quality product for some of Australia's best known brands and, importantly, the defence forces. Where are the moves from the coalition to improve business confidence?    Bruck textiles reformed their business in response to this program, and they tell me that it will make a significant difference to their confidence levels in the future. Where is the coalition commitment to remove red tape? This policy will increase the compliance and administrative burden for Bruck and other textile businesses. Where is the support for sustainable regional communities? Bruck employs 200 people in Wangaratta, a community of 17,300 people. It will have a significant impact.

Cutting this program saves $25 million. I understand the issue of the budget debt and deficit, but in the scheme of a multibillion dollar budget, which is before the House currently, $25 million is chicken feed or, should I say, just an off-cut. However, it is not an off-cut for Bruck Textiles. It is at least $500,000 and 15 jobs. On the issue of cost, the government talks about savings and that every dollar counts in these difficult financial times. How much has it cost the taxpayer to put forward this amendment bill? How much has it cost the taxpayer to hold this debate in parliament today? How much will it cost the taxpayer when this bill is fought out in the Senate? How much will it cost in loss of businesses confidence in the textiles manufacturing industry? How much will it cost the government to provide welfare payments for the people who lose their jobs as a result of the abolition of this funding? How much will it cost my community as strong and viable businesses feel the pain when the government changes programs on a whim? And who can calculate the cost of the loss of trust in government on a community?

To me, the cost of this amendment is high, too high.

The Australian economy is changing. Manufacturing is no longer the strong industry that it once was. Brucks is not an old, struggling manufacturing business; it is a viable business. It now relies on this small amount of funding because it made the decision to restructure in the knowledge that it would be eligible for it. It is one year away from completing this process.

I call on the government to reconsider this amendment bill. I call on the government to provide clear signals to the textiles manufacturing industry: do not change your mind mid-sentence. Tell the textile industry, 'We will honour our commitments under this policy. We will see it through to the end and there will be no more funding cuts.' I understand why the government no longer wants to provide funding to manufacturing industry, but I urge the government to work closely with manufacturing industries right across Australia and transition them out with trust, with confidence and with the best will of the country in mind. I call on the coalition: do not pull the rug out from under this scheme, as this bill will do. I believe this legislation is flawed and I will not be supporting it.

Craig Kelly (Hughes, Liberal Party) Share this | Link to 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.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The people who run businesses and who work in the textile, clothing and footwear sectors of Australia are already under significant pressure. There is the most obvious source of pressure that comes from countries in our region, from China and Vietnam, for instance, where people will work on incredibly low wages without the kinds of protections that people here in Australia would take for granted, without the kinds of supports for them in their retirement, and without the kinds of health and safety laws that ensure they can go home safe at the end of the day. People in Australia are competing with those who will work without those protections and who are getting paid a lot less, and then having those clothes or footwear shipped into Australia. That is one set of pressures.

Secondly, tariffs in these sectors have been coming down for some time and are scheduled to fall further. Thirdly, you have a workforce in Australia who work in these sectors. They are predominantly women, many of whom do not have English as a first language, and they work making the clothes that sell on Bourke Street in Melbourne for $200 or $300 while they are making them in backyards in Richmond or Springvale for $3 or $4 an hour. These people may find it very, very difficult to go and find work elsewhere if not supported in times of need by the government. So all of these are pressures on the textile, clothing and footwear industries in this country.

There is nonetheless a market in Australia for domestically made textiles, clothing and footwear. Many people who make patterns or designs for particular kinds of clothes that sell in shops that you see in our capital cities and shopping centres have those patterns or designs made here. Sometimes even the clothes are made here, because a lot of especially the higher end makers know that they can exercise greater quality control and can have, perhaps, a much shorter turnaround time when they get those clothes made here in Australia.

There is also a growing market for clothes that are ethically produced. People want to know that the reason they are buying cheap clothes is not that someone working in a factory in Bangladesh where the roof may fall in at any moment is making them at near poverty level wages. There are people who increasingly will say, 'Provided that I can be assured that the clothes that I am buying are being made by people who are being properly looked after, who will end their working lives with superannuation and who will be looked after if they have an accident at work—provided all of that—I am happy to pay a premium for that, if I can be assured that they are being ethically made.'

Of course, there is also a strong market—especially if government gets behind it—for specialist clothes made here in Australia, like some uniforms or some equipment that people in some of our essential services might use. Governments around the country have enormous capacity to support those industries and those jobs here through their procurement policies.

So, yes, there are the global pressures that many have spoken about, but, yes, there is hope. But this government seems to be determined to do everything it possibly can to snuff out that hope and not to ensure that what could be a good, albeit small, important section of manufacturing in Australia survives. This government seems to be determined, in this instance for the sake of $25 million, to send a number of small businesses to the wall and to say to the people who work for them: 'We don't mind if you're someone in your 50s who has English as a second language; you're now on your own. Good luck going and finding a job.'

When one looks at this bill in the context of the other things the government is doing, one can see that this is a government that is actually out to attack small businesses in this sector and to attack the prospect of high-end advanced manufacturing in the textile, clothing and footwear areas in Australia. We have seen, first of all, the abolition of the Fair Work Principles that required the businesses tendering for government contracts to comply with the Fair Work Act. So, whereas previously the government in Australia said, 'When we're spending taxpayers' money, we'll make sure that we're spending it ethically,' now that does not have to happen. That does not have to happen anymore at all. So the government itself has delivered a body blow to ethical manufacturing in Australia.

It has compounded that by removing all the funding to Ethical Clothing Australia. Ethical Clothing Australia was a body that allowed consumers to make an informed choice. Otherwise, you turn up and you buy your clothes off the rack in a shopping centre or in a small designer store, and you do not know the process by which they have been made before they come to you. Ethical Clothing Australia was a way of saying, 'We'll put some integrity into the supply chain so that you can be assured that your clothes are being made ethically, and then it's up to you.' But even that step of allowing consumers to be informed was far too much for this Liberal government. It would much rather that we pull a veil over the conditions under which clothes are made or purchased in this country so that you just do not know whether it has been done by someone who will now get workers compensation or done by someone in a factory in Vietnam, China or Bangladesh.

We have seen the review of the Fair Work Amendment (Textile, Clothing and Footwear Industry) Act. These protections have been built up for many years to protect these people, predominantly women, who are working—often because they cannot find work elsewhere—as so-called independent contractors, getting a few dollars an hour without workers compensation, superannuation, holiday pay or sick pay. All of these protections that are there to ensure that we do not have Third World working conditions here in Australia are also on the chopping block from this government. Then we have seen the early termination of the Textile, Clothing and Footwear Structural Adjustment Program and the access and advocacy project in 2013 to 2015.

As I have alluded to before, we are dealing here with a workforce of people who are skilled but who may find it incredibly difficult to move into other jobs. When you have an industry in transition, there are two things that are important to do. One is to help businesses continue, perhaps by reorienting or perhaps by innovating better, so that they can be an ongoing source of employment—and the government is attacking that. The second thing that you can do is say to the workers in those industries, 'You will have a much better chance of finding another job if you're retrained while you're in an existing job.' But this government is much more interested in throwing these people onto the scrap heap, onto Newstart, below the poverty level, rather than helping them to find, from their existing job, a new job to transition into.

This is going to be incredibly difficult for the women who are over 50 from Vietnamese or Chinese backgrounds, who may struggle with English, who have been potentially doing this all their lives and who are now going to be forced to go and find work elsewhere. I tell you what, Deputy Speaker: these are people who are not going to have massive superannuation payments. They probably have none at all because they have been forced to work as independent contractors for most of their lives. These are people who now this government is turning a blind eye to.

And then on top of that we have this bill, which, for the sake of a paltry $25 million, brings a program to an end a year early—a massive saving of $25 million to bring a program to an end a year early!—which is going to have a huge impact on businesses because the businesses who were on the receiving end of this money are businesses for whom this actually counts as quite a lot. We are not talking here about huge multinationals getting big grants. We are talking about small businesses trying to find a new niche for themselves in a sector that is under incredible pressure, now, for the sake of $25 million, being forced to reconsider whether they can continue at all.

It is a crime, because in large part the way that these payments were paid under this program required these businesses to invest up-front. So you have got a lot of businesses who said: 'We can see the writing on the wall. We can see we need to innovate. We can see we need to find niche markets. We will now invest in that innovation. We will invest in that research. We will think of ways of doing business doing differently so that we can stand on our own two feet when tariffs are removed and there are no more subsidies.' They are in the process of doing that, they have spent the money for it and this government comes along and says: 'Bad luck. We know that you thought you might get some return from the government and a bit of help to continue in a difficult environment, but we're going to take it away from you, all for the sake of $25 million and all so that we can end this program a year early.'

This government is quite happy to help out industries in other sectors. When it comes to mining, it is quite happy to say, 'We'll continue to give you $13 billion of subsidies.' It is quite happy to say, 'We'll take away a mining tax that's actually starting to raise some revenue.' It is quite happy to do that. When it comes to the banks, although the IMF has said that the big banks get somewhere between $2 billion and $3 billion worth of subsidies every year, the government is quite happy to say, 'We'll keep giving you those.' If you happen to be running a chocolate-manufacturing plant in Tasmania, the government is quite happy to give you a bit of money there as well. But it is not happy to do so if you are a small business that is trying to do the right thing and innovate and ensure that you have a future when there are no more tariffs, or if you are a worker in that sector who is thinking, 'How am I going to find a job, given that this is something I have done all my life and I can see the industry dwindling in front of me? I would much rather my employer was able to have a future.' For the sake of $25 million—not much more than it gave to Cadburys—this government is quite prepared to turn its back on those small businesses in textile, clothing and footwear in this country.

The government has made a mistake on this one. The Greens will not be supporting this bill. This will be one of the budget measures that is blocked in the Senate. I hope that the government takes that as a sign that perhaps there are better ways to look for budget savings than hitting small businesses who have done the right thing and who are potentially going to be out of pocket because they have already invested in innovation, in the hope of being able to continue in the future. This bill will be blocked in the Senate. The government has then got two choices. It can say: 'We'll admit that we did the wrong thing on that front. Actually we will support small businesses who are trying to do the right thing in the textile, clothing and footwear sector, and we will support workers. We'll just let this one go through to the keeper and chalk it up as experience.' This is what happens when ideological zealotry oversteps the mark and turns into an attack on small business, because that is what this bill is. Alternatively, the government can try and do deals after 1 July with whoever else might be there in the Senate, in an attempt to get this through.

You start to wonder what is going to happen after 1 July. What deals is the government going to do? Are we going to see four-wheel drives in national parks in return for cutting funding to small business? What other far-right so-called freedoms are the government going to give in return for cutting funding to some of the most poorly paid workers in this country, who need support? My fervent hope is that the government cops it on the chin when this bill is blocked in the Senate and just says: 'It's $25 million. In the context of the budget, that is not a lot of money and it is far better spent by those small businesses who are trying to do the right thing by their workers and by the country by carving out a niche in a very competitive industry, in a very competitive global environment.'

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014, as it is emblematic of what this government is all about and emblematic of what Liberals are all about. It is about an end to corporate welfare. Corporate welfare has to end today. The age of entitlement is over. There is no going back. No matter how the whingers-in-chief opposite would like to fantasise, there is no other road, no other option. This bill is indicative of the only game in town.

I would like to take this opportunity to educate members opposite, or anyone with the malady of a Labor mindset: free trade is the only game in town. The history of the world has given us one very clear lesson. That lesson is that the best way to help our fellow Australians is to grow the pie, not fret over who gets the biggest slice. We want to guarantee that everyone gets a slice and that the slices get bigger every single year. Like the old adage goes: a rising tide lifts all boats.

On the specifics of the bill—before I move into a broader, more discursive schooling of Labor Luddites—the Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014 will amend the Textile, Clothing, and Footwear Investment and Innovation Programs Act 1999 to provide for the closure of the Clothing and Household Textile Building Innovative Capability Scheme, or BIC scheme, and the Textiles, Clothing and Footwear Small Business Program, TCF SBP, on 30 June 2014.

The industry and innovation creativity of this government has identified page after page of savings—millions and millions of dollars of savings. By trusting people, by trusting the magic of the market, this Liberal government will save $25 million, as a start from 2015-2016, by moving to greater free trade in the textile area.

Government funding support has been provided to the textile, clothing, and footwear manufacturing industry for many years. Well, that game is over. There is a new team in charge. It is time for the ending of corporate welfarism, just as effectively and brilliantly as we are ending welfare careerism in the social sphere. The social welfare system should never be a career choice for anyone, be they in business or in the social community. There is a contract, a social contract. Our government will restore integrity and trust in the contract between government and business.

Textile, Clothing and Footwear—herein TCF, TCFS—tariffs have been lowered, in stages, over many years. The tariff on clothing is now 10 per cent and this will fall to five per cent on 1 January 2015. The tariff on textiles and footwear is already five per cent. In many cases these tariffs are already effectively further reduced by the range of trade agreements Australia is party to and by concessions provided to some trading partners which qualify under developing country status.

Let me be clear: I welcome and congratulate the government, and especially the Minister for Trade, for his industry perseverance and vision. For the minister knows that rear-view-mirror investing and rear-view-mirror policymaking, much like the whole Labor movement, should be put on the scrap heap of history.

One cannot plan the next 50 years on what happened in the last 50 years. Liberals know this and have a plan. How ironic, then, is it that the only plan that is sustainable, given how much Labor and their masters the Greens crow about sustainability, is the Liberal plan? Sustainable economic policy means becoming economic in the sphere in which you operate, gaining comparative advantage and exploiting that advantage through trade. That is the only way. It should not come as a revelation to Labor members. This basic common sense was put into that wonderful book by Adam Smith The Wealth of Nations, in 1776. 1776! The Labor Party have had 238 years to get the message. And they still do not get it. Why else are they still insisting their members swear their loyalty to enacting socialisation of industry? The only game in town is free trade. However, I am not foolhardy. I know that some countries have trade barriers and often so have many of our regional trading partners. They have conditions and tariffs on our products. But the solution this government has on the table is one that looks to the future, not to the past. We work to get all our regional partners inside the free-trade boat. Remember those rising tides! That is what is happening today with the talks in relation to Trans-Pacific Partnership. This is a sustainable and forward-looking plan. What is the alternative?

Let us examine it for the sake of fun. We continue to honour Gresham's law that you cannot throw good money after bad. Uneconomic enterprises today will only become more uneconomic tomorrow. This will hold true if there is a fundamental systemic issue and, if no restructuring has occurred, why should anything be different? That is the definition of madness: repeating the same experiment time and again, hoping for a different result.

So we could continue the Labor madness and continue to prove right a dead economist. That would prop up jobs in the union-heavy electorates in which these Labor members squat. It cannot be stated loudly or clearly enough. It is one thing to burn money when it is your own money; it is another thing to burn money when it is borrowed money. And this is the public's money.

Even if this government wanted to just give money to rickety old workshops in Victoria, because that is what governments have always done, where is that money going to come from? Thanks to the former Labor government, our nation is drowning in a sea of red, with debt and deficits as far as the eye can see—wave after wave. Each month we go cap in hand to the world, just to keep the lights on. That is the Labor legacy. Every single month Australia is borrowing $l billion, just to pay the interest on Labor's debt—that is, a family of four paying $2,000 annually just to pay the interest on the debt that Labor foisted on the Australian people. So how does it make sense to borrow even more money to give it out in corporate welfare? It does not, it never has and it never will. I could not be happier that, in the Prime Minister and Treasurer, we have a team that have the moral courage and testicular fortitude to call time on this nonsense.

There is no way that the Australian government, either this one or any other coalition government, could happily look any voter in the eye and say that $1 billion in interest every month is money well spent. Dreaming! Labor need to get their head out of the first-class clouds and their hands out of the unions' pocket. They need to wake up to the economic realities of the 21st century. Socialism is dead and there is only one game in town.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

The previous speaker is a very interesting person to follow and I think he speaks to the very big difference between this side of politics and the other side. The fact is that we cannot trust the market; there is a role for government to play in the market to ensure that we have a fair market. The previous speaker said that we need to trust in the magic of the market. There is no magic of the market. There is no such thing as magic. Magic is quite often a con, an illusion, people pulling a trick or playing a game, it is entertainment. To suggest that our market should be based on this notion of magic shows that for those opposite it is not serious about the important role that government has to play to ensure we are building strong, ethical businesses and we are building strong, ethical industry, and to ensure that we have with that good jobs that underpin it.

This bill seeks to amend the Textile, Clothing and Footwear Investment and Innovation Program. If passed, it will result in the closure of the Clothing and Household Textiles Building Innovative Capacity Scheme as well as the Textile, Clothing and Footwear Small Business Program. These programs are designed to help rebuild a strong textiles industry in Australia and there is a role for government to play. I was surprised to learn that there are still 44,000 Australians employed in the textile industries, yet the common belief in the community is that our textile industries are gone. They may have been gone from sight but they are still there, though not in the big factories that we used to have. Today they are in people's garages, today they are in people's homes. What we have seen in the textiles industry, in this 'magic of the market' environment and this push to compete with countries that we cannot possibly compete with, is that people no longer work for a solid company and a solid employer but work on their own as a subcontractor and being paid by the piece and not by the hour. Closing these programs early means a small saving for the government of $25 million but it will have a huge impact on an industry trying to rebuild and re-create its place in Australia. I thought one of the roles of government was to help create jobs. We hear from the other side all the time, 'Don't worry, you'll get a better job. Don't worry, you'll find another job.' But what jobs? Every single programs that was introduced by the former government to build jobs, to create secure jobs, is being torn apart and taken down piece by piece by this government.

The Clothing and Household Textiles Building Innovative Capacity Scheme was about innovation. It was about developing a sustainable and internationally competitive manufacturing and design industry for clothing and household textiles in Australia. In my own electorate we have had one of our manufacturers benefit from this particular scheme. ADA, which employs about 105 people in its Bendigo factory, manufactures clothing that our police wear, the clothing that our emergency services wear, protective clothing that our armed forces wear when on deployment and at home. They have also recently developed, produced and manufactured the uniforms and clothing which our Commonwealth Games team will wear this year. ADA is an example of an opportunity that we have within this industry, but it will only happen and continue to grow if we have innovative schemes and programs like the ones this bill seeks to delete.

Payments of the grants are retrospective. They are based on investment decisions that firms have already made. So it is not about giving money and then seeing the investment, it is about saying, 'You did the good work, it has worked, and here is the grant.' The grants are available for research and development and include innovation, production and design. It is not a corporate handout and corporate welfare, as the other side suggests. It encourages funding for research, development and innovation, and that is exactly the space that our government should be in, supporting industry to innovate, supporting the research and development. It is not a corporate handout at all.

Cutting out the small business program is another whack that I just cannot understand coming from a government that claims to be the champion of small businesses. Small business grants provide grants of up to $50,000 for projects to improve business enterprise and the culture of textiles, clothing and footwear businesses. This fund in 2012-13 provided almost $3 million for 74 innovation textiles, clothing and footwear businesses. That is 74 businesses that did not receive a corporate handout but got support from the former government from this grants program to ensure that they are innovating and that they are growing. If we want small business to continue to create jobs then we have a role to play with responsible and sensible investment to support those jobs. These grants were available to small businesses with fewer than 20 employees but with a minimum turnover of $100,000, so we are not talking about our large companies like ADA, we are talking about our smaller companies. This program helped create job security, it helped create jobs that you could count on. On this side we acknowledge that we need to have strong industry if we are to have strong businesses, and if we have strong businesses then we have secure jobs that people can count on. There is a strong role for the government to play in helping to create industry and ensuring that we have good, secure jobs as part of that industry plan.

Who will be affected by these changes? I have mentioned that it will hurt small businesses. I have mentioned that it will hurt larger businesses. It will also hurt the people who work in this industry and those hidden workers who work for piece rates. These workers are quite often from non-English speaking backgrounds, have quite good skills and work from home. Because they are not paid well and do not have good working conditions, they have to make do on very, very low wages. I will give some examples about who we are talking about. The other side like to beat this up and say that this is a protection racket for unionists and that it is about big handouts to unions. It is not; it is a grants assistance program that helps businesses that see a future in ethical textiles. It is about supporting the businesses that want to directly employ people so that their workers and their supply chain are not exploited.

I will talk about Mia. Mia works as an outworker for a company accredited to Ethical Clothing Australia. She has been working in the industry over 10 years and for the first time in her life Mia has received annual leave and leave loading from her employer. This is why it is so important that we see the re-establishment of an ethically strong textiles industry to ensure that the workers in the industry get back the rights that so many of us have and that they have lost. Because Mia is now acknowledged as an employee, as well as annual leave there are a number of other entitlements that Mia has received. She has received back pay. She is no longer underpaid. She actually gets pay slips for the first time as well as superannuation and workcover.

It seems to be a goal of this government to stop people from being employed directly by an employer and to see as many people become their own small business or enterprise and to be outsourced. It is important that workers are acknowledged as workers and that they receive proper entitlements. That is what we need an industry plan for in this area. We need to ensure that these 44,000 people are recognised as employees not as subcontractors, not as outworkers and not as people who are paid by the piece, and that they are treated as employees with the associated conditions that come with being an employee. That is why it is also important that government supports the employers that wish to rebuild the industry. That is why it is also important that government supports the industry.

Another example of the sham contracting and underpayment that occurs in the industry comes from Lyn, who is a highly skilled outworker. She who has also worked in clothing manufacturing for over 10 years past. Despite her skills, she was paid significantly below the minimum award rate. She was paid as little as $10 per hour. Because of her family situation, Lyn needed to work from home. She has a son with a disability. Lyn's employer sought ethical clothing accreditation and in conjunction with the compliance of an audit, Lyn raised a number of issues, which were able to be resolved through Ethical Clothing Australia. Lyn is now paid properly and in accordance with the minimum conditions. These are real people in our communities, real people who will be affected by the changes that are before the House. It may sound like a small change and it may sound like it is just a fund that is being deleted, but this fund was helping to rebuild an industry in Australia. It is not a corporate handout.

At a time when we are facing the loss of our car manufacturing sector and the loss of other manufacturing sectors, we need to look for opportunities and the future of manufacturing jobs. Given that there are 44,000 people still employed in the Australian textiles industry, it is the role of government, I believe, to help that industry grow. It is the role of government to support through innovation, just like this program, not through handouts but by providing innovation grants that support the businesses that do want to do the right thing and make sure that their employees receive the wages and conditions that they are entitled to and that they are able to grow their businesses.

I will finish on ADA, a business that provides employment in my electorate. ADA employ just over 100 people. The material that they manufacture is used by other ADA businesses as well as other manufacturers around the country. It is about the supply chain. It is about ensuring that wherever possible we start to buy local. Buying local and ensuring that we have the supply chain secured not only helps create jobs but also helps to secure and create industries. Yes, we are competing in the global market but we must always put ethics and ethical trading at the top of that.

The government are delusional if they believe that we can compete with the low wages and the unorganised workplaces of Asia. What we can compete on is quality and ensuring that our supply chain is secure and ethical. ADA is one of the companies that have signed up to this program and they have gone further. Previously, they had imported their ceramic material. However, with the CSIRO they are now trying to develop that product locally. CSIRO is another organisation hit hard by this government in its budget. It is clear not just from the abolition of this grant scheme and the measures in this bill but from the government's whole approach to industry that they do not have a plan and wish to just tear it up. They believe that the role of government is to leave it to the magic of the market. It is wrong. It is wrong to suggest that government do not have a role to play in ensuring that we have strong, competitive and ethical industries.

Josh Frydenberg (Kooyong, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

It is my pleasure to stand up on behalf of the Minister for Industry and to provide the summing up on this bill, and to speak in favour of the Textile, Clothing and Footwear Investment and Innovation Programs Amendment Bill 2014. The bill amends the Textile, Clothing and Footwear Investment and Innovation Programs Act 1999, to close both the TCF Small Business Program, known as TCFSBP, and the Clothing and Household Textile (Building Innovative Capability) scheme, known as the BIC scheme, on 30 June 2014, which will deliver savings to the budget of $25 million in 2015-16.

I must congratulate my colleagues, the member for Tangney, the member for Swan and the member for Hughes for their enlightened contributions to this debate. But I also must point out that some of those members opposite made some mistakes in their speeches to this House on this bill. For example, the member for Indi said that businesses that undertake activities under the BIC scheme will not be reimbursed for their activities in 2013-14; that is not correct. They will get some reimbursement for those activities. The member for Melbourne said that the BIC scheme was for small business; he is wrong. The BIC scheme is for big business, and there is the SBP scheme which is actually for small business.

But I think the point that we need to reinforce in this place is that these original programs were put in place to ensure a transition to a lower-tariff regime, and since 2001-02 the Commonwealth has provided, in grants, over $1.2 billion in taxpayers' money for the TCF industry—a very considerable sum of money over an extended period of time. But now is the time to take the hard decisions to repay Labor's debt and to bring the budget back into balance.

Those opposite can put their heads in the sand and pretend that we do not have to take any tough decisions. But you know what? Every independent authority is telling this government: 'You have to take tough decisions,' to repay Labor's debt and to wind back some of the spending commitments that our political predecessors gave us. The International Monetary Fund has told us that, of 17 advanced economies in the world, Australia has the fastest rate of spending. The independent Parliamentary Budget Office has said that we have massive spending commitments that also need to be pulled back. Then you had the Commission of Audit, which said that business as usual is not an option. This is a result of the $667 billion debt legacy that you bequeathed the Abbott coalition government.

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

On your imaginary figures.

Josh Frydenberg (Kooyong, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

That is an imaginary figure, is it—$667 billion?

Sharon Bird (Cunningham, Australian Labor Party, Shadow Minister for Vocational Education) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I would ask that the member speak through the chair, and not accuse you of things I am sure you have not done!

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member.

Josh Frydenberg (Kooyong, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I notice that the Acting Deputy Speaker is a member of our political opponents' team, and our political opponents, Mr Acting Deputy Speaker, are responsible for leaving a massive debt legacy which we have to repay, and in the most recent budget, of which the measures in this bill form part, we are making an effort to pay back some of that debt. Nearly $300 billion will be paid back over the next 10 years, reducing the interest bill for the Australian people by around $16 billion a year. That is an extremely significant inroad into the mountain of debt that we were left. If you want to make spending commitments around Gonski or the National Disability Insurance Scheme or to put in place new major road projects, you need to remove some of this debt burden. You need to pay back some of the interest bill on that debt which currently stands at $1 billion every month. So we have had to take tough decisions, and we are prepared to wear some criticisms for those because we know it is in the long-term interests of the Australian people.

We do want to increase the competitiveness of our manufacturing industry in this country, because it is an important sector. The member for Bendigo spoke in opposition to this bill—well, she knows about the Bushmaster vehicles which have been a great product coming out of her own electorate, and that is because they are innovative, and that is because they are seeking export markets, particularly in Asia, and that is because we, as a government, are trying to create an environment which is conducive to that form of business.

So we are going to reduce the overall tax burden by removing the carbon tax and the mining tax and by cutting company tax. We are cutting a billion dollars a year in red and green tape right across the economy, to help make our manufacturing industry more profitable and more competitive, and we are looking for opportunities to reach free trade agreements with our major trading partners so as to open new export markets for our businesses—that is how we go about creating the millions of new jobs that we want.

We have a perfect role model for our approach to improving the economy, and that was the legacy of the Howard-Costello years, which gave us more than two million new jobs, which gave our country an increase of more than 20 per cent in real wages, and which brought unemployment and inflation down to the lowest level in decades. That was the record of the last coalition government. And now the Abbott coalition government, with the hard work of our Treasurer, the member for North Sydney, will go about this job of paying back Labor's debt. So we have taken the tough decisions, and one of the tough decisions is in the bill before us, but it will give us that $25 million saving which is so important to paying back Labor's debt.

I also want to point out to the House that we are closing some of these TCF programs but we are also putting in place a $484 million new Entrepreneurs' Infrastructure Program, which will be conducted through a single business service. So we are reinvesting in entrepreneurship in this country, we are cutting red tape, we are reducing the overall tax burden and we are trying to create a more and more efficient and effective industrial relations climate. By doing that we will create hundreds of thousands and, in time, millions of new jobs.

I want to remind the House that the Australian taxpayer, since 2001-02, has provided over $1.2 billion of its precious capital in supporting the TCF industry. This bill removes some programs which were put in place to transition to a lower-tariff environment. That job has been done and now we are trying to find savings to deal with the massive debt and deficit legacy that was bequeathed to us to by our political opponents. I commend this bill to the House.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

The question is that the bill be read a second time.