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John Watson,
Senator for Tasmania
First Speech - 08/11/1978Mr President, I wish to congratulate you on your re-election as
President. I am aware of the qualities of impartiality, sense of dignity and respect
of individual differences that you bring to this high office. I also wish to congratulate
my fellow new senators on the success they have had in representing their States
and their parties in this chamber. May we all work together in harmony to achieve
tolerance, assistance to those in need and security for present and future Australians. I
am deeply conscious of the duties required of a senator and of the contributions
made by my predecessors. I particularly wish to refer to the Honourable Sir Reginald
Wright who, for 29 years, untiringly fought to uphold legal and constitutional
propriety and sought to maintain the Senate as a strict House of review. His utterings
were not always popular but his speeches were thought-provoking and his messages
were clear. As a new senator I recognise that my obligations extend far wider
than to the people who directly elected
me as I now have responsibilities
to the whole community of Tasmania - a State that I am proud to represent. In
this southern-most State the feelings of kinship are generally strong and protection
from the dictates of the decision-makers of the more greatly populated mainland
areas is sometimes required. It is for this reason that the Tasmanian contingent
from both sides in each House is often a vocal one. Regrettably, to some, the
glitter of the Tasmanian 'Emerald Isle' is a little tarnished at the moment not
only by government actions but also by corporate decisions because demands of
profits have caused certain established companies to leave the State, all too
frequently neglecting obligations to employees and townsfolk in decentralised
areas. The vacuum causes difficulties as alternative job opportunities are frequently
lacking and labour mobility is low. Displaced persons in such situations find
themselves with either no employment or a job where their capabilities far exceed
those required of the positi
on. Naturally morale in such an environment is
not always high. In this setting I mention the closure of Kelsall and Kemp,
regarded for many years as the finest woollen mill in Australia. This is one of
the reasons for my presence in this Parliament and the tone of my speech tonight.
Hopefully my contribution will bring a degree of sanity to our protection policy
and prevent similar occurrences. At that mill there was a working environment
that would be the envy of most industrialists because people were not regarded
as cogs in a machine but as contributors to a joint working experience producing
high quality products based on a pride in workmanship frequently handed down within
the family circle. I recall one such dedicated group where 19 members were employed
in various departments. Another unit boasted of service through three generations.
One such member wanted to be the last to leave despite other job opportunities
that were offered in the meantime. This was typical of the loyalty of those men
and women.
The effect of government decisions on people was therefore brought
home very strongly to me during those tortuous months of closure of the mill.
On one occasion a government official spoke glibly of the little social consequence
of the closure since in his mind most of the men could obtain jobs and a high
proportion of the women were married. In such a plaintive analysis, by merely
examining the prefix 'Mrs' to a person's surname, he did not account for the social
implications to the divorced, the separated and the effective breadwinners often
because of a strained domestic situation or because work was a means of supporting
a family suffering tremendous financial hardship due to illness or accident or
even a means for a mother to seek relief and companionship on a five-hour twilight
shift while the husband handled the family pressures of a prolonged terminal illness
of one of their children. I ask honourable senators not to take decisions lightly
when people's livelihoods are in jeopardy because the spi
n-off effects on
social life are tremendous. Governments in nearly all highly developed countries
provide a measure of protection to their industry. North America, the European
Economic Community countries and Japan perhaps provide the best examples. In the
interests of Australia, the popular academic and Treasury thinking now prevailing
must be tempered by examining Australia's position in 1978-79 rather than by what
may be good theoretical economics as taught by the London School of Economics
in earlier years and which apply to a typical British Isles situation of a small,
densely populated country surrounded by world markets on its doorstep. Many
of our economists refer to the 'inefficient manufacturing sector' of the Australian
economy, but in so doing ignore five important factors. Firstly, Australia, since
the Harvester decision, has been a high labour-cost country and our past tariff
policy has rightly contributed to a reasonable and, until now, growing standard
of living for the majority of Austra
lians. Secondly the size of the Australian
Market often places limitations on the scale of manufacturing operations. Thirdly,
balance of payments difficulties, which, despite some statements to the contrary
are not entirely new to this country, in the near future will place increasing
pressures on government to restrain imports and so save a deteriorating foreign
exchange situation. Fourthly, there is a need to maintain a reasonable level of
self-sufficiency in times of national emergency. Fifthly, and most importantly:
there is the employment crisis, especially amongst the young. This situation will
not be resolved while the manufacturing sector's proportion of the gross national
product continues to fall. It should be a matter of Australia-wide concern that
the numbers employed in manufacturing over the' five-year period to June 1978
decreased by 18.8 per cent. No wonder we have an unemployment problem. This situation
must be reversed. I therefore call upon governments to reverse this trend. A
part of the
price of reducing unemployment from the present unacceptably
high levels is to encourage, by appropriate quotas and other measures, protection
to manufacturing industry. Manufacturers in this country do not ask for 100 per
cent of the market, but what they do seek is that their market share will not
be continuously eroded. I know of one sector of industry where in 1973 imports
accounted for 10 per cent of the market. Now those imports account for 40 per
cent of the market and are growing steadily. With capital investment costs increased
because of inflation and a fall in share of the market due to the impact of imports,
I ask from the manufacturer's point of view: Is there any justifiable reason why
investment decisions should not be pruned or placed under close surveillance?
Industry needs to be assured that provided it is reasonably efficient in terms
of output per man hour, there is a reasonable expectation for it to have an agreed
share of the Australian market, whether it be 30 per cent, 50 per cent or 8
0 per cent, depending on the government's philosophy, which in turn is an expression
of its own political priorities. Manufacturing industry provides for a diversity
of employment opportunities and a fulfilment of educational training by applying
high technical skills to the practical needs of business. This expertise requirement
rubs off onto the tertiary industries, to universities and to technical colleges. I
think it is important that in quite simple terms I should come back to this question
of efficient industries. During the last 12 months a major manufacturer mentioned
to me that during his visits to places such as the Philippines, Korea, Hong Kong,
Japan, Italy and the United States of America, despite 'sweat workhouse' conditions
in some of those countries, he could not find one case where the output per employee
for a certain packaged lingerie item exceeded on average production in his own
plant. But according to Industries Assistance Commission criteria, he was regarded
as an inefficient operator
. He agreed that his labour costs were significantly
higher than those overseas but I must stress that this was due to government and
union policy in maintaining a reasonable standard of living by way of paying an
adequate wage. Therefore, if it is government policy to maintain a high level
of wages in Australia, surely the victims must not be the source that provides
this remuneration. Textiles have traditionally been regarded as a dispensable
industry because of so-called failures to meet standards of efficiency or because
of ancient plant. However, I could show honourable senators the most advanced
computerised cutting section at Wentworth outside Sydney that draws industrialists
in textile technology from all round the world to view this particular plant.
Bonds Industries was also amongst the world leaders in developing the revolutionary
open-ended spinning process, and that company pioneered the commercial technique
in Australia. The reduction in textiles output and employment levels has been
quite disas
trous, especially in areas outside the major capital cities. For
example, the decline in the number of people employed from June 1973 to June 1978
was 44.7 per cent in Tasmania compared with the Australian average of 28.2 per
cent. Traditionally primary producers have been against any measure of protection.
In simple terms their philosophy has been one of free trade. But now the situation
is changing. For example, imports of fruits and vegetables to Australia have increased
almost four-fold since 1972-73, and imports for the year 1977-78 exceeded $92m.
That is a matter of increasing concern to local growers. Many Tasmanian producers
are only too well aware of the difficulties faced by certain manufacturers and
primary producers in that State because of the free trade agreement with New Zealand.
Despite criticism which has come principally from automobile associations and
farming groups, the policy of increasing oil prices was not only realistic but
also in Australia's long term interests. The sooner we find
an alternative
fuel to oil the more insulated the Australian economy will become and the less
vulnerable it will be to the political manipulations of the oil exporting countries.
The Government's policy recognises that world supplies in terms of world production
are falling. Therefore, irregularity of supplies and further price escalations
by exporting countries must be anticipated. The increases in the price of petroleum
fuels must lead to an increased interest in oil exploration in Australia. This
will be a factor of considerable importance in improving our balance of payments
situation. I would like to see greater funds provided for research into alternative
fuels because I feel that this is essential for Australia 's prosperity. The
exploration industry provides the best example of the need to ensure an adequate
return for risks undertaken. The often maligned concept of profit deserves some
analysis and it is one to which I shall give increasing attention during my term
in this Parliament. Profit and ex
ploration are not synonymous terms. I now
wish to distinguish at least three contributors to profit. The first is a return
on investment for capital equipment. Such a reward should be somewhat higher than
the long term bond rate. The profit is therefore related to the cost of finance-
in other words, it is an excess over the cost of capital. Secondly, there must
be a further reward for special entrepreneurial expertise or innovative skills.
The third contributing factor to profit is the concept of a reward for risk taking.
In this last component of profit the reward must understandably be high since
managers are not in a position to chart a profitability graph as they can when
they are in a position of uncertainty or a still happier position of complete
knowledge. Regretfully, none of the contributors to profit appears to have been
fully recognised by the Prices Justification Tribunal or by government departments.
As a senator who is deeply conscious of the contributor of Australian-owned companies,
I stress
the importance of maintaining a high and increasing equity in Australian
mining, manufacturing and tertiary industries. I wish to place on record the
tremendous work undertaken by the Broken Hill Proprietary Co. Ltd in securing
Australia's future. That company has provided Australia with a low cost iron and
steel industry. It continues, despite poor returns, to invest new funds in its
steel division. For example, for the year ended 31 May 1978, $ 107m was expended
and it is expected that this figure will be exceeded in the current year. The
company operations are highly decentralised. They extend. from Mount Newman in
the west of the country to Queensland, from Groote Eylandt in the north to Temco
in Tasmania where that raw material is processed. Had it not been for BHP investing
substantially in the Sarich orbital engine, this invention would surely have been
lost to overseas interests. BHP's contribution in buying back the farm - in other
words, putting Australian ownership in the hands of Australian corp
orations
- has been quite significant. The best example of this contribution was the purchase
of the American Peabody's interest in the Maura coal field in Queensland. This
was the first Queensland coal interest which had large scale exports to Japan.
Three years ago, BHP purchased the interest of the British company, Burmah, in
the North West Shelf project. With the technical and financial help from the Shell
company which is a joint manager, this project has great possibilities. In the
new development area, BHP pioneered the manganese deposits on Groote Eylandt with
the result that that mineral is now exported all over the world. However, the
company is not involved only in exploitation, namely, the quarrying of the raw
product for direct sale to overseas markets. Much of the manganese from Groote
Eylandt is further processed at Temco in northern Tasmania. A new development
involves a coal project at Gregory where $230m will be expended and in relation
to which the first deliveries are due to take place i
n 1980. BHP provided
the initiative in offshore drilling for oil which commenced in 1954 not far from
Sydney. This culminated in the successful discovery of oil and its commercial
recovery in collaboration with Esso in Bass Strait. A further project could involve
the liquefying of natural gas in Western Australia. Feasibility studies on this
project are now in their final stages and a decision on the future of it may be
made next year. To proceed with this project, an investment of $2,000m will be
required. A further study involves the new oil discovery on the Exmouth Plateau
which is 200 kilometres offshore. This area is regarded as the last prospect for
a major oil find off the Australian coast. It is anticipated that $lOm could be
spent on a single oil well. A new technology will be involved as the drilling
is expected to commence at 1,000 feet below the sea surface. The first of these
wells will be drilled next year. This is the sort of company that Australia requires.
It is a company that is Australian o
wned, staffed and managed. It develops
products that the country needs and at a price that it can afford. In many ways
our tax laws are archaic and hinder both progress and enterprise. Furthermore,
they do not recognise many new situations faced by today's industries or assist
in tackling community problems. I will cite one example. There is a need for the
creation of a completely new subdivision to deal with forestry, with provisions
as extensive as those sections which deal with mining. The Asprey Taxation Review
Committee provided a comprehensive scheme for the overhaul of our taxation system.
Despite the need, little has been done, apart from the haphazard closing of loopholes.
Many of these changes required up to 40 pages of amendments. Private companies
have been suffering a financial dilemma ever since the increase in the levels
of private company taxation to levels commensurate with public company rates,
simply because there were no offsetting amendments to the Division VII provisions.
An urgent ove
rhaul to section 260 of the Act is needed. Anti-tax avoiding
provisions are well overdue because it is widely recognised that artificial schemes
are on a grand scale flouting the present intention of the law. I would also like
to see the States relieved of the burden of payroll tax which is an iniquitous
tax in times of unacceptably high unemployment. In our budgeting processes,
we need to plan in detail over a longer period than just 12 months. This would
involve adopting a concept known as rolling budgets. The adoption of such a concept
would take out many of the antics and uncertainties which occur in the long and
unnecessary waiting period involved with the present practices. In concluding,
I wish to refer briefly to my own State, which is blessed, for the most part,
with a great variety of scenery, good rainfall, plentiful rivers and lakes. The
free source of water provides the State with pollution free hydro-electric power
producing an output in excess of at least that from two of the other geograph
ically larger States. Tasmania is a major producer of 17 micron and finer superfine
wool and a major contributor to Australia's foreign exchange earnings in terms
of dollars per head of population. Being an island State, and despite its convivial
and envied life style, structural changes, regrettably, have not assisted its
economy. For example, the 'Apple Isle' description is hardly relevant nowadays,
for while Tasmanian apple production in tonnes for the five years to 1977-78 declined
by 53.7 per cent, production in New South Wales rose by 7.1 per cent. Such structural
changes as are occurring in the fruit industry are happening in other areas and
causing difficulties not only to governments but, more importantly, to people. Finally,
I wish to pay recognition to the sacrifices of and the assistance from my wife,
Jocelyn, and four children. I wish to express my appreciation for the help of
my friends, for the support of the Party, for the wisdom of Senator Rae and, for
the guidance of Kevin Newman. I also w
ant to thank Don Wing, State President
of the Liberal Party in Tasmania. Not only has he been a personal friend from
school days; he is a man of integrity. Under his direction the Liberal Party has
organisational leadership with an ethical standard seldom equalled in the realms
of business or politics.
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