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Monday, 20 June 1994
Page: 1740

Senator SHORT (5.21 p.m.) —The Automotive Industry Authority Repeal Bill 1994, as its title implies, abolishes the Automotive Industry Authority and, in doing so, implements yet another plank of the coalition's policies because the abolition of the authority was a part of the coalition's election policy proposals. The bill abolishes the authority for the very simple reason, with which the coalition obviously agrees, that the authority has outlived its usefulness. Indeed, one could question whether the authority should have been established in the first place.

  The fact is that the authority has now outlived the purpose for which it was established; namely, to guide the automotive industry through the changes imposed on it in the early 1980s by the government's car plan, which was a successor plan to several other car plans of the earlier Liberal-National Party governments going back to the 1960s. In 1984 the government made significant changes to the car plan and the Automotive Industry Authority was established for the purposes of guiding the industry through those changes.

  As the Minister for Small Business, Customs and Construction (Senator Schacht) said in his second reading speech, the focus of the car plan was on industry restructuring and the promotion of an internationally competitive automotive manufacturing industry. I will come back to that a little later. He went on to say in his speech:

Reviews in 1988 and 1991 have maintained this approach through the continuation of a policy of reduced assistance complemented by various mechanisms to promote rationalisation and increased economies of scale from export production.

Let me say for the record that the government's tariff policy towards the automotive industry is the same as the coalition's policy, so there is a bipartisan approach on that matter. There are other aspects of policy that involve directly—or more particularly indirectly—the automotive industry along with any other manufacturing industry on which we have some considerably different policies.

  As I said, the authority does not appear any longer to provide a worthwhile, ongoing role which does not duplicate departmental responsibility or industry bodies. It makes sense that the proposed abolition of the authority include provisions for the ongoing functions of the authority that are worth while—and there are some—to be consolidated into relevant areas within the Department of Industry, Science and Technology. The abolition of the authority is going to lead to ongoing annual savings of approximately $600,000 a year, according to the government. The authority's budget this year of $1.1 million will be used for the costs of closing down the authority and related issues.

  It is pleasing to see the advances that have been made by the automotive industry in recent years. On behalf of the coalition, I take this opportunity to congratulate the industry on the significant achievements that it has made. The productivity performance has been notable in recent years. The report of the automotive industry entitled Report on the State of the Automotive Industry 1993, which was tabled in the parliament just a couple of months ago, states:

A 17 per cent improvement in productivity in 1993 . . . brings the improvement in the last two years—

1992 and 1993—

to 31 per cent, is a very strong performance and complements the quality improvement which became evident a couple of years ago.

The authority, in the report to which I have just referred—in fact in its preceding report—identified the industry's success in closing the quality gap between local and imported cars, as measured by owner-identified faults. It also reported at that time that the best of the Australian cars had achieved quality levels better than some imported Japanese vehicles, and that the quality measures for 1993 confirmed that improvement with the majority of local models showing further gains in 1993.

  They are all very noteworthy developments so far as the industry is concerned—and the industry ought to be complimented on them. Not so favourable are some of the other developments that were pointed out by the Automotive Industry Authority in its Report on the State of the Automotive Industry 1993. In particular, it is a matter of concern to see the authority reporting that car affordability has declined and deteriorated progressively since 1984. In other words, it costs more in real terms for people to buy a car now than it did a decade ago. That has been a major contributor to the very static market that we have for vehicles in Australia.

  When we take total sales into account, we have had virtually no increase in the passenger vehicle market for something like 20 years. The average age of vehicles in Australia is now one of the oldest in the world—the latest figures I have seen show an average vehicle age of the order of 15 to 17 years. With that sort of situation major problems are posed not only for consumers but also for the environment because many cars on Australian roads are running on leaded rather than unleaded petrol. There is little incentive in a static market for the capital investment that is needed if we are to see a vibrant local industry in the future.

  The 1993 report of the automotive industry pointed out again the poor profitability performance of the industry over the last decade and made the very important point that that poor performance has been caused by more than just cyclical variations. As the report points out, it is surprising that there has been the level of investment in the industry over the last decade, given the overall state of the industry.

  It is absolutely essential that we create in Australia—not just for the automotive industry but, because it is a significant part of our manufacturing sector, particularly for the automotive industry—the climate that will encourage an even more efficient and, in particular, internationally competitive industry than we have now. The industry has done a lot to lift its own game. I am sure—and having spoken to people in the industry, I know they would agree—that there is more the industry can do and wants to do, as well. But to a very important extent the onus is also on government to provide the conditions and environment, in terms of micro-economic reform, that will enable and encourage the industry—and give it the confidence necessary—to go ahead into the future.

  One of the great concerns I have about the state of the Australian economy—and it is an economy-wide concern—is that this government has given every sign that it has gone to sleep on micro-economic reform and believes that there is no more it can do. There could be no more worrying sign of the complacency and arrogance of this government in terms of its policy performance than that. We will all rue the day very dearly if we do not make the necessary micro-economic reforms that are so patently and obviously needed. It is not just a matter of federal government reforms—

Senator Schacht —State governments could help.

Senator SHORT —Yes, my concern extends to state governments as well as the federal government. There are some notable exceptions. Senator Schacht is a South Australian and he is starting to see the necessary changes there. But if he came to my state of Victoria and saw what the Kennett government has been doing by way of reform in Victoria, it would give him confidence that state governments, if they have the will and courage to bite the bullet, really can achieve major improvements through reforms which give investors and consumers confidence in the future of their economy. I congratulate the Victorian government in particular on what it has been doing there.

  The other aspect of the industry that is of concern—and again this is a combination of government and industry—is the fact that the industrial relations performance across the automotive sector has not been good in the last year or so, as reported in the industry authority's report on the industry for 1993. It says:

For the first time since 1989 the level of disputation in the automotive sector—

in 1993—

was greater than that for all of manufacturing.

That is a great concern. The report goes on to say:

A continuation of the deterioration evident over the last two years—

that is, in industrial relations performance—

would threaten investment, exports, productivity, and as a result, the future competitiveness of the industry.

While there have been significant improvements in the industry over recent years—we congratulate all those concerned within the industry for those achievements—it is very important to note that there is still a long way to go on the part of the industry but, more particularly, on the part of government.

  The government recognised—as did the coalition well before the 1993 election; hence our election policy proposal to abolish the authority was based on this—that times do move on, that the purpose for which the Automotive Industry Authority was established is no longer there and that all the remaining work that needs to be done—

Senator Schacht —What about zero tariffs? Do you support that?

Senator SHORT —As I said a moment ago—obviously Senator Schacht was not listening—the coalition policy on the automotive industry tariffs, as we have said several times in recent months, is now identical with that of the automotive industry.

  The ongoing relevant work of the authority can be very easily, more suitably and cost-efficiently located within the Department of Industry, Science and Technology. That is what the government is proposing. We think that is very sensible. For all those reasons, we do not oppose the bill and we support it as a very sensible and, if anything, overdue development.