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

I move:

That this House:

(1) notes that on:

(a) 20 October 2017 General Motors Holden will end automotive production at the Elizabeth plant; and

(b) 3 October 2017 Toyota will end automotive production at the Altona plant; and

(2) acknowledges the devastating impact the end of automotive production in Australia will have on:

(a) workers and their families;

(b) the communities around Elizabeth and Altona;

(c) support industries;

(d) the national economy, and in particular the economies of South Australia and Victoria; and

(e) Australian manufacturing as a whole.

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

I second the motion and reserve my right to speak.

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

I have spoken on the demise of automotive manufacturing in this country many times in this House because it is of obvious importance to my electorate, to the state of South Australia and to the national economy. It is worthwhile recounting some of the history of what has occurred here. There was a very good article on 30 November 2013 by Joshua Dowling in The Advertiser. He recounted that over the period 2001 to 2012, although Holden received $1.8 billion in federal funding, in effect, it returned $1.4 billion of that through pay as you go income tax of its workers. That is just the income tax of the workers at that plant, not counting the other economic effects that are generated: $21 billion to businesses with other goods and services. Of course it talked about the exports that came out of that factory—out of just Holden alone: its biggest export year was 2008 when 56, 000 cars were shipped mostly to the US when the dollar was 84c. I say this, because the dollar's rise to over parity was one of the key economic reasons why Holden announced its closure. That was the pressing economic effect and that is why they needed additional government assistance at the time. Any government would have looked at the currency and said that clearly it was an issue for manufacturing. It is worthwhile noting that today it is 76c Australian to the US dollar and, but for the actions of this government, we would have been exporting cars to the US, in particular, the US patrol car and US police car market.

What happened after that? The company asked the government for help. Given the currency, given the trading conditions, and what did they get? Well, they got an ultimatum: 'Hockey dares GM to leave.' We know that that was their attitude, that they had set up a contest of who could be harder within the cabinet room: the Prime Minister at that time and the Treasurer, beating their chests about who could be harder on the car industry.

What devastating consequences have occurred for my state, for my electorate and for the national economy, because we are now looking at the effects of 50,000 direct job losses, thousands more beyond that and supply chains being completely disrupted and destroyed. What we find is that the government has put in place a so-called growth fund of $155 million in total that has all been spent. So now we find that we are looking at the closure date of October 20 for Holden—slightly earlier, I think, for Toyota—a devastating day for Australian manufacturing as this government de-industrialises the nation. We are going to see terrible and horrible effects in the local economy and tremendous disruption to the South Australian and Victorian economies and, beyond that, to the car part suppliers in New South Wales and even as far away as Queensland and Tasmania in some instances.

An enormous disruption to the national economy that was entirely preventable—this was the consequence of the Abbott-Turnbull policies put in place by, firstly, one Prime Minister and now another. We will hear later from other coalition speakers, Mr Kelly and Mr Christensen, and they will talk about subsidies and all the rest of it; however, I would point out to the House that Mr Kelly once proposed subsidising power for swimming centres. Mr Christensen wanted to see a new a wave of economic protectionism with the return of tariff and industry subsidies and has been an outspoken advocate, apparently, of ethanol. I would point out to those members that it is hard to have an ethanol industry, if you do not have an automotive industry in the country. We are now looking down the barrel of tremendous economic hardship and dislocation in South Australia and Victoria, and it has all been because you can sheet every single job loss home to this government—to this government's economic policy and to their incoherence in jobs.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

It is indeed sad for all of us who are supporters of Australian manufacturing to see the closure of the General Motors Holden, Toyota and Ford Motor Company manufacturing activities in Australia. Many economists and commentators, including the member for Wakefield and others in this House on both sides of parliament, have canvassed, in recent years, the international competition, consumer trends, costs of production and other reasons for this decline.

We know that over recent years, through successive governments, this has been a particularly difficult economic reality to deal with for none more so, of course, than those employees of these plants in this country. It has impacted significantly in South Australia, obviously, in Victoria and, if we look back at the history of motor vehicle manufacturing in this country, other states as well over the years, including my state of Queensland.

It is important to note the Australian government is supporting the automotive manufacturing workers, industrial supply chains and traditional manufacturing regions through what is clearly a transition period. One hundred and one million dollars has been invested into the $155 million Growth Fund to ensure workers in South Australia and Victoria are receiving the support they need. They have the opportunity to reskill, supply chains are diversifying, and regions are adjusting to new areas of the economy. For employees, $15 million has been committed to extend the Automotive Industry Structural Adjustment Program to help automotive workers find new jobs. It is open until 2018. For automotive supply chains, there is $20 million for the Automotive Diversification Program to help firms enter new markets. It is already generating $51 million in private sector investment. There is the $90 million Next Generation Manufacturing Investment Program to accelerate private sector investment in high-value manufacturing sectors in Victoria and South Australia. It has generated over $283 million in investment. For businesses in impacted regions, the $29.5 million Geelong Region Innovation and Investment Fund and the $24.5 million Melbourne's North Innovation and Investment Fund support innovation and job creation projects that ultimately strengthen and diversify these regions.

With all of that in mind, I want to share with the chamber my firm view that we all, as consumers in this free, democratic society, are free to make our own purchase decisions. I respect that and I celebrate that as a key principle in our free economy. I personally could regale this chamber with stories of the many vehicles that I have purchased over the last 30-odd years since I got my driver's licence. Suffice it to say that it began with a second-hand Australian-made 1967 six-cylinder Ford Fairlane sedan—my uni car, if you like—and has most recently involved my purchase of a 2015 Ford Falcon just before they went out of production. In my experience, they have been mainly Fords—in between a few Holdens, I must admit. I have always been a great fan and supporter of the Australian automotive product, a bent that not all in our country share, I must admit. I therefore, as a consumer, grieve for the loss of these vehicles to our market. I recognise that the sector has been the basis of engineering innovation across the economy for many years, but times are changing.

We should therefore celebrate the fact that design expertise in these companies is being retained in our country. I cite the Ford Ranger as an example. It is a very popular vehicle in Australia, fully designed here in our country and manufactured in Thailand. We should celebrate the fact that many of our automotive supply chain firms have continued to supply manufacturers around the world and, of course, we should recognise the government's efforts in promoting a defence industry plan that presents design and manufacturing opportunities not just in a few states but right across the country, including in my own regional electorate of Groom in Queensland.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support this motion and also to say that 20 October this year will be a very sad day for South Australians and all Australians when the closure of Holden's Elizabeth plant in Adelaide's northern suburbs takes place. It will be a terrible blow to South Australia, to the economy and to the expertise of manufacturing in Australia. The plant at Elizabeth has successfully been building cars since 1963, but of course Holden has been in Australia for many years. It was started off as a saddlery business by James Alexander Holden in 1856, and in 1924 the company became the exclusive supplier for manufacturing the US GMH motor vehicles.

Many thousands of people have put bread and butter on the table as blue-collar workers at GMH in South Australia, Victoria and other places. One of those families was my family. My father migrated to Australian in 1954, and the day after he landed in Melbourne he got his first job, at GMH at Fishermans Bend or Port Melbourne, and stayed there for many years before transferring to the Woodville plant in South Australia.

Just like our family benefited from a decent wage for a decent week's work, the families of millions of other people did the same—migrant families, families that had been here for many generations—and it assisted Australia's economy. It assisted our manufacturing, it assisted the techniques and technology and a whole range of other things. It will be a very sad day to see Holden close its doors. Many of us have grown up with that name. My first car, when I was 16 or 17, was a 1962 EK Holden, and I always had Holdens—mainly because my father worked there and they provided a wage for our family so I wanted to support them, just as many other thousands of Australians did.

Earlier we heard the member for Wakefield talk about the benefits in dollar terms and how much it cost governments to support Holden staying here. We heard that $1.8 billion was the cost, with a $1.4 billion return. But then you add the taxation, you add the spinoff enterprises, businesses that all supplied Holden; you add the small delicatessens and snack bars down the road that would shoot up because of the manufacturing population around there. You can see what a great loss this will be to Australia. Countries all around the world subsidise car manufacturing. Wherever there is an assembly plant there is a subsidy per worker. Research that has been done in Germany and in the US shows that our subsidy was one of the lowest per worker, per assembly line, compared to other nations around the world.

Why do nations provide these subsidies? Because they know of the value adding that each assembly line job gives to the economy. They know that for each assembly line job there is a tenfold spinoff into the economy. Therefore it was our duty as members of parliament, as governments, to do everything we possibly could to keep Holden operating and running. I was not in this place when then Treasurer Hockey dared GMH to leave. A year earlier Mr Devereux, who was the CEO of Holden in Australia, made a statement saying how precarious their position was and how the subsidies would assist them to maintain manufacturing, and any tinkering with the subsidies would mean that they would have to shut their doors. Then we heard the negative spin from member after member, and from ministers—it was like a race to who could be most negative about Holden. The front page of the papers had Mr Hockey daring GMH to leave, and within a few days we had the very sad and unfortunate message from Mr Devereux saying that they were going to shut their doors in 2017.

Holden have provided jobs for thousands of people—in fact, economic modelling estimates that overall economic losses to the state will be in the vicinity of $4 billion, with job losses of up to 65,000 by 2020. It will be a very sad day when they close and I am very disappointed that people in this place did not do everything they possibly could to keep Holden going.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I do partly concur with members of the opposition on this motion—it is a sad day when any company closes down, especially a company with such a long and proud history like General Motors Holden in Adelaide. But the reality is that businesses have to be competitive. No business can continue to be subsidised by other businesses indefinitely, because ultimately someone has to pay for that subsidy. If one business wants to be subsidised, you have to put a higher tax on another business, which makes that business less efficient, deters them from expanding and deters them from employing people. The sad reality at the end of the day was that Holden in South Australia was no longer competitive, and that is why the decision to close down was made.

Holden is not the only company we have recently seen close down in South Australia. Only last week we saw that Coca-Cola were closing their operations in South Australia. They had a glass bottle manufacturing plant, a plant that obviously requires tremendous amounts of energy. It was very understandable that, with South Australia's high energy costs, Coca-Cola pulled out. They joined Pfizer, who pulled out of South Australia the week before. And, only a couple of days ago, we had the decision of Caroma to pull out of South Australia. All of us in this parliament should be very concerned about the exodus of manufacturing from South Australia.

One of the clear reasons for that exodus is the high cost of electricity in that state. It is not only the businesses that we see close down; it is also the unseen—the businesses that would have otherwise started up. Our economy relies on new investments and new business start-ups to keep the economy growing. But who is going to invest in a state that has such high electricity costs, such unreliable power? No business today would make that decision.

Madam Deputy Speaker, to give you some idea of the competitive disadvantage faced in South Australia: recently there was a report released by the Australian Energy Market Commission, looking at the prices in each state, and in New South Wales, for the year 2014-15, the average price of residential electricity was 22c per kilowatt hour, but in South Australia that amount was 30c per kilowatt hour. You had an almost 50 per cent higher price in South Australia than in New South Wales, so is it any wonder that we are seeing this exodus of manufacturing from South Australia?

South Australia not only has a competitive disadvantage within Australia; it also has a disadvantage compared to other countries. I recently had a look at some of the prices in Canada for electricity. In Edmonton, the average price for residential electricity is Can10.3c. The Canadian dollar and the Australian dollar are almost at parity, so you are looking at 10.3c in Edmonton but 30c in South Australia—three times the price. In Vancouver, the average price is 10.7c for electricity. In Calgary it is 10.4c. In Montreal, the average residential price for electricity is 7.23c. That is one quarter of the cost in South Australia.

We have a crisis in this country with electricity costs. We cannot ignore the problems in South Australia to double down on a renewable energy target in South Australia that has caused so much damage. I call on those members from South Australia to realise the crisis that is ahead of you and to call on your party to abandon your 50 per cent renewable energy target, because your state, most of all, cannot afford it.

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

It is clear that the member for Hughes knows nothing about the automotive industry in this country. The decision to close GMH was made in 2013, and even the Productivity Commission's biased report in 2013 did not point to electricity prices as the reason why GMH was going to close. In October, both GMH and Toyota will close their doors in this country in terms of making cars here. Many small and medium enterprises around the country that provide support to the two major car makers will also close their doors. We are talking about anything up to 170 other component companies that will also close. These are the small and medium companies that members opposite constantly try to tell us they stand up for in this place. With the closure of these companies will come the loss of tens of thousands of jobs. We have already seen that begin to occur across Australia. These are the jobs of people who in some cases know nothing else other than working in the auto industry and who have worked there all of their lives. With their job losses will also come the loss of expertise that has been built up over the years as a result of them doing just that.

For South Australia, the closure of the Holden plant will be devastating. I cannot describe it any other way. The Holden plant at Elizabeth has existed for over 50 years—in fact, close to 60 years. It is an iconic building in an iconic location on the Philip Highway. It is a catalyst for other businesses that have come into the area ever since the 1960s—in particular, the development in the last couple of decades of Edinburgh Parks, which is now slowly starting to shut down because Holden is closing. Again, we see job losses with that. We not only see the job losses but also see a loss of confidence in the area. We have another 1,600 jobs still to go. I have spoken to many of the components suppliers that support Holden in South Australia. Many of them have told me openly: 'When Holden closes its doors, we will do the same. There is no transition. There are no other areas that we can go to.'

South Australia is, indeed, bracing itself for that, at a time when we all know that we have people who are unemployed, have been unemployed for a long time and are looking for work. I personally know people who have lost their jobs at Holden and have tried hard for the last 12 to 18 months to get a job. At times, they have been able to get temporary jobs—unfortunately, in many cases, in other manufacturing industries that, in turn, have closed down, so their jobs are lost again. These are the sorts of people that we need to try and think about.

As the member for Wakefield quite rightly pointed out, this is foolish government ideology that makes no economic sense. There will be a $7 billion hit to Australia's GDP as a result of the closure of Toyota and Holden. The cost to the government in lost tax revenue and welfare payments far outstrips whatever subsidy the car makers were asking for—subsidies that pale into insignificance when compared with the subsidies provided by other countries to their car manufacturers. Australia was one of 13 countries that could make a car from start to finish. It will now be one of, I think, two countries in the advanced world that do not have a car-making industry in their economy.

What is this government doing to help those auto workers who are going to lose their jobs? Very little. Indeed, the Prime Minister came out to South Australia last year when we had the floods that affected the food growers in the northern parts of Adelaide. He came out there for a media stunt. We have not heard a word or seen anything of him ever since—nothing. Yet that is an industry that could well take up some of the slack in respect of the workers who are going to lose their jobs in the car industry. Only on the weekend, I spoke to a food producer in South Australia who is well known, has a stable business, probably employs close to 100 people and wants to expand. His question is, 'What is the government going to do to help me expand my food-processing business?'

But it goes further than that, because AUSVEG have put together a very clear proposal that the government could embrace if it wanted to do something about helping those people who are going to lose their jobs—a proposal that talks about extending an irrigation scheme, setting up new facilities, fixing up some of the transport problems that we have and investing directly into skills training that the food growers need. Those are the sorts of things that could be done right now by this government if it really wanted to do something to help the people who are going to lose their jobs as a result of this government's incompetence in managing the economy of this country. It was a bad decision then and has been made even worse by the government's failure to act to support those workers.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

The withdrawal of Holden from manufacturing is a tragic thing, particularly for the families of those employed directly by Holden. Holden's withdrawal signals the end of auto manufacturing in Australia, which is also a tragic loss for those employed across the wider industry who might lose their jobs as a result.

It is a blow to diehard Holden fans across the country, my father being one of them—he was a professional dragcar racer for a period of time and raced a HQ Monaro as part of the then Wild Bunch. My first car was a Holden Commodore, and the family is not happy at all that I now drive a Ford Territory. We all love Holden as an Aussie institution, and the loyalty of Holden fans is matched only by the loyalty of Ford fans.

But the reality is that neither Holden nor Ford had that loyalty to Australia. I will leave it up to others to score the political points over Holden's departure. We could talk about Ford's departure under the Gillard government. The reality is that they were all pulling out of Australia under both sides of politics regardless of what shade of government it was. Frankly, it did not matter who was in government or how much money was thrown at them; their intention was always to leave Australia and to go wherever cars could be produced cheaper. That is a problem of globalisation.

The Liberals are firmly committed to free trade, and Labor is on the same line. No doubt free trade does bring some benefits to industry—certainly it does to agriculture, I will acknowledge—but free trade is also a reckoning and falls hard on manufacturing. Australian workers earn decent wages and, when we pit them against workers in a third-world country who may get $2 a day in some cases if they are lucky, how can we compete? I think the horses have already bolted on this issue not just in the auto industry but right across the manufacturing sector.

And it is not just manufacturing in Australia; this is a problem for developed countries around the world wherever workers are paid a decent wage. The US has seen industrial ruination across their country in places like Detroit, Michigan, and Ohio for the same reason: it is cheaper for large companies to manufacture in second- and third-world countries. A recent Los Angeles Times article told the story of an Ohio resident, Chris Wade, who worked for parts manufacturer Delphi Automotive before Delphi moved operations from the US to Mexico. He was paid $30, a far cry from the $1 an hour paid to Berta Alicia Lopez, who lives on the outskirts of Juarez, Mexico and performs the same job that Wade once did in Ohio.

Globalisation and free trade, we are told, lift the wages of people in poor countries, but Mexico and America are a perfect example: despite the pain in America, Mexican wages have not improved. That blue-collar pain felt across middle America drove millions of voters to Donald Trump at the 2016 election. At a campaign rally, President Trump said:

Every time I see a Delphi and I see companies leaving, that wall gets a little bit higher, and keeps going up. We are going to fight Delphi and other companies and say, 'Don't leave us, because there are going to be consequences.'

Maybe that is the only way here in Australia we can stop it happening: to stand up against these multinational companies and stand up for our working families.

When Holden first announced they were deserting Australia, I said to them and all the other auto manufacturers that we should demand back all the money that we have paid them instead of falling over one another to see how much more money we could throw at them in the forlorn hope that we would keep them here. We should have passed legislation to recover the billions of dollars that had already been given to them. We should be putting a massive tax on them to recoup the money that we gave them. Perhaps these companies need to feel a big stick every so often.

Whatever the answer might be, it does not involve handing out free money. We tried that, and it just did not work. It did not work under Labor when Ford left. It did not work under us when Holden left. The answer is a different style of leadership: standing up to multinational companies that seek the lowest common denominator for production costs. Perhaps we need to tell these multinationals that, if they want to sell in Australia, they need to manufacture in Australia. When free trade was first championed, it was on the back of so-called 'production efficiency', but that has now gone out the window with the increase in technology and also with the low cost of international shipping. No country has a production efficiency. Now it comes down to the lowest common denominator in wages.

The question does come back, sadly, to Australian consumers, who demand cheap little cars that come out of Thailand and Korea. I do not know the answer to the question of whose fault it ultimately is, but I have to say we Australians do need to start being loyal to Australian products and to Australian companies that support Australia and Australian workers.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.