Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The Senate is considering together the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. Together these bills will provide almost $35 billion in further assistance to the Australian automotive industry from 2010 to the end of 2020. This is an increase of approximately $2.231 billion over that previously legislated by the coalition government and an extension of assistance for a further five years. It should be noted that these bills do not legislate the government’s so-called $1.3 billion ‘green car fund’, which is funded by way of annual budget appropriations. Taken together, these bills and the green car fund mean that some $3.5 billion in additional funding to the car industry has been provided since the last election, a not inconsiderable amount, especially given the parlous state of the government’s finances.

It is interesting that this is the second piece of significant legislation relating to the car industry that the government has brought into this place. It should not be forgotten that, in its very first budget the Labor government increased the luxury car tax by 33 per cent, mugging car sales, including Australian made cars, at the very same time as sales were put under pressure by the world financial situation. In a perverse outcome, it meant that the luxury car tax component was reduced for 25 imported models and not one Australian made luxury car received such a benefit. There is also the retrograde decision by this government in relation to LPG conversions, but I will keep that for another day.

So for all the noise about our opposition to the tax allegedly blowing a hole in the budget, we now know that, as a result of collapsing volumes exacerbated by the tax increase, luxury car tax revenue is less than it was before the tax was increased. I still recall being told at the time that the government did not believe that there would be a decrease in sales figures as a result of the increase in tax. My rudimentary understanding of economics is that chances are, if you increase the price, the demand may well decline. Of course, that has now been proven to be the case on top of the financial situation.

But back to the bills. Specifically the ACIS Administration Amendment Bill 2009 increases funding in the last year of ACIS stage 2, which was legislated by the previous government, by a total of $79.6 million by increasing the multiplier under uncapped assistance for motor vehicle producers under ACIS from five to 7.5 per cent. It also extends this assistance to vehicles sold for export. This increase is made in the context that tariffs for imported motor vehicles fall from 10 per cent to five per cent next year.

The Automotive Transformation Scheme Bill 2009, which is the more significant of these two bills, will provide assistance to participants for each motor vehicle and engine they produce at a rate gradually declining to zero; will provide assistance for investment in eligible research and development, 50 per cent of eligible investment up from 45 per cent under ACIS; also, will provide assistance for investment in plant and equipment, 15 per cent of eligible investment varying from the current under ACIS of 10 per cent for motor vehicle producers and 20 per cent for the supply chain. Assistance will be provided by way of cash payment as opposed to the ACIS arrangement of duty credits.

As I was saying before the dinner break, under this package of two bills, assistance will be provided by way of cash payments, as opposed to the ACIS arrangement of duty credits. So, for the first time, this assistance to the motor vehicle industry will be itemised in the budget papers. Australia currently has three motor vehicle manufacturers—Ford Australia, General Motors Holden and Toyota Motor Corporation of Australia. A fourth manufacturer, Mitsubishi Australia, closed down shortly after the election of the Labor government—although I do not draw any connection between those two events. In 2007 the three manufacturers jointly produced 325,208 Australian-made vehicles, including 49,683 Ford Falcons, 18,899 Ford Territorys, 107,795 Holden Commodores and 37,040 Toyota Camrys. For export, Toyota produced approximately 100,000 vehicles, Holden produced about 36,000 vehicles and Ford produced about 6,000 vehicles. Together, they exported around 140,000 vehicles in 2007, although exports have been hit very hard in recent times due to the collapse in the world automotive market. For example, Toyota’s total exports are down by about 80 per cent this year.

Over the years, these manufacturers, which collectively directly employ around 15,000 people, have recorded varied levels of profitability. In the most recent year, which we all know has been incredibly difficult for the car industry globally, Ford and Holden recorded losses of $274 million and $70 million respectively, while Toyota recorded a profit of $124 million. Further, concerningly, despite the Australian car market continuing to grow—it reached over one million units last year and is forecast to be somewhere between 970,000 and 980,000 units this year—the proportion of Australian-made vehicles in this market continues to decline and is now down to just 16 per cent. While it is true that Australia has one of the most open—if not the most open—car markets in the world, with a record number of marques available to consumers, it is of deep concern to the opposition that Australian-made cars continue to lose local market share. With tariffs set to fall from 10 per cent to five per cent next year, it is for this reason that the opposition supports the provision of extra moneys through the ACIS Administration Amendment Bill 2009 to provide extra support to the Australian car industry so that it can adjust to this lower tariff rate.

In the light of all this information, there is a legitimate debate in the community about whether the Australian taxpayer should be providing the level of financial support to the car industry that these bills provide. Unlike Labor the opposition does not shirk from this debate. The opposition believes that it is desirable that Australia has a car-making industry not only to provide cars but also to provide support and spin-offs to the rest of our manufacturing sector. The reality is that, to maintain this industry, we need to continue support simply because of the fact that the global car industry is one of the most corrupt markets in the world—and I use the word ‘corrupt’ in the sense of ‘uneven playing field’, like the shipbuilding and sugar industries. If we withdrew all support from our car industry it would be operating at a significant disadvantage—if it were to operate at all.

In the United States, where taxpayers have forked over literally hundreds of billions of dollars to try and save their car industry, a new term has been coined to describe increasing community disillusionment with car industry support. That term is ‘auto fatigue’. I sense that auto fatigue is developing in Australia too, particularly in light of the government’s latest secret support to the industry of a $200 million line of credit through the National Interest Account of the Export Finance and Investment Corporation. The Australian taxpayer will not keep on providing money to the car industry into the future unless—and I want to stress this caveat—there is more transparency and more accountability, leading ultimately to economic sustainability. That is what is required, and that is the true leadership that the coalition believes needs to be shown in this debate.

Let me be very clear: we as an opposition support these bills, which are a very considerable investment of money in Australia’s automotive manufacturing sector and the 56,750 persons the sector employs, according to the latest ABS figures. But that does not mean we are prepared to give carte blanche and wave through these bills and the billions of dollars in taxpayers’ money that they contain. As we have consistently said, every cent of taxpayers’ money spent must be spent to maximum effect—nor should more be spent than is necessary. Unfortunately, as we have already seen with this government, who plan on racking up a massive $315 billion debt, their spending is usually ill targeted, wasteful and reckless. That is why, after the legislation’s introduction into the House, the opposition proposed amendments which would require that an economic sustainability clause be introduced into the legislation—something which, I am pleased to see, the government has finally adopted and is now contained in the legislation we are debating today.

But might I say that that would not be in the legislation we are debating today but for the fact that the coalition had to shame the minister into it—and that says volumes about the government not matching its rhetoric with legislation and policy. In the second reading speech in the other place the government insisted that we were having this legislation, and that this money was being made available, for economic reasons, yet, surprisingly, that did not find its way into the bill as one of the objectives. We also believe that, with billions of dollars of taxpayers’ money being made available, full openness and transparency is required as to where the money is going and how it is achieving the bill’s stated aims of economic sustainability and environmental and workskill improvements. Mr Rudd promised us evidence based policies. When we ask for proof and commitment to that, we see Labor squib it. They do not want to provide that sort of reporting so that there can be evidence based analysis of Labor policy.

I might add in brief that there were three amendments we as a coalition put forward and about 80 per cent of two of them were taken up in the two amendments that have been adopted. The opposition believed that that was good enough and those amendments were incorporated in the House. But there is still a third amendment that we will continue with because we believe it is needed, and that is an amendment to provide an important counter to what I referred to earlier as ‘auto fatigue’. The transparency and accountability that amendment will create will enable the community to see clearly for themselves for the first time exactly what they are paying and exactly what benefit that money is bringing. I am disappointed that the government refuses to agree with this important principle and, after breaking off negotiations with us, sought to appease us by inserting a reporting clause—the current clause 27A—which is grossly inefficient and will provide no transparency and accountability at all on this matter. To that end the opposition will be moving an amendment, which I will elaborate on during the committee stage, to require full and detailed reporting and disclosure of the spending under this bill.

At this stage can I also express the opposition’s disappointment about the ‘coathanger’ nature of this legislation, with virtually all of the important aspects of the bill to be prescribed through regulation rather than legislation, thereby diminishing the role of this place and the parliament in amending legislation. This has now become a practice of this government. If you have a look at the Carbon Pollution Reduction Scheme, the Ruddbank proposals, the Health Insurance Amendment (Extended Medicare Safety Net) Bill, and the list goes on, you can see that the Labor government is seeking to bypass the parliament as a deliberate policy position to avoid parliamentary scrutiny and to deny parliamentarians and, in particular, this place, the power to amend legislation. As we all know, this place cannot amend regulations; all it can do is either reject them or wave them through. That is why putting important information into legislation is so vital. It has become a practice of this government—and it does not matter in which area: be it the Carbon Pollution Reduction Scheme, be it matters economic or be it matters of health—for the parliament to be bypassed. One only need look at this bill, just 20 or so pages, and compare it to the ACIS bill it replaces, with 124 pages, to demonstrate the point. Take the tip: the regulations will be very detailed, but we will not have the opportunity to amend them.

Finally, in the time I have left, can I say a few words about the so-called green car fund, which the government has chosen not to submit to the scrutiny of the parliament. I have serious doubts about the efficacy of this $1.3 billion fund to achieve its desired aim. Under this fund we have seen $35 million go to Toyota which, according to their then president, Mr Watanabe, they did not know what to do with and, according to their spokesman, was not needed in order to build the hybrid Camry in Australia. We have seen $149 million go to General Motors Holden to build a so-called ‘new’ four-cylinder car which will be more fuel efficient than the six-cylinder Commodore. Well, what a revelation, what an innovation, that a four-cylinder car might actually be more fuel efficient than a six-cylinder car! Really, they are playing with our intellect. More recently, we have seen $42 million go to Ford to develop a four-cylinder Falcon and a diesel powered Territory.

I do not criticise the car companies for these projects or for securing the moneys they have from the government for them, but I do criticise the government. We are told that the so-called green car fund is to fund environmental innovation in the car manufacturing sector, yet none of the aforementioned projects are truly innovative. They are simply importing foreign technology into Australia. We are told the process is competitive. Yet both Toyota’s and Holden’s grants were awarded before the so-called green car program even had any guidelines or application forms. I say to the Labor government: if you want to provide extra support to the car industry, be upfront about it, like through these bills we are debating today, but do not try and hide it behind an environmental facade or as a secret loan through a little-known government agency.

With that can I, and on behalf of the coalition, celebrate the contribution of the automotive sector to Australia and Australian manufacturing. But, as I said earlier, there does come a time when the community has a right to start asking questions as to whether the money that has now been spent, basically ever since the inception of the car industry, over many decades, is in fact paying dividends. That is why we are moving an amendment to seek some transparency and to make out the case for the auto sector that it is money well spent. If the facts determine otherwise, then that will be a matter of concern. But I have every confidence that the transparency we are suggesting will in fact assist the car industry. If it does not assist the car industry, hiding it from transparency will be of no long-term benefit to the sector. I conclude by celebrating the wonderful efforts of the automotive manufacturers and component manufacturers in Australia and, of course, all their workforces that have done Australia so proud.

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

I rise tonight to make some remarks on behalf of the Australian Greens in relation to the Automotive Transformation Scheme Bill 2009 and related bill. The Automotive Transformation Scheme could really just be called the ‘Automobile Gravy Train Transformation Scheme’, since it is a transformation from one gravy train to the next. Members of the Senate will be aware that when I was first elected and took my seat in the Senate in 2005 I immediately moved for a Senate inquiry into Australia’s future oil supplies and alternative fuels. We had a very substantial Senate inquiry looking at the fact that we were approaching peak oil—I believe we have reached peak oil globally—and at the need to move to a major investment in public transport and fuel efficiency. I said that we ought to be advocating that people drive less and that, when they do drive, they drive more efficiently. Ever since then, the Greens have been arguing for mandatory fuel efficiency standards so that we get what is required, and that is not only investment in public transport, cycleways and the redesign of cities so that they are more pedestrian friendly but that we transform the automobile industry.

In 2006 when I gave my speech in reply to the budget, the then Treasurer, Mr Peter Costello, got up and gave out $61 million in subsidies to the car industry, not tied to vehicle fuel efficiency, not tied to anything. It was just another trip past on the gravy train as the automobile industry put out their hands. At the same time as they did that, arguing that they needed the assistance and that this would take them to some sort of greener future, they brought Hummers into Australia for a big motor show so that they could show off the largest petrol guzzlers in the world as the centre of the motor show that year.

I have been arguing ever since then that unless you set rigorous standards for this industry, unless you have mandatory vehicle fuel efficiency standards, this is a recipe for making sure there will be no jobs in the automobile industry in Australia. It means that if you get so far behind the rest of the world in producing what the rest of the world wants then you will automatically shed jobs because people will not want to buy the vehicles that you produce. I remember having an exchange with the minister, in estimates, asking: ‘Why are we building cars that the rest of the world doesn’t want to buy? Everyone wants to buy smaller, more fuel-efficient vehicles. Why are we in Australia continuing to produce vehicles that the community don’t want to buy?’

Governments actually hold up the system through their procurement policies. Look at Mitsubishi in Adelaide. You see the large cars that Mitsubishi used to produce driven round by public servants and politicians because of procurement policies by government. It is the same at the federal level. If you get rid of the fringe benefits tax for motor vehicles, if you start talking about proper procurement policies and getting rid of the fleet fringe benefits, then you will end up with a scenario where you might actually drive a transformation to smaller, fuel-efficient cars.

Twelve months ago I had a meeting with one of the German MPs responsible for quite significant shifts there. He was flying back to Germany at that time to take possession of his plug-in electric car. This was at a time when Australia was still struggling with the notion of hybrids, let alone a plug-in electric car. We are so far behind the rest of the world when it comes to innovation. China had the good sense to bring in a mandatory vehicle fuel efficiency standard that was so high that Australian vehicles would not be acceptable in the Chinese market. They did that in order to protect their own industry. Of course they did. But they knew that if they set high standards they would produce a small, efficient car that would be cheap enough to drive an export industry for them. The Europeans went to the fuel-efficient, luxury end of the market, and that squeezed countries like Australia and the US. That is why we have seen the train wreck—or the car wreck, I should more appropriately say—in Detroit and here in Australia.

Australia is not doing what the Americans have now been forced to do, and that is have a radical rethink about what their car industry should look like, what it is that they are trying to produce to ensure a sustainable industry into the future. Former Mitsubishi Motors Australia Managing Director Graham Spurling said recently of the Green Car Innovation Fund here in Australia:

It’s the same old ship with the same old deck chairs ... The industry has undergone huge changes overseas and I think Australia needs to understand that there is a need for a substantial paradigm shift. The current automotive regime is becoming outdated.

Furthermore, former Mitsubishi executive Bob Manning said that US President Barack Obama had demanded radical restructuring from car giants General Motors and Chrysler in exchange for industry assistance. He said:

We don’t seem to have any idea of the shape of the industry we want, or (one) that can be viably maintained in Australia, and then how we might spend public funds to achieve it ...

The whole point is that by allowing this industry in Australia to set mediocre standards, we are guaranteeing that it will go out the back door. That is the reality of the car industry in Australia. It gets held up all the time with rescue packages in order to save jobs in electorates, because people rush to say, ‘You can’t put this number of people out of work.’ That is absolutely right. The way to avoid putting people out of work is to set high enough standards that they must meet, to drive innovation in the industry and make them competitive. So does this massive injection of funds, yet again, make this industry competitive? The answer is no. We will be back here again with more rescue packages, probably sooner than 12 months. We will hear then from the government how this has not worked and how we need more. What I find extraordinary is that the government tell Australian primary producers every day of the week that they have to compete on a level playing field, that they have to cut their costs, that they have to be globally competitive, whilst they rush out with the gravy train for some of the biggest multinationals on the planet—for Ford, for GMH and for Toyota.

I want to put some facts on the public record. Data from the Productivity Commission shows that the motor vehicle and parts sector received $4.5 billion in budgetary assistance from the government from 2001-02 to 2007-08—so they have already had $4.5 billion from the public purse. An additional $4.6 billion worth of assistance has been provided from the imposition of tariffs on this sector. Total ATS expenditure will be an additional $3.4 billion between 2011 and 2020, comprising a capped amount of $2.5 billion for the total sector, of which 55 per cent will go to Toyota, General Motors Holden and Ford and 45 per cent to the 297 smaller component manufacturers. That is the problem here: there are so many smaller businesses dependent on the fortunes of these three multinationals, who make their decisions about what they do anywhere but in Australia. Another $850 million is set aside just for Toyota, GMH and Ford. An additional $79.6 million is set aside for transitional assistance, which we are dealing with here, to help the sector move from ACIS to ATS—in other words, as I said at the beginning, to move the money from one gravy train to another.

Today I learned in a briefing that the average age of a car in Australia is a little less than 10 years. Turnover is slow, but this policy is relying on a strategy of incremental improvement as people upgrade their cars over time. The reality is that that will not lead to innovation that the government talks about. They keep saying that innovation in the car components sector will spill over into the clean energy sector, but the point is that we should be putting money into innovation in clean energy regardless of what we do in this sector.

Today I heard in the briefing that we should be supporting this in spite of the fact that the devil will be in the detail of the regulations and I was told that in the regulations there will be the environmental outcomes that we expect to get from this massive amount of taxpayer money going to the automobile industry. But what do I find in terms of environmental outcomes? What do they have to do to prove environmental innovation and improvement? Well, the only thing they have to do is annual reporting—they have to report on the extent to which being a participant in the scheme is improving their environmental outcomes as demonstrated by but not limited to a reduction in the environmental impact of the participant’s manufacturing process. They look at more efficient and sustainable energy sources, recycling measures for waste products, environmental upgrades of plant and equipment and the use of sustainable materials. But do they have to actually do anything? No, they just have to report on what they may or may not have done.

It is the same with the input into the development or manufacture of more environmentally sustainable cars, where they look at alternative fuels, mass production of components for hybrids, environmentally sustainable materials and increased fuel efficiency, but not mandatory vehicle fuel efficiency standards. Equally, they just have to tell you whether they are participating in government environmental programs—for example, Retooling for Climate Change or the Green Car Innovation Fund. So they just have to do a report.

We have had enough of reporting. We have seen it with the Energy Efficiency Opportunities legislation in this place—all they have to do is report. Half of them are exempted from reporting anyway, but the ones who report are not required to do anything; they just have to report. Is it a revolution when people just have to write a report on what they may or may not have done rather than on what they have actually implemented and what they are required to do? How does this compare with what China is doing, with what Europe is doing and with what the US is doing, where government assistance is conditional on them meeting these standards?

In Europe, the European Commission has just brought down a new directive not only on vehicle fuel efficiency but also on pollution standards on emissions from the vehicles themselves. The fact of the matter is that the fastest innovation in automobiles is coming out of China and Europe—Europe for the luxury vehicles and China for the lower priced vehicles—and everyone else is scrambling to catch up. As for this nonsense about having a green car built in Australia, the car that was being talked about was one that only had average vehicle fuel efficiency compared with what was happening in Europe. So let us not pretend that we are suddenly going to have Australia making green cars; we are not. That is because there is no commitment from the government or the coalition to mandatory vehicle fuel efficiency standards. If you are going to drive people, that is the way to drive them.

I guarantee that we will be back here in 18 months with the car industry saying: ‘We’re not competitive anymore. Look what they did in the US. Look what they did in Europe. We need another bucket of money.’ They have already had billions and billions. I asked Senator Carr, the Minister for Innovation, Industry, Science and Research: ‘Why are you making these cars that nobody wants to buy? What about the fringe benefits tax? What about getting serious about this?’ His reply was, ‘You don’t have any evidence for that.’ Well, perhaps the almost complete fall-over of the industry in the US is enough to indicate that I was, in fact, right about that.

As for announcing the green car fund at the same time as rushing off and trying to make a free trade agreement with Middle Eastern countries so that we can dump six-cylinder gas guzzlers into the Middle East, what a fabulous idea! It is totally hypocritical and in total contradiction with where we need to be in terms of a future in the automobile industry. I want to see innovation, but I believe that it only comes when governments mandate standards that drive that innovation—that make money conditional upon that innovation actually being achieved. So, like the coalition—who have got a second reading amendment, I believe in relation to transparency—I too have a second reading amendment—

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Milne, are you seeking to move that now?

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

Yes, thank you, Madam Acting Deputy President. I move:

At the end of the motion, add:

and further consideration of the bill be an order of the day for three sitting days after a draft of the final regulations relating to this bill, which according to the Government will set out the requirements relating to economic sustainability, environmental effectiveness and workforce training that the automotive industry is expected to meet, are laid on the table.

In other words, they are saying, ‘Parliament, hand over billions tonight to the car industry in Australia, owned offshore, and subsequent to that, in October, we will bring in draft regulations which we will circulate to the industry and try and get their agreement to those regulations’—and if they do not like them, no doubt they will water them down—’and after that we will bring in regulations here.’ They are saying, ‘Taxpayers, you give the car industry the money and, car industry, you tell us what conditions you want applied to that and we will just agree with them when we bring in the regulations.’ That is entirely the wrong process. If the government has those regulations ready in October to go out for consultation to the industry, then we should be delaying this legislation until we see those regulations ourselves so that we can see whether the government’s rhetoric about the conditions that they are going to impose in terms of economic sustainability, environmental effectiveness and workforce training actually mean anything or whether they are just to put some sort of gloss over what is effectively a transfer of wealth out of the pockets of Australian taxpayers into the pockets of, largely, three multinational corporations. That is what is going on here with this legislation.

The component manufacturers are important in this, and I understand that: we want to keep those regional jobs. But the best way to keep them is to bring in some accountability, some standards and some requirements that have to be met—not a whole lot of pussyfooting around with a few words that might describe something in the way of environmental effectiveness. And I am amused by the government’s choice of language here, because I would remind them that it was in fact originally ‘ecologically sustainable development’, the ESD process. Development was not supposed to be sustainable; it was meant to be ecologically sustainable. Now we have dumped all that, so it is economic sustainability that we want for the car industry, and environmental effectiveness and workforce training are just tacked onto that.

We are in an age of peak oil. We are in an age of climate change. The only vehicles that people are going to want to look at in the future are those that have the highest vehicle fuel efficiency, and plug-in electric cars will rapidly be the way the world goes—plug-in electric cars from renewable energy. Countries like ours that have refused to bring in feed-in tariffs, that are still a mile behind the rest on renewables, are going to suffer rather badly. We will be paying higher oil prices or other energy prices, because of the carbon costs embedded in that energy, because we did not move soon enough to where we needed to be and did not redesign our cities to make them urban villages linked by rapid mass transit with highly efficient plug-ins run from the renewable energy that we installed. We will be uncompetitive in a world in which the oil price will go to $200 a barrel. Let us see what that does to food production; let us see what that does to the way that cities are run; let us see what that does to aviation fuel, because that is what we are headed for in the not-too-distant future.

I am really disgusted by the sloppiness and the laziness shown by this rush to sandbag the multinationals in the car industry. They have not served Australian workers and communities well. They have put off workers willy-nilly as it suited them, in terms of not being competitive. Who is holding them accountable now for refusing to move with consumer sentiment? Where is the government education program encouraging the community to buy energy-efficient cars? It is not there, because the government has actually been subsidising, through its procurement policy and its fringe benefits tax, the manufacturing of vehicles which are uncompetitive and which lead to people losing their jobs. Every worker who has lost their job in recent times from the car industry or the car component manufacturing sector should be holding previous Liberal and Labor governments accountable for handing over taxpayers’ money without picking up the trends, without recognising where the world was going in terms of innovation and consumer sentiment.

Frankly, I think it is time we got real with the car industry. It is time we had a revolution in Australia about how we spend taxpayers’ money on industry development. I think it is lazy and rather tragic that we have such weak language around the basis on which we hand over billions of dollars, yet again, to this industry.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

In my support of the Automotive Transformation Scheme Bill 2009, I would like to speak about, firstly, the importance of the automotive industry in South Australia, and I would like to comment on Senator Abetz’s foreshadowed amendments and of course the matters raised by Senator Milne and the amendment she has moved.

The automotive industry is not only vital to the national economy but also central to the economy of my home state of South Australia. Adelaide is among the top 20 cities worldwide for competitiveness in automotive manufacturing. In 2008, South Australia produced 34.7 per cent of total cars produced in Australia—this represents over 270 motor vehicle and component manufacturers. South Australia is the home of General Motors Holden, one of the major car manufacturing operations in the nation. Importantly, the presence of Holden has built up a cluster of component manufacturers and suppliers all dependent on Holden for their viability and survival. It is interesting to note that the closing of Mitsubishi, although it was a blow to the industry, was by no means a body blow. The component manufacturers have been able to adjust to the shock of Mitsubishi closing, and General Motors Holden has taken up the slack.

In the year to April 2009, the state earned $1.4 billion through road vehicle parts and accessories exports, which is approximately 13 per cent of South Australia’s total goods exports. Servicing these very good results were around 40 component manufacturers, 55 equipment and service providers, six special body manufacturers and 20 aftermarket manufacturers. Making this possible were the approximately 9,300 South Australians that were employed in this sector in the year to May 2009. So, clearly, the automotive sector is vital to my state. But I think that the matters raised by Senator Milne are absolutely legitimate. We as taxpayers do need to ensure we get value for money, in terms of how the money is spent, to ensure that we can protect jobs in a long-term, meaningful way.

On 23 December last year I put out a media release commenting on a deal done with the state government and announced by the state government, which involved $150 million of federal money for a new small car to be produced by General Motors. I welcomed that; I made that absolutely clear. But I raised the issue: why isn’t General Motors in South Australia having access to the technology for the Volt electric car that General Motors in the United States was producing. Why are we getting—

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

Mediocrity!

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Senator Milne says it is mediocre technology or a mediocre approach. I am not suggesting in any way that the technology is itself mediocre—I am not suggesting that at all. But what I am suggesting is that there are legitimate questions to ask as to why South Australia did not have an opportunity to build the Volt electric vehicle, which I saw at the Sydney Motor Show last year, which seems to be the way forward in terms of the future of automotive manufacturing industry in this country. I made that statement. It was not critical of the state government, but the Deputy Premier of South Australia, the Hon. Kevin Foley, lashed out. He saw red. I know Mr Foley quite well. I think I have a good working relationship with him, but the vitriol was just unbelievable, suggesting that I wanted workers at General Motors Holden to basically lose their jobs and I wanted them to have a bleak Christmas. This was absolute nonsense. All I was saying—and I maintain it to this day—was that this is about ensuring long-term viability for the industry and the best way to ensure that is by having access to the best and latest technology. General Motors in the United States is producing a hybrid electric vehicle, the Volt, which has tremendous potential. The question I asked was: why aren’t we accessing the latest and best technology from the United States so that we can manufacture it here rather than a fuel-efficient, four-cylinder, all-petrol engine?

I think it is quite reasonable to ask that question and ask the question of the government: with this significant assistance package that we as Australian taxpayers are ensuring, what guarantees are there that our local manufacturers are getting access to the latest and best technology from their overseas owners? I think that is a reasonable question to ask in terms of our return for taxpayers’ dollars. I want the workers at General Motors Holden in South Australia, and indeed manufacturing workers in the automotive industry across the nation, to have a bright, long-term future. Senator Milne does have a very valid point in saying that we need to look at the technology of the future in relation to this. My question to the government is: what guarantees will there be that the taxpayer assistance will ensure that we have access to that technology, the best technology available from overseas, and that we are not getting the scraps—that we are not getting second-rate technology that has been superseded by technological advances by the head offices overseas? And that is a key question.

In relation to Senator Milne’s second reading amendment, with reluctance, I will not be supporting it, for this reason: the industry makes the point that they say they need this assistance now. They say that in the absence of this assistance they need certainty, and they need this certainty immediately rather than waiting for the regulations. It is a finely balanced argument. I am swayed by the arguments of those in the industry and, given what has happened in the United States, I do not want this industry to go into freefall.

But the point made by Senator Milne is a valid one. We have a situation where there seems to be a trend by this government to have what I think Senator Abetz refers to as ‘coathanger legislation’—you just have the bare frame and you have to wait for the regulations to be put in place to add to the legislation to see what its final shape will be. That is clearly a regrettable trend. The government is justifying it because it says that it is urgent and that we need to move on this. But it does disturb me and, if the government does not do the right thing in terms of regulations, I, and I hope the coalition, will take the view—the Greens already have this view—not to support legislation in future where it relies so heavily on regulations in the absence of seeing the substance of those regulations before this level of taxpayer assistance is provided.

There is no question that we want a good outcome for the Australian automotive industry. I certainly want it for my home state of South Australia. But on issues such as procurement policy, that Senator Milne raised, I would like a response from the government as to what the government will do about those issues. The government is a huge purchaser of vehicles in this country. It could play a very powerful role in shifting the market in providing that critical mass for the fuel-efficient vehicles, for the smaller vehicles, the vehicles that will move us away from the big gas guzzlers. The big gas guzzlers have really set this industry back. We have seen what has happened over the years to the impact that smaller vehicles have had on the marketplace, because there is a trend. People want smaller, more fuel-efficient vehicles for a whole range of reasons, the most important being fuel efficiency, and we now know that smaller vehicles can be as safe with airbags and other safety features as bigger vehicles in terms of five-star safety ratings. They are the sorts of things that the government needs to respond to. This is a huge assistance package and I want to ensure that this package will mean that this industry has long-term viability.

The other issue relates to the amendment to be moved by Senator Abetz on behalf of the opposition. As to giving details of the amount of capped and uncapped assistance, I have received some very strong submissions from the industry saying that this could be unfair if there is disaggregation. To quote Richard Riley, the CEO of the Federation of Automotive Product Manufacturers:

Any disaggregation of the ATS assistance received by individual companies in the department’s annual report would entail revealing company-sensitive commercial-in-confidence information that would prove detrimental to an automotive supplier company when conducting purchasing and pricing negotiations with original equipment manufacturers—OEMs—and companies within supply chain. The highly integrated nature of the Australian automotive industry between OEMs, the supply chain, tooling makers and service providers means that the public disclosure of individual company assistance from the Federal Government could compromise decision-making processes and investment decisions.

Whilst I understand and respect the argument put forward by industry, I am not convinced of that approach. I will hear from the Minister for Innovation, Industry, Science and Research, Senator Carr, on this, but the first principle for me is that there ought to be transparency where public funding is involved. That ought to be the first principle. This is no different from the reporting required for other industries such as textile, clothing and footwear with SIP grants, Innovation Australia data on R&D grant recipients and Austrade data on export market development grant recipients.

The suggestion that a bigger player may cannibalise or use that against other players has not been proven. I think that if there is an issue of that sort of market behaviour then it raises other issues about providing appropriate protection through other legislative mechanisms, whether that is through the Trade Practices Act or other legislative avenues. I just do not accept that it will have the effect that the industry says it will. I do not know what my colleague Senator Milne or the Greens will be doing on that, but I think there is some considerable merit in what Senator Abetz is requiring for a greater degree of transparency. The second part of the amendment refers to providing details of:

… the progress of the Australian automotive industry towards achieving economic sustainability, environmental outcomes and workforce skills development.

I support that principle. The only reservation I have about Senator Abetz’s amendment is that it is a report to be prepared by the secretary to give to the minister. It will be tabled. My preference would have been to have perhaps an independent reporting mechanism, but I certainly believe that this amendment of Senator Abetz’s, on behalf of the coalition, is preferable to not having any reporting mechanism at all. I think it is important, particularly for the environmental outcomes that Senator Milne has quite rightly referred to, that we have that relentless focus on making sure we have the best environmental outcomes for Australian made vehicles. That is where the future of the industry is—to have those cleaner and greener vehicles.

Those are the issues that I am concerned about. I support this bill, but I just want to make one final comment. Earlier today this place was noting the contents of an AQIS report dealing with proposed cuts to the 40 per cent rebate for the horticultural and other industries. It is a very important issue. It is being put to me by irrigators in the Murray-Darling Basin that there seems to be one standard for the automotive industry. I do not begrudge that standard at all, because I think it is important that we provide that level of assistance, and I commend all the very hard and good work that Senator Carr has done. I think it is fair to say he is a tireless champion for the automotive manufacturing sector in this country. However, through a whole range of factors, such as climate change, drought, overallocation and poor policies by the states over many years, we are now facing a situation where the horticultural industry in the Murray-Darling Basin is facing significant and severe pressures. What irrigators have said to me, not just in South Australia but in other states, is that they would like to see the same sort of focus and effort that they have seen for the automotive industry by the government put in to ensure the survival of horticulture and the food-producing bowl of this nation, the Murray-Darling Basin. I think that that is a fair comment. A comparative and a bang-for-your-buck approach for taxpayers’ dollars would stack up very well when you consider the importance of modernising to ensure greater water efficiencies and to ensure that we have an integrated approach to the Murray-Darling Basin with the sort of urgency that the government has taken with the automotive industry. I would like to see sooner rather than later, because we are running out of time, the same sort of approach to the Murray-Darling Basin—the food bowl of this country—that we see with this bill, which I support.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I thank senators for their contributions to this debate on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. I indicate to the Senate that this is an extremely important part of the government’s new car plan, which we are debating tonight. The Automotive Transformation Scheme Bill and the ACIS Administration Amendment Bill are core features of that plan. It supports the renewal and expansion of an industry we expect will provide high-skill, high-wage jobs by producing fuel-efficient, low-emissions vehicles. What this scheme has sought to do is provide the framework for the transformation of the industry and provide new opportunities for the industry to take full advantage of new opportunities that will emerge from the technological and structural revolutions that are occurring in a globalised automotive industry. Therefore, it is important to emphasise the place of the Australian automotive industry within an extremely complex and intensely international industry.

Australia is one of 15 countries throughout the world that can make cars from the point of conception through to the showroom floor. Senator Minchin made the point some years ago that many countries around the world would look at Australia’s place within the international automotive industry with great envy and would go to extraordinary lengths to have the industry that we have got. Our automotive industry is very much part of a global system in terms of the distribution of the technology, the capital and the skills. It employs, directly and indirectly, some 200,000 Australians.

Our industry is very competitive. Australian car firms compete against 63 brands in the market. Australian consumers can choose from 63 brands. In the United States there are something like 34 brands—and the last time I looked the Americans were reducing the number available. That market used to sell 17 million cars a year and we used to sell one million cars a year, but of course it is substantially different. This has to be seen in the context where our three motor vehicle manufacturers are part of global companies and each subsidiary is crying out for capital and investment. Ford has 50 subsidiaries around the world. Each one is seeking access to the extraordinarily limited and scarce capital. Toyota has 54 subsidiaries and General Motors has 34 subsidiaries. Each subsidiary is demanding access to that limited capital. These subsidiaries all compete, not so much against each other but against each branch within the corporation. Their efficiency is benchmarked against what actually occurs within the GM world, the Toyota world or the Ford world.

Australia has probably one of the most open and competitive automotive markets in the world. This package is vital to securing the future of automobile manufacturing in this country. As we speak investment decisions are being made around the world. I want to highlight that I cannot support Senator Milne’s second reading amendment because it would have the effect of stopping dead that investment, because it would place in doubt those investment decisions.

Our decisions tonight do matter for the 200,000 Australians who depend upon the automotive industry for their living. To delay the passage of these bills while waiting for regulations will serve no other purpose than to create uncertainty for the industry and its future at a time of unprecedented difficulty around the world. There will be the normal public consultations and the normal arrangements in regard to public scrutiny of regulations when they are made.

In relation to some of the points that were made by Senator Xenophon, this is an industry that is transforming itself. To suggest that we can undertake quantum leaps in the deployment of technologies outside of the market is to make a very serious mistake in playing with the future of many hundreds of thousands of Australians. To say, for instance, that we can move automatically from being able to produce very good combustion drive train vehicles to being able to produce full plug-in electric vehicles overnight is a mistake. There are three vehicles that we have just agreed can enter the Australian market. One of those vehicles, a Mitsubishi vehicle, is selling at the moment for $60,000. The equivalent petrol vehicle sells for about $17,000. The economics of what is being proposed just do not stack up.

We have to find technologies that are proven and that meet Australian needs and conditions. We have to be able to do this in a way that will transform the industry with technologies that are able to meet those terms and conditions. There is a lot of loose talk in the motoring pages of our newspapers and it often bears little relationship to the realities that the industry faces in this country.

I will discuss at greater length the details of Senator Milne’s amendments and Senator Abetz’s amendments at the committee stage of these bills. I understand that those amendments are likely to be carried. It is the government’s view that those amendments do not take account of the fact that these bills have already been amended. Senator Xenophon, in the House of Representatives amendments were made. It is simply not true to say that there are not extensive processes of accountability and declaration for the expenditure of public funds. The House amendments, which were initiated by the government, reinforce those arrangements and are already part of the bills we are voting on. We will deal with those matters in detail in the committee stage of these bills.

Question put:

That the amendment (Senator Milne’s) be agreed to.