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Monday, 14 September 2009
Page: 6451


Senator ABETZ (6:25 PM) —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.

Sitting suspended from 6.30 pm to 7.30 pm


Senator ABETZ —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.