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

I move the amendment standing in my name on behalf of the opposition:

(1)    Clause 27A, page 18 (lines 9 to 18), omit the clause, substitute:

27A  Automotive Transformation Scheme report

        (1)    As soon as practicable after 30 June each year, commencing 30 June 2012, the Secretary must prepare and give to the Minister a report, detailing:

             (a)    the amount of capped and uncapped assistance paid to each ATS participant under the Automotive Transformation Scheme during the 12-month period ending on 31 March in that year; and

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

        (2)    The Minister must cause a copy of the report to be laid before each House of the Parliament by 31 July that year.

The effect of the amendment is to insert a new clause 27A into the bill.

In moving this amendment can I say, with respect to the Minister for Innovation, Industry, Science and Research, that the insertion of the current clause 27A was not exactly as a result of the government’s thought processes in this matter. It was, along with a few other amendments, the result of the opposition going public, indicating what it believed would be ways to improve this legislation. I note that the government amended, in general terms, along the lines that we had suggested, the objects of the legislation to include in clause 3(1)(b)—the economic sustainability aspect—’to place the industry on an economically sustainable footing’. I also note that clause 27A was only inserted in the House after the opposition went public with its amendment.

The current clause 27A will not provide the sort of detail which I think the Australian people would want in relation to what is a very large sum of money by any standard or measure. We believe that it is appropriate that the amount of capped and uncapped assistance paid to each ATS participant under the scheme during the 12-month period ending on 31 March of each year and the progress of the Australian automotive industry towards achieving economic sustainability, environmental outcomes and workforce skills development be reported to this house and to the other place by 31 July each year.

As I mentioned in my second reading contribution, I think there is a danger of Australian taxpayers suffering from auto fatigue. What better way to inoculate against that than to have openness and transparency and by indicating to the people of Australia the actual value for money that is being provided and what those benefits are that flow. Sure, we always get grandiose statements from ministers—from both sides of politics, if I might say so—in relation to how investment in the auto sector is a very good investment.

This Prime Minister committed himself to evidence based policy. What we are suggesting, as an opposition, is let us see the evidence, let us see what the actual facts are and let us be able to make the determination as to whether or not this money is being well spent. With a 12-monthly review, anybody with an interest in this area will be able to make a sound determination on the basis of the information that will be provided.

As a general rule, as I understand it, any—if not all—grants provided to enterprises are usually listed and the information provided to the Australian public. That was so when the Commercial Ready program still existed, before the minister axed it. Those amounts were publicly known when you had export market development grants and when you had R&D development grants in the textile, clothing and footwear sector. They were all known. So for the car industry or the automotive sector to argue that somehow they should be treated differently undermines their position in the Australian marketplace of taxpayers, given the substantial financial benefits that they receive.

Having said that, just in case I am misquoted, I repeat what I said in my second reading contribution—that I accept that the auto sector is one of the most corrupt industries in the world. I use the word ‘corrupt’ in the sense of it not being a level playing field. Just like the sugar industry and just like the shipbuilding industry, the auto sector around the world is the beneficiary of all sorts of government interference and support. Therefore, it makes good sense that we provide similar support to ensure that we have an automotive sector and a good manufacturing sector in this country. But I believe that the money that is advanced should be accounted for, that there should be transparency and that people and analysts can then make a proper determination whether or not this is money well spent. If there are determinations made that it could be better applied, then so be it and let changes be made to the scheme.

I believe that, if a government says that it supports evidence based decision making and is willing to hand out large amounts of taxpayer largesse to an industry where a substantial proportion, if not the bulk, will be going to multinational companies, the Australian taxpayer has a right to that transparency. That is the basis on which I move the amendment on behalf of the opposition. I look forward to any arguments that might be advanced against it and will rejoin those arguments in due course.

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

I rise to indicate that the Greens will be supporting the coalition’s amendment to this legislation. I notice that Senator Carr remarked that, if the Greens’ amendment which was not supported had been supported, it would have stopped the industry overnight. What a load of nonsense. Today the government’s own advisers indicated to the Greens that the regulations will be ready for discussion in October. There will be consultation with the community and the industry in October-November, and those regulations will be in here then. What we are being asked to do is to hand over billions of dollars to the car industry now. After the car industry has got the money, the government will then go back to them and say, ‘What do you want the conditions to be pertaining to this money?’ So the government will give away all its leverage.

I also want to make the point that for years I have been arguing to Senator Carr that people want to buy smaller, fuel efficient cars and that, as I indicated, the money to the industry should be tied to vehicle fuel efficiency and moving to plug-in electrics. I note here that, as recently as August, there were articles in the paper pointing out that, whilst Commodore remains the country’s top selling car, roughly two-thirds of its sales come from government and business fleet buyers. That is precisely my point about procurement. The government is propping up the old industry sector; but, inevitably, it will not be able to do that in the long term. The longer you prop up inefficiency and things that people do not want to buy, the more guarantee there is that, in the long run, the whole thing will collapse, and you will lose all the jobs associated with it. That is certainly my experience. For years, I have heard people say: ‘You can’t expect this industry to meet these standards. It is terrible. You’ll put people out of work.’ But, by not expecting them to meet the standards, you are guaranteeing that there will be dislocation and that they will be put out of work as the rest of the world moves beyond it.

Interestingly, the same article that points out that two-thirds of the sales for Commodores come from government and business fleet buyers also notes that the Toyota Corolla and the Mazda3 are more popular with private buyers and that, as a result, sales of Commodore and Falcon have halved since 2003. That is the fact of the matter. As I reiterate, the community does not want to buy these big gas guzzlers. Targeting Middle East sales for big cars is, I think, a foolish move. If we want to be cutting edge, we should be setting standards and conditions on public money that require the industry to be cutting edge, because that is the way you drive innovation and that is the way you guarantee jobs into the future. Allowing the industry in Australia to determine its own terms is a guarantee that cutting edge vehicles will be produced in the US, in China and in Europe but not in Australia. It is incumbent on this government to insist that we get cutting edge for $3 billion.

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

I want to respond to the opposition’s amendment. Currently, there are 193 participants in the scheme. We would like to ensure that 193 will participate in the new scheme but, as we know, the state of the industry is such that that number may well reduce.

Senator Abetz, the fact of the matter is that there are genuine commercial secrets. There is such a thing as commercial-in-confidence. That is a reality of commercial life. We are dealing, as I have indicated, with a highly competitive industry and a very large number of companies who are trying to operate in what is an extremely competitive environment. My concern is that the disclosure of amounts in the form that you are proposing may have adverse commercial consequences due to the highly integrated nature of the automotive industry in this country. You will indeed compromise investment decisions. A motor vehicle producer can rely on automotive component producers who, in turn, rely on other component producers, automotive machine toolers and automotive service providers.

Disclosure could well distort commercial negotiations between automotive firms. This is the view of the Federation of Automotive Products Manufacturers. Their concern is that revealing sensitive company information may well have a detrimental effect on a company, particularly when it is conducting purchasing and pricing negotiations with original equipment manufacturers and other companies within the supply chain. This may well disadvantage smaller Australian based component manufacturers, limiting their ability to continue investment in innovation and modernisation. The Federal Chamber of Automotive Industries, FCAI, has told us that, given the significant investments required to develop new products, reporting of company specific payments provides clear signals to competitors of product development and time frames and perhaps the nature of these products. It could be concluded that the business plans of companies may well be revealed by the provision of this information. FCAI believe that public disclosure of this information could compromise the decision-making processes within the parent companies with regard to future investment and research and development decisions within Australia. The coalition amendment—and I take it that Senator Abetz has not deliberately set out to cause this outcome—may well have the unintended consequence of discouraging investment in innovation, especially within the supply chain.

The regulations will contain provisions that will allow the publication of individual assistance, subject to the minister’s discretion. Senator Abetz, that has been the position under your government since 2003. From 2003, Mr Macfarlane had that capacity. Senator Abetz, can you recall the circumstances in which the former minister revealed that information? The answer is no. It did not happen. And the reason it did not happen is that Mr Macfarlane would have received exactly the same advice that I have received. The government has already amended the bill in the House of Representatives to reinforce what I say is already very stringent accountability and transparency requirements of this current scheme.

The amendment is adding new reporting provisions requiring the department to report in its annual report on the total assistance under the scheme and the progress in achieving the bill’s objectives. This demonstrates the government’s commitment to openness and transparency in terms of public expenditure. In addition, clearly and openly details of amounts of assistance provided to the car industry under ACIs for 2007-08 financial year have been published in the annual report. This is the first time that a level of detailed assistance provided to the automotive industry under the current scheme was in fact published—under this government. If this was such a red-hot idea, why did my predecessor not act on it when he had the power? Why did he not seek to use that power in the manner in which you are now asking subsequent ministers to do?

The requirement of separate reporting details of the ATS assistance, as opposed to the department’s annual report, is frankly a duplication and totally unnecessary. The department already prepares an annual report with total amounts of assistance to the automotive industry, which is presented to the parliament on or before 31 October for the previous financial year. This report is prepared in accordance with section 63 of the Public Service Act 1999 and meets the guidelines approved on behalf of the parliament by the Joint Committee of Public Accounts and Audit. So, Senator Abetz, a question arises in terms of your amendment where it clearly and explicitly states that you are requiring the individual details of companies’ payments under a production based scheme. You are in fact asking the government to provide ipso facto the business plan of 193 companies which are participants in this scheme. There would be untold damage to companies should that proposition be accepted. The government will not be accepting your amendment. The numbers are here tonight and it is quite clear that your amendment will be carried and the matter will have to go back to the House of Representatives.

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

Firstly, if I may briefly comment on Senator Milne’s contribution, all I would ask her to do and those others who are concerned about the so-called ‘big cars’ is that we in Australia should not think of big cars as necessarily being gas guzzlers. I think we can achieve environmental outcomes and fuel efficiencies with big motor vehicles keeping in mind the socio-demographics of Australia where the average family still has 2.1 kids, where you have family outings and Grandma wants to come along as well. The Abetz family being the proud owner of a Hyundai Getz, I can say that not many people fit into a Hyundai Getz. If you want to tow your boat or a caravan, as so many Australians do, you require a bigger and sturdier vehicle. So to take all those factors into account I would like to think that there may well still be a very good market for larger vehicles, albeit hopefully more fuel efficient vehicles.

I return to the minister’s rebuttal of my amendment. I am not sure whether I understood the minister correctly, but he was indicating that my amendment would cause a complete breach of commercial-in-confidence considerations and then in the next breath he was telling us we would simply be undertaking a duplication. I hope I have misinterpreted the minister’s comments. One thing I have not misinterpreted—and this is what exposes the government—is that nobody can know the grants that are being given by this government and this minister because business plans might be revealed, commercial-in-confidence could be at stake and investment decisions could be at stake. But guess what? The minister uses taxpayers’ money to fly over to Japan to announce a $35 million grant to Toyota. No problems there, if it gives a headline for the minister. Then $149 million is announced for GM Holden and guess what? The Prime Minister even appears in one of their advertisements. No problem there with commercial-in-confidence, no problem there with giving away business plans. It seems to me that the minister wants to pick and choose.

You see, what the minister and the government have deliberately done since 2003 is change the scheme from a credit scheme to a deliberate grant scheme. As a grant scheme, with every other business that gets a government grant—be it under the much loved Tasmanian community forest agreement that Senator Milne absolutely loves; I do not know why she is shaking her head; I thought she was a great supporter of it—it is made known publicly and the companies have to indicate what the money was made available for, whether it was retooling for new sawmilling facilities or whatever. Indeed I have in front of me a press release by the member for Grayndler, Mr Albanese, announcing grants in the textile, clothing and footwear sector, also a highly integrated sector. They were getting grants for all sorts of purposes, highlighting what the business plan was for the future—how they were going to redevelop themselves, how they were going to position themselves in the marketplace. But bingo! It does not seem to apply in the textile, clothing and footwear sector.

If you look at the grants under the Export Market Development Grant Scheme, which covers all sorts of industries—indeed, even the Tasmanian Symphony Orchestra was the beneficiary of an export market development grant which got them to South America, if I recall correctly—they are all publicly disclosed. The business plan of the Tasmanian Symphony Orchestra, in getting itself into South America and trying to get more recognition on the international stage, was there for people to see. It was put up in lights, with no problems. You have that for the export development grants in, I assume, the trade portfolio. You also have a huge number of grants that have been made in textile, clothing and footwear, all of them available on the AusIndustry website—little grants to all sorts of little companies—and, might I add, I am sure money well spent but publicly disclosed.

I have heard the argument on this commercial-in-confidence aspect changing quite considerably. First of all, I was told by elements—and I am not going to name anybody, but in general terms—that it would be very detrimental to the auto manufacturers. When I said to them that they may well have the capacity to reverse engineer the figures for each to find out what the other was getting, they had the decency to acknowledge that that basically was the case. Then all of a sudden the FAPN were called into the argument to say that the totality of the component sector was potentially going to be prejudiced. In further discussions with them, it was then refined to potentially just the small businesses. With all the arguments, as the minister has said in every one of his phrases in his commentary on my amendment, what has been exposed is not that it will cause these problems but that it could or may possibly be a problem. I might say the words give a flexibility to allow you to make an assertion without having any conviction behind the assertion being made.

If this was such a sensitive sector where no amounts of money should be disclosed, I would take the minister’s word on that but for the fact that he took himself to Japan to announce the $35 million grant. If I recall correctly, he also went to Adelaide to announce a $149 million grant. There was no commercial-in-confidence there, no undermining of investment propositions there, because it was made for TV. It made for a great announcement. When the minister wants to publicly announce something and make a big man of himself, or indeed the Prime Minister, then it is all okay and the commercial-in-confidence can go out the window.

I believe—and I have said this before—that, when a sector is the beneficiary of straight-out grants of money funded by the Australian taxpayer, the Australian taxpayer has a right to know the amount of money that is being provided. The previous scheme was a credit scheme and it is interesting that the government, by a deliberate policy decision—I am still not 100 per cent sure why—changed it from a credit scheme to a grants scheme. That is fine, but there are consequences that flow from that and people do expect grants to be publicly disclosed.

I say to the minister this was a good attempt to put up an argument, but even if everything that he asserts about a grants scheme being akin to a credit scheme were the case—which I reject—then I simply say that, while certain things may have been done under the Howard government, we do look afresh at things in opposition and it is our considered position that now that this has turned into a grants scheme there should be the sort of transparency that I have been arguing for and that this amendment will deliver.

Question put:

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