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Tuesday, 18 June 2013
Page: 6171

Mr ZAPPIA (Makin) (21:55): The announcement by Ford that it will cease manufacturing operations in 2016 has understandably raised questions about the future of GMH operations in Australia and in particular in South Australia. Auto manufacturing is important to Australia, directly employing around 50,000 people and about 200,000 indirectly. The sector exports over $3 billion worth of components and vehicles every year. Importantly, car makers underpin much of Australia's manufacturing capability and investments in research and development.

Whilst the global financial crisis brought things to a head, the reality is that Australian car makers have been under pressure for years. Today Australians can choose from over 60 models and choose according to what design best suits their personal needs. Choices are not made on price alone. Australian car makers simply cannot produce every desirable design and model, and so their market share has understandably been declining. Nor is the high Australian dollar the sole cause of current difficulties. The greatest pressure on car makers comes from the financial assistance or protectionist policies of governments in other countries with whom Australia competes. Many of those governments provide much higher levels of assistance than that provided by the Australian government. Some have even made direct investments in their car makers whilst others adopt protectionist policies such as tariffs or similar barriers to car imports.

In recent times there has been discussion about a temporary increase of Australian tariffs to offset the impact of the higher Australian dollar. The proposition is not without merit as it is well known that some governments also manipulate the value of their currencies in order to create a competitive trade advantage. I also note that replacing tariffs with government financial assistance, as we have done in Australia, simply transfers the assistance from those who buy imported vehicles and pay a penalty for doing so to the whole community.

So what does the future hold for the Elizabeth Holden plant? The loss of Ford does not help because it makes it tougher for component suppliers to remain viable. Conversely, Ford's closure could result in an increase in Holden sales to Australians who will remain loyal to an Australian product, so there is good reason for optimism. In a letter sent to me recently, Holden's chief financial officer, George Kapitelli outlines Holden's financial position. He said:

Holden has a world class balance sheet. We have ZERO debt, strong cash reserves and a very healthy pension fund.

Holden's strong balance sheet allows us to continue to invest in Australia for the future and this great position is best demonstrated by our significant capital and R&D spend. Our capital spend in plant and equipment was increased by $65 million in 2012, to over $100 million, in the lead up to the launch of the new model VF Commodore.

Last year Holden remained one of Australia's largest R&D spenders, with over $197 million invested in new product development. Holden has spent over $1 billion in the last 5 years on R&D alone because we know future success is directly linked to Research and Development.

Holden has a long term manufacturing plan in Australia for the future, which is very much supported by our R&D and capital spend.

The new model VF Commodore … will win hearts and minds. It is the most technologically advanced car ever created in Australia.

This highlights the world class capabilities that our domestic auto manufacturing industry can bring to Australia and the world—

It is clear from Mr Kapitelli's letter that Holden see a future in Australia and have been making considerable financial investments in their operations here. The federal government's $215 million assistance package to GMH is a responsible offer to a company with a sound financial footing, a plan for its future in Australia and co-investment commitment of $1 billion.

But in a blow to their future, as reported on the front page of The Advertiser on 13 June 2013, the coalition, if elected on 14 September, would cut $500 million in automotive assistance over the next two years and put at risk a further $1.5 billion after 2015.

Shamefully, neither the federal coalition nor the South Australian state Liberals will commit to any further assistance to Holden, thereby turning their backs on the jobs of thousands of South Australians. In so doing, the coalition have shown how little they care about South Australia and the thousands of South Australian families whose future depends on Holden.

Tony Abbott's message to South Australians is very clear. South Australia will not be important to him nor to the coalition in the coming election and the automanufacturing industry in Australia will be left to wither and die.