Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise to discuss this issue of the Australian car-manufacturing industry in relation to the amendments before us. I would suggest that the state of the Australian car-manufacturing industry is an absolute classic example of where a total failure to have an industry policy and a total failure to recognise the trends in climate change and peak oil have led to government failure in relation to manufacturing—and that is exactly what occurred under the Howard government. I think it is absolutely critical that people understand that, because the Howard government never believed in peak oil and, as far as I know, the coalition still does not.

The coalition was committed to Australia building V8s for the American market and big cars for the Australian fleet vehicles. They refused to tie subsidies to the car-manufacturing industry to developing fuel efficient cars. At exactly the same time, the whole world recognised the importance of reducing emissions and the fact that petrol was going to get more expensive as the underlying price of oil increased, so consumers were moving to smaller, more fuel efficient vehicles at the time that the Australian car industry was being encouraged by the government to build big gas guzzlers and was being subsidised not only with direct dollars but also with government purchasing power to buy these cars for the Australian Public Service, for the government fleets. The fringe benefit tax concession was also encouraging exactly the same—more car use for their corporate fleets around the country. So, at a time when the whole world was moving in one direction, Australia was positioning itself to go out of business and out the back door.

What a surprise then that car manufacturers were saying they could not cut it in global competition, they could no longer sell their vehicles and they were putting people out of work. That is directly attributable to former Prime Minister Howard’s climate scepticism, peak oil scepticism and belief in the American dream of bigger, better and faster cars all over more and more freeways. So the rest of the world moved on and Australia was stuck. In 2006 in my budget reply speech in here I said that another $60 million into the car industry not tied to fuel efficient vehicles was a guarantee for disaster. Not long after that, we had the government celebrating a new contract for V8s into the US.

I would like to read for the benefit of the coalition senators, who do not seem to know about global trends, a recent article from the Economist. It shows how China, on the other hand, got very smart about this. China recognised that the competitive advantage for China was building the cheapest, smallest, lightest, most fuel efficient vehicles in the world for the mainstream market, whilst the Europeans moved to European Union new standards of not only fuel efficiency but also emissions intensity, recognising that they would capture the world’s global luxury market and the Chinese would try to displace the Japanese and everybody else out of the mainstream market. How did the Chinese proceed? By doing exactly what the Greens are proposing for the Australian manufacturing industry. The Chinese realised that the only way you are going to be cutting edge in the world is to set yourself high standards, get your manufacturing industry to produce to those standards and then go out onto the world market.

China has just lost its first legal dispute with the World Trade Organisation and it has introduced a new tax that will achieve much of what it originally wanted with the measures it had taken previously—and it is a green tax. China imposed a special 25 per cent tariff on imported car parts rather than the usual 10 per cent if the parts made up more than half of the value of the vehicle. Included in that, imported new cars were also subject to the 25 per cent tariff. This was to encourage foreign car manufacturers to use more local suppliers and reduce imports. America, the European Union and Canada argued that the tariff was against World Trade Organisation rules and the WTO agreed, so China lost its first court case in the WTO on the basis that its imposing a tax on imported car parts was against free trade.

Not to be outsmarted, what the Chinese then did was announce a new green tax. It came into effect on 1 September. It was designed to reduce fuel consumption and fight pollution. Then China imposed a 25 per cent tax on vehicles with an engine size of two to four litres and a 40 per cent sales tax on cars of 4.1 litres or above. The article in the Economist said:

The government says the new tax will encourage a shift to more fuel-efficient cars. It will also help Chinese carmakers, as they tend to make cars with engines smaller than 2.5 litres. Foreign carmakers, which make most of the cars with larger engines, will suffer.

I hope the coalition is listening to this, because the Chinese have set a policy deliberately to make those people who manufacture large cars suffer. That is the result of the coalition’s policy for insisting that Australian car makers make the cars that the Chinese have set themselves the ambition of making sure do not cut it in the world market. How stupid is that for a coalition policy on manufacturing? To be a global manufacturer, you need to be cutting edge yourself and then go out to the global market, not make things that you think people ought to buy when there is not a market for them.

So the Chinese have gone on to try and introduce greater import tariffs so that they reduce the size of vehicles, which is good for that country in terms of their pollution and their emissions strategy. Their new tax is canny because it cuts fuel use, reduces imports, benefits local car makers and will improve air quality and get around the WTO rules. So, wait for China! Here comes China, with cheap, efficient, light, safe, mainstream vehicles.

What gives the coalition any idea that some sort of patriotism about buying big gas guzzlers simply because they are made in Australia will give enough Australian families the incentive to buy a more expensive, less safe, less efficient vehicle? Let us get much more sensible than that and make cars here which can compete with the kinds of vehicles that China is going to turn out. And we can do that. That is why the government has introduced a green car tax initiative. I support that. The initiative is for $500 million, and the Bracks review has said, ‘Increase it to $1 billion,’ and I agree. If we are going to keep an Australian car manufacturing industry and keep people employed in it we have to convert that industry rapidly to being green and fuel efficient, and we have to reduce the emissions intensity of those vehicles in order to compete.

That is the first part of the process. The second part of the process is changing the tax system so that we get rid of the notion of luxury cars—we phase it out altogether—and, instead of that, we phase in a tax regime which taxes all vehicles on their fuel inefficiency and their emissions. So, if you buy an inefficient car which emits huge amounts of greenhouses gases, you pay a higher tax on that; if, on the other hand, you buy a car which is highly fuel efficient and has low emissions then you will not pay much tax—right down to zero if you buy a car which runs on electricity made from renewable energy. That is the kind of tax system that we want to phase in. The amendment which I will speak to in a minute, when Senator Conroy moves it, takes us a first step on that journey.

The third part of the process is in government procurement. If you are going to give the car manufacturing industry money to make these green cars, you have to purchase them. So I agree that government procurement policy should be to buy Australian low-emission, fuel efficient vehicles, and then get rid of the fringe benefits tax concession for motor vehicles, which is a perverse incentive for people to drive more. We need to subsidise the industry to make the right cars that fit the global trend on efficiencies and emissions, and then set up a tax and registration system to favour those cars which are doing the right thing in an environmental and peak oil context.

Let’s be aware that the oil price jumped yet again today and it is only a matter of time before it goes through US$150 a barrel. And let’s be aware of what will happen if the Middle Eastern countries succeed in changing the way that they represent the fuel price. If they change to the euro, away from the US dollar—which is currently under suggestion in the Middle East—then in OPEC you will see a massive shift in fuel prices. So the most sensible thing to do, if you are really serious about protecting motorists from the vagaries of the global fuel market, is to invest in public transport and in fuel efficient cars. Then you need to drive the market, through your procurement policies.

That is a sensible, internally consistent policy. So I find hypocrisy in the way the coalition in opposition harp on about how they wanted to support the car industry. Every move they made was to undermine the industry by throwing good money at the wall, and watch the industry go out the back door because their climate scepticism and their peak oil scepticism blinded them to the fact that the rest of the world had moved and they were stuck in the past and trying to keep Australian industry in the past. In so doing they were driving the industry out the back door. So, if there is one classic example you could put in the textbooks of a government that did not have an industry policy, that was out of step with global trends and that drove an industry out the back door, it would be the history of the Australian car industry under the coalition government.

That is why I am trying to work very hard with the government to drive a shift in policy so that we rebuild the car manufacturing sector, we rebuild competitiveness and we shift the tax burden onto the ‘bads’ and reward the ‘goods’. That is where we should go in a world where you have carbon constraints and fuel constraints. I look forward to the day when we roll out of Australian car manufacturers a plug-in electric vehicle which we can run from the renewable energy which we are deriving from our own rooftops or our own solar-thermal or wind stations around the place.

It is not beyond the realms of possibility. Germany has just rolled off its first plug-in electrics. One of the German ministers was here recently and was going home to collect his. In Paris and London now you have centres—up to 1,000 of them in the centre of the cities—where they are setting up electric plug-in stations in anticipation of this shift to fully electric vehicles powered by renewable energy. So to hear the coalition still raving on about Hummers and V8s and gas guzzlers, and suggesting that roaring around in those is somehow a national pastime, suggests that they are well left behind. I remind them that a Nissan Patrol costs $51,000. There are many four-wheel drives under the $57,000 threshold. There is no reason for anyone who wants a four-wheel drive to have to buy a luxury four-wheel drive. There are plenty on the market they can get for under $57,000.