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

Just prior to question time, I was talking about the importance of the car industry to my home state of South Australia and Victoria in particular. We were discussing the change in the economic structure in South Australia, ushered in in the nineties by the former Liberal government under the guidance of Dean Brown and John Olsen, with Rob Lucas changing what was an old school economy that relied very heavily on the manufacturing industry into a fast-moving and much more adaptable economy that relies on newer industries. The defence industry in the electorate of Port Adelaide is doing quite well, thanks to the support of the previous government, and so forth.

What had happened was that Mitsubishi, in the southern suburbs of Adelaide, which for a long time had been subject to government support and employed a lot of people in South Australia, had run into significant financial hurdles. I think it is not unreasonable to say that the reason they survived so long was probably the attitude of management in Japan. They were able to keep the plant in South Australia going for some time, probably longer than they would have liked. When they eventually shut down the plant—I think it was only 12 months ago that it came to a complete end—they adapted the structure of those areas in that labour market. They took it away from relying wholly and solely on heavy manufacturing, the car components area, at Tonsley Park and Lonsdale to a situation in the mid-2000s where the number of employees at the Mitsubishi plant was the sum total of people affected by its closure.

Of course, it was difficult for most people, but I think it is true to say that most of the workers found other work without having to access the employment assistance programs that were on offer—and that was a tribute to the way that issue was managed. It goes back to this question: what value for money do we get for the significant assistance we give to the car industry? This government is proposing to give nearly $5 billion worth of assistance to this industry. What the opposition is rightly saying is that we need a level of scrutiny on that money. We need to ensure that we get value money. When we are paying back $300 billion of debt, we have to ensure that every dollar the government spends is directed to the right place.

Moving forward as a country, we need to look at investment in science, technology and education, investment in the newer industries. I am sure the wine industry in the Adelaide Hills in my electorate would not mind $3 billion over the next 10 years to assist their development. But, of course, they have not asked for that. They have simply asked the government not to take away the Wine Equalisation Tax in the Henry review. I am sure the Minister for Agriculture, Fisheries and Forestry, who is at the table, would be very alert to that issue. He is probably seeing some of those fine wine industry people this evening to discuss that issue!

Over time the Australian government, in conjunction with South Australian and Victorian governments both Labor and Liberal, has offered significant assistance to the car manufacturers. It is time, I think, that the government and the taxpayers were assured that they are getting value for money. You cannot survive in the Australian car manufacturing industry without having a large focus on exports. Toyota do very well at it and Holden do very well at it. Ford probably trail, but they are still focusing on exports. Of course, that is what they must do. They must be part of the global supply chain in this industry because that is the way it has moved. Whether we like it or not, we do compete against lower cost economies when it comes to manufacturing, and that does make it difficult for us. We are not playing on a level playing field—I accept that. However, we have to ask: at what point are we spending too much on this industry? I think the level of scrutiny that has been suggested by the shadow minister is appropriate. Coming from South Australia, I know it is a big issue. I am sure that the member for Wakefield, who I see is listed to speak on this bill, will be very supportive of the assistance given to constituents who live in his electorate and work at Holden and in the car component sector around it. We need to have a mature debate about this. We need to consider this carefully because there is a lot of money at play.

As I said before question time, the Productivity Commission has commented in the past. It looked at this in 2008 and said that it costs the taxpayer around $300,000 per job per year to keep people employed in this industry. What we have been saying in this debate is, ‘Let us look at the accountability of this issue.’ I know the Prime Minister, when he was first elected Leader of the Opposition, highlighted manufacturing in his first press conference. I think he said something like, ‘We need to be a country that still makes things.’ Of course, we all agree about that. I think that is a reasonably non-contentious thing for him to say.

I think we should keep making cars. I think we make good cars. I drive a Ford Territory. It is a very good car, a fine Australian product. However, we have to also understand that many fellow Australians choose to buy overseas-manufactured cars. That puts pressure on our industry, but it also indicates that it is in a very competitive environment. It is one that we need to keep an eye on and see how it is developing, because chucking more dollars at it will not work in the long run. We saw that with Mitsubishi.

I think if you had said in early 2008, when Mitsubishi finally announced they were leaving Adelaide, that the government was going to give them more money to try and help keep them here, you would have seen a very strong reaction against that. Going back 10 years, I do not think that would have been the case. Ten years ago, in 1999, had Mitsubishi said they were going to leave—and in fact they did a couple of times, and they got significant amounts of money out of it—the reaction would have been different. The community attitudinal change is quite significant.

I think that reflects the change that our economy is going through. I suspect that has helped in South Australia, as we have moved to a more flexible economy, which has meant that we have not relied on the heavy manufacturing industries as we have in the past. It is all very well for us to cling to the historical story-line that we need a car industry in Australia, but, if it is costing us too much as a government, if it is costing us too much as taxpayers, we need to give serious consideration to how we move forward with this industry.

The final issue I want to briefly deal with this evening before concluding my remarks is this. There are changes that the government is making or has made which will make management of the car industry more difficult going forward. None are bigger than the changes it has made to the industrial relations system. The rewind of the industrial relations system poses a great threat to this industry, as it does to the Western Australian mining industry. We heard what Governor Glenn Stevens of the Reserve Bank said about that last Friday—that, if you re-regulate, if you have more industrial disputation in Western Australia, you will kill the golden goose. I think that is equally true in the manufacturing industry. Changes such as allowing good faith bargaining and so forth, I think, are a very big danger for the industry going forward. Privately, the industry will tell you the same. They do not like the changes. They know the changes pose problems for them. Employee costs in that industry are quite significant. I think that is a major worry, with increasing union activity leading to disputation and strikes and increasing wage costs in the industry. That is another concern brought on by changes the government has made.

The biggest change of all to our economic structure which will affect this industry, will affect our ability to continue to pump in the millions that we do, is the amount of debt, obviously, because we will as a country at some point need to make some attempts to pay that debt off. That may be through tax increases, the Labor way. That is what we will see with Labor; that is the way they will try and pay this debt off. But we will also need to have a serious look at the services our country provides, so we can get back to the balanced budget situation that we on this side of the House desire and the Australian community desire. I am not so sure about those on the other side of the House. With those short remarks, I will conclude.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

I rise this evening to speak on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. The Automotive Transformation Scheme Bill 2009 is a very important bill and it provides the legislative framework for the establishment of the new Automotive Transformation Scheme, with the administrative details included in the regulations. I want to begin by congratulating the government and the Minister for Innovation, Industry, Science and Research for bringing this bill before the House at this time. This is a new, better targeted and greener scheme, which implements the centrepiece of the government’s automotive policy, announced on 20 November 2008, entitled A New Car Plan for a Greener Future.

The car plan includes an expanded Green Car Innovation Fund of $1.3 billion, brought forward to 2009 and running over a 10-year period, and changes to the Automotive Competitiveness and Investment Scheme in 2010 to smooth the transition to the ATS, to the value of some $79.6 million. The plan also includes $116.3 million to promote structural adjustment, through mergers and consolidation in the component sector from 1 January 2009, and facilitate labour market adjustment; $20 million from 2009-10 to help suppliers improve their capacity to integrate into complex national and global supply chains; $6.3 million from 2009-10 for an enhanced market access program; a new Automotive Industry Innovation Council, bringing the key decision makers together to drive innovation and reform; and a $10.5 million expansion of the LPG vehicle scheme, to start immediately. That in fact doubles payments to purchasers of new private-use vehicles that are factory fitted with LPG technology.

The Automotive Transformation Scheme, running from 2011 to 2020 and providing $3.4 billion to the industry, is, as I said, a new, better targeted and greener assistance program. The Automotive Transformation Scheme encourages the competitive investment and innovation necessary for the future viability of the Australian automotive industry. It provides assistance to registered participants who invest in eligible research and development, plant and equipment and, in the case of motor vehicle producers, the production of motor vehicles. The bill provides much needed flexibility in order to address changing circumstances in the Australian automotive industry.

The main feature of this bill is a renewed emphasis on innovation. This renewed emphasis will be achieved by increasing the level of assistance for eligible investment in research and development from 45 per cent to 50 per cent. This provision is particularly important as it reaffirms the government’s commitment to driving its innovation agenda across all industry and, in particular, the automotive industry. This government understands how important innovation is to Australia’s future prosperity. The Australian automotive industry needs to develop new technologies to meet the new and changing circumstances of the 21st century. What is at stake is nothing less than the very survival of the automotive industry, and a strong and innovative automotive industry is vital to technology development and innovation in a whole range of industries in this country.

The renewed focus on innovation in this bill will be of substantial benefit, for example, Mr Deputy Speaker Thomson, to our state of Victoria, which has over 82 per cent of Australia’s automotive research and development being undertaken there. That translates to nearly $540 million worth of R&D. But we must always remember that, in ensuring the survival of the automotive industry, we are in fact ensuring the survival of the livelihoods of the many thousands of hard-working Australians either directly or indirectly employed in the automotive sector.

As the member for Calwell, which is home to the Ford Motor Company, no-one understands this more clearly than I do. Ford has been a major employer in my electorate for many years, and, as a result of Ford’s existence in Calwell, there are many other employers in the area who supply and depend on Ford for their ongoing viability. My constituents, the people of Calwell, are typical of thousands of other workers across Australia. Their livelihoods depend on Australia having a strong and viable automotive industry. So, through bills such as these, the government is maintaining and strengthening our manufacturing capacity. In the last two years we, in my electorate, have suffered many job losses in the car component industry. Many constituents have spoken to me of their personal angst and worries for their future in the context of the global financial crisis. They know that this economic downturn has hit the major car manufacturers in the US and in Europe. They are worried about their livelihoods, and they are worried about the livelihoods of their children.

We have all watched the car industry come close to being brought to its knees by this global financial crisis. Across Australia, in fact, we have held our collective breath as its potential impact has become apparent. But I can say with confidence—and, to a certain extent, with great pride—that the government and, in particular, the Minister for Innovation, Industry, Science and Research are doing everything we can to protect, support and develop our manufacturing capacity. We are determined to refocus and reshape our car industry, because we are committed to preserving and growing its capacity. The car industry not only provides vital employment for Australians, it is a driver of manufacturing innovation across many other industries as well. And having a local car industry that is strong and confident enough to innovate is essential for Australia to be at the forefront of adapting to our pressing environmental needs.

In the debate surrounding government assistance to the automotive industry, there are many—and there have been many speakers here on the opposite side today—who think and have stated that we should cease or seriously limit taxpayer-funded bailouts and let the chips fall where they may. But I was at one with the government when we expressed the view that better targeted schemes are the answer—schemes such as this, that will drive innovation throughout the automotive industry. Those who may oppose this scheme, I say, simply want to surrender Australia’s car manufacturing capacity.

An example of the opposition to this government’s bill is the contribution today by the member for Wide Bay, who not only voiced opposition to our investment in the automotive industry but sought to misuse the Productivity Commission data as he went on to say that support for the industry was the equivalent of a $300,000 subsidy per job and cited the Productivity Commission as the source of this figure. The fact is, though, that the Productivity Commission did not say that every job in the auto industry received the $300,000 subsidy. Instead, the Productivity Commission did an exercise where they assumed that the industry received $1.1 billion per annum. It estimated that if government assistance were removed it would lead to the loss of 3,000 jobs, so that each job saved cost $300,000—3,000 times $300,000 implies $900,000,000. The $300,000 is an estimate based on an assumption that is not valid. The fact is that 3,000 jobs have been lost in recent months in the auto industry as a result of the slump in the auto market following on from the global financial crisis. This has occurred in the context of the loss of tens of thousands of jobs in this industry around the world.

When in government, the opposition recognised the importance of the automotive industry and provided support through the ACIS program. The question now is: have they changed their minds on this? The member for Wide Bay questioned whether this support was indeed worthwhile, and our question is: is this just another case where the National Party perhaps thinks differently on this issue from the Liberal Party?

Without the support provided by ACIS and the ATS, many more jobs in the car industry would be lost, and a critical element of our manufacturing industry would also be lost. I want to remind the House, because it is a very important thing to remember, that some of the key automotive industry performance indicators reaffirm the need to support and maintain our automotive industry. We are looking at exports to the value of $5.8 billion in 2008. We are looking at an employment figure of 46,474 people as of May 2009, an industry value of $5.8 billion between 2006 and 2007, and a business expenditure on research and development which was worth some $648 million in 2006-07. And of course we are also looking at demand: the industry used $11.4 billion worth of inputs from other sectors—services, primary industry and other manufacturers—in 2004-05.

Despite this, the opposition want us to surrender our manufacturing sector to the vastitude of the globalised free market. They want us to surrender our skills base and, ultimately, the livelihoods of working Australians, such as my constituent Mr Kalpa Dewan. I want to mention Kalpa because I had a chat to him recently about this. Kalpa lives in the suburb of Campbellfield in my electorate of Calwell. He has been working at Ford for 20 years and is now in the customer service division in the spare parts warehouse, where he is the occupational health and safety representative. Manufacturing for Kalpa is not an abstract economic indicator. Manufacturing for Kalpa is actually his livelihood. This government intrinsically understands the importance of this sector to the fabric of Australian life, to workers such as Kalpa, to families, to communities and to the whole region across this country.

I am proud to say that the Automotive Transformation Scheme Bill 2009 proves that the government are committed to Australia’s manufacturing future and that we will not surrender this industry. That is why we believe it is imperative that we make investments such as those included in the bill today. This government understand that it is incumbent on us to intervene in an area as important as manufacturing. As I have said, my electorate of Calwell, with its large manufacturing base, has many thousands of constituents whose livelihoods depend on the availability and the provision of manufacturing jobs.

Ford Australia, as I have mentioned, has an assembly plant in Broadmeadows and employs some 4,500 people across the country. In my own state of Victoria, the automotive industry is in fact the largest element of the state’s manufacturing sector, contributing approximately $3 billion in 2006-07 to the economy. Figures for February 2009 indicate that some 25,000 people were employed in this area. That is over 48 per cent of Australia’s total employment in motor vehicle and parts manufacturing.

Coming from Victoria and being the member for Calwell, I cannot stress enough the duty that we as parliamentarians have to ensure quality job opportunities for our constituents. We also have a duty to provide these opportunities in a targeted way which will ensure their long-term viability. It is not something that I believe we should let fall to the whims of circumstance. I know that my constituents support this view, and they are thankful that this government is doing everything possible to support their industry.

On 24 June this year, Minister Kim Carr announced a $230 million investment in Ford Australia. Ford Australia, with the support of this government, have convinced their Detroit headquarters that the first application of the EcoBoost technology to a rear-wheel-drive platform should begin here in Australia. This is not only a great achievement for Ford and a great outcome for Ford Australia but also a great achievement and a great outcome for Ford Australian workers and my constituents in the seat of Calwell.

The support this government has provided will revitalise and strengthen the automotive sector into the future. This government is not about just throwing money at the issue. In the context of the fund, the automotive industry is expected to build the skills and innovation capacity that is required to compete internationally into the future. Through the Green Car Innovation Fund, the Commonwealth will also contribute $42 million to Ford’s ambitious sustainability initiative. These are all important investments and they demonstrate clearly that this government is not willing—and nor am I, as the member for Calwell—to surrender our manufacturing sector.

The Automotive Transformation Scheme Bill 2009 provides capped assistance totalling $1.5 billion from 2011 to 2015 and $1 billion from 2016 to 2020. This assistance is guaranteed by the inclusion of a standing appropriation in the legislation, and the total assistance also includes an uncapped element for motor vehicle producers. Importantly, the scheme requires participants to improve environmental outcomes and promote the development of workforce skills and capabilities. The administration of the scheme is set so that assistance will be provided in grants instead of duty credits as was the case with ACIS.

Moreover, this bill makes it explicit that the scheme is self-assessed. This will ensure prompt payment to industry whilst reducing administrative costs to government. This bill also ensures that the Commonwealth can recover moneys overpaid to scheme participants, and these recovered funds can be redistributed. Payments to participants will be subject to robust verification and compliance. The measures in this bill are carefully and deliberately targeted. This is a scheme that looks to the future by requiring participants to demonstrate a commitment to improving environmental outcomes and developing workforce skills in the industry today and to do so now.

Additionally, it is important that I take a moment to note that the success of our cooperative efforts with industry have not occurred in isolation. Throughout this process, the government has maintained a commendable working relationship with the Vehicle Division of the Australian Manufacturing Workers Union. In conjunction with industry, the vehicle builders union has worked tirelessly with the government to ensure the survival and future prosperity of the automotive sector. While those opposite may attempt to gain political points by trying to demonise the union movement—and we see that happening constantly, and I am sure the member who speaks after me will do his bit as well—this government is prepared to roll up its sleeves and get on with the job with any stakeholder that is willing to fight for the long-term viability of Australian jobs and Australian industry. I invite the members opposite to be among those stakeholders who wish to ensure the survival of Australian jobs and our manufacturing capacity.

This bill protects jobs because it requires participants to promote workforce skills development. This element of the bill recognises that a key contributor to the future viability of the industry is the development of a highly skilled and highly paid workforce. In response to some of the concerns that have been raised publicly by the opposition, the government is proposing amendments to this bill to deal with those concerns. The opposition wanted a greater focus on economic sustainability and transparency in the operation of the scheme. The government is proposing amendments that will address those concerns. These amendments emphasise economic sustainability and provide for an annual report to the parliament on how the industry is progressing towards achieving economic sustainability, environmental outcomes and workforce development. These amendments will increase the transparency and accountability of the ATS and should be supported, not attacked.

In conclusion, as I have already mentioned, speaking to this bill gives me a great sense of pride because I know that this government is doing everything it can to protect, support and develop our manufacturing sector. It gives me pride because I represent an electorate that will directly benefit from the provisions in this bill. It gives me pride because of the progressive manner in which this government has brought all stakeholders to the table. And, finally, it gives me pride because I know that this bill is the centrepiece of the government’s A New Car Plan for a Greener Future policy. I commend this bill to the House.

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

I thank the member for Calwell for her contribution in this debate on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. I might disappoint her by not attacking the unions, but if she wants me to and invites me to then I might have a shot at them. It is great that the member for Calwell has the Ford factory in her electorate. I hope that the member for Calwell actually drives a Ford and supports the industry that employs people in her electorate.

When the car industry is spoken about in this place there is usually an eastern-centric focus, so today I hope to give a Western Australian perspective. Eastern state towns like Geelong are often referred to as the manufacturing heartland of Australia. This is true: large-scale manufacturing in the east currently employs some 56,000 people, producing annually around 300,000 vehicles. However, to treat the large manufacturing plants as the only part of the Australian car industry would be wrong. There are many complementary industries across the country that rely on the success of the Australian car industry. In fact my electorate of Swan has 105 motor vehicle body and trailer manufacturing companies, six automotive electrical component manufacturing companies and 43 other motor vehicle parts manufacturing companies. The industry extends further with other organisations such as service providers that are reliant on local vehicle manufacturing.

The largest motor vehicle retailing company in Western Australia, the John Hughes Group, is located in my electorate of Swan. Just the other day my office was assisting The Tyre Factory in Cannington with their telecommunications problems. This is another type of company that is related to the motor vehicle industry. The point I want to make is that the success of these small businesses in my electorate depends on the success of the large-scale manufacturing in the east. They should all be considered part of the automotive industry. Automotive legislation considered by this place will therefore ultimately affect small business and jobs in Swan.

It is important that I rise today to speak on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. The coalition has always been a great supporter of Australia’s car-manufacturing industry, its employees and the three main motor vehicle producers in Australia: GM Holden, Ford Australia and Toyota Australia. The car sales strips of Albany Highway, Victoria Park and Albany Highway, Cannington are also in my electorate. These strips are littered with dealers who are household names in Perth. My electorate is also the transport hub of WA, and many companies use the suburbs of Kewdale and Welshpool to run their transport and subsidiary companies.

An issue for the manufacturing sector has been controlling job losses, fundamentally caused by improved technology as well as by job restructuring and training in order to work with the new manufacturing tools. The automotive industry operates in an extremely competitive international arena. Pressure has been put on the Australian car manufacturers over the past 20 years to reform to new technology and innovation, to become more flexible with industrial relations practices and to enhance the industry’s position by exporting our cars to overseas markets.

The previous government took steps to address this problem. It provided the automotive industry with certainty in moving towards a low-tariff environment. Under the Howard government’s ACIS program approximately $2.8 billion of transition assistance was provided to the Australian automotive industry between 2001 and 2005. In 2006 some 126,000 vehicles were exported to destinations including the Middle East, the United States, China, South America, South Africa, New Zealand and South-East Asia. Growth in the industry was present in 2006, when domestic automotive manufacturers exported 38 per cent of local production—this compared with only seven per cent of local production exported in 1990. As tariff levels declined, the Howard government helped the industry to compete internationally and to continue to export to foreign markets. In recent times, however, during a world economic downturn, demand for the industry has decreased and growth has declined.

I would like to now talk about the health of the big three car manufacturers in Australia: Ford, Toyota and Holden. Profitability between the three car manufacturers in Australia has been extremely varied over the past 20 years. Let us take Ford Australia for example. Ford entered the Australian car market back in 1904 with the Model T Ford, and 20 years later Ford’s first factory in Geelong was opened to locally manufacture the vehicle. An Australian designed and developed car came in the form of the Falcon in 1960. Since then Ford has been strong competition for other Australian manufacturers, and the Ford versus Holden debate has divided the nation for decades. It is part of the Australian culture. It is part of the fabric of Australia. It is like barracking for teams in the AFL.

I can remember as a young lad travelling to Bathurst in the late seventies to go and watch Moffat and Bond cross the line at Bathurst. I remember the might of the vehicles—Holden versus Ford—travelling down Conrod Straight, up the mountain and across the skyline. Often the trips up there were related directly to the Holden versus Ford debate. I remember a mate of mine, who I have often spoken to about this, Adrian Lawson, from the ‘Magic Men’, used to speak about the Fords and Holdens being rust buckets. That has been brought up recently as well in a state versus state competition for funding between New South Wales and Western Australia, and the Treasurer of Western Australia aptly called the state of New South Wales a rust bucket.

I will return to the subject of the day. Unfortunately, with the downturn in the world economy, Ford’s full-year financial result for 2008-09 was a loss of $274 million with a sales revenue fall of 7.4 per cent. Ford operates two plants, at Broadmeadows and Geelong, in Victoria and has around 4,500 employees and 230 dealers. In 2007 it produced around 68,000 vehicles. Only a small portion of some 5,000 units were exported that year. On 22 August 2008, Ford announced that production would be cut by 25 per cent, with some 350 jobs lost as a result of the downturn in vehicle sales. However, on 24 July 2009, the Australian and Victorian governments announced funding of $42 million would be provided to Ford to produce a new four-cylinder engine version of its Falcon. The catch, unfortunately, is that the engine will be fully imported, and Ford announced at the same time that it would not proceed with its proposed new, locally built Ford Focus plant at Broadmeadows. Although the Rudd government have been somewhat supportive of this motor company, they have in turn cost the Australian economy further job opportunities. It is disappointing that the new plant will not be opening.

GM Holden is a wholly owned subsidiary of the General Motors Corporation. With uncertainty surrounding the future of General Motors as well as the current downturn in vehicle sales, the company was hit particularly hard in recent months. Holden’s vehicle export program began in 1954 when FJ Holdens were shipped to New Zealand. The company has grown dramatically, exporting 36,534 vehicles in 2007, with plans to expand its export program. However, the axing of the Pontiac brand by General Motors had an adverse effect on these plans, as the Commodore was to be exported to the US under this brand. Rather than shedding staff, Holden asked employees to reduce shifts, change working hours, take forced holidays and take an effective pay cut. Its plant at Elizabeth in South Australia is now one of the most flexible automotive operations in the industry—an essential strategy to serve the diverse markets.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Hear, hear!

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

I acknowledge the member for Wakefield’s cheering. Changes have also been made to Holden’s corporate structure, with Alan Batey set to take over the role of chairman and managing director on 1 September this year, succeeding Mark Reuss. With regard to local sponsorship, Holden has been extremely focused on providing its support to netball in Australia. Its broad commitment to the sport includes partnerships with the national team, the Australian Diamonds, the ANZ Championships, Holden International Test Series, all five state netball associations and various grassroots programs.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

And the Central Districts Football Club.

Steve Irons (Swan, Liberal Party) Share this | Link to 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.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I would also like to acknowledge that the member for Swan was most restrained in his speech and paid tribute to the Central Districts Football Club, which is always a good thing. I rise to support the Automotive Transformation Scheme Bill 2009. This bill is a $3.4 billion plan and is the foundation for our New Car Plan for a Greener Future. The automotive industry remains the cornerstone of Australian manufacturing. It creates some $5.8 billion in export revenue and directly employs over 52,000 people. Car manufacturing is a hugely important industry in my electorate, where one in four workers in the city of Playford is employed in manufacturing. Elizabeth is a place that was born to make Holdens and to make cars. It was born for manufacturing, and thousands of my constituents have worked there or had a family member work there over the last 30 years or longer. So it is a very important industry for jobs and economic growth, but it is also important in so many ways to the identity of Elizabeth and the northern suburbs. I can remember many of my friends, after graduating from school, going to work there.

Currently, over 3,100 South Australians work at Holden, and these workers have felt the effect of the global recession. While no jobs have been lost, many sacrifices have been made, particularly with the loss of the afternoon shift. The company has moved to an incorporated day shift with a one week on, one week off roster, and the second week is at half pay. I know many afternoon shiftworkers who have had to completely rearrange their lives, including things like child care, which is an enormous expense in a family’s budget. It has been a very trying time for some families, particularly those with a mortgage, those with children and those with overheads. Many workers have taken up leave voluntarily to assist the company and to help other workers get their hours, and some 370 workers have taken up the opportunity to have more time for their own purposes. That has been a good arrangement. It has allowed some people to have more hours and other people to have more leisure. Obviously, the downturn has affected different people in different ways, but there have been great sacrifices made to retain jobs and to assist the company in a time of international economic turmoil, a time when the car industry has been at the front line of these economic changes.

It is a testament to the workers and their union, the vehicle-building division of the Australian Manufacturing Workers Union. It is a very proud division of the union with a very strong history in South Australia of protecting members’ rights at the Holden plant and a very strong tradition of standing up for what is right. This union has very strong and sensible leadership in South Australia from the secretary, John Camillo, and the vehicle division secretary, John Gee, and it has a hard-working, highly skilled, well-paid membership, who have been very quick to respond to the new economic circumstances. It is that approach that has helped to attract new investment to the plant, and that is a huge achievement when you consider the global state of car manufacturing.

A recent report in the Messenger newspaper highlights that morale is at a six-month high in the plant following a series of very positive statements by the company. Senior shop steward Michael Etherington said:

If you go a few months back we felt like we’d been kicked pretty hard.

But there’s been a major upsurge in confidence.

Things are starting to pick up and we can see the light at the end of the tunnel.

These announcements include the launch of the new small car, the Cruze, by the Prime Minister in December at the Holden plant in Elizabeth. I was there. A lot of workers who were actually on leave at that stage came in in their uniforms with their families. There were a lot of very young kids there and there was a sausage sizzle and the like. There was a really amazing and positive reception to the announcement. The Cruze is currently selling very well in the Australian market and from all accounts it is a great car. Some 2,000 of these new vehicles were sold in the first month, according to industry figures. It has had a pretty good start, and manufacturing will begin next year on that small car here in Australia, in Elizabeth. It defies the nay-sayers. It defies the people who were running around saying that car manufacturing was on its last legs in Australia. We got a new model up at a time of international economic uncertainty.

Of course, we also have the new model Commodore, which I am particularly looking forward to. I am sure it will be an absolute ripper of a car and very fuel efficient to boot, and I hope that this will encourage all Australians to buy Australian made cars. This especially applies to state governments, some of which have been purchasing foreign made vehicles for their fleets in recent years. The erosion of state governments buying Australian made cars is a very big concern because it is a vital part of the domestic market. Those fleet sales help Australian car manufacturers no end, and I would certainly like to see some state governments change their policies. It is interesting to note that the South Australian government and the Victorian government have very good policies on that front, but some of the other states have allowed things to slip.

Considering the importance of the automotive industry to the Australian economy and to so many families in my electorate, I am proud to support this bill, which demonstrates the government’s commitment to the automotive industry. It is a bill which is at the heart of the government’s comprehensive A New Car Plan for a Greener Future. This bill will assist in protecting jobs as the automotive industry faces intense pressure from the global economic downturn. The Automotive Transformation Scheme Bill 2009 sets up a legislative framework and administrative details for a new scheme, which replaces the previous government’s Automotive Competitiveness and Investment Scheme, ACIS.

The new scheme offers greater flexibility to deal with changing circumstances that are facing the automotive industry over the next decade. The scheme will start in 2010, and it is estimated that $3.4 billion in grants to the industry will be delivered over 10 years from 2011. This new, better targeted and greener scheme looks to the future by increasing the level of assistance for research and development, by improving environmental outcomes and by requiring participants to promote work-first skills development. There has been a great deal of that going on at Holden in the run-up to the launch of the new Commodore. The company has made a major investment in skills while the workforce has been getting ready for that new model. This transformation is already going on in the industry, and this bill will assist it.

It will be a self-assessment scheme, which will enable prompt payments to industry and reduce administrative costs and red tape—we are all fond of talking about it in this place but this bill actually does it. Robust verification and compliance mechanisms will be put in place, the most certain of which is the right of the Commonwealth to recover any overpaid moneys to scheme participants. Right now, the automotive industry needs a strong legislative framework and an equally robust commitment from government and, I have to say, from opposition, to encourage long-term planning for the future. This is an industry where there are very long lead times on investment. This bill delivers in these areas and provides much needed certainty for the future.

It is interesting to note that opposition speakers the member for Wide Bay and the member for Mayo went on a bit of a theoretical, rhetorical question and answer session with themselves in their speeches. I think this is rather disappointing, because when you get up and talk about the troubles besetting the industry, or about Mitsubishi and things like that, you do not focus on the future investment opportunities or on the real story that is happening on the ground.

It is significant to acknowledge that this commitment by the government does come at the same time as the legislative reduction in automotive tariffs from 10 per cent to five per cent in January 2010. This reduction will mean that Australia’s tariffs on passenger motor vehicles will be amongst the lowest in the world and we will have the fifth most open market for passenger vehicles in the world. That reflects the government’s belief that the long-term viability of the Australian automotive sector does not lie behind high tariff walls but in its ability to increase its innovation, its capacity, its competitiveness and its global integration. I have expressed to this House before my reservations about rapid tariff reduction—reservations that I and many of my constituents still hold—but it has not stopped us from looking to the future and it has not stopped us from backing investment in the industry.

As I said before, the global economic downturn is having a particularly negative effect on communities reliant on the manufacturing industry. Those communities look to us for certainty and, unfortunately, they have not found it in the opposition. We heard speeches in this debate from the member for Wide Bay questioning the value of the car industry, questioning why we should give assistance to it, and then we heard the member for Mayo talking about the same thing. It is an extraordinary thing for a South Australian member to be questioning the value of the car industry and our support for the car industry. But, unfortunately, it does outline the kind of push-me, pull-you approach of the opposition because, on one hand, we have Senator Abetz saying on 11 November last year that the coalition has ‘a very proud record of supporting the car industry’ and how that support is completely reasonable. He also said that it is not a better package ‘when you take into account the number of years it’s spread over’. Against that, you have Tony Abbott saying just the opposite:

There have been a lot of assistance packages for the car industry and the real issue of any future package is just how long is this going to last?

Will the car industry in this country ever be able to stand on its own two feet? Will Kevin Rudd be able to give a guarantee that any new package of assistance really will be the last package?

And Joe Hockey said:

I don’t know that it is necessarily the right thing to hand money immediately to the motor vehicle industry in Australia without knowing whether those key companies are going to be merging or even won’t even exist in 12 months time.

That was the member for North Sydney in an interview with Laurie Oakes on the Sunday program on 9 November 2008—an extraordinary thing to be saying in the context of an international recession. To be questioning whether or not the car industry would even be present in Australia is a tremendously irresponsible thing to be doing at this time. Certainly, it undermines the people in Elizabeth, the people in Geelong and it undermines this country’s capacity to get new investment and it is a complete contradiction of the government’s position and sometimes of the opposition’s stated position. One minute the opposition are one side of the debate, the other minute they are the other side of the debate. They cannot seem to make up their mind. We hear this in many of the speeches when they say, ‘On one hand, we support the car industry, we support the workers, we want to see them here,’ and then they go on these rhetorical exercises without evidence, without any backing, about the future of the car industry. I think it is tremendously irresponsible at this time.

It bring us to what the car industry itself desires out of this legislation. I have a media release here from the Federal Chamber of Automotive Industries—a peak body of the industry—which calls on the federal opposition not to delay or frustrate the passage of this legislation. It quotes Andrew Mckellar as saying:

Now is not the time for political opportunism.

It goes on to quote Mr Mckellar as saying:

Tens of thousands of automotive jobs, as well as vital investment decisions are dependent on the support of this crucial legislation. The legislation will provide the industry with the confidence to invest in new technologies and support the development of lower emissions and greener vehicles in Australia. Any delay will cause unnecessary uncertainty and concern.

Mr Mckellar puts it far better than I could in saying that the opposition cannot afford to question or delay this legislation and cannot afford to frustrate this legislation, as is their wont to do with so many bills in the Senate. They should just get on and pass it. I am confident that this bill strengthens the government’s commitment.

Peter Lindsay (Herbert, Liberal Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker: the opposition will not be delaying this legislation.

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

That is not a point of order, and he should not interrupt like that in the future. He would not get the generous consideration of this Deputy Speaker.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

It is not a point of order but it is reassuring. We hope that they put the grease on the wheels in the Senate and punch this one right through. This bill does underpin the forward changes in this industry—greener cars, new export opportunities and new products for the domestic market. The future of this industry does lie in our ability to innovate, to become globally competitive and to adapt to new consumer demands. This bill is an important part of the government’s strategy to achieve just that, and I commend it to the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to address the Automotive Transformation Scheme Bill 2009 and note that the government is spending $6.3 billion of taxpayers’ money and including assistance from 2015—which was the coalition’s previous scheme—out to 2020. One has to ask the question: at what stage will this industry stand on its own two feet? At what stage does it become economically viable?

I understand the importance of an automotive industry in this country. I understand the research and development that it provides. But currently there are 67,384 people—as at 2007 according to the Australian Automotive Intelligence yearbook—employed in the automotive industry, including component tooling and design. With $6.3 billion over the 10 years the government is looking to fund this, that is $9,000 per job. If we just focus on the 26,135 people directly employed in motor vehicle manufacturing, over the 10 years that is $24,000 per job. That is $24,000 the taxpayer is paying per job for those in the car-manufacturing industry.

I compare that to the marine industry in my electorate of Fadden. I have spoken twice to the Minister for Innovation, Industry, Science and Research, Senator Carr, and not a brass razoo was rolled out to that industry. There is nothing for the marine industry. Riviera Marine are in administration—from 1,200 employees down to 300. I spoke to aluminium tinnie builders today—they are in administration. The number of employees in the marine precinct in Fadden has decreased by 65 per cent. You would think there would be some dollars and cents to help R&Ds when they come out of the current trough they are in so that they will be able to move forward strongly, but there is nothing. But we throw around $24,000 per employee at the direct car-manufacturing area. It is staggering.

I would have expected that the bill would come out very strongly to say that this is all about the economic viability and the future of this industry so that it stands on its feet once and for all—which was the coalition’s intent with the Automotive Competitiveness and Investment Scheme finishing in 2015—and also to be using the incentives for dollars and cents as part of the ACIS scheme to come off tariffs, now replaced with direct cash handouts. When will this industry stand on its own two feet? When will this Labor government stop supporting and propping up industries?

The other significant issues I have with the bill at present include the fact that there is very little transparency and accountability within the $3.4 billion car fund that is being raised. Today, Senator Carr, by abandoning negotiations with the coalition, refused proper transparency and accountability over how those dollars and cents will be used. Why? Why hide from transparency and accountability? The details in the bill are also very, very light-on with respect to debt recovery provisions, the right to an AATT review, the monitoring and evaluation of the self-assessment schemes, performance clauses around environmental outcomes and workforce skills. One could say that this is really just coathanger legislation, with everything being put in place through regulations and guidelines which, of course, cannot be amended; they can only be voted down, or indeed, up.

I understand where the bill has come from. I understand it has come from the Bracks review—another classic example of jobs for Labor mates. That never ceases to amaze me—even as an MP from Queensland, where the stench of Labor corruption at the state level is almost overwhelming. But I understand where the Bracks review has come from. I understand why they have moved towards the bill; I just feel that it is lacking, especially in those areas with respect to transparency and accountability, and I am stunned that agreement could not be reached with the coalition to address those issues. Notwithstanding that, the coalition is moving forward in support—notwithstanding the issues with the bill, notwithstanding the extension of support out to 2020, notwithstanding the doubling of money, notwithstanding the $24,000 per employee in the car-manufacturing industry and notwithstanding that the boat-building industry gets nothing. Having said that, the bill will pass the House, and I look forward to the car industry standing on its own two feet in time.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I take this opportunity to speak in support of the Automotive Transformation Scheme Bill 2009. Having listened to the contribution to this debate by the member for Fadden, I have to say that I am deeply disappointed at what I heard. I am deeply disappointed, because it is absolutely clear to me that he does not understand the significance of the automotive industry to this nation. It is also clear that he is at odds with members of his own party—and I was pleased to hear the reassuring comment from the member for Herbert that coalition members will be supporting this bill. It is consistent with comments I heard from a previous minister from the Howard government when he came to Adelaide some three or four years ago to support the release of a new model of the GM Holden Commodore. He spoke glowingly about the importance of the automotive industry in this country. I hope that that sentiment still applies to at least the majority of members in the coalition, because it is indeed important.

When you come from South Australia, as I do, where the automotive industry was the home not only to GM Holden but also at one stage to Mitsubishi, you very much understand and appreciate the important contribution it makes to the state as a whole, not just to one region. I suspect that any member who has an automotive plant within their electorate or near their electorate would have the appreciation that I am alluding to. It is an appreciation which goes far, far beyond the direct employment of the people who work in that particular factory, wherever it may be located.

I understand that in Australia there are some 63,000 people directly employed in the automotive sector. There are probably another 100,000-plus people employed in indirect supply industries. Added to that are the tens of thousands of additional jobs in industries that are in no way connected to the automotive industry but which rely on the prop up to the local economy that that particular industry provides. I say that as someone who is very much aware of how important such an automotive manufacturing plant is. I refer specifically to the GM Holden plant in Elizabeth and the significance of that plant to the whole northern region of Adelaide. I say it as someone who over many years had a close relationship with the GMH plant at Elizabeth. I saw firsthand not only what it did but also the significance of the contribution it made to the region.

As an example, adjacent to the GMH plant at Elizabeth there is now is the Edinburgh Parks development. Edinburgh Parks is a billion dollar development and it was only made possible because all of the supplier industries to GMH located there. As a result of their location there, other industries came to the region and, in turn, contributed towards that billion dollar investment of businesses and industries in that region. So the GMH plant was the catalyst for a whole range of direct supply industries—and others as well. When you multiply the combined effects of all of those industries, you start to understand the value it has to that region. I suspect it would be exactly the same in every other region of Australia, wherever there is an automotive plant in place.

But I will go further than that. In the northern region of Adelaide we have a very strong Defence Force industry and a defence supply industry. In fact, I would venture to say that it is probably home to the biggest Defence Force sector in this nation in terms of industries that are defence related. Most of them have contracts with the Department of Defence. But, in order to underpin and sustain their operations, many of them have to deal with manufacturing at one stage or another. As a result of GMH being there, and the supply companies to GMH also being there, they have access to products and contracts that they would not have access to if those automotive industry suppliers were not there as well. So one industry feeds off another, and that is the multiplier effect that is not reflected in the 100,000-plus people who owe their jobs indirectly to the automotive industry being there. So when the Rudd government came to office and committed some $6.2 billion to the Automotive Transformation Scheme, it was an investment that was welcomed certainly in my region but also, I suspect, by tens of thousands of families around the nation—because that is how many people would be relying on the automotive industry remaining viable.

If the automotive industry in this country were to go down, there would be a concern that I believe every Australian would share, and that is this: whilst our manufacturing industry across the nation has been in decline for several decades—and I think few people would dispute that—if the automotive industry were not around, the manufacturing industry would decline even further. In my view, that would leave this country totally vulnerable if in future years we were not able to make our own goods and did not have the facilities or the skilled people with the know-how to do exactly that. I say quite clearly and openly that I certainly refute the views put forward by the member for Fadden.

Before I get on to my own remarks, I would like to talk about a matter that was raised by the member for Mayo. He made reference to his concern about industrial relations under this government. GM Holden at Elizabeth has been competing in a very competitive environment across the world for the last couple of decades. The reason that it has remained competitive in the worst possible times—and even right now during this time of global economic downturn—is because the workforce at the GM plant, working hand in glove with management at the GM plant, know what is best for the future of the industry and have worked together to ensure the viability of that plant. It is through almost a decade of cooperation between the workforce and management that that plant remains viable. That plant was, in fact, one of the most productive GM plants around the world. So much for the concerns expressed by the member for Mayo. The situation is, in fact, quite the opposite. The people in the workforce in those plants are not there to try to ensure that they bring down those plants or create problems; rather, they understand what is in the national interest and they understand what is required of both parties—employer and employee—in order to ensure that the industry remains viable.

The attitude and approach of the workforce has been commended by GM executives time and time again. As someone who has been associated with that plant, I have seen the GM executives come and go and I would have to say that, without exception, each and every one of them has always understood, respected and commended the workforce at that plant for their approach in all of this.

I support this bill because it does a number of things. It underpins the viability of the automotive sector within Australia, but it also does two other significant things that I believe would be of concern to each and every one of us. We have just spent weeks and weeks debating the Carbon Pollution Reduction Scheme. We have debated in this chamber about what should and should not be done in order to minimise the effects of climate change, and we have debated in this chamber about what is the best way to reduce carbon emissions. When you look at Australia and you consider that something like 13 per cent of the carbon emissions that are produced in this country comes from the burning of fuel for the automotive sector, you can understand how important it is to ensure that we reduce the amount of carbon emissions coming from the automotive sector. It is not that difficult to do that if we are prepared to invest in some research, development and better designs. That 13 per cent could easily be halved, from the material that I have read. An investment in new car technology will, if nothing else, make huge inroads into our ability as a nation to reduce the carbon footprint of this country. If that is then transferred worldwide, as it currently is, it is surely one of the most productive ways of reducing carbon gas emissions across the globe. We need to do that for all the reasons that I suspect most members in this place understand.

It is interesting; only this morning I went to a breakfast presentation put on by World Vision. Tim Costello was there as the host of the breakfast, and there was a specific presentation relating to the effect of carbon emissions across the globe, how that links in with climate change and the consequences for each and every one of us. It is sad and somewhat disappointing that not all members of this House were able to go to that breakfast, because what they would have seen, I suspect, would have frightened them. It was indeed very concerning. But, putting that to one side, I make that point simply to reinforce the concern that is out there with respect to the importance of reducing carbon emissions. Investing in new car technology is certainly one of the ways of doing that.

That is one of the other critical outcomes of this bill. The third is this. We have debates in this place about the cost of crude oil and the impact it has on petrol prices. We know that we went through a period last year where crude oil was being sold for something like US$160 or US$170 a barrel, and we saw petrol in this country rise to $1.70 or $1.80 a litre. At the moment it has come back down in my home state to around $1.20 a litre and crude oil is selling for around $50 a barrel. But there are two issues relating to crude oil that truly concern me. One is this: it is inevitable that once the economy picks up crude oil prices are likely to rise. If it does, the increase in the price of crude oil will be transferred to the motorist—that is, the homeowners, the mums and dads, the people of Australia who rely on petrol to get to their workplaces, schools and wherever else they need to go. It would directly affect the household expenditure that households will be faced with.

So it is important to try to reduce that burden by coming up with more fuel efficient cars. This bill will do that. If you can reduce household expenditure on the petrol that is consumed, you will directly impact the household because of their expenditure. As we all know, everything we consume in this country has the cost of petrol factored in at some point or another. It adds a huge amount to the daily cost of living of people in this country. For that reason it is important that we come up with more fuel efficient cars.

In addition to the question of fuel efficiency per se, there are also views out there that the production of oil around the world has already peaked. I do not know whether that is true or not; I read mixed reports about that. But if it is true, given that countries like India and China are increasing the numbers of cars they produce and are selling to their own people in high numbers, it is likely that we will have, on one hand, less fuel and, on the other hand, greater demand for it. The consequence will quite clearly be that the cost of crude oil will increase. If it increases, that will be deflected directly onto the motorists and households of Australia.

It is imperative for the future of Australia’s automotive industry, for Australia as a nation and for the world that we reduce greenhouse gases. It is imperative that we reduce our reliance on petrol. It is imperative that we do whatever we can to minimise the costs of living associated with higher petrol costs. The $6.2 billion that was committed by the Rudd government as part of the auto plan will go a long way towards providing the kind of support that the automotive sector need to encourage them to make the investments that they need to make in order to design the cars that will ensure that they remain competitive around the world.

In that respect I come back to the GM plant at Elizabeth and commend the plant for having the foresight and making the commitment to change its design next year so that it is building a four-cylinder, more fuel efficient vehicle. I was at the plant probably six months ago when that announcement was made. I have seen the kind of model that they are looking to provide. I have also seen the timetable for the production of that car. Right at a time when we were going through probably the worst economic recession that the world has ever seen, that plant was planning for the future—a future that was dependent on a car that was going to be globally competitive. My understanding is that everything is on track to build that car within the time lines and have it in production by late next year. That was the information that was provided to me when I last spoke to the plant manager there, and I have no reason to believe that that will not happen.

I also commend the current workforce there, who at this very difficult time for the plant—and the workforce understands the difficulty that the plant is in—have agreed to reduce their hours of work so that they can ensure that no-one loses their job at GMH at Elizabeth. It is a great example of what I would call Australian mateship, in which the workforce have agreed collectively to work fewer hours each and that way ensure that no job is lost. The importance of that is, firstly, that it ensures that every household at least maintains a level of income. More importantly, it reflects the confidence that that workforce and management have in the future of that plant as a result of the new model that they will be building next year. That confidence is such that they do not want to lose their workforce. It is a workforce that is highly skilled and highly trained. It is a workforce that GM out at Elizabeth has invested a lot in. Quite clearly, they have the confidence to say to them, ‘Stay with us during hard times because we will bounce back and, when we do, you will have your job and you will have the full hours that you were accustomed to in better days.’

I say again that I commend the workforce and the company for sitting down and agreeing to the deal that they did some months ago in order to secure the jobs of all of those people at Elizabeth and, in doing so, put to an end the myth that was constantly going around that the future of the GMH plant at Elizabeth was in jeopardy and that the plant might close. It certainly did not—and, as a result of that, all of those other industries that depend on it were also given the confidence that they needed to continue their own operations.

Debate interrupted.