Steve Irons (Swan, Liberal Party) Share this | Hansard source

Yes. Thanks for the prompt, Member for Wakefield. I appreciate the support. Unlike Ford and Holden, the Toyota motor company has not yet looked at shedding or changing jobs as a result of the downturn in vehicle sales. Although figures show Toyota’s total domestic sales are down 40 per cent, exports to the Middle East are thought to be holding up well.

Before I continue, I would like to briefly acknowledge that Australia’s big automotive manufacturing companies have been and are still investing in local communities. Ford is one of the major partners supporting United Way, Geelong’s major charitable organisation. This organisation raises funds for over 60 vital health and human care agencies within the region. Commendably, the organisation has also recently set up a program in the Geelong plant where employees are entitled to two hours paid leave each quarter to visit the Red Cross blood bank to place donations. I also believe it supports the Juvenile Diabetes Research Foundation. As most people would know, Ford has terrific brand awareness, and this is used when sponsoring Australian sport. Ford is involved in cricket, AFL and the racing and surfing industries, having a particular focus on grassroots involvement. Ford has now been involved with the 2007 AFL Grand Final winners, Geelong Football Club, for 80 years.

The Holden team also run many great initiatives that give back to the local communities. They support the Leukaemia Foundation, providing transportation for patients to and from treatment facilities. GM Holden were in a similar financial position to Ford this year. Their engine plant at Fisherman’s Bend in Melbourne will close at the end of this year, with around 500 people losing their jobs. In December 2008 GM Holden reported a loss of $70 million, with the demand for Holdens down by nine per cent.

Toyota’s community spirit scheme involves working closely with Phillip Island Nature Park, providing support for conservation, education and research activities. Along with this, Toyota also partner with Conservation Volunteers Australia, an organisation that completes more than 200 conservation projects across Australia each year. As a strong supporter of conservation groups in my electorate of Swan, this is good to know. Maybe I could champion some of my local environment projects to Toyota. As well as these environmental schemes, Toyota are sponsors of the AFL and the NRL Cup 2009. They look to support Australian sport at a professional level as well as locally through youth involvement in the broader community.

I do have some concerns about the bill. As members will recall, on 10 June 2008 the Prime Minister and the Minister for Innovation, Industry, Science and Research, Senator Carr, travelled to Japan to announce funding of $35 million so that Toyota could manufacture a hybrid Camry in Australia from 2010. At a press conference shortly after the announcement of the grant, the Toyota president said, ‘We are not sure in what way we would like to use that amount.’ Further to this, a spokesperson for Toyota told the Australian newspaper when speaking about the hybrid Camry:

It would have happened regardless and we wouldn’t bring it to market unless we’re going to make money … it’s always nice to have support but it comes back to a business decision.

Since the funding was announced it has emerged that, similar to Ford, the engine for the hybrid Camry will be fully imported into Australia. While this generation 1 car is introduced to the Australian market, Toyota is planning to start building a generation 2 vehicle in the US, Japan and Europe. What is extremely concerning is that Senator Carr and the Prime Minister felt the need to fly all the way to Japan to boast about the $35 million provided to Toyota but tried to keep Holden’s $200 million loan a secret. As I understand it, the government only made this information available after questions were asked by a couple of journalists.

You may ask why this concerns the legislation we are discussing today. The green car fund, combined with the proposed ATS, will see the Rudd government proposing to provide an additional $3 billion to the Australian car industry. Economic analysts have expressed concern, one commenting:

Assisted ‘green car’ production is unlikely to lead either to innovation spillovers or lower greenhouse emissions. The GCIF will like encourage some buyers to switch from taxed, more efficiently produced imported hybrid and fuel-efficient vehicles to subsidised, higher cost, locally-produced ones without markedly increasing ‘green car’ sales overall.

The green car fund officially commenced in April 2009; however, the government announced funding for Toyota and Holden prior to this start date. This reinforces the coalition’s view that there should be more transparency when it comes to how the government is spending taxpayers’ money.

Secondly, the ATS is another example of a scheme designed by the Rudd government that contains no benchmarks or requirements for public reporting. I remember making a similar point during a speech about the Schools Assistance Bill last year. There is no outline of reporting how public money is succeeding in supporting the bill’s objectives, nor does it have accountability measures for such a large sum of money. Surely the Australian people have a right to be shown that their money is not going to waste, but rather to improve economic outcomes of the automotive industry. The bill proposes to commit $3.4 billion in total over a 10-year period—an increase of approximately $2.1 billion on what is currently committed through ACIS. My concern is that this spending would represent a blank cheque for some manufacturers.

What we are asking for is simply details of how the cash is going to be handed out and to whom. There needs to be a direct link between the level of assistance and the level of economic activity. Whereas the ACIS arrangement of duty credits provides assistance to the automotive industry, the new ATS will provide assistance in the way of cash payments, and hence for the first time this will be itemised in the budget papers. It should be the responsibility of the minister to submit a report annually to the parliament on the progress towards achieving the bill’s objectives. This is an important and sensible amendment for the Australian people and does not impact the benefit to the automotive sector in any way.

The current ACIS act provides about $500 million in duty credits to the automotive sector each year, and it is scheduled to provide more than $4 billion in subsidies between 2006 and 2015. Announcing an extension of the ACIS in 2002, the then Ministry for Industry, Tourism and Resources, Ian Macfarlane, said:

The new-look … package goes far beyond what was recommended by the Productivity Commission Review, adding an extra 50% or $1.4 billion over the 10 year continuation of the scheme

               …            …            …

Similar to its predecessor, the post-2005 Automotive Competitiveness and Investment Scheme will be a transitional … scheme that will encourage competitive investments by firms in the automotive industry in order to achieve sustainable growth.

The ACIS provides credits for motor vehicle producers relative to production and investment. Credits for other services such as service providers and automotive component producers were also set in relation to their investment in plant, equipment and research and development.

All participants under the current scheme are eligible for funding from the capped pool of $2 billion over five years. If claims are to exceed the cap, the credits are reduced to keep the total credits within the cap. The second pool of funding is not capped but is only available to motor vehicle producers. This is estimated to cost $850 million over five years. In addition to all of this, under the current ACIS no participant can receive credits exceeding five per cent of their automotive sales in the preceding year.

The automotive industry also benefits from a range of policy measures in addition to these current ACIS funding pools. For example, there are industry-specific initiatives such as the fringe benefits tax concession on the private use of company cars. This is seen as significantly important to local manufacturers given their reliance on fleet sales. Purchasing preferences are also in place with some governments and statutory bodies for vehicles manufactured or imported by local vehicle producers. These purchases effectively provide a subsidy to companies with a local presence. General policy such as the Export Market Development Grants Scheme is also beneficial to the industry, as it provides taxable grants to reimburse up to 50 per cent of designated export promotion expenses, with a focus on small and medium enterprises.

In respect of the current downturn the automotive industry is facing, the opposition supports the provision of further funding to the industry to ensure its long-term sustainability in the face of lower tariffs and one of the most open car markets in the world. However, the ATS Bill, which has been put forward aiming to make the car industry economically and environmentally sustainable, does not focus on the economic outcomes. Minister Emerson said in his second reading speech on this bill in the House:

… the ultimate aim is to make it economically and environmentally sustainable.

The outline of the ATS, however, does not set out economic stability as its aim. The ATS requires all participants to demonstrate two things: (1) progress towards achieving better environmental outcomes and (2) a commitment to developing capabilities and skilling the workforce at present. These requirements are welcomed; however, I feel the act should also incorporate a requirement to improve economic outcomes and this amendment should be made to the bill.

It is also my opinion that the ATS Bill is a piece of so-called coathanger legislation—that is, it contains very little detail, with the bulk to be included in the regulations and guidelines. The ACIS act, as previously mentioned, was introduced by the Howard government and is some 124 pages long. In stark comparison, this piece of legislation put forward by the Rudd government is a mere 18 pages. Containing the bulk of its information in the regulations and guidelines robs the parliament of a true view of the legislation and does not allow for any real opportunity to properly scrutinise and amend the material. This is of concern to me.

The bill does specify three main objectives: to provide assistance to participants for each motor vehicle and engine they produce, to provide assistance for investment in eligible research and development and to provide assistance for investment in plant and equipment. These three areas are also covered in the current ACIS, although the ATS would see them produced at higher levels to support the current downturn in the industry. Having said that, I say there are many details not included in the bill that should be stated and would be particularly relevant to be included in the papers—for example, the rate of assistance available for motor vehicle and engine production, debt recovery provisions, registration and deregistration, the right to an AAT review and performance clauses around ‘environmental outcomes’ and ‘workforce skills’.

In conclusion, there is no doubt that we must provide assistance to the Australian car manufacturing industry, as this industry is vital to the economy not only in Australia but in my electorate of Swan through employment, exports, innovation and skills. There must be support provided to the automotive industry as it deals with the ramifications of the downturn in business. I urge the government to consider the coalition’s amendments, which are important and sensible and do not affect the benefits for the automotive industry. I believe it is of great interest to the nation for us to continue to assist the car manufacturing and automotive industry in Australia to hopefully see it regain strength after this difficult international economic situation. I would ask the Minister for Agriculture, Fisheries and Forestry to point out to the member for Calwell that I did not bash the unions once during this speech.

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