Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Hansard source

The Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009 provide a new tranche of assistance to the Australian automobile manufacturing industry. The opposition strongly backs Australia’s car manufacturing industry and the 57,000 jobs that it supports. We also accept that there is a need to provide further funding to the industry to ensure its long-term sustainability in the face of lower tariffs and one of the more open car markets in the world.

However, this particular legislation is part of a new generation of legislation being brought into this House by the government which is being referred to as ‘coathanger legislation’. It contains very little detail and merely authorises the preparation of a whole series of regulations. The real important issues about the nature of this new industry assistance package are all relegated to the regulations. This is a pretty unsatisfactory procedure because it does mean that the key elements of legislation are not subject to proper parliamentary scrutiny.

We have serious concerns about the nature of this bill, which is just 18 pages compared with the existing ACIS bill, which contains 124 pages. The government’s increasing predilection to coathanger legislation means that the critical detail of the bill is reflected in the regulations and the guidelines, and that is concerning. It robs the parliament of any real and meaningful opportunity to properly scrutinise and amend the legislation. When the regulations come in, the parliament certainly has the option of rejecting them; but we cannot reject them any way other than in total, and so all of the regulations have to be rejected, in which case the government then has to take them away and cannot bring them back for a certain period. There can be no discussion about the detail of those regulations, and when there is virtually nothing in the bill the regulations do matter.

I appeal to the government to look at the legitimacy of the process that it is following in relation to this legislation and, indeed, other bills. They cannot expect oppositions to give blank approvals for legislation when there is no real detail in it. The real problems are most likely to arise in the regulation. You have all heard the old phrase ‘the devil is in the detail’. That is absolutely true of this legislation because there is nothing in the legislation itself about the detail of the way these proposed schemes will operate.

There is a huge amount of taxpayers’ money on the table with this legislation. Not a few dollars, not a few hundreds of millions but many billions of dollars are being authorised in increasing support for the car industry. However, with such a large amount of taxpayers’ money on the table there clearly ought to be greater focus on what the government is actually trying to achieve with this funding. There need to be strong accountability measures and, clearly, the legislation, and the taxpayers’ money, ought to be directed towards delivering economic outcomes—a more sustainable car industry. You cannot simply keep coming into this House, decade after decade, with another massive assistance package for the car industry. Sooner or later, surely, we expect this industry to be able to stand on its own two feet and to be competitive without massive government and taxpayer subsidies.

So it is important that the objectives of the bill clearly demonstrate the economic outcomes that are proposed. Improving economic outcomes must be a key requirement of the bill. It is not satisfactory to contain in the objectives a requirement to improve environmental and work skill outcomes, although those are worthy objectives. Surely the most important reason to spend billions of dollars is to make this industry economically sustainable. Further, as the bill stands it contains no benchmarks or requirements for public reporting on how the money is spent. It is particularly important that that also be a part of the bill’s objectives.

The opposition proposes to move amendments in relation to the bill to try and improve these elements. In the moments before the debate on the bill started, a copy of proposed amendments that the government plans to make to the legislation in these two areas was handed to me. I welcome the fact that they recognise the bill is defective in these areas. I understand that there had been negotiations between the government and the shadow minister in relation to these issues, and we thought those negotiations were going on in good faith. However, we are disappointed now that they seem to have abandoned the negotiations, and the amendments that are on the table simply do not reflect our position on the bill, particularly in relation to disclosure requirements and accountability. So we will vigorously pursue proper amendments on this matter, particularly in the Senate.

The legislation itself involves the expenditure of very large amounts of money to support the Australian car industry. There are currently three motor vehicle producers in Australia: General Motors Holden, Ford Australia and Toyota Australia, who between them produce of the order of 300,000 vehicles, although, of course, the number built this year will undoubtedly be less than in previous years because of the economic situation in this country and in other parts of the world. There are over 56,000 people employed in the motor vehicle and the motor vehicle parts manufacturing industry in Australia although, again, those numbers are declining as factories, understandably, lay off workers because of the lack of demand.

Well over half of this industry is in Victoria, with a further 18 per cent in South Australia. States like New South Wales and Queensland have a very small share of the industry—about 11 per cent each—and the other states even less. This is an industry very definitely concentrated in a few key areas in Victoria and in South Australia. It is a relevant observation that this industry is heavily focused and heavily located in Labor electorates. Perhaps that is the reason why this industry has been singled out for this massive level of government support and continuing financial assistance.

The Ford Motor Company of Australia is a wholly owned subsidiary of America’s Ford Motor Company. It has two plants at Broadmeadows and Geelong in Victoria. They produce the Ford Falcon range and the Ford Territory. From 2001 Ford had plans to build the smaller Focus vehicle at Broadmeadows. On 22 August 2008, Ford announced that, as a result of the downturn in vehicle sales, it would cut production by 25 per cent and shed 350 jobs. However, Ford subsequently announced on 20 November that it would keep its Geelong engine plant, which it had been planning to close, by reactivating a previously abandoned $13 million ACIS grant. Ford has somewhere around 4,500 employees and 230 dealers, and, in 2007, produced about 68,000 vehicles, with only a very small percentage of them exported.

On 24 July this year the Australian and Victorian governments announced $42 million would be provided to Ford to produce a new four-cylinder engine version of its Falcon as part of a $230 million total investment. The engine will be fully imported. At the same time, Ford announced it would not proceed with its proposed new locally-built Ford Focus from 2010. The early plans and optimism that Ford may shift some of its capacity to smaller cars, perhaps better suited to the new world market, have now been dashed. Ford Australia’s full-year financial result for 2008-09 was a loss of $274 million, comprising a restructuring cost of $162.2 million and a sales revenue fall of 74 per cent.

Holden is a wholly owned subsidiary of General Motors Corporation and its plant in Elizabeth, South Australia, produced about 108,000 Commodores in 2007. Engines are made at its Fishermens Bend plant in Melbourne, which will close at the end of this year with the loss of 500 jobs. Holden has been particularly hard hit by the current downturn in vehicle sales and uncertainty surrounding the future of General Motors. It has reduced production to 310 vehicles per day when the plant is operating. However, unlike Ford, it has not shed staff, instead reducing shifts and making employees take forced holidays et cetera.

On 22 December 2008 the Prime Minister announced that the Australian government would provide $149 million from its green car fund to help Holden produce a new four-cylinder vehicle from 2010. The government claimed the new car—to include both petrol and diesel variants—would support up to 600 jobs at Holden and up to 600 jobs in the automotive supply chain. It was also stated that the new car would provide Australian motorists with an Australian made car that is around 20 per cent more fuel efficient and produces 20 per cent less in carbon emissions than current larger vehicles, and that families travelling 20,000 kilometres a year will save almost $500 a year in fuel costs and produce about 1.7 million tonnes of carbon emissions.

Holden exported 36,534 vehicles in 2007 and was hoping to expand its export program. However, the axing of the Pontiac brand by General Motors will certainly place that whole ambition in doubt. Holden’s total exports are down by more than 80 per cent in the current year. For the year ending 31 December 2008, GM reported a loss of $70 million due largely to declining volumes, with demand for the locally-built Holdens down by nine per cent.

I was surprised to read recently that the Export Finance Insurance Corporation has been used to support the export programs of General Motors Holden with a working capital line of credit of up to $200 million. This loan to General Motors does not seem to meet the guidelines for EFIC lending. There is only one EFIC program that is advertised on its website that funds working capital and this is a loan—we are told—for working capital. However, there are rules in relation to who can apply for this funding; for instance, you have to have a maximum turnover of $50 million a year. I know that Holden is in trouble, but nobody suggests that their turnover is down to less than $50 million a year.

The government has never explained why the government itself approved a special loan for GMH under the EFIC Act. Apparently this decision was not made by the EFIC board, according to the press release that was put out; it was in fact made by the government. The government, it seems, is now using EFIC, an organisation with a substantial and deserved reputation for its support for Australian industry, to prop up General Motors Holden with working capital. This was initially unannounced but became public information. There has been no satisfactory explanation as to why the rules and the legislation for EFIC have in fact been ignored in the provision of this loan. Is this yet another example where the Labor government has one rule for the car industry and another one for everyone else?

I refer now to the Toyota Motor Corporation of Australia, which manufactures Toyota Camrys and Aurions at its Altona plant in Victoria. In 2007 Toyota produced almost 150,000 cars—111,891 Camrys and 37,040 Aurions. Toyota is much more export focused than Australia’s other passenger vehicle manufacturers, with total exports reaching almost 100,000 vehicles in 2007. The principal export market for Camry is the Middle East. It would surprise many Australians and indeed many visitors to the Middle East that the taxis and many of the other vehicles that drive around on the roads and streets of the Middle East are in fact Australian made. It is a real tribute to Toyota that they have been able to penetrate so substantially into that Middle Eastern market. I think they set an example which perhaps other Australian manufacturers have not followed so enthusiastically.

On 10 June 2008, the Prime Minister and the Minister for Innovation, Industry, Science and Research, Senator Carr, travelled to Japan to announce that Toyota would receive $35 million from the government’s Green Car Innovation Fund so that Toyota could manufacture a hybrid Camry in Australia from 2010. Doubts were raised about the need for this grant when the Toyota president, Mr Watanabe, said, ‘We are not sure in what way we would like to use that amount.’ Subsequently a spokesman for Toyota was quoted in the Australian newspaper:

“It would have happened regardless and we wouldn’t bring it to the market unless we were going to make money,” Mr Breen said.

“It’s always nice to have support but it comes back to a business decision.”

So we had the government throwing $35 million of taxpayers’ money at Toyota, as a surprise to Toyota. It was money they said they did not need, for a project that was going to go ahead anyhow. It subsequently emerged that the engine for the hybrid Camry would be totally imported from Japan and that Toyota was planning to start building generation 2 lithium-ion-battery plug-in Camrys in the US, Japan and Europe while building a gen 1 car in Australia. So Australian taxpayers have thrown $35 million at Toyota for a project they were going to do anyhow, and for yesterday’s technology. And yet we are told by the government that this bill is about encouraging innovation and encouraging Australian industry to be leaders in technology in the motor vehicle manufacturing sector. What we are going to get is throwaway Japanese technology which is already being superseded in Toyota’s own factories. Why on earth Australian taxpayers would want to spend money on yesterday’s technology is simply beyond me.

For the year from 1 April 2008 to 31 March 2009, Toyota reported a net profit of $123 million. These are three companies that are employing a lot of Australians and have made an excellent contribution to our nation’s economy over the years, but it has been at continuing high cost to Australian taxpayers through direct grants and subsidies and through tariff protection and a whole range of tax and other measures which advantage the Australian car-manufacturing industry. The Productivity Commission, in its research report of May 2008, said:

On the Commission’s reckoning, each job currently ‘saved’ in the industry—

the car-manufacturing industry—

requires around $300 000 in support each year from the Australian community.

That is $300,000 per job for the privilege of having a car industry in this country. I think it is important to have a car industry in this country. I accept that it operates in a corrupt world market, but so do a lot of other Australian industries. How many other investors in this country would welcome a $300,000 subsidy for every worker that they employ? The car industry certainly has a pampered and subsidised history in this country, and we pay a very high price for this industry operating in our nation.

It must be a huge embarrassment to our Minister for Trade, when he goes overseas and he argues for other countries to cut their tariffs and subsidies, to have to admit that Australia is again putting up its support for the Australian car industry. The trade minister has been happy to give up tariffs in the Australian food industry, on our agricultural production, but when it comes to the car industry it has some kind of special place. With the recent ASEAN-Australia-New Zealand Free Trade Agreement, the Australian government immediately, for all of our trading partners in Asia, got rid of all of our tariffs and support for the Australian agricultural sector and food industry. All those tariffs went to zero immediately. But, when it was announced that this agreement was signed, there was no text available. The minister had nothing to show the people about what was agreed. We were told that there were still some ongoing negotiations. Surprise, surprise—the ongoing negotiations were about the car industry. Our government was still holding out for some ongoing protection for the car industry, even though it had given away all the protection—and it was quite, quite small in percentage terms—for all the other sectors in the Australian economy. In the end, a special deal was done for the car industry so that there would be tit-for-tat-type tariff reductions in the far distant future. Once again, this government made special arrangements for the car industry that were not available to other sectors.

The Prime Minister went to the G20 summit and, with the other leaders, called for an end to subsidies and a renewed commitment by world leaders to the Doha Round of trade talks. Within weeks, 18 of the 20 presidents, prime ministers and leaders who were at that summit had gone home and introduced new subsidies, announced new tariffs, announced new trade protectionist measures. Included among those 18 was the Australian Prime Minister. Overseas he boldly talks about the need to reduce tariffs and subsidies, but when he comes home he announces a major new program to subsidise the Australian car industry. So our Prime Minister is just as hypocritical as all the leaders that he has chosen to criticise around the world. Eighteen of the 20 countries broke that promise, including Australia—and in our case it was once again the car industry that received the benefits.

There are many, many Australian industries that would love to have a subsidy of $300,000 per job. Think what could happen to the Australian aviation manufacturing sector if there were a $300,000 subsidy for every job in that industry. We manufacture a lot of aircraft in Australia and we do it very well, but we do it with a very lean and competitive industry. We would like to do more. I am proud of the achievements of companies like Gippsland Aeronautics, who have now made around 150 of their GA8 aircraft and are seeking funding to start remanufacturing the Nomad aircraft in Australia. Wouldn’t Gippsland Aeronautics love to have a $300,000 subsidy for each of their workers? They would introduce real new technology. They could become leaders in the avionics and aviation manufacturing sector if they had access to the kinds of support programs that are offered in Australia to the car industry.

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