Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to 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.

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

Great company!

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

I see the honourable member for Gippsland here. We visited the Gippsland Aeronautics factory together. They are a wonderful example of Australians pioneering in a difficult sector with an aircraft that really does a wonderful job. The Jabiru operations in the electorate of the honourable member for Hinkler have sold well over 1,000 aircraft and something like 2,000 engines. They are an entirely Australian produced aircraft, with Australian engines in them as well. Wouldn’t they love a $300,000 subsidy for each of their employees? They would take the world by storm if they had that opportunity. If we go down to Hervey Bay, where the Seabird Seeker is manufactured—about a dozen or 15 of them—Seabird Aviation have had to move a lot of their manufacturing operations to Jordan—Jordan!—because of the difficulties of being able to operate in this country. Wouldn’t they like a $300,000 subsidy for their workers? The Seabird Seeker would be flying in a lot more countries in the world than it is now if the government were prepared to offer them that kind of support. In your own electorate, Mr Deputy Speaker Scott, the Whitney Boomerang is being manufactured in Kingaroy. Dean Wilson Aviation are battling to get a new training aircraft accepted in the world market. It is a huge investment for a small family business. They have done that. They have got the aircraft operational. But wouldn’t they love a $300,000 subsidy for each of their employees? We could be world leaders in aviation if we were prepared to offer the aviation industry the same support that we give to the car industry. We could be a world leader in chemicals manufacturing, in food processing—in almost every sector—if the government were prepared to give these people a $300,000 annual subsidy, but we have these special arrangements only for the car industry.

I turn to an industry in my own area that would love just a bit of sympathy from the government, let alone a $300,000 subsidy. At the Queensland state election, Premier Anna Bligh promised to create 100,000 new jobs. She, incidentally, drives around in an American Dodge, not an Australian car. Anna Bligh also promised to protect existing jobs by preferring local contractors in tenders to supply publicly funded infrastructure. But, behind the scenes, she has endorsed the tendering on the international market of a $2 billion Queensland Rail contract which will supply 200 new QR trains. Rail is a very significant and important industry in Maryborough in my electorate. Downer EDI Rail in Maryborough employs approximately 600 people and supports at least 1,000 jobs. It is not asking for a $300,000 per job subsidy; it just wants a fair go in competing for a tender to provide trains to the Queensland rail network rather than having the government run overseas seeking to buy Chinese or Indian trains. The company just wants a fair go. It wants some support, and surely it is entitled to it.

Downer EDI has a strong tradition of supplying trains to Queensland Rail, having secured a contract to supply 20 three-car passenger trains valued in excess of $200 million as recently as February this year. Given the successful relationship between Downer EDI and Queensland Rail and Anna Bligh’s public statements about protecting Queensland jobs, it came as a shock to learn that the new $2 billion contract is at risk of going offshore. It is incredible that the Bligh Labor government, with all the trouble that the state is in—its huge debt, its rising unemployment—would send jobs overseas, threatening the livelihoods and families of businesses who rely on Downer EDI jobs, especially when the Premier was so explicit during the election campaign about keeping the jobs in Queensland. Anna Bligh offered jobs as an excuse for her government’s economic incompetence in running up an $85 billion state debt and a $2 billion budget deficit. In the light of the news that a foreign company is amongst those short-listed for this tender and for this process, her excuse seems more like spin, just like her promise to keep the Queensland fuel subsidy.

Downer EDI’s contribution to the Fraser Coast economy cannot be underestimated. They have got a proven track record going back well over 100 years. Downer EDI—or its predecessor, Walkers—built the first trains in Queensland. They built, I think, the first steam engine produced in Australia—it was certainly the first one produced in Queensland. A replica of that train still runs around the streets of Maryborough on weekends and on special occasions as a result of the tremendous work of local volunteers. They built Queensland’s first steam trains. They built the first diesel and diesel-electric trains. In fact, they have had almost 100 per cent of the market. They built the electric trains and, of course, the tilt train. This is an innovative and progressive company. They succeeded in devising and building a tilt train where companies around the world had failed, and we have this high-standard technology operating in Queensland. They built passenger trains not just for Brisbane. Maryborough trains run on the Perth network and also in Kuala Lumpur, and they have been active in producing products for other places. Wouldn’t they love $300,000 per employee subsidy when they are trying to bid against Korean and Chinese companies to build trains for Queensland?

The government in Queensland is well aware of what is at stake. If Downer EDI lose a contract of this magnitude, which amounts to the loss of decades of work, the factory will simply have to close. At a time when jobs are becoming harder and harder to get, these jobs in a regional centre are so important to maintain. A responsible government would not have the double standard of providing massive subsidies to car manufacturing plants in Melbourne and Adelaide while allowing major heavy industry, such as the manufacture of trains, to close in regional centres. A responsible Queensland government would understand and act on its obligation to the Queensland economy by supporting local businesses and securing local jobs, but if the Bligh Labor government will not do it then the federal Labor government most certainly ought to. If it can find billions to subsidise the car industry, surely it can give proper consideration to other, innovative manufacturers in this country who are battling against the high costs and the changes to industrial relations in this country in a way that means the loss of flexibility, so increasing the costs to this sector.

The opposition supports the legislation. We are concerned that the car industry depends year in, year out on ongoing government support. It must look forward to a day when it can stand on its own feet and compete fairly and properly with manufacturers in other parts of the world. We commit ourselves to working with the industry to achieve economic self-sustainability and we hope this is the last time that governments have to come into this parliament with major assistance packages through legislation such as this for the car industry.

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of both the ACIS Administration Amendment Bill 2009 and the Automotive Transformation Scheme Bill 2009 before the House today in this cognate debate. These bills are a clear and unmistakable sign of the Rudd government’s commitment to stand together and support a local automotive industry that, according to 2007 figures—from the 2009 yearbook Australian Automotive Intelligencedirectly employs more than 67,000 Australians. This includes people from my local electorate of Deakin and people from my city of Melbourne—Victoria being a base of automotive manufacturing. Companies such as Holden, Ford and Toyota all operate out of Melbourne and have done for a long time. Of course, they also operate out of other cities in Australia, being based, notably, in South Australia.

The automotive manufacturing industry is one of our major exporters, which earned export revenues of $5.8 billion in 2008 alone. That was from the export of around 159,000 vehicles, both passenger and light commercial. In 2007 the industry had a gross turnover of over $24 billion and, importantly, an R&D spend of $635 million. The passing of these bills would ensure a smooth transition from the previous Automotive Competitiveness and Investment Scheme, the ACIS regime, to the new Automotive Transformation Scheme, the ATS, commencing in January 2011. I support these bills, as someone who is a Labor Party member, as someone who is committed to supporting jobs in the manufacturing sector and as someone who believes that our next generation of cars needs to be more fuel efficient, more environmentally friendly but, importantly, built here.

As an electrician in years gone by, I have been employed at various times at automotive factories such as Ford in Broadmeadows, at the old GMH plant in Dandenong, at Altona Toyota and at the GMH engine plant at Fishermen’s Bend. They were all good, well-paying jobs at the time. It was a different era. For most of the time there was much more manufacturing then of cars locally. Even though the jobs were hard and dirty they were consistent. There was always ongoing work at the car factories. It is important that there is that sort of continuity and support for people who are after jobs who have skills. Sometimes there is not much work happening in other sectors of the economy, but there has always been that fallback for some skilled trades in the automotive industry.

What is often forgotten when discussing jobs in any particular sector or industry is the flow-on effects for contract services and supplies and, as I said, in the automotive sector particularly for skilled tradespeople. It flows down the line. It flows back to the local workshops that do metalwork, fitting services or electrical switchboards, for instance, that are supplied to automotive manufacturers every time a production line is rejigged or changed or a new one put in place. There are also maintenance workers at those plants. The plants in Melbourne, both Ford at Broadmeadows and the GMH engine plant at Fishermen’s Bend, have large teams of maintenance staff to ensure that things do go right and that they operate at maximum capacity.

Component manufacturing and design is the other side that is associated with the industry. Many companies, especially in suburbs, are not what you would regard as heavy-manufacturing suburbs but are light industry suburbs, do work, do design and do produce components that are not only used by car manufacturers here in Australia, particularly in Melbourne, but are also exported to other countries in the world. Just as the FX Holden was the first car for Australians, produced by Australians, this bill will ensure that Australians will keep producing Australian cars and components for markets not only in Australia but, as I said, across the world for years to come.

As members may be aware, $3.4 billion ATS was a key recommendation of the government commissioned review of the automotive industry, popularly known as the Bracks review. Of the then proposed ATS, the honourable former Premier of Victoria, Mr Bracks, said:

In particular, the Review recommends that the existing Automotive Competitiveness and Investment Scheme be reformed into a new Global Automotive Transition Scheme, which supports greater innovation through enhanced research, development and design.

He continued:

The emphasis on exports of assembled vehicles and component parts is also reinforced, noting that the Australian automotive industry is crucial to our worldwide trading position.

The automotive industry, from the local producer manufacturing hinge components for car doors in Bayswater North in Victoria to the Holden Commodore that rolls off the line in Elizabeth, South Australia, is a key employer in these states and across the nation. Supporting this industry and insisting on innovation in this industry is about jobs. That is the bottom line: jobs now, jobs in the future.

These bills will amend the current ACIS and replace the current ACIS regime. The ATS will include a shift from an import credit based transfer of payments to a grants system. This change was requested by the manufacturers—a clear sign that this government is willing to work with and listen to the stakeholders in the industry, delivering a package of government assistance that supports manufacturers and, in turn, supports local jobs. Importantly, the government will also boost the maximum rate of assistance for eligible research and development from 45 per cent to 50 per cent—again, done as a result of industry feedback, aimed at strengthening the focus of manufacturers on research and development.

This is a 10-year plan. The ATS will include secure funding streams from its beginning in 2010 until its planned conclusion in 2020. Capped assistance will be $1.5 billion for 2011 to 2015 and then a further $1 billion from 2016 to 2020. It is this capped assistance that will provide the much needed certainty to local car manufacturers throughout the coming decade.

There are, of course, some common-sense strings attached to this assistance. Manufacturers will be required to show that they are improving environmental outcomes and, importantly, the development of better workplace skills and capabilities. This is one of the reasons that the Australian Manufacturing Workers Union supports this legislation. There are tens of thousands of jobs on the line, and there are opportunities for the upskilling of the workforce. The five per cent increase in the eligible assistance rate is also expressly aimed at increasing our export capabilities and boosting productivity.

In supporting the industry but also insisting on a move to less-polluting vehicles and more productive manufacturing processes, the Rudd government aims to future-proof the industry to ensure its long-term viability. The Rudd government believes in sensible trade liberalisation, but it will encourage the local car industry to modernise as one of only 15 concept-to-completion car-producing nations in the world. We can do this by changing tack and developing a more modern industry that is well placed to capitalise on its proximity to markets such as India and China.

We are all aware of the effect that the global financial crisis has had across the world as credit has dried up and economies have shrunk. The automotive industry globally has been hit hard, with no greater examples than the short-term bankruptcy of Chrysler and then General Motors filing for bankruptcy in the United States in June this year. The Obama administration in the US has changed its approach in how it has dealt with automotive companies, compared to US administrations of the past. As part of dealing with the problems that came to the surface in the US, it ordered both companies to reform work practices, modernise their approach to environmental impacts and, especially, look at the fuel efficiency of their finished products. The Obama administration made a range of commitments, including money for the development of cheaper batteries for electric cars, tax credits for the retooling of factories to build plug-in vehicles, and tax offsets—all aimed at fostering modernisation.

Thankfully, in Australia we are not facing the complete collapse of our major producers, as was almost the case in the US, but a good government can see that it is better to prevent rather than cure the ills of its major industries. The composition of the global car industry is changing as well. For the first time, China has overtaken the United States as the second biggest car producer, as more plants across the US are set to close, with estimates showing that up to half the existing plants in the US will close in the coming years.

In 2008, more than 70 million motor vehicles were produced worldwide. Certainly, due to the effects of the global financial crisis, that number will be smaller in 2009, but, going forward, one would hope that it does pick up and that the industry also picks up with that increase in demand. Changing attitudes and rising fuel prices have seen diesel car sales rise sharply in Europe. Legislative changes in California have spawned a shift to hybrids and especially driven a new interest in electric cars in the US. The threat of climate change has seen people change their preferences when buying a new car. People are moving to smaller cars with greater fuel efficiency and fewer cylinders or better engine management controls. The Australian car industry needs to shift with these changes, and the government needs to help it do so as quickly as possible.

I want to also take this opportunity to remark on our Green Car Innovation Fund. Many years ago, the then Minister for Industry and Commerce, John Button, put forward the motor industry development plan known to many as the Button plan. That helped kick-start a rise in exports and greater efficiency in the industry back in the 1980s. For instance, the number of vehicles exported from Australia in 1988 was a grand total of 1,921, some 150,000 vehicles fewer than were exported from Australia in 2008. Again it is left to a Labor government, some 25 years later, to usher the Australian car industry into a new era, and the Rudd government is doing so through the introduction of the Green Car Innovation Fund.

The fund includes a $1.3 billion investment over the coming decade, targeted specifically at boosting the environmental performance of our locally produced vehicles. The ATS requires improved environmental outcomes; the Green Car Innovation Fund will help the industry deliver it. This funding is not just for producers but also for component makers and, importantly, our local researchers and developers. Importantly, this funding will operate on a funding basis of one dollar to every three dollars, ensuring that we as a government are supporting and bolstering research and development, all aimed at multiplying the value of our initial contribution. As I remarked before, trends in consumer preference are changing. This fund will help the industry place itself front and centre in the development of new, more fuel efficient technologies, particularly with a focus on export markets.

When discussing issues of climate change, which I note have been a popular topic round here lately, the issue of the creation of ‘green-collar’ jobs comes up with people that I talk to. It is government initiatives such as these that will help develop a viable green-collar job base in this country. Ongoing increased demand will then lead to more employment opportunities. This fund in particular is part of a much wider commitment on the part of the government to tackle climate change. The Minister for Innovation, Industry, Science and Research, Senator Carr, put it quite plainly:

“Labor’s new car plan is a car investment scheme and companies will not get any benefit unless they undertake new economic activity,” he said.

“Therefore, there is a direct link between the level of assistance and the level of economic activity.”

In conclusion, the Rudd government is committed to stand with and support a local car industry that directly employs more than 67,000 Australians. We stand with an industry that is also one of our major exporters, major employers and major drivers of research and development. The ATS, along with amendments to the ACIS, will bring the automotive industry forward into a new era of more modern, internationally competitive, greener domestic motoring options. In time, I am confident that future generations may look back upon this scheme as some look back upon the Button scheme and say to themselves, ‘This was the point where we set up the automotive manufacturing industry in Australia on an economically sustainable footing.’ I commend the bills to the House.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

I also rise to speak on the Automotive Transformation Scheme Bill 2009 and a related bill. I follow the member representing the Electrical Trades Union in this place and I acknowledge that that member has had a bit to do with the car industry over time. He mentioned some of that at the beginning of his speech, and I am sure he also had ETU members that he used to service in the car industry as well, being, of course, the member who represents that union for those on the other side.

I rise today as a member from South Australia to talk about what is an important industry in our state, although in Mayo we do not have a car manufacturing plant or component sector. The member at the table, the member for Boothby, used to have in his electorate a more significant car manufacturing and components industry and would be able to talk about his experience on this issue, I am sure, a lot more thoroughly than I could.

However, what I want to say about this bill is that I think it is important that this country starts to take stock of how much money we are actually spending on this industry and whether we are getting the value for money that we expect. Prior to my position here, I had some involvement in the former Prime Minister’s office, looking after the issues related to this industry. It is a complicated industry that employs many Australians. It is an industry which has a significant structural basis, particularly in Melbourne and Adelaide. In the northern part of Adelaide, the Holden plant and the related component sector employ many thousands of people and it is a very important part of that economy. However, the question that we must ask ourselves—given that this government has taken us from a position of having no debt 18 months ago, zero debt, to a position where we have $315 billion of debt, 15 per cent of our GDP, all lined up—is whether these are some of the issues that we need to start considering going forward. We need to ask whether we are, as a country, able to afford this amount of money. It is $3.4 billion over a decade, not including the $1.3 billion for the so-called green car fund, which is a fascinating concept they have established, a very clever hollowmen type term. You have to wonder whether we can as a country afford that $5 billion over 10 years, given that we have significant debt to pay off, substantial debt, all because of the reckless spending of this government—ill-thought-through decisions to hand out $900 cheques, which is borrowed money, to everybody. That will genuinely impact on our ability as a country to respond to these sorts of industries with such large amounts of money.

I come from South Australia, and, over the last 10 years, South Australia has restructured the base of its economy quite substantially, largely due to the hard work done by Dean Brown, John Olsen, Rob Lucas and Stephen Baker, who had to rescue the South Australian economy and budget from the disaster that was left by the South Australian Labor government in the early nineties. We restructured so that it was no longer ‘a rust bucket economy’—as it was formerly described. It is now a highly skilled economy. We have light manufacturing. We are focusing on the defence industry. Obviously our wine industry is the best in the world. We no longer rely wholly and solely on this industry to be our No. 1 mainstay, as we did in the past. That was, as I said, because of the work of the South Australian Liberal government, in conjunction with the work of the former Howard government.

So, in relation to this bill, the opposition has moved several amendments on the amount of money spent, trying to put into this bill a better outlook or overview of how the money is being spent, trying to get some value and trying to ensure that the Australian taxpayer—including people in the gallery today, who I am sure care deeply about the spending of over $4 billion on this industry—is getting value for money, because there have been questions over time, I think, about the value we have got from the support to this industry.

It is important that we ensure the money that we are spending on this type of industry assistance is worthwhile, because it will be a difficult issue for us going forward. Higher taxes will no doubt be part of the strategy to pay back the large level of debt left by this Labor government to future generations. We have seen over the last couple of days in this place that the Treasurer and the Prime Minister will not rule out new taxes to pay off the very large debt that we are building up.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

Mr Albanese interjecting

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

There’s Albo—Gollum. He is chatting away.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The Leader of the House will not interject while out of his seat.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

Mr Albanese has a lot of familiarity with this industry, of course, because of the AMWU, the union that he is from—although not so much in New South Wales, because there is not so much of a car industry there.

We do have to put some analysis into the amount of money we are spending on this industry. Because of the large amount of debt that this government has built up, we will not be able to spend like we have in the past, when we managed the economy properly, when we managed the economy well. Let us not forget that we left this government 18 months ago with no net debt. Now we find we have $315 billion in debt, and it will reduce the amount of money that can be spent on industries such as this. It will mean higher taxes. It will mean a very difficult time ahead for the Australian economy.

This is a large amount of money. That is why we have moved these amendments: to have some better analysis of government spending on this. So it is very disappointing that Senator Carr has walked away from the negotiations we were undertaking with him on this bill. We wanted to have strong analysis of how this money was being spent to ensure it was being spent well. I think there is great concern in Australia, and certainly in the South Australian constituency of mine, that this money is not just wasted and that we are getting value for money. There certainly has been a perception in the past that the amount of money being spent on this industry has not been worthwhile or has not achieved what it was setting out to achieve. There is the analysis by the Productivity Commission that suggests that it costs $300,000 per job in this industry, which is a large amount of money. It is an extraordinary amount of money per job to be supported.

Mr Speaker, I will get us through the remaining 30 seconds before the beginning of question time, by reminding the House and everyone present that one of the reasons we need to do this is the debt that has been raised by this government, which is the highest level of debt we have ever seen, all because of the ill-thought-through, badly planned spending decisions of this government.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! It being 2 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.