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Monday, 9 December 2013
Page: 2117


Mr DANBY (Melbourne Ports) (19:23): I rise to grieve for the Australian automotive industry. This issue is causing serious concern in my electorate where thousands of skilled workers depend on our car industry and where Holden has its major plants at Fishermans Bend. The fate of Australia's last big manufacturing sector hangs in the wind due to the government's torpor. Inaction is the government's byword. It is caused by deep ideological divisions in the coalition and a fanatic ideology held by some, with some ministers secretly backgrounding the media while in the middle of a hopefully objective assessment by the Productivity Commission. What we need in this debate is rational, considered policy—policy that judges the entire scope of this area of manufacturing and how a small investment by the government multiplies into thousands of jobs, millions of dollars in research and development and significant export dollars. At its height a few years ago when the dollar was not so high, the car industry was exporting nearly $200 million of automobiles to the Middle East, Asia and other places.

Instead, at the moment we see the coalition and the Prime Minister attempting to shift the blame by making it look as though the closure has nothing to do with Australian government policy. We have the member for Warringah saying, 'I do wish Holden would clarify their intentions because at the moment they've got everyone on tenterhooks,' instead of offering to engage with Holden in relation to their future plans. It is not up to the victim of rumour-mongering to respond to those saboteurs who are trying to undermine the manufacturing industry by spreading rumours.

This double game of the government is stark. On the program Lateline, the reporter Chris Uhlmann revealed with a sense of urgency a leak by some leading Australian minister. This is a minister leaking that the automobile manufacturing industry is going to close at a time when his own minister, the Minister for Industry, Mr Macfarlane, is working with the Productivity Commission to see that an objective inquiry is made into how this industry can be supported. If the story had not been broken by the coalition, there would have been no need for the Prime Minister to call on Holden to clarify its intention. It is like goading General Motors as far as possible to close down—hardly the 'open for business' state of affairs for Australia that we heard from the coalition prior to the election.

The coalition is backgrounding journalists about 'supply-chain decisions' in Detroit. This is a clear attempt, in my view, to shift the blame by making it look as though the closure has nothing to do with Australian government policy. Did anyone take the Liberal and National parties seriously when they promised to cut $500 million from the Australian automobile industry prior to the election? I suppose people heard the claims. They did not think that they would go so far as to make redundant the last great area of our manufacturing industry. The Prime Minister says the government 'will not chase them down the road waving a blank cheque at them'—hardly what is being called for—rather than acknowledging the tough field that Australia faces at the moment because of the high dollar and foreign government subsidies. He says:

Ever since the first car rolled off the line in 1949 there have been pots and pots of money available to the car industry in this country.

By contrast, the shadow minister for industry, Senator Carr, said:

For $300 million a year, Holden, Toyota and 160 … manufacturing companies plus all the suppliers that flow from there can be preserved but the Government does not want to face up to its responsibilities.

It is a significant investment but an investment that brings returns. When Labor invested $2.7 billion in this industry, we saw a $26 billion return on new investment. This is a return on investment of nine to one—pretty impressive, in my view. It also means that we directly employ 46,000 people in the car industry in South Australia and Victoria and 33,000 in Victoria still have a job. That is not to mention what $150 million means to the preservation of high-quality jobs in Australia.

A blanket rule cannot be applied to the entire coalition. There are a beleaguered group of MPs, it appears, around Minister Macfarlane who want to keep the car industry and are acting in good faith. Nonetheless, in my view, it is clear—you can read it in the newspapers—that the ideological advocates of the so-called free market, including the member for Higgins and the member for Mayo, seem to be rampant and they seem to reflect the views of many of the members of the government from Sydney, who have contempt for the manufacturing industry. In opposition, the Liberals pledged to cut $500 million from the industry. They are not putting anything further into it, as the Prime Minister insists. South Australian Premier Weatherill said:

So they're going to make it a fait accompli by seeking to destroy Holden through damaging speculation.

…   …   …

… they want to transfer responsibility to Holden, to get Holdens to make the decision to close and absolve themselves of responsibility.

But the effect of doing that would be to jeopardise General Motors' contemplated investment of $1 billion to develop two new models in Australia. It would also undermine the $750 million in research and development that this industry spends a year. It is the biggest research and development expenditure in any industry in Australia. To jeopardise this for relatively small amounts of money from the national budget and for ideological reasons is not rational economics.

There are other important points that coalition members ignore. The auto industry is not operating on a level playing field. The US spends 14 times more money on the automotive industry than Australia, and Germany spends five times as much. In Australia the cost-per-capita support is around $17 per vehicle, far lower than the $90 per person in Germany and the $264 in the United States. There is not a car on the road anywhere in the world that is not supported by the government somewhere. Despite this, Australia's automotive industry has performed relatively well. A significant percentage of all Australian vehicles are exported still and they sell more than 100,000 per year to Australian customers. In recent years the total automotive manufacturing industry turnover has declined because the value of the Australian dollar has increased. It is a very narrow mind that wants to undermine and destroy the capital of this great industry, because the Australian dollar will not stay high forever. Between 60c and 80c, this industry is a very important export earner for Australia. Why destroy the vast capital that has been built up by these companies, the engineering know-how, on the basis of a fanatical free-market ideology?

It is astounding to have a government which dismisses huge job losses that would accompany the end of the auto industry. People in my electorate who host the base of operations are not so blase. The number of jobs that would immediately be lost were the auto industry to close down is, as I said, 46,000 directly. It is estimated by various people, including the Productivity Commission in the past, that the automotive industry indirectly employs 310,000 people. According to some estimates, the effect on the budget bottom line of increased welfare payments if the entire auto industry was to close, and this would happen in a cascading effect if Holden or Toyota were to close, would exceed $20 billion. The automotive industry is important not just for the jobs it creates; $750 million of research and development go into it.

It is time for the government to start thinking practically, practising rational economics, weighing the cost of closing this industry against the small public support that it needs, particularly through this transition time when the Australian dollar is high. We should be thinking clearly and rationally in the economic interest of Australia beyond the immediate time of these few days and we certainly should not be acting on the basis of hardline ideological views that are fashionable with Grace Collier and some of the lesser known ideologues in the Institute of Public Affairs. People in parliament have a responsibility to see that the Australian economy is not undermined in the long term. Between 60c and 80c, where the Australian dollar has been to the American dollar for long periods of time, the Australian automotive industry is very viable and a great export earner for this country.

I know many of the engineers and many of the people who work as skilled tradesmen in the automotive component industry. I grieve for them. I implore serious government members, including the two who are in this chamber tonight, to have a look at again, to make sure that those people in the government who are undermining this do not control the course of events by goading General Motors into making a decision we will all regret.