Federation Chamber – Private Members’ Business – Food Processing Industry

Mr HUSIC (Chifley—Government Whip) (11:31): I figure I should perform the hat trick in repeating at the outset, or at some point in the speech, that there will be things we will agree on and things we will most definitely disagree on in the course of this debate. Undoubtedly, Member for Murray, I think it is a good opportunity for us to discuss a sector that provides critical support within your electorate and in others and that also provides a valuable economic contribution to the nation. I think the member for Murray is most definitely right in highlighting the importance of the food and beverage manufacturing industry to our nation.

These are exceptionally difficult economic conditions both for the food and beverages and for the broader manufacturing sector. The manufacturing sector within the electorate of Chifley provides up to 10,000 jobs for locals in our area, and so anything that affects the member for Murray’s electorate in this way is also something that I have a keen interest in, which is why I was very heartened that you had put the resolution forward and also heartened to participate in the discussion around this.

The conditions that are present within the food and beverage processing industry evolve and are certainly putting pressure on a sector that has a lot of potential for growth. In this nation it employs close to 230,000 people, many of whom are from our respective electorates. Like the rest of the sector, food and beverage manufacturing faces huge challenges, the most notable being what is happening with the dollar—something that will not go away anytime soon and will continue to put pressure on businesses operating within the sector. I have seen that within our area and it is something that I would like to reflect upon during the course of my contribution.

Other challenges include the small size of our domestic market—and we have variously touched upon this issue through the course of our respective contributions this morning—and the lack of manufacturing scale. The issue of the domestic market—the price sensitivity of customers and the fact that they are willing in many cases to substitute overseas products for locally produced products that they might have used for many years—is a constant challenge for the sector. Again there are those in my area that are responding to this. The availability of skilled labour and retail market concentration all contribute in their own way to putting pressure on the sector.

Ninety-nine per cent of the 13,000 food-manufacturing businesses—and this is worth reflecting on: 99 per cent—are SMEs. Ninety-nine per cent is a huge figure. The government acknowledges the challenges that face them and the other sectoral challenges that I mentioned a few moments ago and we have put in place measures to help industries to remain competitive and sustainable—not just this one but across a range of different sectors.

Look at what we are doing with AusIndustry and with Enterprise Connect. Look at the magnificent work done by the CSIRO, the cooperative research centres, the industry innovation precincts which are starting to roll out—with a specific focus of one of them on food. They all provide programs aimed at lifting innovation, investment and productivity to help manufacturers overcome and better deal with the challenges that I outlined earlier.

Stakeholders in the food industry are right to be concerned with long-term viability of food manufacturing in this country. It is the reason the government is particularly keen to encourage greater investment in R&D and to provide tax incentives and programs that increase the level of cooperation between public and business research institutions.

One area where food manufacturers in the Chifley electorate are looking to get some advantage and also to help reduce costs and improve the way they operate is in the area of clean energy. Businesses in the Chifley electorate are learning how to reduce the costs of production at the same time as reducing their carbon footprints. Since our carbon price came into effect, businesses are taking initiatives to take practical steps to improve the way that they use energy, to reduce power bills and to reduce their emissions. They are also doing it in part, as they tell me when I visit them, to respond to what consumers are expecting them to do too.

One manufacturer in particular I am very proud of in the Chifley electorate is Arnott’s. They operate a plant in Huntingwood within the Chifley electorate. I was really pleased to visit them last month. It was the second time I have been there to look around their plant, not to just avail myself of free samples but to see the way they operate in a very competitive market. They produce a product that is more highly priced relative to competitors which does put pressure on them but they deliberately price to the quality of our market and also to export markets—notably Japan.

When I visited Arnott’s, I was able to see a $113,000 federal grant in action improving production methods and helping Arnott’s reduce their carbon footprint. It was provided to Arnott’s from the government’s Clean Technology Investment Program and represents a third of the total investment of $340,000 being made to upgrade refrigeration controls and also install other energy-saving equipment. This is not the full extent of Arnott’s commitment to a clean energy future. Over the past six years they have invested a total of $3.4 million to complete 24 green projects just at the Huntingwood plant in the Chifley electorate alone. The majority of the investment is being paid for by Arnott’s with the assistance of $610,000 in combined rebates, 18 energy-saving certificates, and five supplier grants

Since 2008, Arnott’s reckon that the average cost of power has increased 7.1 cents per kilowatt hour to 11.4 cents per kilowatt hours, so these improvements are not only great for the environment but also for their bottom line. From our clean technology investment grant, Arnotts expects to reduce the carbon emissions intensity of their refrigeration equipment by 13 per cent, resulting in savings of about $50,000 in energy costs per year—that is a three per cent annual energy reduction or about 1350 kilowatt hours.

It is important that the manufacturers remain competitive, particularly in the food sector, and sustainable to protect jobs. In our area, Arnott’s employ 400 people, many of whom live locally and who I know from various other walks of life and from doing great things in our community. Ninety-nine per cent of Arnott’s products are made right here in Australia supporting jobs across the country, and they spend $300 million a year in raw ingredients and other services from Australian farmers and businesses. It is important that when we talk about things such as this, which was prompted by the member for Murray, we need to ensure that many manufacturers like Arnott’s and SPC Ardmona have a future in this country.

The government is considering SPC Ardmona’s call for emergency safeguard action and will respond consistent with our obligations to the World Trade Organisation. I understand any emergency safeguard measure will be subject to a Productivity Commission inquiry to assess whether there is clear evidence that increasing imports are causing or threatening to cause serious injury.

As much as there are a string of positives associated with what has been put forward today, I cannot avoid pointing out some other things which I think are important enough to go on the record. There are elements—not necessarily in place right now in this chamber—of the coalition that do provide some sort of confected concerned about the manufacturing sector. National party members get, Labor members get it but there are some Liberal Party members that clearly do not. Why?

You have only got to look at what they want to do in terms of manufacturing support and the fact that they want to take out $500 million in support. They failed to support the steel industry transformation plans we put forward. The member for Murray has rightly made reference to the auto industry and observed that everyone has been lining up to support the sector, and they are right to—46,000 auto industry workers look at having their jobs affected. I do not misinterpret the point that the member for Murray has made, but there are others who run the risk of dismissing the level of support for people in transition. For instance, with Telstra—a company that employed 90,000 now only employs 30, and a lot of that was shed through privatisation. There was not a single cent of support during that period of privatisation under the Howard government. Telstra have kept shedding and there has been little support.

Contrast what has been called for in this motion with the broader coalition policy. Broader coalition policy indicates no manufacturing support but, worse still, at a time when the member for Murray is rightly calling for support, another side of coalition politics is arguing for a $5 billion subsidy scheme for polluters through the Direct Action Plan. Where can you argue on the one hand that you cut support for manufacturing—the type of support that is being called for in this motion—and then hand over $5 billion in a subsidy through a direct action program advanced and advocated by the coalition? These are the types of pressures that do need to be confronted by the coalition. It takes nothing away from the member for Murray’s motion. It is an important motion to discuss. It talks about jobs and it talks about having a viable sector in this country, and we all need to work to support that.