DON DUNSTAN FOUNDATION 1 DON DUNSTAN ORAL HISTORY PROJECT David MITCHELL This is George Lewkowicz from the Don Dunstan Foundation interviewing Mr David Mitchell for the Don Dunstan Oral History Project on the topic of economic development in the Dunstan decade. The date today is 27th March 2008 and the location of the interview is the Don Dunstan Foundation. David, thanks very much for doing this interview for us for our project. Can you just give some background on yourself, your qualifications, and then how you joined the Premier’s Department and when? Okay. I’m a graduate in Economics from Adelaide University and a CPA, if you like, these days. That’s certified practising accountant? What used to be – accountant, yes; used to be AASA. Yes. I originally joined the Government in 1970 in the Department of Labour, where I worked for three years, and then took up the position in the Premier’s Office, as it was then, or the Industry Development Division of the Premier’s Department, I suspect. Gets a bit confusing with titles. My specific position was – well, it was a threefold position: it was to act as Secretary of the Industries Assistance Corporation; Secretary of the Industries Development Committee, which was a parliamentary committee – bipartisan, bicameral committee of parliament; and as Secretary of the Industry Development Advisory Council. The main role was really Secretary of the Industries Assistance Corporation, which was then chaired by Malcolm Kinnaird, and other members were Max Dennis, who was then Chairman of the Public Service Board; Max Scriven, who was Director of Industry Development; Charles Rothhauser, who was an industry person, ran Caroma – that’s four, isn’t it? Oh, yes, and Gar Tattersall, who was then Assistant Under-Treasurer. So you had these three roles, and you mentioned the – was it the Industries Development Committee was the – – –? No; Industries Assistance Corporation. What sort of work did you do for that? Or, firstly, what was its role? MITCHELL_David_Cleared.doc DON DUNSTAN FOUNDATION 2 DON DUNSTAN ORAL HISTORY PROJECT David MITCHELL Its role was to provide development capital for small business, really, small to medium business, and the theory at the time was that there were many good South Australian companies which were starved for capital or for loans at reasonable rates, so the Industries Assistance Corporation really borrowed money from Treasury at government rates and then lent it to eligible companies at a small profit, shall we say. I think we added about one per cent to whatever the government rate was. The reality was that the (laughs) Corporation, if you like, minimised its profits and maximised its losses by that philosophy; so, in other words, if a company fell over because you were operating in an area where banks were a bit nervous, we only made a very marginal profit on the really good ones but if one fell over then you usually did your dough. You copped it, yes. Nevertheless, at least in that period, while times were relatively good, there were some reasonably successful companies that emerged out of it, as well as some duds, as one would expect. Can you remember the successful ones? Well, Murray River Developments was one, Murray River Queen, the original one there. We funded the first extrusion line for San Remo Pasta, when they were just emerging. The Commonwealth Development Bank had actually knocked them back, which was – and it was a good company – surprising that they had. They were two that spring to mind. I can remember a few other not-so-good ones. (laughs) The classic – although that might have been a little later in time – was; Golden Breed, knitted tops. Jeans? Oh, yes, there were a couple of jean companies. At that stage, South Australia was the jean capital of Australia, shall we say. If you like it was a mixed thing because the Government also provided government guarantees under Government Guarantee Program. They were dealt with separately and they’d go to the Industries Development Committee. So these DON DUNSTAN FOUNDATION 3 DON DUNSTAN ORAL HISTORY PROJECT David MITCHELL were, if you like, Treasury guarantees, but they were provided under the Industries Development Act so the framework was the Industries Development Act, which had the government guarantee provisions and the Industries Assistance Corporation. So, if you like, I co-ordinated those. So how did that guarantee work? Well, again, the companies had to demonstrate that the government guarantee was necessary to get the funds, it was in the public interest and they had reasonable prospects of repaying the loan – that’d been something which had operated since 1944, I think, so it was set up under Playford – rather than providing direct funds; whereas the Industries Assistance Corporation was set up under Dunstan. So who was the original funder? Was it a bank or some financial institution – Yes. – and then they’d do that subject to the government guarantee? Guarantee, yes. And there were some pretty big ones given over the years. I think in the ’50s I think even Adelaide Brighton Cement had had a government guarantee from what I recollect. But by the time that I was doing it those big, if you like Playford-type guarantees were not required. The financial system was working somewhat better for those major companies. But there were still some given over time, I think, we provided a government guarantee for the original Football Park development, and, despite all the nonsense that you hear from the SANFL saying they never had any government support, the government guarantee was absolutely critical in them getting up. Right, that was West Lakes. Yes. At that stage the Industries Development Committee was chaired by Don Simmons and I remember we– (laughs) we had Don Bradman lobbying intensely to try and stop it, because they wanted it at the Adelaide Oval. But the reason it went down to West Lakes, of course, was then that Delfin was struggling – I think it was really struggling to get the development up and actually having a – I mean now DON DUNSTAN FOUNDATION 4 DON DUNSTAN ORAL HISTORY PROJECT David MITCHELL they’d be kicking themselves for having let so much of that land go for sporting facilities, but then it resolved a bit of a problem in getting cash flow through and that sort of stuff, but it still required the government guarantee. So can you just describe the methodology, like you had certain requirements of financial information and – – –? Okay. If you’re going back to the Industries Assistance Corporation – Okay, sure. – because I’m rambling a bit, as one might expect – the Industries Assistance Corporation required that companies had to apply. There was a set out format for which they applied, it was a three-page, four-page questionnaire including – it’s what a bank would normally ask for – a full history, something akin to a business plan. Most of them couldn’t do a business plan, they didn’t know what a business plan was in those days; but effectively it was a full detail of the company, its projections, last three years’ financial history if it had one. A number of them didn’t have much of a financial history. We generally used to get a consultant to go out and assess them, somebody from one of the chartered accounting firms. Sometimes we’d use Treasury people, as Basil Kidd that you may remember who became Assistant Under-Treasurer; at that stage he did a lot of work for the Corporation, working out of Treasury. Then I’d do some myself. I did the less hard ones. (laughs) And then a report would be put to the board. Well, in fact, I should say that what we used to do was first of all the raw application would go to the board and they’d have a look and say, ‘Okay, well, this is worthwhile doing all the work or not.’ Then we’d organise for that. Then final recommendation would come to the board, we’d take as much security as we possibly could, which was generally inadequate; if their security was good enough then the bank should have done it. ..... ..... ..... So it was more cash flow lending and based on the business prospects, so a lot of it was gut feel on the part of the board members, who were relatively experienced people, and hopefully it would all come to pass. Was this within any policy framework about the sort of industries the Government wanted to support and promote? DON DUNSTAN FOUNDATION 5 DON DUNSTAN ORAL HISTORY PROJECT David MITCHELL No, not really, not at that stage. There was no – well, in a way. I mean, there’d been this Gap Study which you’re probably aware of, the great Gap Study, and so Max Scriven was aware of those sorts of issues and could bring that there. So I guess he was there for the overall industry development policy framework. But I’d have to say in those days the Industry Development Division was a team of eight people, and I keep on telling people when I finished my career the function probably had two hundred people doing less effectively what eight people did back then. You just got bogged down in bureaucracy. But the emphasis on policy and all of that sort of stuff was pretty minimal and because you had eight people you only attacked the big issues, the important issues. Bumf you just couldn’t handle. I still think it was a more effective way of doing things – and you had closer relationship with the Minister, whoever that was, and originally obviously it was Don and later Hugh Hudson was the Minister.