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House debates Monday, 22 February 2010

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Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Bill 2009 – Second Reading

Photo of Sophie MirabellaSophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

The Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Bill 2009 amends the Textile, Clothing and Footwear Strategic Investment Program Act 1999 to provide authority for the formulation of a new Clothing and Household Textile (Building Innovative Capability) scheme. This scheme is part of the TCF measures announced in the 2009-10 budget and comes in response to the review conducted by Professor Roy Green which began in 2008. It is a scheme which will replace the then coalition government’s Textile, Clothing and Footwear Post-2005 Strategic Investment Program Scheme for the 2010-11 to 2014-15 years.

The coalition’s scheme sought to foster the development of a sustainable and competitive TCF manufacturing sector and design industry in Australia by providing incentives in the form of grants. The coalition has always been supportive of the textile, clothing and footwear industry. This industry is particularly close to my heart as it is a significant industry in my electorate and a significant employer. In November 2003, the then coalition government announced a long-term assistance package of $747 million for Australia’s textile, clothing and footwear industry. This followed a five-year $678 million textile, clothing and footwear strategic investment program.

The textile, clothing and footwear industry is an important industry, providing employment to thousands of people. It is also one that has faced particular challenges and difficulties. This has not changed, with the industry today facing strong competition from countries such as China and other low-cost-manufacturing countries, the impact of a strong dollar on exports, the further reduction in tariffs and the difficulties associated with the global financial crisis. While the Rudd government, true to form, pay lip-service about supporting Australia’s TCF industry, their actions across other areas and other portfolios tells another story.

Like the vast majority of Australians, I was horrified and dismayed last week when it came to light that fabric for Australian defence uniforms could be sourced from China. The public revelation of the government’s secret plan resulted in the Minister for Defence Personnel, Material and Science backflipping and back-pedalling in a significant way. It was quite interesting to listen to the tricky language that was used at the time. The minister claimed that the Chinese supply was ‘just an option’, which clearly contradicts Defence confirmation of the contract and the Indi Labor candidate’s comments on local radio that some of the material would be made in China. The reality was that it was part of a tender that had been awarded by this Labor government—that is, because it awarded this tender, the government had accepted the purchase of fabric from China.

Just briefly, I would like to put on the record some of the background to this issue, because it is important to walk the walk and not just talk the talk. This issue very much relates to the future of the textile, clothing and footwear industry. It is not good enough just to have a debate about some assistance program in isolation without looking at some of the broader issues and the government’s approach. This issue goes back to July 2009, when Defence awarded a contract to the Bendigo based Australian Defence Apparel for the manufacture of Defence’s combat camouflage uniforms and the fabric known as DPCU. There is nothing surprising here: ADA has been making uniforms for the Commonwealth since 1912. However, unlike previous contracts, this tender allowed the sourcing of fabric from China, presumably once Defence’s current stock of locally made Australian fabric had been exhausted. But sourcing this unique fabric from China is not at all like a local clothing manufacturer importing any sort of fabric. It is not. This modern DPCU is not just your run-of-the-mill pattern fabric. It is a high-tech fabric with a range of features designed to make it difficult for modern optical sensors to detect and target soldiers. The technology has been developed in Australia, partly using taxpayers’ dollars. It is not in our soldiers’ interests and not in the Australian textile industry’s interests to give this recipe to a foreign manufacturer who supplies third parties with soldiers’ uniforms as well. To make matters worse, it appears that the government was going to allow this technology to go to China.

I know there are many other tenders outstanding and contracts awarded by government which raise similar issues and concerns and I will be monitoring and investigating those over the next few months. It is of particular concern because, again, the minister gave certain undertakings. Last July, around the same time this contract was awarded, Minister Combet adopted Defence’s longstanding Priority Industry Capability policy. This is where the government is committed to:

… ensure that certain strategically important industry capabilities continue to be available from within Australia … and which, if not available, would significantly undermine defence self reliance and Australian Defence Force (ADF) operational capability.

So, at roughly the same time that this contract was being awarded, Minister Combat was putting on the record totally the opposite. Interestingly enough, this is on point because Minister Combet’s document adopting priority industry capabilities includes combat gear as a key priority industry capability.

Under this policy, the Chinese tender should never have been accepted. The federal government, and Defence in particular, have a responsibility to get good value for the taxpayer dollars they spend, but scrimping a few dollars to dress our diggers in Chinese uniforms is both a false economy and a slap in the face to our men and women in uniform for no good reason. It is a slap in the face to domestic industries which are successful, competitive and innovative in this sector that we are trying to help with this bill. The cost to the economy of endangering 400 jobs in north-east Victoria and the damage to the industry that this could cause is far more significant than the alleged, and quite questionable, $1.5 million in savings that would have come out of this contract.

It is very interesting for this sector to ask, ‘Where was the union in all of this?’ The Textile, Clothing and Footwear Union issued a statement only on the day the story broke, calling on the minister to guarantee Australian jobs. Can you imagine: there they are in their nice red brick building down on the edge of the CBD of Melbourne panicking and saying: ‘Well, we haven’t said anything about this issue. It’s front-page on some of the papers around the country and we’d better come up with something quick smart. Of course, we knew about it, but we couldn’t say anything because we’re part and parcel of the Labor Party; we couldn’t criticise them to support local jobs.’ The workers who potentially could have been affected know what the union did not do and know that the union was silent on this issue. In the close-knit world of Labor and unions, it defies common sense that the union was unaware of this situation. This was not an isolated case; it is just another example of the union being silent for political expediency.

We do not have to go that far back to recall the barest whimper from the unions last year when Pacific Brands sacked more than 1,400 workers and shipped machinery to China, including equipment funded by the Australian taxpayer. These may be difficult and unpalatable issues for some on the other side, but they are part of the debate about the long-term sustainability of the industry. I am pleased to say that the coalition will continue to strongly support the textile, clothing and footwear industry and will continue to highlight cases like the Defence fabric fiasco, where the Rudd government’s actions were planets away from its rhetoric. Certainly, when the Rudd government makes a decision that is clearly not in the national interest, as was the case with the Defence contract, we will be running after it and holding it to account.

In a sense the jury is still out on this current bill. While the bill does replace the TCF Post-2005 Strategic Investment Program, it is important to note that the bill does not actually contain the detail of the replacement scheme. It provides only the authority when enacted for a scheme coming within the broad parameters of the bill to be formulated. So, once again, we are being asked to take this government on trust and to sign a blank cheque, leaving them to fill in the details. This leaves me particularly uncomfortable because we have seen time and time again with this government—and you have to look at how people behave on past experience to make a judgment of them—that part of the problem, as has been in the past, is the devil is in the detail. We have only to look at the utterly, disgraceful botched installation batts program and its tragic outcomes to see that the devil is indeed in the detail and the lack of responsibility that has attached to the Minister for the Environment, Heritage and the Arts in that program. We have seen other programs where a lack of detail has caused enormous waste of taxpayers’ dollars at a time when there is record debt mounting for future generations to pay back. We have seen the expensive and highly wasteful Building the Education Revolution program that has produced particular gems such as a $250,000 library for a one-person school. Now it has been revealed that some of the building works cost nearly 10 times normal commercial rates.

That is what happens when you do not have details of government programs properly scrutinised. We have seen a whole stream of ineffective and ultimately abandoned programs like Fuelwatch, GroceryWatch and the absolute budget blow-out of the National Broadband Network. The list goes on. Time and time again we have seen this government prove that it is incapable of delivering effective, efficient and well-run programs. It is very big on rhetoric and spin and being seen to run from one media circus to another, but when it comes to the real world, when it comes to the nuts and bolts, when it comes to delivering, it fails miserably and I am sure all its very expensive focus group research is showing it exactly that. You just wait and see the Prime Minister and some of his ministers try some action shots in the media. They will be wearing hard hats and colourful fluoro vests, digging a hole here and there, trying to prove that they are men and women of action, not just all talk and no action. But the cynicism of Australians right across the country has been pricked and will continue to grow. It is just one of those factors that goes to continued distrust and cynicism about government in this country.

It is no wonder that there is a lot of industry concern about the operation of the new TCF scheme that is going to be facilitated by this bill. With much of the detail as to the scope of the new scheme, such as eligibility, definitions and the calculation of grants to be contained in the scheme yet to be formulated, it is difficult to properly assess the merits of the actual scheme. Without the opportunity to examine the details, we do not know, and neither does the industry, what impact it will have. It is these details that are important to industry players. I note that this concern has been reflected in submissions made to the Senate Standing Committee on Economics, to which this bill has been referred. The Australian Industry Group have implored that eligibility criteria be carefully developed and that transparency be increased and red tape reduced by streamlining the application and decision-making process. Again, these are details that will be part of the final scheme—so we are told. The Technical Textile and Nonwoven Association expressed concern in their submission, stating:

… it is disconcerting to assess and to make comment on a program with few specifics.

The Carpet Institute of Australia stated:

It is difficult to assess the Scheme because the Bill and Explanatory Memorandum provide only a basic framework.

Bruck Textiles, in its submission, observed:

… what is missing from the Bill, is the actual Scheme detail outlining how the Program will be implemented and delivered.

There is no ambiguity in that.

As I said earlier, the devil is in the detail, and it is only when we have a full picture of the details of the new scheme that a full assessment and judgment can be made on any effectiveness that the government puts in place with the new scheme. As regards the provisions contained in the bill itself, I am concerned that section 37ZM provides authority for the new scheme to allow grants to be made even where manufacturing has moved overseas. It is important that taxpayer funds are used to support Australian manufacturing—not the transfer of manufacturing offshore. I have received advice from the Department of Innovation, Industry, Science and Research that it is not proposed to formulate a scheme that would allow grants to be made in such circumstances. If that is the case, I believe the bill needs to be amended to reflect that fact.

As I have indicated, I do have a number of concerns that are shared by industry regarding the bill and, more importantly, the new scheme that it puts in place. I do note, though, that the Senate Standing Committee on Economics, to which the bill has been referred for inquiry, is due to report by the end of the week, and I trust the government will take heed of the recommendations of this inquiry and address the genuine concerns that have been expressed by industry leaders. The department has also advised me that they will be undertaking further industry consultation in February to assist them in formulating the new scheme. It would be of considerable benefit to the industry and to good legislation to be in a position to examine both the Senate committee report and a draft of the details of the scheme.

I have outstanding concerns that amendments to the bill may be required, and these will have to be dealt with in the Senate in due course. I implore the government not only to consult widely but to give effect to the wishes and the concerns that arise out of consultations and that have already been raised by industry players—and, of course, to ensure that the details of the final scheme help strengthen the TCF industry and do not put on further strain or add another layer of bureaucracy that Australian employers simply do not need at this stage. I look forward to the Senate Economics Committee report and the government’s response to that.

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Written by Greg Naylor

23 February 2010 at 11:13 am

Posted in PERSONAL

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