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Tuesday, 19 June 2012
Page: 7156

Mr COMBET (CharltonMinister for Industry and Innovation and Minister for Climate Change and Energy Efficiency) (20:59): I certainly appreciate the question from the member for Melbourne Ports—he was my member of parliament when I was living in that area in Melbourne, and he was a mighty fine representative for the community. He asks very important questions in relation to the automotive manufacturing industry, and the fact of the matter is that 55,000 people are directly employed in the auto industry and more than 200,000 others are employed in areas associated with the sector. That, in itself, tells why it is a very important part of our economy—a quarter of a million working people and their families who depend on the industry and all the businesses that are associated with the industry and provide services to it mean that it is a very important part of our economy. Labor, of course, has a very long history of association with the automotive manufacturing industry and of encouraging its development and sustaining its role. That is very important for the member for Corangamite who is here too, and of course he has many Ford workers living in his electorate.

The government are very committed to the industry and that is why we undertook the discussions. We acknowledge the work done by Senator Carr previously in this portfolio—he did much of this work. We have worked very closely with General Motors in relation to the co-investment that was announced some months ago. The auto industry in this country is under significant pressure. We have three major manufacturers and of course many suppliers in the supply chain that are feeling the pressure of the high dollar in particular. As we know, the high dollar means imports are cheaper, relatively, and exports are more difficult. General Motors Holden's operations in Australia, including in Port Melbourne, are feeling that pressure. This government is committed to sustaining an automotive manufacturing industry, but of course it will only be sustained at the end of the day if it is viable.

We may well have parity with the US dollar for quite a continued period of time, and in the auto industry, as in many other industries, they need to change their business models so that they can function and be competitive at parity with the US dollar. Many businesses in Australia, including many in the auto sector, have essentially been structured and financed on the basis of the exchange rate perhaps in the region of 80 to 85 cents to the US dollar. Those days are not here, and they have not been here for quite some time. That means businesses need to change their business models, and the co-investment that has been announced between the Commonwealth and the South Australian and Victorian governments, both making a small contribution relatively, with General Motors is designed to achieve a restructuring of General Motors operations in this country so that it can establish itself on a viable basis with the exchange rate at parity with the US dollar. It is important for governments to work with businesses to achieve outcomes like that and to achieve change.

Holden, as a consequence, has been able to announce more than $1 billion of investment as part of that deal that will ensure that it has operations in this country for the next decade, to 2022. It will change its operations, yes, and it will be a matter for Holden to indicate in coming months how it will go about achieving that. It is anticipated that two models will be produced in Australia for the domestic market and also with an eye to export markets. Just imagine how important that is for the economy in Australia.

In relation to the question asked by the member for Melbourne Ports, Holden's operations in Victoria, and in Port Melbourne, are extremely important. The engine plant is there, as are the engineering and design facilities. To provide some insight into what this arrangement means, General Motors has been able to announce subsequent to the co-investment that a deal has been secured with its operations in Shanghai for the design and engineering of vehicles in Australia for manufacture in China. That is the sort of focus that this co-investment is designed to achieve.

The alternative, of course, is to do nothing. That is the coalition's position. The member for Indi has left now, unfortunately; however, their policy is to take $1.5 billion out of support for the auto sector compared to what the government has committed to.