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Wednesday, 29 April 1987
Page: 1977

Senator LEWIS —I am sure the Minister for Industry, Technology and Commerce is well aware that, since the introduction of the Australian car plan, the Australian dollar has fallen about 40 per cent against the trade weighted index-it may be up a little in recent days-and even more against the yen, giving Australian car manufacturers much higher levels of protection than originally envisaged, an opportunity to obtain a greater share of the Australian car market and the potential to export both cars and components. Can the Minister tell the Senate what effect this increased protection will have on the Government's Australian car plan? In view of the substantial increase in the cost of cars, whereby local manufacturers seem to have increased their prices to match the prices of imported vehicles, will the Minister give consideration to indexing car import tariffs against the value of the Australian dollar as a means of keeping pressure on local producers to build better and cheaper cars and components?

Senator BUTTON —Senator Lewis is about the only surviving shadow Minister. He is an extraordinary chap because he told me that he was going to ask me this question. I must say that it is almost a dorothy dixer and I said that I would not answer it if he asked it. I am not going to change in substance the view that I expressed to him yesterday. But let me say first of all that the car plan is, of course, a structural adjustment plan for the motor vehicle industry in Australia. The elements of that structural adjustment are to reduce the number of model lines produced in Australia in order that greater volumes can be obtained and to reduce the number of firms operating as independent entities as manufacturers and get them into joint venture activities-again for the same sort of purpose. Many of those structural issues are being discussed at present in the industry and it would not be appropriate for me to make any particular comments about the effects of the devaluation on the car industry, which, of course, have been very mixed.

There is no simple conclusion about the benefits or detriments that flow to particular firms from the effects of the currency devaluation. Nonetheless, I concede the central point of the honourable senator's question, which is simply that the devaluation is responsible largely for the increase in car prices, which is a different view from that which the honourable senator's party was arguing a month or two ago when all the blame was put on the fringe benefits tax.

Senator Messner —It still is.

Senator BUTTON —The shadow Minister for Industry, Technology and Commerce, Senator Messner, says that it still is blamed on the fringe benefits tax. Well, I know there are splits in the Liberal Party of Australia and I know that Senator Messner is supposed to be the shadow Minister for Industry, Technology and Commerce, but Senator Lewis has a more intelligent appreciation of the issues than has Senator Messner. The basic cause of the increase in the price of cars is the devaluation of the dollar, particularly as against the yen.

Having said that, I do not accede entirely to the suggestion made by Senator Lewis that local manufacturers have followed up the price of imported cars as a result of the devaluation and that that is a substantial factor in increased car prices. I think some manufacturers did do that in 1986 to some extent. As a result of that, we arranged for the Automotive Industry Authority to get in touch with each of the manufacturers and explain to them that we would be closely monitoring any price increases with a view to ensuring that that practice no longer happened. The protection regime extended to the industry is always capable of re-examination by any government, but it is not on the present agenda of the current Government.