Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Hansard source

I rise tonight to speak about the challenges facing Australia’s car-manufacturing industry and about the importance of this industry to my electorate of Calwell. I do so in the context of nearly 600 job losses announced by South Pacific Tyres in late June this year and Ford’s announcement some two weeks ago that it would shed a further 350 jobs in its Broadmeadows and Geelong plants. Both South Pacific Tyres and the Ford assembly plant are located in my electorate of Calwell.

To say that there is a growing sense of uncertainty over the future of car manufacturing in Australia, especially among those who work in the industry, is an understatement. The challenges faced by Australia’s car industry are well known. They include rising fuel prices; changing consumer preferences as people opt for smaller, more fuel-efficient cars; the appreciation of the Australian dollar; and greater competition from overseas. Since the early 1990s, Australian-made cars have continued to lose ground in their share of domestic car sales in Australia, accounting for just 25 per cent of all domestic car sales in Australia in 2006. Australian car manufacturers, in turn, have increasingly come to rely on export market opportunities. In particular, market opportunities in the Middle East, the United States, New Zealand and Korea have seen the export arm of car manufacturing grow to a $5 billion industry that now underwrites 40 per cent of all local production in Australia. Aggressively pursuing new export opportunities remains absolutely crucial to the industry’s future.

Nationwide, car manufacturing still accounts for around 68,000 jobs. These include those who work on the car assembly production line as well as those who are employed in one of the 200 automotive component firms, many of which are concentrated in Melbourne and Adelaide. It is an important industry whose reach extends beyond the big three remaining car manufacturers in Australia—namely, Ford, Holden and Toyota—to include a host of auxiliary industries, from component manufacturers to specialised tooling firms which rely upon car manufacturing for their very survival.

Calwell is home not only to the Ford assembly plant in Broadmeadows but also to a number of car component suppliers and specialised tooling firms and, as such, it serves as a barometer of how the industry has fared over the last decade. The industry has not fared well. In late June, South Pacific Tyres announced that it would close its Somerton plant at the end of the year, leaving the plant’s 587 employees with the daunting prospect of having to find work between now and December. Only two weeks ago Ford announced that it would shed a further 350 jobs across its Geelong and Broadmeadows sites. This follows some 650 jobs that Ford shed in December 2006. Such announcements have a ripple effect that, where job losses are concerned, extends through the entire car component supply chain. To give two local examples, at least 500 jobs have been shed at Autoliv over the last few years, along with significant job losses at Kozmo Industries. These and similar examples serve as a warning of what lies in store if we fail to get the policy settings right, especially when it comes to helping the industry meet its future challenges.

The question is: where to from here for car manufacturing in this country? This question has recently been front and centre of national debate, following the much anticipated release of the report of the Review of Australia’s Automotive Industry. The review, chaired by the Hon. Steve Bracks, makes a number of important recommendations. They include replacing the current Automotive Competitiveness and Investment Scheme with a new and retargeted Global Automotive Transition Scheme designed to support research, development, design and export, and bringing forward and doubling to $1 billion, if successful, the Rudd Labor government’s Green Car Innovation Fund.

The most controversial, however, of the review’s recommendations is for a further reduction in Australia’s passenger motor vehicle tariff from 10 per cent to five per cent by 2010. This is in keeping with the recommendation put forward by the Productivity Commission and is one that has created particular anxiety amongst Australia’s automotive workforce. Opposition to further tariff reduction is being voiced not only by the major car makers themselves but also by those who work in the car industry, including many who live in my electorate of Calwell, and I have to say that I am yet to be convinced by the arguments that are used to support a further five per cent reduction in Australia’s passenger vehicle tariff.

In essence, the argument in favour of tariffs goes something along these lines. Opening up Australia’s automotive industry to greater international competition will compel the industry to identify and home in on its competitive advantages more quickly. In the process, those parts of the industry that fail to be competitive or prove to be artificial for the way they rely on government support to keep them afloat are expected to go under, allowing investment to be channelled to where it can be better utilised for industry gains. Tariffs are seen as a disincentive to change, whilst their reduction or removal is believed to have the reverse effect by creating an environment that is more conducive to innovation and greater industry competitiveness. It is those firms that are able to survive and prosper in this environment, whether through new advances in technology or by capitalising on niche markets, that will eventually form the backbone on which the long-term future of automotive manufacturing in Australia will rest.

But when advocates of this argument refer to efficiency gains and rationalisation of the industry, they are actually referring to job losses. It is not until you have been at the coalface of the car industry that you are able to appreciate just what effect job losses like those announced by South Pacific Tyres and Ford have on individual workers, their families and the local community in general. All of us—business, government, unions and workers—agree that in order to survive, prosper and grow in a more competitive international environment Australia’s automotive manufacturing industry must transform itself by diversifying its manufacturing base and increasing its investment in research and development and the testing and development of new technologies.

But there is another argument around car tariffs that can be made. Tariff reductions by and large benefit those firms and enterprises that are already in a position to outperform the international competition. Tariffs are often used to provide a protective barrier within which fledgling or struggling industries are given the breathing space to build up their competitiveness and maximise their strengths before being fully exposed to international competition. It can be argued that freezing tariffs is one way to provide Australia’s car industry with both the space and the time to undergo the reforms it needs to make in order to be more internationally competitive. I understand that a balance needs to be made between ensuring access to overseas markets for Australian exports and tariff protection, but many have pointed to the failure of the latest round of Doha negotiations in support of the argument that Australia’s car tariffs should be left at 10 per cent. Others point to the high tariffs that other developed countries currently impose on Australian car exports.

This is a debate that has yet to run its course. Across a number of industries, manufacturing has helped lay the foundations on which my electorate of Calwell can build for the future, especially in terms of our existing industry infrastructure, our highly skilled local workforce and our capacity to innovate and compete. There is both potential and opportunity out there, especially as attitudes to climate change shift and consumer demand for green technology grows. As policymakers we have a responsibility to help harness that potential. We have a responsibility in particular to get this policy right, because we do not want to be in a position where we may make decisions that lead to the demise of Australia’s car-manufacturing industry.

I firmly believe that car manufacturing has a future in this country and I also believe that we in this place must do all that we can to help protect that future. Government has an important role to play both in terms of showing leadership and by developing the right policy settings capable of channelling more investment and energy into those areas where the potential for industry gains are greatest.

I also want to put on record that, although people often malign the union movement, I have nothing but praise and admiration for the union movement—in particular, the Australian metal workers union and the vehicle builders union. I know those officials, I know the people who are members of both unions and I know the organisers. I know the people who are involved with the unions are committed to protecting, preserving and supporting Australia’s car-manufacturing industry. They believe in it not only because they want to preserve jobs for Australians now but also because they want to preserve Australia’s car-manufacturing capabilities into the future. If we do anything that leads to the demise of the car industry in Australia, we will lose an entire generation, a critical mass and a capacity that I do not believe we will be able to get back in the next 50 years. So together unions, government and the general community need to support the car-manufacturing industry in order to ensure its survival. (Time expired)

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