Industry wants a better investment environment

Mr Michael MacKellar, Chief Executive of the Plastics and Chemicals Industries Association, presented the Forum with a wealth of data from the association's imports study, and concluded with a challenge for governments: they have to decide whether they really want balanced trade and be prepared to offer investment incentives to get it.

The concept of the chemical deficit emerged to the public mind in 1994, the year the Plastics and Chemicals Industries Association was formed. The problem as we saw it was 'How do we approach the chemical deficit problem so it can be meaningfully tackled?' For a start we needed data on imports, and to obtain this we commenced a chemicals and plastics imports study in 1994.

Surprisingly, disappointingly, information on imports wasn't readily accessible: it had to be sought. It was going to cost $20000 to 25000, but a lot of organisations came to the party and the work was done on the basis of agreed data needs.

Among its key findings were:

What does it all mean? We now have a very much better handle on the situation than ever before. Our study gives a very clear indication of where the products are coming from, what the growth is, and what areas can be further investigated.

Frankly I find it disturbing that we had to mount such an investigation at all. This sort of information is necessary for a national government. I would have thought that this information should have been readily available. When we discussed the figures with Treasury, they replied that they weren't interested in sectoral issues; they dealt with aggregated figures.

Where to next? States will continue to try to attract investment candidates, as is shown by a Victorian government study that will be released soon.

But already it is apparent that we in Australia don't compete with the sort of investment packages offered by the countries of Southeast Asia. We have the raw materials, technology and the trained workforce, but we're missing out in that area of an investment package. The Federal Government is most important, although states are also important. There have been investment decisions on hundreds of millions of dollars worth of new chemical projects in recent years and Australia has very largely missed out. Australia needs to develop an investment incentive menu, something to offer the multinationals when they ask, as they inevitably do: 'What's the bottom line?'

'Plastics make it possible' as a motto for the plastics side of the industry is a microcosm of what the chemical industry is all about. The chemical industry makes manufacturing possible and the manufacturing provides secure employment. But if you have a look at what Australian companies are doing, many of them are going offshore and importing back into Australia.

The government of the day really must make up its mind whether it wants a chemical industry, because the window of opportunityis rapidly closing. The investment phase is now upon us and if we don't do something about it very quickly we will miss the bus.

On the positive side, state governments are continuing their work in attempting to attract major investment projects, and technology suppliers are persisting in promotion of local technology. For its part the Plastics and Chemicals Industries Association is taking its case to the federal and state governments that the investment environment needs to be improved, and we are continuing to work with the Department of Industry, Science and Tourism to identify impediments and put forward solutions.