Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry and Innovation) Share this | Hansard source

I have great pleasure in rising to speak on the ACIS Administration Amendment (Unearned Credit Liability) Bill 2007. I will start by going through what the Automotive Competitiveness and Investment Scheme is. Basically it is an industry assistance scheme for the Australian automotive industry. It is administered by the Department of Industry, Tourism and Resources. The responsibility for the program delivery comes under AusIndustry. The scheme commenced on 1 January 2001 and expired in December 2005. It replaced a Labor government scheme, the Button car scheme, previously called the Export Facilitation Scheme. Since then it has been renewed and extended. In fact, in December 2002 the Australian government announced a new assistance package for the automotive industry. Under the package and after the scheduled reduction in January 2005, automotive tariffs are to remain at 10 per cent until January 2010, when they will be reduced to five per cent, and they will remain at least at that level until 2015. The package also includes an extension of the ACIS scheme from January 2006 to December 2015, albeit with some modifications, including a phasing down of assistance between 2011 and 2015.

The ACIS program, in short, is massive—it is a huge program. It is a massive scheme. In fact, the Productivity Commission stated:

Although assistance to both motor vehicle producers and parts suppliers has declined significantly since the mid-1980s, the automotive industry remains one of the most highly assisted industries in the manufacturing sector. This assistance derives largely from tariffs and tariff concession schemes, particularly the Automotive Competitiveness and Investment Scheme (ACIS).

ACIS is in fact the single largest government tax concession scheme. It represents a massive proportion of industry assistance, and automotive assistance in itself represents about 38 per cent of all manufacturing budgetary assistance. It is a good thing, and it is certainly something we support. We are supporting the amendment to this bill—it is very necessary—but questions still remain and need to be answered on the outcomes of the scheme and whether the Commonwealth and industry are getting bang for their buck rather than perhaps what is taking place at the moment.

The purpose of ACIS is to improve the automotive industry’s investment and competitiveness in the lead-up to the planned implementation of free trade under the APEC Bogor goal in 2010. There are a range of firms that are eligible for assistance. Mostly they are motor vehicle producers. There are also automotive components producers, automotive machine tools and tooling producers and automotive service providers. There is a variation in how they are assisted, through either production credits or investment credits on plant, equipment and expenditure on R&D. Duty credits can only be used to offset an import duty liability within the Australian Customs Service, which is in fact what this bill is about—trying to rectify something which was not in the original intent of the bill in the way it was originally set up. As import duty liabilities arise, a holder of a duty credit can use that credit in lieu of cash to meet that particular liability. Duty credits can also be transferred—that is, they can be sold to any other person—but there are restrictions on their use. The offsetting of an eligible import duty liability still remains.

What today’s amendment to the ACIS Administration Act 1999, and hence the ACIS scheme, does is no doubt necessary and in the best interests of the efficient use of this enormous financial resource set aside for the scheme. However, it is what it is—a minor amendment at the end of the day, a minor amendment to the one and only policy tool that the Howard government has been able to devise to assist the Australian automotive sector. If you took the toolbox of available instruments that the government has, you would see that it is a very large tool but that it is the only tool in its box.

The Minister for Industry, Tourism and Resources is not bringing before this House a vision. There is no new direction, nothing has been planned and there is no considered strategy for the Australian automotive sector. This simple procedural tinkering at the margins is not what the Australian economy needs, nor is it really what Australian industry needs or, for that matter, what the automotive industry needs. I am very happy to have the opportunity to speak on ACIS and on the broader automotive industry and industry related issues, but at the end of the day, while the amendment is supported by Labor, it is a very small, minor amendment.

Labor has for many years now been advocating a much more considered approach, a much more comprehensive whole-of-government approach, to innovation in Australian industry. I do not think anyone would argue that there is no better time than the present to actually get on with that job. The leader of the ALP, Kevin Rudd, has recently articulated a vision for the Australian economy that involves using the great prosperity we currently have through our resources boom to invest in our economic future. That is very important to the economic future of the automotive industry and, more broadly of course, right across industry.

While the government’s only policy response to lift our productivity has been to introduce ill-advised and unfair labour market reforms, the ALP is thinking much bigger and much smarter. We want to invest in our human and physical capital. We want to invest in our ability to innovate. We want to invest in the future. To do that you have to do it today. Innovation is at the forefront of Labor thinking in finding new solutions and formulas for the Australian automotive industry and for industry.

The Labor Party’s record on automotive industry policy is actually quite impressive. It was the Hawke-Keating government that made the hard, necessary decisions to break down trade barriers. We just heard from the member for Corangamite, who laments tariff reductions—mind you, tariff reductions supported by his own government, of course, because they are necessary. They are necessary to drive that very important tool, the most important tool that industry has, that is international competitiveness. Without that in your toolbox you cannot compete and you cannot survive. All you can do is rely on protection for some short-term gain, and eventually your industry will collapse.

The result of the government not having a focus, not looking at what it ought to be doing, is that the automotive parts industry is struggling. We made the hard decisions on trade barriers, on liberalising capital markets and, yes, on the sensible, measured labour market reforms that were needed at the time. The result was that an industry that was once inward looking is now much more efficient and has endured many decades of competition. It will continue to do so if it becomes more internationally competitive, more focused on the international market and more export oriented, but there is no doubt that it does need assistance from government and some vision in that area.

Because of the Hawke-Keating government, the consumers of Australia have been provided with an automotive industry that makes sense and delivers forward for them, an automotive industry that has rationalised its structure and an automotive industry that has improved its methods, its R&D performance and its export focus. The previous speaker talked about some of those improvements and some of those things that happened, and those improvements today can be seen in the sale to the United States of rebadged Commodores, the success of the Ford Territory, the sale to the Middle East of the Holden Statesman and so forth. All those success stories were not built in the last five years or in the last few years; they were actually built on previous Labor plans—on the Button plan, in fact, which no-one really questions.

If you look at the Button plan and its rebadging as the Automotive Competitiveness and Investment Scheme today, you will find that there is not really a great deal of difference. That in itself is okay; it is okay that the government just picked up Labor’s policy and ran with it. The problem that exists today is that they have not adjusted that policy, that they have not looked forward. The policy was fantastic in its day and delivered much for the Australian automotive industry, but I think it needs another review. I think we need to look a little further down the track. What is going to be the policy for the next two decades? We cannot just sit on a policy that was once successful and say, ‘That’s enough,’ because one thing you can guarantee in life is that a past success does not guarantee a future success. We need to seriously investigate ways to do a better job. Just merely sitting on the policy plans of others is not going to deliver that.

It is almost a great irony that while Labor put in the hard yards, the many years of reform not only in the broader economy but also in industry—and it was quite involved, with vision and leadership required to actually deliver those 16 years of economic growth that we enjoy today—and while the government ride that wave of prosperity, the only policy solution they have is called industrial relations. By giving the tools to drive down wages and making it easier to get rid of people, they think that that is somehow going to deliver greater prosperity, productivity growth, innovation and increased skills. All those things that we actually need will not be delivered just through that one simple tool that this government are using in terms of industrial relations.

As I work through this legislation, I also want to mention that the government’s other response to the automotive industry was a four-page action plan. It is quite uninspiring and, frankly, does very little. What is even more worrying about this action plan from the government is that it ended in 2002. There has been nothing since. There was very little to inspire us back then, but now there is no action plan at all for the automotive industry. It is as simple as that. It has been five years since the government sat down and actually thought about it and asked: ‘What do we need to continue to make the proper adjustments that we need?’

What Labor believes in and what the government ought to be doing is looking at properly investing in skills, in research and development, in human and physical infrastructure. This is what needs to happen, and a myriad of data is there to back that up and prove it. Whenever we raise this data, people say we are talking down the industry or that somehow we are trying to paint a gloomy picture. That is far from the case. Australian industry certainly is doing well, but it can do much better. It certainly needs to do better in the area of emerging technologies and it certainly needs to catch up with the rest of the developed world, particularly the OECD.

When the member for Grayndler made his contribution to the debate on this legislation, he talked about some of the very poor and sad figures about where Australia stands on its spending on education and skills. We are at the bottom end of the OECD when we should be at the forefront, when we should be leading. Australians have a great heritage and great history of being thinkers, innovators and doers—practical people. Partly because of where we come from, our geography, the tyranny of distance and all those harsh elements of Australia, we have always been able to adjust and be innovative. But you need to support that innovation.

If you ask any man or woman in the street, one thing that always concerns them is that all the best ideas that are thought of here in Australia walk their way offshore. We heard from the member for Grayndler about Dr Shi and solar hot water technology. What a great loss to Australia that this technology was actually invented here but was not supported. There were no mechanisms or processes by which he could be assisted to make that happen in Australia, and he had to go back to China to make it happen. I will not go into all the details of that hugely successful story about Dr Shi and the technology, but I lament that great loss to manufacturing in this country.

There are a number of challenges for us and it is poignant to raise that in terms of how we spend our money. Because ACIS is such a large scheme, it is very important that we look at how we spend that money and how that gives us a much broader picture. We will hear much talk in this House about the threat of China and India and international competition, that battle for imports into Australia, but those fronts are not quite as they seem on the surface. We tend to consider that the really big threat coming from China is simply cheap labour, that cheap labour will be what makes us come undone because we cannot compete on that front and manufacture as cheaply as they can. Australia still has an advantage, though. We still have some natural advantages with our resources, we are still internationally competitive and we still innovate. We still put some money into R&D, but we are falling behind in R&D. The reality is that while Australia is marching backwards in its spending on research and development, China are increasing their spending year on year by 21 per cent. They have actually understood what is going to make them internationally competitive in the next two decades, and it is not the fact that they have cheap labour. That certainly will give them an incredible natural advantage, but what will give them an extra advantage, an extra leg-up over us here in Australia, is that they are now becoming the innovators as well.

Imagine the picture in Australia for the manufacturing and automotive industries, and for industry generally. Not only do we have to compete against countries in terms of cheaper labour but suddenly we have to compete in terms of how they innovate. I am referring to how they change processes—manufacturing and management processes—and financial industry products. When they start to become competitive and think outside the box, as we have always been known to do, we suddenly lose the last little bit of our natural advantage. We will be left only with resources.

Resources are great, and certainly we are now going through a once-in-a-lifetime boom, with the rivers of gold—taxation gold and revenue—that flow in to this government. I have to say that I don’t know what they are doing with this revenue. Are they keeping it for a rainy day? Shouldn’t they be investing it? Isn’t that what they do with our taxes? Should they hold onto the money or should they invest it, on our behalf, in education skills, in our children’s future, in industry, in the most innovative pathways, emerging technologies and new industries that will deliver the jobs of tomorrow? Is it the government’s role to just sit on huge surpluses and say: ‘Look, aren’t we great? We’ve got this big bag of money’?

While everything around us is crumbling—infrastructure is crumbling; industries are facing huge challenges globally—the government says, ‘Look, our bag of dollars is getting bigger and bigger.’ But it is not doing anything with it. Any mum and dad sitting around the table and doing the budget know they cannot buy a house by just sitting on a bag of money; they have to borrow and invest. That is the point. This government simply does not understand that aspect.

The moral of the story I am telling today in the chamber is a simple one. It would have been great if the minister had been here to hear it. The small, minor change contained in the bill that is before us is simple and straightforward. Labor supports that change; there is no question about that. It is something that needs to happen. But that is it; that is the end of it. There is just one small, minor administrative change to ACIS—the single biggest scheme from the government in terms of supporting the automotive industry—but there is nothing else. I think that in itself speaks volumes about the devastating figures that we have before us regarding where manufacturing is going.

If we look at some of the data, we see that manufacturing output has actually shrunk. No matter what the government says, output has shrunk; productivity has shrunk. So our capacity to grow is shrinking. While the numbers may vary, it is the growth figures that I think are the most important.

There is also a very sad side in terms of lost manufacturing jobs. Since 1996, 110,000 manufacturing jobs have been lost. That is sad. What is being done, though? I know that a lot of people who lose their jobs in traditional manufacturing areas, if they are skilled up, retrained, if there are packages in place for them, will go on to bigger and better jobs. They will go on to other industries—new, emerging industries. It is a matter of taking old industries and making them new again. So there is potential for them, but the government does not do that. This is not a government that looks forward; it is a government that reacts to what has happened in the past. Not only has it reacted by introducing ACIS, which rebadges a very good Labor program; it has also reacted in a backward fashion. It waits for people to be displaced from industry before it moves forward to do something for them. In my book, that is a little too late. It is a little too late, when somebody loses their job in manufacturing, to decide to give them some sort of assistance package to try and retrain them. It would be much cleverer if the government had packages in place that looked to the future to see where those new, emerging technologies, jobs and industries will be.

There are a whole range of sad figures, and I will not go through all of them. There are some good figures and some bad figures. Obviously, there are niche markets and areas where Australia does incredibly well. There are stories out of Victoria of a components manufacturer that once used to provide a bulk, generic type spring for a vehicle and decided that there was a great niche market for a high-performance, innovative product. It did that and now supplies a global market—Mercedes-Benz and other high-performance car manufacturers—with some great products.

In the short time remaining to me, I want to raise a couple of other points. With respect to the automotive industry, the action agendas—things that the government puts on paper that it wants to do—ended in 2002. In the five years since, there has been nothing. I assume it is no longer interested. There is no action agenda for the broad industry sector either. There is no action agenda for manufacturing. There is no action agenda for emerging industries. There is no action agenda for emerging technologies. Where is the government? Is it just looking backwards again? Obviously it is, because there is nothing in its own documents and papers to suggest that it is in any way interested about the future of the automotive industry or industry more broadly. It just looks to the past. It sits on its rear and hopes that, with a strong economy, driven by a resources boom which it has had nothing to do with, it can skate home and ride the wave of economic fortune. (Time expired)

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