Steel Industry Protection Bill 2016
Mr ALISTER HENSKENS ( Ku-ring-gai ) ( 11:29 :14 ): I will enunciate the very clear position that this Government supports the New South Wales steel industry, but because this bill is not in the best interests of New South Wales the Government will oppose it. Having read the bill and listened to the speech of the member for Keira who is in the Chamber and the speeches delivered in the Legislative Council I am struck by the way that this bill would become completely unworkable in practice and that its justification by members in both the Legislative Assembly and Legislative Council reflects their lack of comprehension of the real world.
I come to this debate with a father whose first job in Newcastle in 1952 was in the Commonwealth Steel Works. I come to this House as somebody whose oldest brother had his first job after school in the BHP Newcastle steelworks. I come to this House as somebody whose best friend from high school had his first job in the BHP Newcastle steelworks. So I bring to this place some knowledge about why the steel industry in Australia and manufacturing in general have been struggling. I welcome the opportunity through this bill to shed light on some of those issues.
This bill is an interesting political joint venture between The Greens and the Australian Labor Party. It was introduced in the Legislative Council and the second reading speech was delivered by David Shoebridge in the Legislative Council. My parents told me that I should be very careful of whom I make friends with in life. An interesting political joint venture is behind this bill. We all know that The Greens party is racked with factionalism. On the one hand The Greens have the Trotskyist faction and on the other hand they have a much more extreme left faction. We all know that a communist in a koala suit hugging a tree is just as much a communist regardless of whether they are wearing the koala suit.
I am pretty sure that David Shoebridge never had a brother who was blowing soot out of his nose for six months after he stopped working in the steelworks. I am a little curious as to how a so-called environmentalist party could promote this bill. What has happened to the Australian Labor Party? What happened to the free market Labor Party that, under the Hawke and Keating Government, floated the dollar, de-regulated the financial markets, privatised Qantas, Telstra and other government instrumentalities, ended protectionism and believed in competition? They believed in competition because they knew that the best way to help working people was to give them a job, and not to prop up failing industries.
Who opposite in this Chamber has any real life experience of the steel industry? We know that none of the former political staffers and union officials who have never worked on the tools has any knowledge of how a steelworks operates. Is it the member for Rockdale, who is a businessman? Or is it the member for Heffron, who is a barrister? I do not think so. The only experience the member for Maitland has of a steelworks is driving past the shutdown BHP steelworks in Newcastle. Is it the Leader of the Opposition, who grew up on the North Shore at St Ives and went to a private school in Ku-ring-gai? Or is it the member for Keira, the property baron, the Prince of Potts Point, the land baron?
One can only imagine how he put together his speech last night. He was in his Potts Point pad in a silk dressing‑gown, on the balcony looking out over the sparkling Sydney Harbour thinking to himself, "I feel so concerned about the steelworkers of the Illawarra. I don't think they are ever going to be able to afford an apartment in the eastern suburbs, like me." This sort of hypocrisy is what the modern Labor Party is about. It reminds me of what Kim Beazley senior said about the modern Labor Party, about those opposite, when he retired from the Australian Parliament:
When I joined the Labor Party it contained the cream of the working-class; now it contains the dregs of the middle-class.
Mr Greg Warren: Point of order: The member should return to the leave of the bill.
The ASSISTANT SPEAKER: If the member for Campbelltown wishes to contribute to the debate on this bill, he will have an opportunity to do so. There is no point of order.
Mr ALISTER HENSKENS: When the Prince of Potts Point—
Mr Jamie Parker: How does this relate to the bill?
Mr ALISTER HENSKENS: I will get to that in a minute. The Prince of Potts Point pretends, when speaking on this bill, that he is in touch with the working class, but he does not have any real knowledge about why the steel industry is facing challenges. If those opposite really understood these challenges, they would not support this bill, which includes an Industry Advocate, steel usage reports, mandatory contractual provisions and Independent Pricing and Regulatory Tribunal [IPART] reports and oversight. However, it will do nothing to help the Australian steel industry—not a jot—and I will explain why. There are three important components to steelmaking: There is capital, there is labour and there is energy in the form of coking coal and iron ore. We should talk a little about those components.
The industrial practices in steelworks, such as the Newcastle Steelworks, were so bad that prior to the closure of the Newcastle Steelworks 6,000 workers were making more steel more cheaply with the same blast furnaces and machinery than 20,000 workers made under the restrictive union practices that were forced on management. Management spent so much money on expensive labour that the necessary investment in capital to keep the steelworks competitive was never made. I will give an example: My friends from school, when they started working in the steelworks, were assigned to the dog watch. On the night shift they did nothing but play cards while being paid double time. Most left after a year because of the boredom; they wanted a real job.
When the car industry recently announced its shutdown, it came to light that production line workers had conditions that included $150,000 minimum pay before overtime and 10 weeks holiday per annum. Does anybody think that the workers in Detroit, Japan or Germany get anything like those conditions and that pay? The reason manufacturing has almost ceased anywhere in Australia during my lifetime is not that governments do not support them but that excessive union demands killed jobs. The union movement and the Labor Party are all about short‑term gain but long-term industrial pain. What about the coalmining and iron ore that are so important to the steel industry?
Is it not The Greens that oppose mining? Is it not The Greens that want to impose a carbon tax, which would be an additional cost to steelmaking? The hypocrisy of Labor and The Greens—who are the cause of, not the solution to, the problems in the Australian steel industry—is incredible. I ask this question: Why is the useless symbolism of this bill occupying the time of this Parliament? I have undertaken a review of the electoral disclosures by the union movement. It is clear that it gave more than $3 million in donations to the Australian Labor Party [ALP] for the 2015 election, including hundreds of thousands of dollars from unions that employ steelworkers.
Ms Anna Watson: Point of order: My point of order is relevance. Donations have nothing to do with the bill we are discussing. We are talking about the steel industry in the Illawarra.
The ASSISTANT SPEAKER: There is no point of order. This is a wideranging second reading debate and the member is speaking about steelworkers in Newcastle. The member has the call.
Mr ALISTER HENSKENS: This bill is an example of the influence over the ALP that those union donations command. The unions are getting pay back for their donations to the Labor Party. Straight and simple, it is political payback to the union movement to force these members to support this ridiculous bill.
Mr David Harris: I think they are going to use your speech in ads.
Mr ALISTER HENSKENS: No-one would ever use anything you said in an ad. I grant Labor members that the protection of Australian jobs is a noble cause, but this bill is not the way to achieve it. The ideological battle in Australia between protectionism and free trade is one of the oldest political debates in this country, but it is clear that this Government is the best thing that New South Wales businesses have going for them. The Government is investing a record $73 billion in an historic infrastructure program. As a result, the Government is the largest single buyer of steel in Australia. The biggest help the Government can give to the Australian steel industry is to facilitate a healthy demand for its product. The Government purchased more than $33 billion in construction goods and services over the past four years. Of that, 70 per cent, or roughly $23.5 billion worth, was purchased from New South Wales suppliers.
With regard to the Government's infrastructure program, for example, the M4 widening and the Gerringong and Berry bypasses use a majority of Australian steel. The majority of steel used on the M4 widening was locally sourced. Significant quantities of Australian steel are also being used on the Sydney Metro Northwest, the Wynyard Walk and the Barangaroo Ferry Hub. The New South Wales Government has also engaged in other measures to support the local steel industry, such as $60 million in payroll tax relief to BlueScope Steel to help maintain its steelmaking capacity in Port Kembla. It is clear that this Government is supporting the Australian steel industry. In addition, the infrastructure program has included the Infrastructure Skills Legacy Program, which involves training of workers.
The reason that the Government does not support this bill is because it would have some critical results for the New South Wales economy. Firstly, it would increase the cost of infrastructure for taxpayers and it would delay the delivery of infrastructure due to red tape. It is in breach of Australian free trade agreements and the potential for retaliatory actions by our trading partners is immense.
Without going into more detail on those matters, because the speakers following me will, I turn to a critique of the particular provisions of the bill and why it is so undesirable for this House to pass it. This piece of legislation is clearly the product of somebody who knows nothing about commercial law or construction contracts. I say that with some expertise in the matter, because I once had a case against David Shoebridge when he was still a barrister.
The first important thing to note is that there are two steel manufacturers in Australia—a company subject to a deed of company arrangement in South Australia, and a steelworks in the Illawarra. The two steel mills in South Australia and the Illawarra make different steel products. Clause 6 of this bill will give them a monopoly over 90 per cent of the steel in New South Wales infrastructure projects without any constraint on them charging whatever price they want. Contractors can be exempt if the steel price is 20 per cent above the fluctuating world steel price, according to Mr Shoebridge's second reading speech, but how will that work in the real world? The world steel price changes regularly, but infrastructure contracts are written years before construction begins and take many years to actually perform. This bill requires contractors to price jobs and enter into long-term contracts, using some sort of crystal ball to see what the world and local steel price will be many years into the future.
I look forward to hearing why the New South Wales taxpayer should not have new schools, new hospitals, new roads or new public transport because of the need to prop up the jobs of South Australian steelworkers. The reason is that steelworkers have a national union worried only about its workers and not about the best interests of New South Wales taxpayers. It should be noted that in the infamous recent shutdown of the South Australian electricity system, great damage was done to the South Australian steelworks. How could any responsible New South Wales member of Parliament make our future infrastructure dependent on the chaotic South Australian electricity market, which has been completely ruined by its 15-year Labor Government?
The second point to note is that if a type of steel can be manufactured in Australia, there is an obligation under this bill to use the Australian steel—even if the producer cannot supply it for, say, 10 years because of other contractual commitments. There is no time constraint on when the Australian steel has to be available. New South Wales infrastructure projects required by this legislation to use Australian steel mills will always go to the back of the line because other non-government orders will get preference. They do not need to worry about the New South Wales Government orders; there will be legislation requiring them to use Australian steel.
This bill will put New South Wales last and not first in the line of steel supply. This bill, if passed, not only would make New South Wales infrastructure more expensive but also would delay the completion of infrastructure projects for years. The financial penalty provision in clause 6 (1) (b) of the bill is uncertain in its operation because the measure of the quantity of steel under clause 6 (2) is not defined, so the penalty cannot be calculated. Only the amount of money, not the quantity or the measure of the quantity, is to be prescribed. In Mr Shoebridge's second reading speech on this provision he talked about tonnes, but there is nothing in the bill that specifies a measure of tonnes. The legislation does not match the second reading speech.
Not only is this provision of the bill meaningless, but it also forces private infrastructure contracts to include a penalty provision when the High Court of Australia has found such provisions to be unenforceable. This bill has been put together by legal pygmies. The content of the duty of audit under clause 6 (1) (d) is not defined. It is completely meaningless. The audit could be conducted under this legislation by a boy scout in an hour to comply with the legislation—that is how ridiculously drafted this piece of proposed legislation is. Clause 7 (2) of the bill shows the draftsman has no commercial experience. Contractors to government under clause 7 (2) will be starved of cash flow while waiting for the Independent Pricing and Regulatory Tribunal [IPART] to provide reports. This will mean small contractors will be disadvantaged—they would not have the cash flow to be able to work on government contracts—and the bigger companies will be able to load the price to take account of the delay.
The bill also contains clause 7 (3). The cumulative steel report has to specify the origins of any steel under the contract. Well, I have news for those opposite: There is no DNA test for steel. Contractors will be forced to undertake extensive investigations as to the origin of every nut and bolt on an infrastructure project in New South Wales. Any report as to the origin of the steel will be hearsay in any event, but according to this bill a hearsay report by IPART on the origin of the steel is a worthy piece of red tape to be put in legislation in this Parliament.
The bill also proposes in clauses 8 to 11 the establishment of a NSW Steel Industry Advocate. No remuneration for the advocate is set. No guidelines for remuneration are set. No qualifications for such a person are specified. No budget is specified. In five years the advocate could do one report and satisfy the requirements of clause 10 (1) (c)—another easy sinecure for some unionist. The advocate has no power to reinforce any requests under clause 10 (3) of the bill. No budget for the staff of the advocate is specified under clause 12. Again, this is an example of how unworkable, how un-thought-through and how superficial this bill is. This is as poorly drafted a piece of proposed legislation as will ever come before this House. It is a cynical piece of disingenuous politics which will do nothing to help the people of New South Wales have better infrastructure or do anything to help the steel industry.
It is instructive that in the Legislative Council second reading speech on the bill David Shoebridge said he had consulted with the labour movement, workers in the Illawarra and the community. Significantly, there was nothing about actual consultation with the owners and operators of the steelworks in the Illawarra, and yet those owners are the ones who make decisions about where they deploy their capital. Labor and the unions are making the same mistakes that led to the Newcastle steelworks and most of the manufacturing industry in Australia closing down. They ought to be working collaboratively with the owners of the businesses to change work practices and to plan for greater efficiency and productivity. They ought to be following the fundamental principles that were advanced by the Hawke-Keating Government instead of the retrograde protectionism and hollow gesture in this bill.
When Labor increased subsidies to the car industry, what happened? Ford and General Motors took the money from the Government and closed down anyway. All this will do is stop infrastructure being built in New South Wales. It will push back the strong economy of New South Wales just when this State is eating into the backlog of infrastructure caused by 16 years of inactivity by those opposite. I urge the House to reject this bill. It is the product of the union lurk merchants that fund those people on the Labor benches and therefore control the Labor Party and The Greens.