John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Following the sacking of 600 workers from the General Motors car plant in Adelaide earlier this year, I spoke in this place about the progressive collapse of the Australian motor vehicle industry that has occurred under the Howard government. At that time, I said that an analysis of the figures provided by the Australian Bureau of Statistics showed that local manufacturing of motor vehicles would cease by 2030.

The closure of Ford’s Geelong engine plant, which was announced on 18 July this year, with the loss of a further 600 jobs, is a continuation of that trend and is a direct consequence of the failed policies of the Minister for Industry, Tourism and Resources and of this government. The root cause of the closure of the Geelong engine factory is not a consumer shift away from big cars; it is the fact that the engines produced at Geelong are inefficient and obsolete and are based on a design developed by Nicolaus Otto back in 1876. No matter how modern the external styling, virtually all of the cars sold in our country are powered by Nicolaus Otto’s ancient, inefficient 19th century engine.

The direct consequence of this market failure by the motor vehicle industry and the regulatory failure by the government is that Australian drivers are forced to purchase vehicles that have an overall energy efficiency of less than 20 per cent. In other words, for every dollar spent on fuel by a motorist, less than 20c worth of the energy in the fuel is actually converted by the engine to a useful mechanical output to drive the vehicle forward. The physical principles that underlie the operation of the Otto cycle engine have been understood since Sadi Carnot worked out the thermodynamics of heat engines in the 1820s. These fundamental laws underlie the limitations of the Otto cycle engine and are the reason that the energy efficiency of these engines has been and will remain very poor—a fact that seems to have escaped the attention of the government and its policy advisers.

Despite these inconvenient truths, the government is willing to hand out $5 billion to the local motor vehicle industry, under the Automotive Competitiveness and Investment Scheme, without any requirement that the low efficiency of current engine technology be seriously considered. This is a national disgrace and a most serious failure of policy by the Howard government because it ignores the underlying reason for the closure of the Geelong engine plant and the loss of 600 jobs. The ACIS has been criticised by other observers for failing to encourage innovation. In fact, there is little in this scheme that would encourage manufacturers to produce more efficient vehicles because it simply provides cash handouts to multinational companies as an inducement to continue local production. Where are the incentives for improved fuel consumption? Where are the incentives for reduced vehicle emissions? Where are the incentives for alternative fuels? Not one of these critical issues is addressed by the scheme that presently costs the taxpayer $500 million per annum.

Another reason for the closure of the Geelong engine factory was the fact that the engines presently produced would not comply with the government’s new Euro 4 equivalent vehicle emission standards due to come into force on 1 July 2010. While the Euro 4 emission standards do not incorporate a carbon dioxide limit, a voluntary level of 120 grams of carbon dioxide emission per kilometre for all new passenger cars manufactured from 2012 has been reached by the European Union and the European car makers. An emission level of 120 grams of carbon dioxide per kilometre is approximately equivalent to a fuel consumption of five litres per 100 kilometres—less than half the current Australian average fuel consumption of 12.1 litres per 100 kilometres for passenger cars manufactured since 2000. I note that the average fuel consumption of Australian passenger cars was 11.5 litres per 100 kilometres in 1995.

These figures from the Australian Bureau of Statistics show that the fuel efficiency of Australian vehicles is actually declining under the Howard government. No wonder the average Australian family finds that it costs more than ever to fill the family fuel tank. Why does the Howard government not require that the recipients of the ACIS subsidy double the fuel efficiency of their vehicles? In conclusion, there is no reason that this level of improvement cannot be achieved, and the next government—a Rudd Labor government—will take steps to ensure that car makers significantly improve the fuel economy of all vehicles sold in Australia.