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Monday, 24 March 1997
Page: 2742

Mr McARTHUR(4.01 p.m) —The honourable member for Reid (Mr Laurie Ferguson) would fully understand that there is no level playing field throughout the world. The key feature he should understand is that tariffs around the world are at about five per cent. There are a few anomalies, I concede that point, but on balance tariffs have fallen and average five per cent around the world. However, this motion would have us believe that tariff reductions would be tantamount to devastating the Australian automobile industry, while at the same time it praises the improvements in the industry over the past six years, a period when tariffs have been falling each year by 2.5 per cent.

As the member for Reid should understand, it was the previous Labor government's decision to lower the automobile tariff barrier from 57 per cent down to 22 per cent. It was gained with bipartisan support from the shadow minister at the time, Mr Ian McLachlan, and people like me. That tariff reduction exposed the industry to greater competition and led to the great gains which the motion now refers to.

By contrast, for most of this century, our car industry has been highly protected and uncompetitive by world standards. If tariff protection were an effective way to secure the future of Australian industries, then by 1990 we would have had the best car industry and the best TCF industry in the world following 70 years of protection—that is, if the arguments of the honourable member for Reid were to be sustained.

Tariff reductions, far from being devastating, have arguably secured the future of Australia's car industry. I have visited a number of the automobile factories in Geelong. I have a good news story to tell about the improvements on the ground that have occurred in the factories and in their industry since tariff rates have been gradually reduced.

At Henderson's Automotive Group, where they construct car seats for the four manufacturers, cost reductions of two to three per cent each year have been passed on to the four main car component manufacturers. They have an open mind on tariffs. They conceded that had tariffs never fallen the hard decisions would not have ever been taken in that factory. They now have a position where there are good industrial relations and good teamwork in the factory. They are even doing their own maintenance on their own equipment, and everyone is part of the team. Surveys of employer attitude show that higher pay is not the No. 1 issue, evidence of a real teamwork culture.

I have also been to Pilkingtons, which manufactures windscreens for both the domestic industry as well as for exports. Costs are down 15 per cent over the last six years. Productivity is up a staggering 92 per cent. They have now got 13 unions down to one union. Quality performance has improved remarkably—the rate of 7,000 faults per million is down to 300 faults per million today. That is a remarkable change in the productive performance. This has led to a $50 million renewed investment by Pilkingtons in their Geelong operations, including a new factory.

I also visited Paratus Industries which constructs upholstery for the motor car industry. It employs 70 people. Likewise, it has achieved cost reductions in each year on components for the Ford motor company. It has moved to two shifts, giving greater flexibility to the work force, especially to female workers. It has embraced enterprise bargaining with a focus on training and continuous improvement. It has regular work force meetings to discuss the progress of the firm, possible improvements and where it stands in the state of the market.

On Friday, 14 March, I visited the Toyota factory at Altona in Melbourne with members of the government industry committee. This is a very up-to-date factory participating in a global car manufacturing operation with a potential to export to 21 countries. Profitability is improving in that plant. As they pointed out very clearly, the exchange rate was a key factor which eroded their profitability in 1996. They made the point that sales tax was a big issue—something that the Labor government put on. That 22 per cent sales tax was a bigger issue than the 22 per cent on tariffs.

I also met with the Geelong Manufacturing Industry Task Force. They are very concerned about the tariff argument in Geelong. They talked about micro-economic reform, market access and industrial relations, not protection, industry assistance or backdoor subsidies. Theirs was a practical, on-the-ground assessment of how they saw the tariff argument.

Protectionist arguments have been demolished both in theory and in practice. This motion simply wants to have it both ways: to concede that competition has brought about great improvements in the local automobile industry while at the same time claiming that protection is the answer for the future. Protection never secured the future of any industry. It never led to efficiency, and it certainly never protected jobs in the long term.