Anthony Albanese (Grayndler, Australian Labor Party, Manager of Opposition Business in the House) Share this | Hansard source

I rise to speak on the ACIS Administration Amendment (Unearned Credit Liability) Bill 2007. The Labor Party supports this bill, which seeks to confirm the Australian government’s continued ability to issue participants in the Automotive Competitiveness and Investment Scheme with unearned credit liabilities that are offset against their future ACIS credits in the case that items of ineligible expenditure or other errors are identified. It is important that the Australian automotive industry is able to participate in ACIS and not be disadvantaged by administrative delays. The significance of the Australian automotive industry, and indeed all Australian manufacturing, cannot be overstated. The Australian Labor Party has a strong history of supporting Australian industry and keeping pace with changing industry needs over time. Labor’s approach has included the introduction of a generous 150 per cent research and development tax concession, the development of specific industry policies in areas such as automotive and pharmaceuticals, and a proactive approach by government in attracting foreign capital. If it were not for the assistance provided by previous Labor governments, some industries would never have passed the embryonic stage. Under the leadership of Labor’s former Minister for Industry and Commerce, Senator John Button, industry was assisted to modernise, innovate and face foreign competition. Labor Party reforms have enhanced the competitiveness of Australian firms by removing tariff walls and other barriers that had sheltered Australian industry from international competition and engagement.

Today the automotive industry directly employs around 80,000 Australians. With turnover of approximately $27 billion per annum, the industry accounts for six per cent of employment in the manufacturing sector and around one per cent of Australia’s GDP. Reforms initiated under John Button have allowed the industry’s productivity and quality performance to become a significant asset and allowed some Australian firms to supply products to particular export markets.

But, upon coming into government, the Howard government wasted no time in undoing many of these positive reforms. The first Howard-Costello budget slashed the R&D tax concession, from 150 to 125 per cent, and cut back funding for export and trade enhancement programs. Two years later they announced a pause in the tariff at 15 per cent, from 2000 to 2004, followed by a reduction to 10 per cent in 2005, and the introduction of ACIS, designed to provide the automotive industry with import credits to be offset against customs duty on eligible imports. But, in truth, ACIS has been little more than a rebadging of the Export Facilitation Program, a similar assistance program introduced under the previous Labor government.

In December 2002 the government announced that its automotive policy commitment beyond 2005 would revolve around a 10-year, $4.2 billion extension of ACIS until 2015 and, following a 2008 Productivity Commission review, a reduction in the tariff on passenger vehicles and automotive components to five per cent from the beginning of 2010. What is clear in 2007 is that the Howard-Costello government thinks it has done everything it needs to do as far as the Australian automotive industry is concerned: it has extended the ACIS program, called for a review or two and reduced vehicle tariffs. What the government has failed to do is to keep step with the rest of the world and the changing face of the global and local automotive industry. This is an industry that must now take into account globalised supply chains and the emergence of new automotive economies such as those of China and India.

There are unaddressed industry concerns that ACIS is failing to deliver benefits to local industry, in terms of both R&D value and in facilitating the involvement of Australian manufacturers in the global supply chain, and that car makers are using import credits in a way that reduces the local content of domestically manufactured vehicles. The Howard government approach to policy leaves industry unprepared—and this is not confined just to the automotive industry. The Howard government has washed its hands of the plight of the Australian manufacturing industry as a whole. We on this side of the House know that good industry policy translates into vibrant and growing manufacturing industries of all varieties. However, on the Prime Minister’s watch manufacturing has plummeted to under 12 per cent of GDP, amongst the lowest levels in the OECD. Just over a decade ago, manufacturing accounted for over 14 per cent of GDP. That is over $24 billion in today’s value lost to the economy. Between 2002-03 and 2005-06 alone, manufacturing output fell by $860 million.

Despite the fact that the manufacturing industry employs over one million Australians, the Howard government does not have a plan for the future of critical manufacturing industries, such as the automotive and textiles industries. Without policy reform, the numbers will continue to decline. The downward trends are astounding. Since the election of the Howard government in 1996, we have lost over 110,000 manufacturing jobs. This is equivalent to approximately 204 manufacturing jobs disappearing each and every week that the Howard government has been in office. Since 2004 alone we have lost 36,700 manufacturing jobs. That is equivalent to 352 every week.

The impact of these job losses on local communities and workers is severe. At the beginning of 2006, the Australian Manufacturing Workers Union conducted a survey of workers made redundant at Ion in Albury around September-October 2005 and at Tristar in Sydney in August 2005. The findings of the survey are astounding and should be of concern to anyone interested in the long-term future of manufacturing and communities which are dependent on manufacturing employment. The main findings were:

• The percentage of redundant workers who have found employment is 37.2% with the average length of unemployment for the lucky ones who found jobs being 5 weeks.
• The unemployment rate amongst these people up to 6 months after they were made redundant is 48.2%.
• 5.1% of those surveyed were forced to retire prematurely because of the redundancy.
• Only 41.4% of the workers who had managed to find jobs were able to secure employment in the manufacturing sector.
• Only 48.4% of those workers employed found full time employment.
• 31% of the workers had to accept casual jobs.
• The average hours for the redundant workers who found full time jobs was 44.4 hours per week representing 10% more hours than they worked in their previous job.
• Of those lucky enough to find employment, 89.7% suffered a reduction in wages with the average reduction being 28.3%—

or more than one dollar in every four—

• Exactly half of those who were made redundant believe that their long term financial security has suffered significantly from this redundancy.

In other words, high-skill, high-wage manufacturing jobs, once lost, are extremely hard to replace. This is the ultimate price that Australia will pay if we allow the automotive component industry to disappear.

Another big concern for manufacturing is the significant downturn in export growth and the impact this is having on the trade deficit. The data is telling. Between 2001 and 2005 manufacturing exports fell by $1.3 billion, while manufacturing imports grew by $28.4 billion. In 2004-05 the manufacturing trade deficit blew out from $29.7 billion to more than $89 billion. This government has reached new records and filled industry data with superlatives. Australia’s share of world exports has now fallen to its lowest level since records began in 1946. The Howard government has presided over 57 monthly trade deficits in a row—the longest run of any Australian government.

This government’s declining support of industry is damaging and does not bode well for future economic prosperity. There is a dire need for this government to develop sound industry policy that will see to industry growth, not decline. How can we revive a globally competitive manufacturing industry in Australia? One of the strengths of the manufacturing industry here in Australia is its innovative nature. We must build on this strength. Australian businesses and industry have imagination and a desire to grow. We must catapult emerging industries so that they become Australian success stories of tomorrow and not foreign success stories built on Australian innovation.

In the last decade, it was a tragedy that some of our best technology and brightest and, indeed, most innovative people went overseas. Take, for example, the solar hot water systems developed at the University of Sydney. The Chinese saw its commercial potential and grabbed it. It is now a huge part of China’s solar market—invented in Australia, but made in China. Some of you may recall Dr Zhengrong Shi, a dual Chinese-Australian citizen. Dr Shi completed his PhD in solar energy at the University of New South Wales, but his wealth, which is estimated at $3 billion, comes from commercialising solar energy technology in China. Dr Shi told the Sunday Telegraph on 27 August 2006:

... if Australia had a similar type of incentive program (to China’s), we definitely would have set up a manufacturing facility in Sydney or Australia.

I have met Dr Shi and spoken with him on a platform at the Australian National University. He is indeed someone we should all be proud of. We should be encouraging innovators such as Dr Shi to develop industry here in Australia so that the profits and the jobs stay here. Australia needs the right mechanisms and incentives to encourage innovation and investment. We simply cannot afford to lose these sorts of opportunities.

Labor believes that innovation and research and development are the keys to a competitive manufacturing industry, but a complacent Howard government is unable to create an environment that fosters innovation. Under its watch, business expenditure in R&D in Australia has been declining in comparison with our competitors. In Australia, business expenditure in R&D, or BERD, is 0.89 per cent of GDP. This ranks Australia 15th in the OECD. The OECD average is 1.5 per cent. By comparison, Chinese firms have been increasing their R&D expenditure by over 20 per cent per year. Though the government will argue that since 1996 BERD has been growing on average at 2.6 per cent per annum, it will not tell you that in the previous decade R&D investment grew by 11.4 per cent per annum—11.4 per cent under Labor and 2.6 per cent under the Howard government. Manufacturing has taken a more severe hit, with BERD down from 10.5 per cent to 0.8 per cent. This is a devastating decline given that manufacturing is generally seen as the major driver of BERD. Within manufacturing, the automotive industry contributes the majority of research and development.

The future of Australian industry must be underpinned by innovation—a critical factor to drive productivity and therefore to drive growth. It is not just Labor that says so. In its paper New concepts in innovation: the keys to a growing Australia, released in March 2006, the Business Council of Australia stated:

… there is a lack of understanding … about how innovation occurs within businesses and the policy environment required to allow it to thrive.

We need to meet the challenge and kick-start the next generation of innovation. Under a Rudd Labor government, industry will be driven by investment in research and development, a highly skilled workforce, sound intellectual property arrangements and venture capital finance initiatives that facilitate commercialisation.

The Howard government strategy for making us competitive is very simple: cut wages and conditions so that Australia can compete with its neighbours on wages. It is a road to a low-wage, low-skill economy. Labor believe in a high-wage, high-skill economy and we believe in an expanding manufacturing sector. Labor’s industry policy will appreciate Australia’s place in a globalised market. It will map a long-term, forward-looking strategy that is sensitive to the competitive advantages of the Australian economy and the pressures being felt by Australian industry.

With Kevin Rudd’s education revolution we will make the right investments that are needed in the skills and education of our people. Australia cannot stand ready to meet new challenges and take advantage of emerging industries if the Howard government continues to reduce public investment in universities and TAFEs while other OECD countries increase it. Labor’s industry policy will ensure that Australia’s great research institutions, including the CSIRO, are supported, heard and respected for the work they do. It will foster a culture of innovation that will not just advantage manufacturing industries but will also allow our mining and agricultural sectors to build their skills and add value to exports. It will position Australia such that it can offer our region the banking, financial, educational and environmental services of the future. It will be an internationally competitive Australia that is proud of its modern manufacturing, smart services, cutting-edge health and medical research, innovative mining and sustainable agriculture.

There is an example of what is occurring, particularly in the automotive industry, at the moment in my electorate of Grayndler. When I was first elected, the Tristar plant in Marrickville employed over 600 Australians. By and large, these are Australians who came here after the Second World War, many of them migrants from southern Europe. They have worked hard and made an outstanding contribution to the economy, to the local community and to Australia as a whole. It is an outrage that 30 of those proud Australians have had to put up with the extraordinary actions of the owners of Tristar, who have moved the work offshore to China and who make those workers clock on every day and sit in a vacant factory simply because their redundancy entitlements of four weeks per year of service would entitle them to a considerable redundancy payment. These are Australians who have worked in the manufacturing sector for years. The late John Beaven worked in that factory for 43 years. It was the only job he had. The 30 remaining workers have an average service to the company of well over 25 years. They rely on the manufacturing sector. Many of them will find it very difficult to find other employment; therefore, the securing of their entitlements is vital for them and their families.

Yet, when we raised questions about this issue in the parliament on 10 August last year, when the Tristar workers came to parliament in November and we asked questions again in the parliament, and when the workers wrote to the Prime Minister, they were treated with contempt by this government. They were thrown on the scrap heap, just as large portions of the manufacturing sector have been regarded as unimportant. They are the personification of Australia’s decline in manufacturing. Labor will continue to campaign for them to receive the payments to which they are entitled. This is nothing more and nothing less than theft by this company. The government, which treated those workers with contempt for many months, has now acknowledged there is an issue but has failed to take real, effective action.

To conclude, Australia’s manufacturing industry, including the automotive industry, is now at a tipping point. For more than 10 years, the government has failed to demonstrate the national leadership required to secure Australia’s industrial future. Australia must develop a forward-looking industry policy and strategy. Our long-term prosperity as a nation cannot depend on exporting more raw materials to developing nations, or slashing wages and working conditions such that they are lower than other nations. Australia’s ongoing future prosperity will be guaranteed by being innovative, with leading businesses and individuals that are the best and most productive in their fields. Complacent governments like the Howard government generally concentrate on distributing income rather than generating it. More than 10 long Howard years represent a missed opportunity that will impede Australia from sustaining our prosperity and compromise our ability to remain internationally competitive. The alternative Labor formula is simple: investment equals productivity equals growth equals sustained prosperity—prosperity for Australian industry and sustainable prosperity for all Australians.

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