Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I present a ministerial statement in relation to manufacturing. I seek leave to move a motion in relation to the document.

Leave granted.

I move:

That the Senate take note of the statement.

Our nation is facing an historic shift, the like of which we have not seen in two generations. Australia is in the process of recreating itself, building a new society fit for the challenges of the 21st century.

  This is a transition we must embrace. This is our time to retool our industries, to reskill our people, to build a new economy on a new type of manufacturing.

Late in 2008, our industries were hit by the global financial crisis. The government took prompt action to safeguard the financial system and provided much-needed support through its own spending. It is now widely accepted that the combination of prompt government action and the underlying resilience of the Australia economy stood us in good stead. Unlike almost all developed countries, we avoided recession and we have a strong growth outlook.

Developing countries in our region like China and India were also able to negotiate the crisis. They too have resumed growth. Their rebound has been so strong that commodity prices have surged, bringing a dramatic increase to our national income and sparking a new investment boom.

Global investors like the Australian dollar, they like our growth prospects, they like our low levels of government debt and they like this government's record of economic management. All of this is of great net benefit to Australia but it has also brought challenges. Driven by the resources boom the real exchange rate has moved some 45 per cent in the space of two years. The speed and the duration of the climb have been unprecedented.

Many manufacturers have found the higher exchange rate extremely difficult to handle. The rate of change has been so rapid that many have simply not had the time to adjust their business models. On top of the exchange rate there are now growing concerns about the sustainability of the world recovery. There has been a sharp decline in equity markets around the world, prompted by debt concerns in Europe and growing doubts about the strength of the recovery in the United States.

Normally doubts about the world economy would lead to downward pressure on the Australian dollar but on this occasion the effect has been muted. Our strong economic outlook is simply out of kilter with the rest of the developed world. The cash rate in Australia now stands at 4.75 per cent. In the United States and Japan it is effectively zero.

The government has been urged to direct the Reserve Bank to intervene in the foreign exchange market or to remove its independence on monetary policy. We will not take that course.

What, then, are our choices? If we do nothing, we sacrifice the manufacturing capabilities of this country which have been built up over generations. We deal with distressed companies as best we can, using what fiscal flexibility is available. Or we could decide to transform our economy, firm by firm and region by region, through science and innovation.

The government has taken the third course, and I reaffirm our commitment to that path today. We are modernising the telecommunications system. We are rebuild­ing rail and port infrastructure. We are investing heavily in training and skills. We are strengthening and upholding anti­dumping protections. We are using the taxation system to stimulate business investment. We are leading the nation's transition to a clean energy future.

This is a comprehensive agenda for a new Australia: a nation that can generate jobs and opportunities for all. If we want to harness that potential, we need to change the way Australians do business. We need to put innovation at the heart of every firm.

As my department's Australian Innovation System Report 2011 makes clear, innovation-active businesses are much more likely to raise productivity, boost their profits and put new employees on the payroll. That is acknowledged by our competitors overseas.

The Chinese, for example, have made it clear that taking growth to the next level will require major investments in science and research. And that is exactly what they are doing. China's expenditure on R&D has multiplied by a factor of six in the space of a decade. China is doubling its R&D effort every five years.

And it is not just China that sees science and innovation as the driver of economic progress and prosperity. India and the EU are committed to major investments, with indi­vidual countries like Sweden and Germany embarking on extremely aggressive programs. Universities and research agencies have moved to the front line of the innovation battle being waged all over the world. Australia is ready to keep pace.

Since Labor came to office in 2007, we have been doing the work this nation needs to drive industry up the global value chain. I am proud that the government is now spending $9.4 billion on R&D and innovation, which is 43 per cent greater than the level we inherited when we came to office—and of that $9.4 billion, more than one-third finances our university research.

We are calling on Australia's universities and research agencies to be more responsive to the communities that sustain them. Their partnerships with industry are the key to the businesses and jobs of the new Australia.

But this is not a challenge we expect our people to shoulder alone, least of all in the current fiscal circumstances. We are here to back firms who are prepared to back themselves.

The taxation system is one of the most powerful levers we have to encourage innovative firms and we will harness it to the best possible effect.

The government's new R&D tax credit will give Australia a tax incentive for the 21st century. It will support more companies at a more generous rate, at a time when they need it most.

We will also strip the current deterrence for companies which wish to locate their intellectual property rights offshore, encouraging global investment in Australian research.

If we want to compete for global investment, we must have world class research precincts. Global innovation precincts have the critical mass needed to tackle complex problems. They are places with an exciting creative culture that bring out the very best in exceptional people.

Global scale innovation precincts can develop spontaneously, as they have done in some countries like the United States where they have large scale and deep research resources, but it does not happen as a rule. But for smaller countries like Australia it does not happen by chance. It happens by choice, and this is a choice that Australia has to make.

To illustrate our potential, we need look no further than the CSIRO, one of the top 10 applied research agencies in the world.

With the active support of the govern­ment, researchers and industry, the CSIRO has identified five innovation precincts of global scale in Australia. The CSIRO will co-locate with universities and other partners at these locations.

The CSIRO has also identified seven other national scale innovation centres with strong potential and it should be our shared objective to build them into global centres.

But it is not enough just to generate good ideas. We need to equip firms to take them forward and to deal with the inevitable difficulties that any business has to overcome if they are to expand. In this regard, I am proud of Enterprise Connect and Commercialisation Australia, two of the programs that the Labor government has set up to help small and medium sized business. We are building the capabilities and partnerships that industry needs to transform. We are making Australia a place where ideas become commercial realities. This is the platform on which the government will build Australia's Clean Energy Future. This is the next phase of our journey to a richer, fairer and greener economy, a journey Labor resolved to make when we first took office.

$1 billion will be invested through two new clean technology investment innovation programs to support innovation in the manufacturing industry for the future. At the same time the $10 billion Clean Energy Finance Corporation will provide a major stimulus to the commercialisation and deployment of renewable energy, energy efficiency and low-pollution technologies.

Together, these programs will galvanise Australia's innovation system with new investments and new momentum. That does not mean that change will be easy or swift. These are incredibly challenging times. The government stands shoulder to shoulder with companies like BlueScope Steel, working to restructure their businesses over a short pace of time. We will face these transitions together and we will emerge with a stronger economy, with a vibrant manufacturing sector able to create quality and secure jobs for the whole community.

This is the nation we choose to build, with and for the Australian people. I commend the statement to the chamber.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

This statement to the Senate comes with a really bad odour to it. It is a statement of fear with panic written all over it. The statement is more about the minister trying to convince himself that everything is okay and trying to convince some in his party that everything is okay. It is a statement that is absolutely devoid of anything new. This government has a major problem. It has a very significant problem. It is that nobody trusts them anymore. They have no credibility. They have lost the confidence of the Australian community, the Australian investment community, the manufacturing sector and industry generally. They are a government that has become, quite frankly, a sovereign risk.

When major manufacturers in this country tell me that they have opened their books and their plans for the future for the next 10 years to this government and they have invested in accordance with the promises made to them by this government, only to have the rug pulled out from underneath them, they then ask me, 'Why should we continue to invest in this country? Why should we continue to believe it when the government tells us what its intentions for this nation and for the manufacturing sector might be?' They tell me that their corporate headquarters ask, 'What is going on in Australia that we can give you the go-ahead to invest, based on a promise given to us in The Lodge in Canberra, and then the promise doesn't last three or four years?' Why should they continue to invest here on the basis of that?

This is the climate that this government has created through its complete and utter mismanagement of the Australian economy: no trust and no credibility and they have completely lost the confidence of Australian industry and the investment community. I will put a few things on the record: more than 105,000 manufacturing jobs lost over the last three years, 620 jobs a week on average; a reduction in the total number of manufacturing workers in Australia to under one million, the worst figure since ABS figures were kept; at least 24 separate monthly contractions in manufacturing activity since Labor came into office.

Over the weekend we heard on Insiders on Sunday morning that this was going to be a bad week for manufacturing. That was the prediction of Phil Coorey on Sunday. On Monday morning we woke up to hear of a thousand jobs going at BlueScope Steel and on Monday morning the Treasurer said that there would be some more action in the week and 'it's our intention to match our capabilities with opportunities'. The Prime Minister even gave an indication of something big when she said 'we'll have something more to say about the advocacy for Australian industry during the course of this week'. And what do we get? We get Peter Beattie. That is all the Australian government has to offer Australian industry: Peter Beattie standing alongside Minister Carr as industries they slide backwards.

Minister Carr said in his presentation a few moments ago that they are modernising the telecommunications system. Well, that is not going to occur until 2020. And they are rebuilding rail and port infrastructure. But they do not have a finite plan. So I take the time to look on the Infrastructure Australia website for plans but it refers me across to the Treasury website and it says that those plans are not finalised yet! They are acting on antidumping but they are making some small changes at the margins at this stage and we are yet to see the rest of the government's agenda on that. And they say they making use of the taxation system— and we saw the passing of legislation yesterday—but industry are not as confident as the government as to the impact of the measures, and we will have to wait and see what happens with those. Then, of course, they say they are leading the nation's transition to a clean-energy future. But what is that code for? That is code for a carbon tax. We know that there are enormous stresses on the economy at the moment; we know that and we all understand that. The dollar is a significant issue and there are significant structural changes occurring in industry. But the minister's statement brings absolutely nothing new to give any confidence to anyone in industry. It is simply a regurgitation of what has gone before. So what they are doing, when things are really tough, is to impose yet more cost, a greater impost on industry in this country, and they expect industry to be prepared to accept that.

I do not understand the thinking of the government. Having gone through all of the issues, experienced all of those terrible statistics—105,000 manufacturing jobs lost over the last three years at the rate of 620 a week—the government's response is to add more to the cost of business in Australia when their major competitors are not suffering that. Is it any wonder that businesses have no confidence in Australia as an investment destination? Then we hear from industry that the assistance that is being offered by the government in compensation for this additional tax, the carbon tax, is like 'a bandaid on a bullet wound'. Industry has no confidence in what this government has to offer and it is no wonder that the minister is here trying to convince himself and some of his back bench that there might be some future for the industry.

I took the time to look around my home state of Tasmania and the impact since this minister came to office on manufacturing. Having done that, I thought, 'Let's take it a little further.' The major players who have had a significant impact are BlueScope Steel—and we have already had a discussion about the desperate situation there where 1,000 jobs are to go; Tascott Templeton, the last carpet manufacture of its type in Australia, which closed last year; McCain, which has moved all of its vegetable processing out of Australia and to New Zealand; and ACL Bearings in Launceston which made the announcement yesterday of another 30 jobs to go. We have heard about One Steel and PaperlinX, or Australian Paper, which has closed both its Wesley Vale and Burnie plants. We have got Bosch making decisions, as well as Golden Circle, SPC Ardmona and Ford at Broadmeadow and Geelong. Schweppes is looking very closely at its operations. Kingwall Manufacturing expect to offer redundancies in the next couple of weeks—so that is something else coming down the line. There is Boral Plywood in Ipswich. Crest Curtains and Blinds have knocked 10 per cent off their staff and are outsourcing to Asia. Heinz Australia have plants in Girgarre, Wagga Wagga and Brisbane. Austral Shipping has left Tasmania and sacked more than 100 workers. BHP Billiton has closed the Ravensthorpe nickel mine. Other major players are Pacific Brands, Bridgestone's Adelaide plant, Visicorp at Taree and Mitsubishi in Adelaide. National Foods have undergone a major restructuring of their operations. The list goes on and on. Yet we get from this government a ministerial statement that effectively restates the same story. It talks about manufacturing and future operations for the 21st century. The Australian people are tired of the rhetoric, the same old stories. It is little wonder that they have lost confidence, they have lost trust and that industry in this country is seriously reconsidering whether this nation has an investment future.

The government needs to do better than just rhetoric. It really does seriously need to lift its game if it is going to win that confidence back. It needs to offer more than a ministerial statement and Peter Beattie as a solution to the current manufacturing crisis in this country. It really does need to do better. My fear is that, with that complete and utter lack of confidence, it is not going to be able to do it.

Question agreed to.