THURSDAY, 8 APRIL 2016
SUBJECT/S: Australia’s steel industry/the blowout in HELP debt/CSIRO cuts
CARR: It is a particularly sad day for Australian industry that Arrium’s been put into administration. It is quite clear the banks have got what they want in regard to forcing this circumstance. The word ‘voluntary administration’ here is somewhat of a euphemism.
I have been part of a Senate inquiry that’s been looking into the steel industry since November of last year and we were at Whyalla 48 hours ago, so we have had an opportunity to talk to the main players directly.
I am confident that the Australian steel industry will survive. I am confident that Arrium can trade its way out of its difficulties, if the right policy settings are put in place.
The fact remains that Arrium has a massive debt level. But decisions have been taken by management over a long period of time to produce this outcome.
On another level, the Australian steel industry has been subject to an extraordinarily vigorous assault by the Chinese steel companies. Seventy-five per cent of Arrium’s product is now subject to anti-dumping decisions by the Australian Anti-dumping Commission. Seventy-five per cent of the Anti-dumping Commission's work is now tied up with the Australian steel industry. Eighty measures just this year have been put in place by the Anti-dumping Commission in response to the claims by the Australian steel industry dealing with the dumping of foreign steel in Australia.
Now this is an extraordinary development where you have foreign companies, strongly supported by foreign governments, launching an assault upon a critical industrial capability of this nation. So it's in the national interest that we preserve the industrial capabilities of this nation, particularly when it comes to steel.
Arrium is too big to fail. It doesn't mean it does not require substantive changes, but there is a national responsibility by government to show leadership, to work with the state governments, to work with the companies, to work with the creditors, to secure the future of steel making in this country.
Now we know that it's possible, but it is a tragedy that this government has cut back so much when it comes to government programs that were available to support industry. There is no reason why that can't be put back into place. This country can prosper as a manufacturing nation if the right policies are in place.
We need a national steel industry plan. We need to be able to secure the jobs of workers, not just in Whyalla but in Melbourne, and in Sydney, and in Wollongong, which of course are directly dependent upon that industry. It's not just the workers in those companies. It's the regions, and it's the nation.
We can't have a situation where a country like this, an advanced industrial country like this, where we can't produce steel for our own war vessels, where we can't produce Australian steel for our bridges, for our roads, for our buildings. We simply can't have a situation where we are entirely dependent upon foreign companies to dictate terms as to what we'll produce in this country. It's simply not satisfactory. The government has been far too slow to act and it is now a requirement of government to demonstrate a commitment to the national interest and ensure the survival of the Australian steel industry.
JOURNALIST: Senator Carr, back in February Mr Shorten wrote to the Prime Minister.
CARR: He did.
JOURNALIST: About the steel plan. Did he receive a response to that, and what was the response?
CARR: I'm not aware there has been a response received. The Leader of the Opposition, Bill Shorten, indicated we are prepared to work with the government on this. There's been no response to that either.
You see, we know what's required here. We need to be able to sell more Australian steel. That's the nub of this problem. We simply need to sell it at prices that are able to produce a return and what we’re finding is, these foreign companies are dumping steel here, forcing down the price and trying to destroy Australian steel companies. Now they are doing pretty well at it. We've got to defend the Australian steel industry.
The Labor Party stands willing, ready to work with government, with the community, with state governments, with the unions to secure the future of the Australian steel industry.
JOURNALIST: Do you think free trade deals might be also affecting the sector?
CARR: There is a range of matters, a range of matters that are affecting these circumstances. But the reality is this – we have the capability in this nation, we have the wherewithal to be able to maintain our capabilities in the making of steel.
We have very fine universities. We have very fine companies here that are able to secure the future of steel making in this country. We have the capacity through the CSIRO to improve the way in which the science is applied to this industry.
But above all, we need to be able to sell Australian steel for Australian projects. Surely it's not unreasonable to expect that Australian Government funded projects will use Australian steel. Surely it's not unreasonable to expect in the huge private projects that are developed, that there’s the capacity for partnerships with Australian steel fabricators to ensure that we actually use Australian steel in projects that are developed in this country.
Now, the government has resources. The government has policy levers. It's simply not good enough to turn around and say; oh it's all a matter for the market. That won’t work. Leave it to the market and a market will find against this country.
JOURNALIST: Should the government provide a cash injection to this company?
CARR: There is a whole range of measures that this government can consider, but above all else, they’ve got to be able to talk to the creditors about the supply of Australian steel. The sale of Australian steel is the critical issue here. We've got to be able to ensure that when government-funded projects are running across this country, building roads, building infrastructure, building bridges, that we use Australian steel.
We’ve got to have the capabilities in our supply chain for our companies to provide them with the support, so that they can tender on a competitive basis for work. We’ve also got to have the Department of Foreign Affairs and Trade work for Australia's interests in making sure that we sell steel overseas.
But, this is a problem that we are facing internationally. Governments around the world have made it their business to defend their steel industries. The United States Government doesn't hesitate, and I find it incredible that in this country we don't adopt the same approach that the United States Government does.
JOURNALIST: What do you think is the likelihood that we’ll be able to find a way to keep operating without government support?
CARR: I think it's possible – in fact I'm very confident the company can trade its way out of its difficulties. There obviously will need to be some quite serious conversations about the debt levels. The company is structured in such a way it has operations in structural steel in Whyalla, but it also has operations in Melbourne and in Sydney. It also has substantial mining interests, and of course these are a different part of the questions. The major debts have been run up around the mining side of the business. It would be a travesty to see the closure of Whyalla. That's what we're talking about here, if this falls, the closure of Whyalla because of the debt decisions the banks have made. Rather than think about what is in the national interests, they’ve thought about their immediate balance sheets.
JOURNALIST: Senator Carr, does Labor have any specific ideas as to what government purchasing contracts could be brought forward like the Turnbull Government did with the rail project?
CARR: That was one project. There are many other rail projects, that's a matter you should canvass with Mr Albanese. In the advice that’s been sent to the Senate Committee on this question, there are major infrastructure projects requiring significant volumes of steel that can be brought forward.
There are of course, positions that can be taken by state governments as we’ve seen in Victoria, where the Victorian Government has actually said we want to see 100 per cent of steel used in their railway crossing projects come from Australia, which is essentially out of Whyalla.
There are actions that can be taken by state governments in regards to Australian standards. There’s an extraordinary amount of steel that’s brought into this country, which is sub-standard. We are getting a lot of evidence in the Senate Committee about work that’s being done on bridges and other roads that is actually dangerous because it's using sub-standard steel. We have many examples put to the Senate Committee of companies that have found inferior work being passed off as work that's up to the Australian standards. We've simply got to crackdown on all of that.
We've got to be able to secure the sale of more Australian steel. We can do that consistent with our trade obligations. We can do that consistent with our international treaty obligations in other areas, but we've got to have a political will.
The government has to find the bottle to stand up to the international companies that are simply seeking to destroy the Australian steel industry. The Australian Government has to have the bottle to defend the national interest and defend the communities across this nation that depend upon steel, and the industries that depend upon Australian steel.
JOURNALIST: Senator, we might just turn to higher education if we can, is Labor looking to tighten entry requirements for certain courses or across the board?
CARR: Yes, I’m interested in finding mechanisms whereby we can get rid of the rorters out of the vocational education system. The VET FEE-HELP system has blown out of all proportion, entirely under the life of this government.
There are steps that can be taken to improve the quality assurance, improve the capacity of our vocational education system to meet real industry needs, to provide real opportunities in this country for people with serious jobs, rather than pandering to the stock market speculators that have rorted the VET FEE-HELP Scheme, caused so much damage, and have had so little response from this government in that regard.
CARR: That’s a separate matter, that’s for universities. The university question that’s come up today is that we’ve long held the view – and I’ve articulated this for a very long time – that we have to lift the standards of our universities. It’s not good enough to simply enrol people in a university and not provide them with the support to secure a quality qualification.
We are seeing far too many people just enrolled and left to languish, so Labor says we can get 20,000 more graduates out of the system every year; we can guarantee the funding of our universities, without the $100,000 degrees; we can secure the financial sustainability of the universities, without the 20 per cent cuts that this government has proposed. That’s what’s causing the big blowout in the higher education loan scheme. It’s made up essentially of about 30 per cent from VET FEE-HELP and various actions that have been taken there, and about 50 per cent – the report states on page six – this is mainly due to the decisions made by this government to pursue deregulation and the $100,000 degrees.
JOURNALIST: So this specific proposal around today about forcing universities to release their minimum, median and top scores for students accepted into courses, you think that is a good idea?
CARR: I think it’s important that people know what the entrance requirements are for universities. We have far too many universities in this country admitting people in the bottom third of entrants out of school. Now, for our teaching and nursing programs we really have to do a lot better than that. That doesn’t mean that you impose a minimum ATAR, but you have to talk to people about what it is that’s required to get into university, and you have to be confident that what’s being said is actually real.
What’s happening in our universities is quite often various discounts are offered to people, in terms of their entrance score, which gives you a false impression of the standards of applying for entry to universities.
Now the real test here is the fact that people with entry scores of less than 50 have a one in two chance of failure. That’s what the records show – one in two. Now people that go in with no ATAR at all have pretty much the same failure rate. So the real issue here is how we lift the standards to support students to secure quality qualifications, so they can get decent jobs.
The real issue, in terms of the loan scheme longer-term, is that people have the capacity to actually have a decent life, and that means have a decent income. What we’re seeing of course is that increasing numbers of our graduates are not able to secure decent jobs, and that’s why a lot of them aren’t able to secure the repayment arrangements.
Now, that’s on top of the rorting that’s been going on in the VET system and the fact that in the PBO projections – and that’s what they are, they’re projections – the government’s plans for $100,000 degrees will be reckless and would blow the budget to pieces.
JOURNALIST: How do we stop sub-standard students going into nursing courses or teaching courses without putting in a minimum there?
CARR: Well you can talk to the universities about who they enrol. Remember the decisions are made by individual universities about who they enrol. You can have a direct conversation through the compacts process. That’s the plan Labor has put forward through the Higher Education Commission that we will establish, to secure higher entry standards and a stronger commitment to recognise the changes in the labour market.
Now I’m not of the view that the universities are a glorified vocational college. We have to acknowledge the attitude towards education mean there will be a variety of people who want to undertake courses, but there has to be some connection. If you’re going to enrol a whole lot of people in journalism for instance, there has to be some acknowledgement there aren’t too many jobs in journalism at the moment. If you’re going to enrol people in the teaching qualifications, there has to be recognition that people will be able to secure jobs, predominantly with state governments. We can’t have the circumstance that we have at the moment where people can’t even get practicums because of the arrangements that are underway.
Now, it’s just irresponsible to allow people to do whatever they like. There has to be a conversation with government so that we get value for money, the public is confident that we can lift the performance and the accountability of our universities, so that people can be certain that they’re getting qualifications that actually mean something and will help them secure important jobs for the future of the nation.
JOURNALIST: Senator, are you still concerned with the way that the CSIRO decided to make job cuts and to reprioritise its research?
CARR: I am disgusted. I’ve been involved with the CSIRO now here for nearly a quarter of a century. I’ve never seen anything like it. There is no doubt in my mind that this new management at the CSIRO is responding to government priorities. I’ve got no doubt whatsoever that they’ve taken far too literally the view that you’ve got to find money from other sources.
Now, one of the biggest consequences of the government budget cuts of $114 million to the CSIRO has been job losses. But it’s not just the CSIRO that’s been subject to budget cuts. It’s the environment department; it’s the Bureau of Meteorology; it’s all the other agencies in government that feed into the CSIRO.
So the cumulative effect of that is that government cuts cause this sort of chaos, but the decisions of management have to be held up to public scrutiny. That’s why I’m very concerned that we have an inquiry into the fitness of the current management at the CSIRO. There hasn’t been an external inquiry for a very, very long time. It’s time that we didn’t just look at the structure of the CSIRO, but we looked at the way in which decisions are made, and whether or not they’re consistent with the Act, and with the objects of the Act, and whether or not they’re meeting Australia’s national interest, in terms of the future direction of the CSIRO.
JOURNALIST: Senator, what’s your reaction to Larry Marshall not being able to say when scientists will find out about the job cuts?
CARR: Well, it just lends you to the view that Dr Marshall said that when he came into CSIRO he was there to stabilise the organisation. Now, if this is what you call stabilisation, well then I’d hate to see what he thinks uncertainty looks like. It is simply not satisfactory that we’re unable to get a clear answer to these questions.
I’ve called on the minister to halt these changes, as we’re now effectively in an election campaign. The Labor Party has a fundamentally different approach. We can wait until the election is decided, but in the meantime these cuts should not occur. We should put them on hold, and there should be an inquiry into the management of the CSIRO.
JOURNALIST: What evidence is there that CSIRO management emails of excessive government influence on this decision, or insufficient consultation with the CSIRO Board?
CARR: What I have got is the one brief that’s been to the minister, which the CSIRO officer said today the minister did not repudiate. If I was the minister and saw that brief I would have sent it back and told them that it wasn’t satisfactory.
We have been told that there’ve been regular telephone communications – I’m surprised frankly that there’s not been more formal meetings, because there is a requirement under the letter of expectation that ministers provide to the CSIRO that there be a regular process of dialogue and discussion with government.
Now, I find it impossible to believe that the Prime Minister hasn’t taken an interest in what has been occurring in the CSIRO. I find it impossible to believe that the minister hasn’t taken a keen interest in what’s happening. One can only presume that if these actions haven’t been stopped, then these propositions have been advanced with the support of the government.
JOURNALIST: Just lastly, Senator, were the CEO’s comments about having to partner with private companies concerning?
CARR: Well it’s very concerning. I’ve seen reports that there are proposals around to take a greater interest in terms of the share trading within the CSIRO. Look, we’ve seen these sorts of actions in New Zealand before the privatisation of the New Zealand science organisations and the Crown Institutes that were established there.
I’m very concerned that the preoccupation with external earnings is a distortion of the research and scientific priorities of the organisation. The CSIRO is one of the great public institutions and one of the great nation building institutions of this country. I can’t fathom why it is that we’ve allowed circumstances to develop where there’s been this level of disruption, this level of uncertainty, this level of hostility generated throughout the public towards what’s going on, on the basis that we’re going to find a more commercial approach.
Now the reality is this: $1.2 billion is spent on the CSIRO every year and the bulk of that money comes directly from the budget. Only $75million on average comes from private companies. So, when we talk about external revenue in the CSIRO, what we’re really talking about is of course, other government agencies.
This is a publicly funded research agency, dedicated to the public good, dedicated to public benefit research. It has always provided support to industries in the 100 years it’s operated, but it’s done so in the context of the national interest. It won’t be on the basis of running it as a glorified commercialisation firm.