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Thursday, 21 August 2003
Page: 19274


Mr BILLSON (11:07 AM) —I rise to speak in this cognate debate on the ACIS Administration Amendment Bill 2003 and the Customs Tariff Amendment (ACIS) Bill 2003. I am pleased this is such non-contentious legislation that it has come here to be debated. My message is that it sounds like we all need to take a bit of a cold shower. The member for Corio can wax lyrical about all the things that the Labor Party would do, but it has not done them. He seeks to criticise what the government has done and then gives an account of what Labor would do that looks amazingly similar to what the government is doing. What a great mystery it is to try and work out where the point of difference is. I do understand the tensions down in Geelong and the debate on domestic consumption—there should be—between the right honourable member for Corangamite and the member for Corio, who is ducking off to let Geelong media know he has had another spray at the member for Corangamite over the car industry.

The issue today is another instalment in a menu of government policy reforms that has given life to a car industry. The car industry—domestic sales and manufacturing—is as strong and as robust as it has ever been, and there is no one element that has delivered that. It has been a combination of things, including the sound advocacy of the member for Corangamite for a sensible and sober review of tariff and protection policies; encouragement from governments to invest in innovation and research and development; programs like ACIS that we are discussing today; improved productivity from the labour force of the major manufacturers; and cont-inuing innovation, not just at the manufacturers' level but at the componentry level—those small to medium businesses that provide the pieces that go into vehicles that are now being exported to all corners of the globe.

I remember the first time I had the opportunity to speak about the car industry. I think that during that year Ford exported one car, and I believe that was the one Jac Nasser took with him when he went to the US. Thankfully the picture has changed. We are seeing all four manufacturers exporting vehicles. On my recent visit to Toyota in Melbourne I found that the majority of their production is now exported. I found that quite a remarkable statement. A global company, Toyota, with a very clear focus on business performance and outcomes has recognised that a plant in Melbourne—a boutique plant by international standards—is producing world--class vehicles for this region and beyond. The story is a good story, and this is another chapter in that story which provides the automotive industry 10 years of certainty; a decade of certainty.

What a great government it is to provide that kind of comfort, clarity and forward thinking to give an important sector of the economy, the Australian automotive industry, a clear understanding of what the picture looks like and what the domestic environment will be in 10 years. That is the key benefit of these packages that we are debating here today. To support an ongoing, robust and vibrant automotive industry, the government will continue to provide not only certainty of policy but also a supportive general economic environment. We know the trilogy: low interest rates, a pro-investment climate and strong employment opportunities. That is something that all Australians are benefiting from, but industry also benefits from it.

Industry benefits from having an environment that is conducive to its performing well and then, through its endeavours, the broader economy, the work force and their families benefit. Here we have 10 years of sunshine—another 10 years to go forward and see the car industry expand its domestic capability and reach out further with exports and, hopefully, take a larger share of the domestic market.

The ACIS Administration Amendment Bill 2003 makes some changes to the ACIS program that was implemented through the 1999 act, and they follow rather extensive and very public consultations. It is novel—that is the nicest thing I can say—to hear the member for Corio talk about a government with blind ideology supporting the car industry. Nothing has had more light shone on it than this industry, and no more exhaustive process of consultation and review has been carried out for any industry, so the whole nation gets to hear about these reviews for the car industry. We are adopting a no-surprises position so that all participants know exactly what the sound footing is from which they can move forward.

As a result of the most recent review and another examination of how we can best support an important industry in an increasingly liberalised trade environment, the government is going to provide generous support through the ACIS program estimated at $4.2 billion between 2006 and 2015—$4.2 billion not just in handouts or corporate welfare but incentives that say to those producers, `If you partner with the other factors of production in this country and work with the government, we will encourage your innovation and your high-end research and development activities and we will support an even stronger industry.' The good news is that we have some finetuning of the package. The package will see automotive tariffs over time align with the general manufacturing tariff. The package also puts forward in advance implementation dates which give the certainty that I spoke of.

The tariff picture is an interesting one. There are many people who think that making people pay more for cars than they need to is somehow helpful. If they are spending more on their cars they are spending less on something else. It is easy to understand how other sectors of the economy and our overall standard of living can be undermined by recklessly large tariffs. We also understand, though, that sometimes tariff regimes can be counterproductive in supporting an industry where high tariffs have not supported innovation, have not supported improved competitiveness and have not supported improved quality. The important thing about the tariff regime is that it is phased down while the industry tools up. That is exactly what the package provides for.

To put the matter into historical context, in 1995 we had a tariff of 27.5 per cent and our Australian car manufacturers produced 313,000 vehicles and exported 23,940 of them. In 2001, with the tariff at 15 per cent, just under 350,000 vehicles were produced, with over 111,000 exported. These are bumper times for the car industry. We are seeing record production and record sales year upon year. Our test, though, is to make sure that the domestic market gets a fair share of that growing volume of sales, and the best way to do that is to produce quality products that respond to consumer demands and deliver for customers. What we have is a package that will support that and will provide assistance to industry and complement a further reduction in the tariff regime.

Some innovations in the package were incorporated at the request of industry. Again, entirely contrary to what the member for Corio would say, blind ideology is not driving this; we had collaboration and consultation with industry. Industry said that it would like some splitting of the available funds, with 55 per cent for the major motor vehicle producers and 45 per cent for other ACIS participants. That proposition was put forward by the industry and it was supported by the government. It not only provides a clear picture into the future; it also recognises that there are various elements within the car industry that deserve to know where they fit into the picture.

The other issue I would like to talk about today is support for research and development and innovation. There is funding available in this package to support industry research and development. There are incentives for those who are doing the right thing, putting their own energies, know-how and experience towards a better vehicle production industry into the future. There is support for high-end research and development activities and there is a living, breathing example of the very best of that kind of activity in Melbourne. The General Motors design facility in Melbourne is outstanding. It is world class. You can go in there and see a hologram of a new vehicle. You can see what it looks like, the finish and the shape, and the way it sits on the road. You can apply some of those high-end computing capabilities that we know are very much a part of contemporary manufacturing. You can actually see what it looks like. You can see what new vehicles look like and that certainly would not put you to sleep if you were at that facility.

The opportunity to have that kind of capability in our country to complement a global corporation could, into the future, see 24-hour production as a fact of business. As the time zones move, you could kick into the Melbourne design and research facility and you could show how a contemporary car industry could conceive of, design and construct world-class vehicles, and that could be done in a shorter time. That is the big challenge. That is something that the member for Corio seems to overlook.

There is little point going on without recognising that a hostile industrial relations climate is counterproductive to the car industry. I do not know anybody who believes that hostility, lockouts, shutdowns, wildcat strikes and disruption to supply chains are somehow going to help a world-competitive business where we need to be smarter, sharper, more productive and produce high-quality vehicles. Nobody could suggest that would happen. I stand here today not necessarily spruiking for those in the union movement who want to look after their members; I am here to represent the people who are not in those jobs yet and who might like to be union members down the track. They are the people who do not have jobs in the car industry. I am here to see if we can grow that industry and expand the employment opportunities. Even those who are here as mouthpieces of the unions, as fully owned subsidiaries of the union movement, might even see benefits in what I have said. There would be more people to rip money off to support the Labor election campaign. It is a win-win for everybody. The key is to make sure that there is a productive, collaborative climate to let those evolutionary improvements go forward and get better products into the marketplace faster with fewer defects and better quality, representing great value for money. That is the combination that is needed and that is what is reflected in the government's approach.

Another issue I want to consider today relates to the whole setting of the car industry. We know and understand that a domestic market is central to providing a capacity to export. We need some reason for being here. The car industry is a multinational industry and it has excess capacity around the world. There are no signs which say, `This segment of the car industry is reserved for Australia.' There is nothing like that. There are no walk-up starts. We need to show that this is the sensible place to invest and we can do that by the kind of performance that has been nurtured and supported by the Howard government since it has been elected, as reflected in the figures I mentioned briefly earlier.

However, there are other factors. It is a little-known fact that some of the top three or four producers of technology for LPG vehicles are here in Australia. Just as we understand that we need a domestic base to produce vehicles and use that as a foundation to move into the export market, we need to recognise that the same applies with the LP gas industry. We have probably the second largest fleet of LP gas vehicles per head of population anywhere in the world. We have some of the finest component manufacturers and our people in Australia are producing LP gas technology for Toyota. For example, Apollo Gas in Melbourne produces an LP conversion kit which has been endorsed by the manufacturers of the Mercedes van. That is being produced in Australia. It is world-class technology. But if we do not have a domestic base, why should they continue with that innovation here?

The excitement that you are reflecting, Mr Deputy Speaker Lindsay, is what I reflected when I launched the Toyota LPG Camry, where you have a world-competitive car, produced in Australia, using Australian produced LP gas technology. It is a great story. Just as we need to support and provide a sound domestic foundation for the car industry, we understand that the component market also needs a similar foundation. Let me point to another example: LG Equipment Pty Ltd and the team in Sydney, under the leadership of Philip Treloar, produce gas guard nozzle technology. It is remarkably outstanding technology which is used worldwide, is produced in Australia, and is supporting and earning export dollars for this country. They need a domestic base here.

My concern is that the producers of LP gas in the country do not care where they sell the stuff. It does not matter if it goes out on a big ship to our trade competitors; it does not matter if other countries recognise that it is a first-class, here now, transition fuel. These producers will just sell it overseas. So we need a domestic base for LP gas driven transport systems that actually supports this world-class production. I mention Apollo Gas. I also mention Ausmart, in my own electorate, which is exporting LP gas technology to China. It does not just happen because we want it to. You need a capability domestically and you need a domestic market to refine the technology and to sell it in those international markets.

Ebsray Pumps Pty Ltd produces 98 per cent of all of the LP gas service station technology. So, whenever anybody pulls up at an LP gas pump to fill up their car, there is Australian made world-class technology there. It wiped out the competition in France and Thailand in the late eighties. They gave away their domestic LP gas commitment, so they have shut down. Now there are so-called equivalent competitors in the United States, Germany and the UK looking at Australian made technology and saying, `This stuff is the bee's knees.' Why? Because we have such a large domestic fleet that is powered by LP gas.

I mention that because these are component industries that are involved in local design, development, manufacture and marketing of what is world-class, leading-edge technology for the auto gas industry worldwide. They have had some encouragement from government through excise regimes, but we know that subject is up for discussion now. What I am saying, though, is: do not just look at the use of the gas when you are considering what is an appropriate excise regime; look at the industry that sits behind what is a remarkable story. If we poorly handle the excise question, it will become a story of missed opportunities.

LP gas is the new fuel, the clean fuel of the future. It is not something that people lie awake at night and dream about; it is here now and it is being embraced by one in 17 cars in this country. It is little wonder that we have the world's best technology. We need to support that by making sure there is a domestic demand for the gas and that there is some encouragement for everybody involved in that chain to make their contribution. Support for the car industry must be focused not only on selling world-class, completed units—motor vehicles—domestically and internationally but on recognising that there are component manufacturers. Australian Arrow in my electorate make some of the world's best electronic technology. They do not make the harnessing anymore. They do not sit there and make the long strings of wire—that is made in Samoa. The contribution made at Australian Arrow in Carrum Downs is to make sure there are no big spiders in the kit as it comes over from Samoa. Australian Arrow make the high-end applications that plug into either end of the trains that run through all motor vehicles. My message today is that the car industry story is a fantastic story, but it has not happened by chance. Successive governments have recognised the importance of collaboration with this crucial industry and appropriately targeted government support. Some agitation to make sure the industry is the best that it can be has produced a world-class industry. It is a little boutique by world standards, but it is still world class.

So I say we should support this legislation today. Remember it is not just about the fully completed vehicles; it is about the component manufacturers. I would like to give a message to anybody who is remotely interested: there is world-class capability in the auto gas sector, and how we handle the changes to excise in the near future is crucial to see whether we give away an international edge, give away and trash a domestic production capability that is exported around the world, and give away the environmental, social and economic benefits of LP gas. We are smart on this. We understand the multifaceted nature of a solution. We need to be equally as clever and smart on LP gas and excise changes to make sure that all the good gains that are there are not given away for no return.