Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

I make it clear from the outset that Labor will be opposing the Automotive Transformation Scheme Amendment Bill 2014. I will explain why in my contribution to this debate. When Holden made its submission to the Productivity Commission inquiry in November 2013, Holden said:

Nineteen of the G20 countries all have automotive manufacturing at their core.

Australia still is a G20 country which makes cars, but because of the Abbott government, it will not be for much longer. The Abbott government will indeed be remembered and condemned for abandoning Australia's automotive manufacturing industry and for abandoning the 200,000-plus workers and the hundreds of businesses across Australia which depended on that industry. On 21 August 2013, before last year's federal election, then Leader of the Opposition Tony Abbott said:

I want to see car making survive in this country, not just survive but flourish.

After the election, his promise turned out to be just another one of Prime Minister Abbott's litany of broken promises. Adding insult to injury, after turning his back on car workers and provoking the end of car making in Australia, on 18 December 2013, Prime Minister Abbott said about automotive workers:

Some of them will find it difficult, but many of them will probably be liberated to pursue new opportunities and to get on with their lives …

I have not heard one car worker, and I have spoken to many since that statement was made, who feels liberated about losing their job, their income and their security. How car workers can get on with their lives without a secure job shows just how disconnected with reality Prime Minister Abbott and his government members are. Then we have the totally out of touch Treasurer who believes that low-income Australians do not drive cars. Prior to the election, the member for North Sydney, Treasurer Joe Hockey said:

The coalition will be the best friend the car industry has.

Yet once elected, the Abbott government proceeded to cut $500 million of automotive funding. It then ordered a predictable Productivity Commission inquiry into Australia's automotive industry with full expectations of what the findings would be to use as a cover for its intended cuts and even worse having the commission hand down its report after the deadline GMH had set for having to make a decision about its future in Australia. There was never ever any intent by the Abbott government to keep Holden in Australia or to support the automotive industry. The Abbott government also knew—it could not possibly not have known—that if GMH pulled out, so too would Toyota because component suppliers could not remain sustainable supplying just one Australian car maker. That was well known throughout the industry. So the Abbott government knew that, if Holden were to leave on the back of Ford leaving, Toyota would have little choice but to do the same. Yet instead of senior members of the Abbott government meeting with car makers and attempting to overcome their problems and keep their operations in Australia, as the previous Labor government had done, the Prime Minister and the Treasurer did the opposite.

To my knowledge—and I stand to be corrected if I am wrong—neither the Prime Minister nor the Treasurer ever met with senior GMH executives prior to GMH's announcement that they would cease operations here in Australia. In parliament Treasurer Joe Hockey made it clear to GMH that the Abbott government was not interested in them. I want to remind members of what the Treasurer said at the time, on 10 December:

So I would say to the Leader of the Opposition … join with the Acting Prime Minister and the government in calling on Holden to come clean with the Australian people about their intentions here. We want them to be honest about it—we want them to be fair dinkum—because, if I was running a business and I was committed to that business in Australia, I would not be saying that I have not made any decision about Australia. Either you are here or you are not.

In answer to another question, he then said:

A hell of a lot of industries in Australia would love to get the assistance the automotive industry is getting. A hell of a lot of other businesses, and foreign owned businesses, would love to be able to remit money from Australian taxpayers to head office in Detroit …

I am not surprised that Holden the next day made an announcement to leave this country after those remarks were made in this parliament by the Treasurer of Australia. If I were a GMH executive, I would have found those remarks highly offensive. I would also have found those remarks to give me a very clear indication that this government is not interested in us continuing to build cars in Australia. And not surprisingly, that is exactly what happened. GMH made an announcement literally overnight that they would cease operations in Australia in 2017. They made that announcement while their CEO here in Australia, Mike Devereux, only the day or so before, had made it clear that no decision had been made about the future of GMH operations in Australia. Indeed, industry Minister Macfarlane, who I understand at least had met with GMH executives here in Australia and had been saying that no decision had been made by GMH about its future in Australia, was left stranded by the Prime Minister and the Treasurer in the same way that Australia's automotive workers were. Industry Minister Macfarlane said:

We are working on a solution for the car industry and we will continue to do so.

That quote was only in the days before the announcement was made by GMH. Deputy Prime Minister Truss added to that comment by saying, 'We want a strong car industry.' And, yet, in the days when this matter was being debated, I understand, by government Abbott government ministers, only one of the 19 Abbott government ministers were prepared to support Australia's automotive industry. And I would expect that that was Minister Macfarlane.

Having pushed GMH and Toyota out of Australia, the Abbott government then allocated a paltry $100 million of transition funding. The funding does not include a single cent to help auto workers retrain and reskill. Indeed, my understanding is that, originally, they were prepared to put only $60 million on the table. Only yesterday there were comments made about the level of funding required, and a figure like a billion dollars was suggested by one of the commentators as being more appropriate, given the number of people that are going to be affected. Yet, the Abbott government, having provoked the car makers to leave Australia then puts a paltry $100 million on the table to assist 200,000-plus Australians that are likely to lose their jobs as a result of car making ending in this country. The Abbott government's contempt for automotive manufacturing in this country could not be clearer.

To add to the woes of co-workers who already face a grim future, this legislation, the Automotive Transformation Scheme Amendment Bill 2014, effectively now cuts $900 million of funding from the Automotive Transformation Scheme. And, by doing so, it is very likely to bring forward the demise of car making in Australia. Labor is not going to turn its back on car makers, component suppliers and co-workers, and Labor will oppose this legislation.

This bill gives effect to the Abbott government's $500 million of cuts to the Automotive Transformation Scheme over the years 2014-15 through to 2017-18, as announced as part of the government's 2013-14 Mid-Year Economic and Fiscal Outlook. The bill also terminates the Automotive Transformation Scheme on 1 January 2018, some three years earlier—cutting a further $400 million from the ATS in line with the Abbott government's budget announcement. On 24 September, only a few days ago, Tony Weber, Chief Executive of the Federal Chamber of Automotive Industries, said:

If the Amendment Bill passes Parliament, it will reduce the Automotive Transformation Scheme by $900 million and intensify the financial pressure on the automotive supply chain at a time when they are trying to transition their operations into new business area.

His comments were supported by those of Richard Reilly, Chief Executive of the Federation of Automotive Products Manufacturers, who said, 'Reducing funding of the ATS by 66 per cent in 2015 and by a further $150 million each year in 2016 and 2017 will have serious implications for the continued operations of many firms within the automotive supply chain.' Mr Reilly goes on to say:

To reduce the funds available mid-stream leaves companies in the supply chain vulnerable to more competitive international pressures … a reduction in ATS funding will put in jeopardy up to 30,000 jobs in the component industry, not to mention the potential impact on jobs in the vehicle manufacturing side of the sector.

There you have it, Mr Deputy Speaker: two of the chief executives of the independent associations that represent automotive manufacturers in this country have both assessed this as bad policy for their industry sector. It seems that the only one who does not seem to understand that this legislation is bad policy and bad for the economy is the Abbott government, whose ideology is to shut down the automotive sector as fast as it can. Indeed, the Abbott government's auto industry response from the outset has been driven by ideology rather than good public policy and the national interest.

Nearly 50,000 Australians are directly employed in Australia's auto industry, and a further 200,000 jobs are in some way linked or dependent on the industry in fields ranging from metal manufacturing through to scientific services and general community services. The sector contributes billions of dollars to the Australian economy each year. Again, there have been several reports that talk about the quantum—and, depending on which report you read, these will give you a different figure. But none of them talk about it as contributing in the millions; they all talk about it contributing in the billions. It also contributes almost $700 million annually to research and development in Australia. Indeed, it is the largest research and development contributor in the manufacturing sector. Research and development expenditure from the automotive sector benefits so many other sectors of Australian society and we will lose all that once automotive manufacturing ceases in this country.

Indeed, Australia is one of only 13 countries that can make a car from start to finish. And Ford, Toyota and Holden have some of the best design teams in the world right here in Australia. Again, how much longer they will be here for, we do not know. In recent years, a combination of the global financial crisis, which in turn created a glut of cars and a downward push on the price of imported cars, the high Australian dollar, increased government assistance in other countries, currency manipulation by other governments, generous government establishment assistance in emerging economies and tariff reductions have all impacted on the competitiveness of the Australian car makers. Indeed, tariffs in Australia right now have dropped to, on average, three per cent. Given that, whilst the figure is notionally five per cent, because of several free-trade agreements that Australia has entered into the average figure is more like three per cent. I note that both Toyota and GM Holden, at the time of making submissions to the Productivity Commission or making public statements about leaving Australia, cited free trade agreements as being one of the issues that caused them to make the decision that they did.

Unlike other advanced economies including the USA that value their auto industries and were prepared during times of need to provide billions of dollars of assistance to keep them afloat, the Abbott government was not only prepared to see the Australian auto industry shutdown but it literally pushed it out the door. Governments in every country with whom Australia competes against all support their car makers by far greater amounts than the Australian government was being asked to do. They do so because they understand the wider value car making adds to their economies. For example, in Sweden, the per capita cost of government support is around $334; in the UK it is $28; in Canada it is $96; and in France it is $147.

The US government committed $81.3 billion to bail out its automotive industry in the midst of the global economic downturn. They did that because they understood the value that that industry brings to their country. Contrast that with what was being asked and what was being provided by the Australian government: $17.40 per capita of support by the Australian government. And for every dollar of Australian government assistance, we saw a substantial co-investment by the car makers. For example, every dollar of support from GMH saw a three-dollar co-investment by GMH, which, in effect, translated to a total economic return to Australia of around $18 billion for the $1 billion of support that Holden received over the last decade. It was a pretty good return on taxpayer funds. And it was a similar outcome with respect to Toyota, where, I understand, the economic return was in the order of 20:1.

Other Australian industry sectors continue to receive billions of dollars in government assistance. I mention mining and agriculture as two of them. But those subsidies are never questioned or scrutinised. What is even more illogical about the actions of the Abbott government is that the cost to the Australian government of the industry closure will be much greater than the co-investment that was originally sought. It does not make economic sense. It may make ideological sense but it does not make economic sense, particularly by a government that claims that one of its priorities is to balance the budget, because this is going to make its task of balancing the budget even more difficult.

Earlier this year, in fact I believe it was April this year, a University of Adelaide analysis by Bianca Barbaro, John Spoehr and the National Institute of Economic and Industry Research into the loss of the auto industry found firstly that Australia is expected to suffer a fall in national employment of around 200,000 jobs as a result of the planned closure to motor vehicle manufacturing between now and 2017. Econometric modelling forecasts a negative annual shock of $29 billion or more by 2017 in 2011 prices, a total of around two per cent of national gross domestic product. The largest regional shot to gross national product is expected to be felt in Victoria with an annual decline of $13 billion in 2011 prices expected by the end of 2017 then followed by a $5-billion drop in New South Wales, a negative figure of $4.3 billion in Queensland and a negative figure of $3.7 billion in South Australia.

Those figures are indeed concerning because they will have undoubtedly a flow-on effect right throughout Australia. It does not matter where you are in Australia, in one way or another when your economy takes those kinds of hits there will be a flow-on effect. I understand from other reports—and there have been several reports into this matter in the last three or four years alone—that the welfare payments and the lost tax revenue are projected to exceed $20 billion—that is, the tax that would have gone back to government by people being employed in the auto industry or the reliant sectors. The taxes that the government raises through payroll tax and the like and the cost to government of paying welfare payments to those people who will find themselves unemployed will exceed $20 billion. They are the projected costs.

I have no doubt that government members and others will say that those figures are only estimates, they are only projected and the like. That may be so but the figures are staggering. Even if they do not turn out to be spot on, the reality is that there is an undeniable impact on this country that is going to hit Australia very hard. It is also estimated that it would take some 10 years before the economy recovers from the hit.

Just to break down the job losses across Australia, there will be: some 98,000 in Victoria; 30,000 in Queensland; 11,000 in Western Australia; 400 in the Northern Territory; 32,000 in New South Wales; 24,000 in South Australia; and 1,700 in Tasmania. There is not a state or territory that will not be affected. In my home state of South Australia, the end of Holden will directly affect around 6,000 auto jobs. The South Australian economy will take $1-billion-plus hit and the result will be thousands of additional job losses—as I say, 24,000 are the long-term estimates.

A recent survey only reported yesterday in Adelaide carried out by the University of Adelaide found that one-third of SA businesses in Adelaide's northern suburbs—that is, the region surrounding the Holden plant—risked closure as a result of the Holden shutdown. One in three feared that they may have to close once Holden ceased operations. Smaller enterprises felt most vulnerable, with almost half of them risking closure or a downturn in trading and profitability. We are talking about businesses in a region of Adelaide that is already doing it tough, with high unemployment and youth unemployment, currently running at around 18 per cent. So the closure of Holden and all those other businesses will have a devastating effect. For those people who are going to lose their jobs, you then compound that fact by adding the uncertainty of the Abbott government's policies in respect of replacing our naval fleet, in particular the submarine replacement program.

The fact that the Abbott government is now no longer prepared to commit to building the submarines in South Australia compounds the real concern that every South Australian has because, if the submarines were to be built in South Australia and if other defence contracts were to come there, as expected and as promised, then it would offer some alternative opportunities for those people who will lose their job from the closure of the car industry. But that now does not appear to be likely.

Interestingly, when it comes to both the car industry and the submarine project, the South Australian Liberal members of parliament, who were all happy to campaign in support of both the car industry and the replacement submarine contract prior to the 2013 election, are now nowhere to be seen. They have gone silent.

I note that the member for Hindmarsh is starting to feel the pressure and has written to the Prime Minister about a compromise option for the submarines. I say to the member for Hindmarsh: a compromise is not what South Australians were promised by the Abbott government—a compromise will not deliver the best outcomes for South Australia and a compromise is a clear admission of a broken promise.

This legislation compounds a bad decision by the Abbott government because it not only directly affects car making in this country but is likely to hasten the demise of car making in Australia at a time when there is nothing in place to assist car workers when unemployment is trending upwards and when naval contracts are in limbo, thereby closing off manufacturing opportunities for retrenched car workers and engineering companies that might have otherwise been able to be supported by that sector.

Contrast all of that with Labor's record in office. In government, Labor's investment ensured that Australia maintained its auto industry in the face of the global financial crisis, global industry restructuring and a record high Australian dollar. A New Car Plan for a Greener Future, announced in November 2008, provided $5.4 billion of car investment support, from 2010 to 2020. The centrepiece of the plan was the Automotive Transformation Scheme, which provides $3 billion and which is now being cut. Labor's approach has always been based on co-investment and in providing long-term certainty. It is not a handout. The industry only ever received support when it was prepared to put its own investment on the table. Labor support was critical in keeping the industry here and attracting new investments, new models and new capacity.

Before the election, Labor announced a new car plan for the 2020s, to keep making cars in Australia and to keep jobs in the Australian automotive industry. This included a new program of $300 million per annum to support the transformation of the industry, to attract new investment, support research and development, and design and engineering, from January 2016.

Labor's commitments would have seen motor vehicle producers commit to new investments in Australia and a future for the thousands of Australian automanufacturing people whose jobs are now on the line. I feel for those people, because they are people whom I represent as the member for Makin. My electorate is not far from the GMH plant. I grew up in the region where GMH operates within and from where it draws many of its employees and where many of the components suppliers or other support industries are based. I see these people on a daily basis. I have spoken to so many of them in the last year or so. The concern is absolutely real. In fact, I took a phone call yesterday—and I referred to it when speaking about the previous legislation only an hour or so ago—from a person who is indeed concerned about the impacts of the closure of GMH and the many small businesses in the area. Those concerns are very real because I know that, once GMH ceases operations, those businesses will struggle to remain viable, unless there is an alternative for them. The alternative is not, supposedly, to retrain them or point them in a different direction because, quite frankly, there may be different directions for them to go but not for all of them. There are simply not the jobs out there in the community to transition to. This sector is not just a minor sector of employment; this sector impacts over 200,000 Australians. That is why this legislation, which speeds up the process and brings forward the demise of the car industry, is bad legislation, bad policy and Labor opposes it.

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