Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

The automotive and component manufacturing industry is important for my home state of South Australia and Australia as a whole, providing highly skilled, well-paid jobs for thousands of Australians and their families. Australia is one of only about 15 nations in the world today that can create a car from ground up, starting from the design right through to the showroom floor. Locally, the industry contributes over two per cent to gross state product and around 0.6 per cent to gross domestic product. As of August this year, it employs around 12,000 people in South Australia and 60,000 nationally. South Australia makes up 19 per cent of the national total employed in the industry, with one in five jobs located in South Australia.

Automotive exports from South Australia were valued at $1.2 billion in the year to February 2008, while nationally the figure was $4.7 billion in 2007, making automotive one of Australia’s top 10 export industries, ahead of wine, wheat and wool. Meanwhile, automotive manufacturing was responsible for 6.5 per cent of total research and development expenditure by Australian business. As a proportion of industry value-added, this was nine times higher than for the economy and three times higher than for manufacturing as a whole. There are also around 40 component manufacturers in South Australia, mostly multinational firms; 55 equipment service providers; six special body manufacturers; and 20 after-market manufacturers. The viability of small component suppliers across the country depends on having a robust vehicle-manufacturing sector in Australia.

The vehicle manufacturing and component sector in South Australia does more than just provide a livelihood for South Australians and their families. In South Australia’s northern suburbs, the General Motors plant is an economic backbone for the broader community, with families in some cases having been employed for three generations in the plant. It provides social networks through sporting clubs and various community associations, and it provides for the economic viability of scores of small family businesses in the area.

The automotive sector drives demand, sustains capabilities and stimulates innovation across the manufacturing sector. More broadly, it fuels the entire economy, using $8 billion worth of service sector inputs in the 2004-05 year alone. However, employment in the auto industry has declined substantially since 2002, when the last automotive review was conducted, with around 26,000 jobs lost nationally, including, unfortunately, 6,000 from South Australia.

It is worth noting that in January 2007 a high-level automotive group, including Mitsubishi CEO Robert McEniry and GM Holden Manufacturing Operations Executive Director Rod Keane, warned in a report that the industry would continue to trend downwards if it did not become more innovative in the global market. That report called for greater federal funding to develop more fuel efficient vehicles, a rebuilding of the knowledge base, improved productivity and improved viability of component suppliers. This issue, therefore, has been looming for a while now, and I am very pleased that the Rudd Labor government has now addressed it and is committed to securing these high-skilled, well-paid jobs into the future.

More than 12,000 South Australian workers and their families will benefit through the New Car Plan for a Greener Future, which will provide $6.2 billion in assistance over 13 years. Our $6.2 billion car plan has already assisted the Australian car industry, in spite of the global financial crisis, with Ford announcing they will keep open the Geelong engine plant slated for closure in 2010. Ford will receive a $13 million grant from the federal government to help with the $21 million it will spend to retool the plant to produce engines compliant with new European environmental standards. The decision means 400 workers will keep their jobs at the plant, which makes the unique-to-Australia in-line six-cylinder engine for Ford’s Territorys and Falcons. The grant also boosts the prospects of a further 900 people being employed in the plant’s component supplier chain, which is a fantastic beginning.

The key features of the New Car Plan for a Greener Future are a new, better targeted, greener assistance program, the Automotive Transformation Scheme, running from 2011 to 2020 and providing $3.4 billion to the industry. There is an expanded Green Car Innovation Fund of $1.3 billion brought forward to 2009 and running over 10 years. This is already fulfilling a lot of the requests of those car industry specialists. There are changes to the Automotive Competitiveness and Investment Scheme in 2010 to smooth the transition to the ATS with $79.6 million, and $116.3 million to promote structural adjustment through mergers and consolidation in the components sector from 1 January 2009 and to facilitate labour market adjustment from 1 November 2008. It will also, crucially, provide $20 million from 2009-10 to help suppliers improve their capacity to integrate into complex national and global supply chains. It will provide $6.3 million from 2009-10 for an enhanced market access program. A new Automotive Industry Innovation Council will be formed, bringing key decision makers together to drive innovation and reform. It will also provide $10.5 million for expansion of the LPG vehicle scheme to start immediately. That scheme will double payments to purchasers of new private-use vehicles that are factory-fitted with LPG technology.

I want to talk a bit about the individual schemes, because I think it is worth dwelling a bit on how they will all fit together. First of all, the Automotive Transformation Scheme: in the last six years, Australia spent $3.8 billion on the Automotive Competitiveness and Investment Scheme, the ACIS. That was a successful scheme; I will acknowledge that. Manufacturers taking part in the scheme spent more than 10 times that amount on plant, equipment, R&D, taxes, wages and salaries. The government expects the New Car Plan for a Greener Future package to stimulate industry investment of at least $16 billion in new capacity and new technologies. In Australia it has been proved again and again that manufacturers will take advantage of well-structured grant and investment schemes and build on those with their own money to forge a better future for themselves.

The ATS will also provide capped assistance of $1.5 billion from 2011 to 2015, up from the $1 billion which was planned for the ACIS stage 3. It will also provide new capped assistance of $1 billion from 2016 to 2020. Capped funding will be in the form of grants rather than duty credits and will continue to be split 55 per cent to vehicle producers and 45 per cent to the supply chain. Then there is the Green Car Innovation Fund, which has attracted a lot of the publicity of the scheme and certainly is very important. The GCIF will provide $1.3 billion over 10 years from 2009 to vehicle producers, component makers and researchers, up from the $500 million over five years promised before the 2007 election and brought forward from 2011. The focus of the GCIF will be on research, development and commercialisation of Australian technologies, and I think that commercialisation step is very important. Time and time again in Australia, we have shown that we have the ability to do the research and development, but sometimes the commercialisation has fallen down. I think it is very important that this be a focus of the GCIF. This will significantly reduce fuel consumption, greenhouse gas emissions and the weight of vehicles.

Another part of the package is the Automotive Industry Structural Adjustment Program. I think this program is crucial for the success of the industry because it ensures a proper functioning after the cars are manufactured and sent to market. This program recognises that the supply chain will need to consolidate if the industry is to achieve global scale and retain core capabilities. It also recognises that, in the short term at least, there may be further job losses. This program will provide $116.3 million to facilitate consolidation by helping firms with legal, relocation and other merger costs. The program will provide labour market adjustment support similar to that provided by other adjustment programs but using delivery mechanisms appropriate to this particular industry. When workers are displaced, the program will provide training and other assistance to get them into alternative employment.

Then there is the Automotive Industry Innovation Council. The Australian government’s innovation and trade ministers, the Victorian and South Australian industry ministers, the three vehicle producers, component makers, unions and researchers will all be represented on this council. It will serve as a forum for discussion and will provide strategic advice, not least on the best ways to boost skills and job opportunities. Its overarching task will be to coordinate the transformation of the industry. One thing that particularly struck me when I was working with the manufacturing industries generally in the northern suburbs of Adelaide was that industries can still compete fiercely with each other but cooperate in the common areas where they need assistance, such as skilling and training, and also in the supply chain and in marketing generally.

There has obviously been an impact on the car industry from the global financial crisis, and challenges will be thrown up in the future. There has been a drop in new vehicle sales during October, which reflects the broader slowdown in the Australian and world economies, as well as reduced access to wholesale and consumer finance. This has been critical with the closure of GMAC here in Australia. That is a very difficult hurdle for the industry at this point in time. Official data released on 6 November by the Federal Chamber of Automotive Industries shows that 79,105 cars, trucks and buses were sold in October. That is down 11.4 per cent, or 10,184 vehicles, compared to the same month last year. In the year to date, new vehicle sales are down 0.9 per cent compared to the same period last year, with a total of 864,037 vehicles sold. Light commercial sales were positive in October, with the segment recording a 7.9 per cent increase compared to the same month last year. All other segments recorded decreases during October. Passenger vehicles were down 13.8 per cent, SUVs down 19.1 per cent and heavy commercial vehicles down 15.9 per cent. Toyota retained the top sales position in October with a market share of 23.6 per cent, followed by Holden with 12.9 per cent, and Ford with 10.8 per cent. The Federal Chamber of Automotive Industries chief executive, Andrew McKellar, said:

These figures confirm that the global financial crisis is having an impact on broader economic activity, including the new vehicle market …

Locally in South Australia, the global financial crisis has led Holden to schedule another 25 days of production shutdowns, to be spread across the first three months of next year. Holden will make 15,000 fewer cars because of the production slowdown, so the impacts are being felt at a local level. In addition to the global financial crisis, the industry faces longer term challenges, including increased competition, rising environmental expectations, increasing fuel prices and changing consumer preferences. The industry expects major challenges in the future in each of those areas, particularly increased competition. We all know that the developing countries are working on their vehicle manufacturing industries, and it is important for Australia to work not only harder but also smarter to stay ahead of those developing countries.

We need to recognise that Australia’s automotive and component manufacturing industry is a crucial part of the Australian economy and the broader manufacturing sector and is a key employer. I think we should not resile from supporting that industry or from making sure that the research and the development, the skills and the ability inherent in that car-manufacturing industry continue to be supported so that we can continue to keep this industry, which is the backbone of many families and communities around the country. Certainly, in South Australia it is held in high regard and valued greatly.