Mr BAILEY - 1996-08-20
I remind the minister of his spectacular incompetence in recovering less than $20 000 from the Country Liberal Party government's $1m investment of taxpayers' funds in Modular Medical Products. Mr Speaker, I seek leave to table an extract from the Territory Register of Business Names which shows that the business name Territory Surgical Supplies is owned by Modular Medical Products.
Leave granted.
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Mr BAILEY: Can the minister provide any proof to support the claim he made on ABC radio on 25 July this year that no taxpayers' money has been used to support the operations of Territory Surgical Supplies in competition with totally private-sector-owned and privately-funded suppliers of surgical supplies? If so, will he give an assurance to this House that he will table that evidence?
ANSWER
Mr Speaker, that is a good question. Last month, I announced that the Northern Territory government had concluded its involvement with Modular Medical Products which included a deposit of some $669 000. The government had sold its shares in the company to 4 of the original directors of Modular Medical Products.
The Northern Territory government's involvement with Modular Medical Products began in 1987 when it provided the company with financial assistance specifically to develop and commercialise a Territory invention, the System I wheelchair. There is no doubt that this was a great invention. It won the 1987 Northern Territory Enterprise Workshop Award. The wheelchairs were to be manufactured in the Territory and it was expected that they would provide jobs and economic growth in future years. The support was in line with the government's policy at the time of encouraging and fostering the development of manufacturing industries in the Northern Territory. That policy certainly had its share of success and failures, but the fact remains that the Territory's narrow manufacturing base was then, as it continues to be, an impediment to our economic growth.
It is well known that the System I wheelchair did not achieve the commercial success that was envisioned at the time of its development. That was due to a number of factors, including the economic downturn of the early 1990s, and the resulting decrease in expenditure by most state health services which had been projected to be the major purchasers of the wheelchair. As a consequence, Modular Medical Products has struggled over the past 5 years. However, the company has continued to trade, due to its commitment and the personal financial support of its various private-sector directors and shareholders, combined with diversification into the supply of other medical products. This was a logical and commercially expedient step for the company to take at that time to enable commercial opportunities for the wheelchair to be fully ...
Mr Bailey: Which subsidised which? That is the point of the question.
Mr SPEAKER: Order!
Mr Bailey: You had better be careful. We are looking at a ...
Mr SPEAKER: Order! The minister will resume his seat. The member for Wanguri makes a habit of continually interjecting and he does not make his interjections short and to the point. I ask him to refrain from interjecting in that way.
Mr POOLE: Mr Speaker, the government had supported the company where possible in its marketing endeavours, including extensive negotiations in 1994 towards the possibility of establishing a joint venture agreement for the System I wheelchair to be manufactured and
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distributed in China. I have personally sought buyers while overseas on various trade missions, but unfortunately without success. All negotiations to date have been unsuccessful. With no progress in sight, the government decided to cut its losses and terminate its involvement in the firm.
As foreshadowed in my department's 1994-95 annual report, it is unlikely that the government would be able to redeem its investment in Modular Medical Products. The report shows the shares at face value. The notional, realistic value, as at 30 June 1995, assuming the shares were redeemed on that date, would be approximately $2504. That is the A-class shares at face value and a nominal value for the B-class preference shares of, say, $4. This note was included in the report in consultation with the Auditor-General for prudent accounting reasons. However, the government's shareholding remained on the books of the company at its full face value of $690 000.
On 2 April this year, Cabinet authorised my department, in conjunction with the Attorney-General's office, to terminate the government's involvement with MMP and the System I wheelchair. On 27 June, the government finalised the sale of its entire shareholding in Modular Medical Products with the 4 original directors of the company for the total sum of $20 000. This action crystallised the government's loss in this investment in Modular Medical Products at $669 000. All previous agreements between the government and the company were negated at the time of sale and the government has no further involvement, directly or indirectly, in the company.
However, the government does not resile from its actions in supporting local innovation. Government expenditure in research, development and commercialisation of the System I wheelchair equates to less than $5000 per chair manufactured. Given the acknowledged benefits of the wheelchair to the severely disabled children for whom it is designed, these costs can be justified on purely humanitarian grounds.
I note that the government's endeavours, during the late 1980s, to promote local innovation and develop manufacturing opportunities in the Northern Territory, are only now being emulated by the former federal government's policy on innovation, announced by the then Prime Minister in December 1995. In fact, the former federal government was committed to spend in excess of $400m on just such products and projects as the System I wheelchair.
There is no question that my government is extremely disappointed to have lost out on any venture that it has backed, but we are in the business of supporting local enterprise in order to help the Territory grow ...
Mr BAILEY: A point of order, Mr Speaker! I am aware of your rulings in the past, that ministers do not need to answer questions that are asked of them. We have just been given a concise history. However, the question I asked was designed specifically to give the minister the opportunity to clarify whether or not he had lied in a radio interview by providing in this Chamber proof as to whether or not, as he stated on the radio, the government monitored Modular Medical Products to ensure that its investment ...
Mr COULTER: A point of order, Mr Speaker! What is the honourable member's point of order?
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Mr SPEAKER: I am about to rule on that.
Mr COULTER: He has not advised what his point of order is.
Mr BAILEY: My question quite clearly gave to the minister the opportunity to respond in this Chamber ...
Mr Stone: He is making a speech.
Mr SPEAKER: Order! The member for Wanguri has made his point. There is no point of order. I reiterate that I have no power to demand an answer in any form from a minister. The minister is attempting to answer the question asked and I will give him the opportunity to do so.
Mr BAILEY: Mr Speaker, I move that his response be no longer heard, because he will not answer the question.
Mr SPEAKER: Order! The honourable minister.
Mr POOLE: Mr Speaker, I was about to answer his question. As I said, the government is in the business of supporting local enterprise in order to help the Territory grow. Although financial assistance is not as readily available today as it was at one time, we will do what we can and we will continue that support. Government assistance to local enterprise is reflected in the Territory's economy, which has been growing at twice the national average. However, in supporting local business, government has sometimes to take very calculated risks. Unfortunately, on this occasion, it did not pay off.
I pick up the member for Wanguri's comment about whether or not I lied on ABC radio. I do not believe that I did. I will have to look at the transcript of what was said to refresh my memory. However, let us face it, on the evidence presented in this House today, whether or not I lied to the ABC is completely irrelevant. Ask the member for Fannie Bay. She does it quite regularly.
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Leave granted.
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Mr BAILEY: Can the minister provide any proof to support the claim he made on ABC radio on 25 July this year that no taxpayers' money has been used to support the operations of Territory Surgical Supplies in competition with totally private-sector-owned and privately-funded suppliers of surgical supplies? If so, will he give an assurance to this House that he will table that evidence?
ANSWER
Mr Speaker, that is a good question. Last month, I announced that the Northern Territory government had concluded its involvement with Modular Medical Products which included a deposit of some $669 000. The government had sold its shares in the company to 4 of the original directors of Modular Medical Products.
The Northern Territory government's involvement with Modular Medical Products began in 1987 when it provided the company with financial assistance specifically to develop and commercialise a Territory invention, the System I wheelchair. There is no doubt that this was a great invention. It won the 1987 Northern Territory Enterprise Workshop Award. The wheelchairs were to be manufactured in the Territory and it was expected that they would provide jobs and economic growth in future years. The support was in line with the government's policy at the time of encouraging and fostering the development of manufacturing industries in the Northern Territory. That policy certainly had its share of success and failures, but the fact remains that the Territory's narrow manufacturing base was then, as it continues to be, an impediment to our economic growth.
It is well known that the System I wheelchair did not achieve the commercial success that was envisioned at the time of its development. That was due to a number of factors, including the economic downturn of the early 1990s, and the resulting decrease in expenditure by most state health services which had been projected to be the major purchasers of the wheelchair. As a consequence, Modular Medical Products has struggled over the past 5 years. However, the company has continued to trade, due to its commitment and the personal financial support of its various private-sector directors and shareholders, combined with diversification into the supply of other medical products. This was a logical and commercially expedient step for the company to take at that time to enable commercial opportunities for the wheelchair to be fully ...
Mr Bailey: Which subsidised which? That is the point of the question.
Mr SPEAKER: Order!
Mr Bailey: You had better be careful. We are looking at a ...
Mr SPEAKER: Order! The minister will resume his seat. The member for Wanguri makes a habit of continually interjecting and he does not make his interjections short and to the point. I ask him to refrain from interjecting in that way.
Mr POOLE: Mr Speaker, the government had supported the company where possible in its marketing endeavours, including extensive negotiations in 1994 towards the possibility of establishing a joint venture agreement for the System I wheelchair to be manufactured and
Page 1516
distributed in China. I have personally sought buyers while overseas on various trade missions, but unfortunately without success. All negotiations to date have been unsuccessful. With no progress in sight, the government decided to cut its losses and terminate its involvement in the firm.
As foreshadowed in my department's 1994-95 annual report, it is unlikely that the government would be able to redeem its investment in Modular Medical Products. The report shows the shares at face value. The notional, realistic value, as at 30 June 1995, assuming the shares were redeemed on that date, would be approximately $2504. That is the A-class shares at face value and a nominal value for the B-class preference shares of, say, $4. This note was included in the report in consultation with the Auditor-General for prudent accounting reasons. However, the government's shareholding remained on the books of the company at its full face value of $690 000.
On 2 April this year, Cabinet authorised my department, in conjunction with the Attorney-General's office, to terminate the government's involvement with MMP and the System I wheelchair. On 27 June, the government finalised the sale of its entire shareholding in Modular Medical Products with the 4 original directors of the company for the total sum of $20 000. This action crystallised the government's loss in this investment in Modular Medical Products at $669 000. All previous agreements between the government and the company were negated at the time of sale and the government has no further involvement, directly or indirectly, in the company.
However, the government does not resile from its actions in supporting local innovation. Government expenditure in research, development and commercialisation of the System I wheelchair equates to less than $5000 per chair manufactured. Given the acknowledged benefits of the wheelchair to the severely disabled children for whom it is designed, these costs can be justified on purely humanitarian grounds.
I note that the government's endeavours, during the late 1980s, to promote local innovation and develop manufacturing opportunities in the Northern Territory, are only now being emulated by the former federal government's policy on innovation, announced by the then Prime Minister in December 1995. In fact, the former federal government was committed to spend in excess of $400m on just such products and projects as the System I wheelchair.
There is no question that my government is extremely disappointed to have lost out on any venture that it has backed, but we are in the business of supporting local enterprise in order to help the Territory grow ...
Mr BAILEY: A point of order, Mr Speaker! I am aware of your rulings in the past, that ministers do not need to answer questions that are asked of them. We have just been given a concise history. However, the question I asked was designed specifically to give the minister the opportunity to clarify whether or not he had lied in a radio interview by providing in this Chamber proof as to whether or not, as he stated on the radio, the government monitored Modular Medical Products to ensure that its investment ...
Mr COULTER: A point of order, Mr Speaker! What is the honourable member's point of order?
Page 1517
Mr SPEAKER: I am about to rule on that.
Mr COULTER: He has not advised what his point of order is.
Mr BAILEY: My question quite clearly gave to the minister the opportunity to respond in this Chamber ...
Mr Stone: He is making a speech.
Mr SPEAKER: Order! The member for Wanguri has made his point. There is no point of order. I reiterate that I have no power to demand an answer in any form from a minister. The minister is attempting to answer the question asked and I will give him the opportunity to do so.
Mr BAILEY: Mr Speaker, I move that his response be no longer heard, because he will not answer the question.
Mr SPEAKER: Order! The honourable minister.
Mr POOLE: Mr Speaker, I was about to answer his question. As I said, the government is in the business of supporting local enterprise in order to help the Territory grow. Although financial assistance is not as readily available today as it was at one time, we will do what we can and we will continue that support. Government assistance to local enterprise is reflected in the Territory's economy, which has been growing at twice the national average. However, in supporting local business, government has sometimes to take very calculated risks. Unfortunately, on this occasion, it did not pay off.
I pick up the member for Wanguri's comment about whether or not I lied on ABC radio. I do not believe that I did. I will have to look at the transcript of what was said to refresh my memory. However, let us face it, on the evidence presented in this House today, whether or not I lied to the ABC is completely irrelevant. Ask the member for Fannie Bay. She does it quite regularly.
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Last updated: 09 Aug 2016