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Bracks car review: additional $2.5b required -

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ELEANOR HALL: First to the future of the Australian car industry. The report commissioned by the
Federal Government into the highly sensitive issue of federal support for the auto industry was
released this morning.

Chaired by the former Victorian premier, Steve Bracks, it recommends that the government provide
$2.5-billion worth of assistance from 2010 to 2020, to help the industry survive and thrive and
that a large part of that be for environmental measures.

Mr Bracks has recommended that the government double the amount of taxpayer dollars it's planning
to provide to the industry in its Green Car Fund.

But the review team ignored pleas from the car industry to abandon or delay the planned cuts to car

In Canberra, Sabra Lane reports.

SABRA LANE: The Bracks report into the Australian car industry was commissioned in February in the
wake of Mitsubishi's decision to close its Australian operations.

High oil prices, the high Aussie dollar and more recently, a change in consumer preferences for
smaller cars with lower emissions have battered the local industry.

But report author, Steve Bracks, describes the Australian industry as vibrant, but says it would
become viable if the report's recommendations are adopted.

STEVE BRACKS: These set of recommendations delivered to the Government today are designed to have a
long-term sustainable case for the automotive industry in Australia.

A sustainable case both economically and environmentally, a competitive industry that can compete
worldwide, that goes for export whilst of course having a competitive domestic market as well, and
one which has a reliability in its supply chain in the future.

SABRA LANE: The industry was last reviewed in 2002.

The Bracks report gives the green light to the current plan of halving motor vehicle tariffs on
imported cars and components from 10 to five per cent in 2010.

The industry had pushed for a freeze, as Steve Bracks once advocated when he was Victorian Premier,
but not anymore.

STEVE BRACKS: I was persuaded by the weight of argument that having the existing timetable to 2010
would not disadvantage the industry and would assist in driving forward further, further
productivity and competitive advantages to the industry whilst having additional support for
transition in the process to seek reliability as well.

SABRA LANE: Crucially, the report says the current Australian Competitiveness and Investment
Scheme, aimed at helping companies with research and development, be extended beyond its 2015
deadline to 2020 and include an extra billion dollars.

It also says the Green Car Fund set up earlier this year be doubled to $1-billion, and brought
forward by two years to start next year to allow manufacturers the opportunity of making better
fuel efficient cars.

All up, the report suggests $2.5-billion of government assistance from 2010 to 2020, to help the

STEVE BRACKS: The reality is we have an auto industry. The auto industry has survived here enormous
challenges whilst it has been open to greater competition. It therefore has a greater chance of
success because embedded in the auto industry are those competition changes and those productivity

Now whilst there is significant pressure, particularly in Detroit currently, there are signs that
the auto industry is changing.

SABRA LANE: And, he says the transport sector, including fuel, has to be included in an emissions
trading scheme if Australia is genuine about creating new technologies to tackle climate change.

STEVE BRACKS: There are a lot of views about this. Should the automotive industry be exempt as it
is in some other countries or not and our view is that road transportation should not be exempt
because it sends a better sign to the market on the true price of carbon and therefore consumer
preferences which result from that and changes in technology and design as a result of that.

KIM CARR: Now, I trust that all of you do know that I am an unapologetic supporter of the
Australian car industry.

SABRA LANE: Innovation and Industry Minister, Senator Kim Carr.

KIM CARR: I'm in no mood to hide this report. I want to sing this report from the rooftops. This is
an opportunity here. This is an enormous opportunity here to actually revitalise an incredibly
important industry. I take the view that this is an industry that has really good chances of
success if the right decisions are made.

SABRA LANE: The industry employs more than 64,000 people. Last year, it produced 335,000 cars worth
$7.7-billion, $5-billion of that in exports.

The Industry Minister says there is a future for car and components industries in Australia.

KIM CARR: The Australian Government has taken the view that we want to be part of that. We want to
keep an industry here because once you lose the capacity, you never get it back.

But we can also diversify the industry and transform the industry in terms of the supplier base. So
all those things considered, leave me to be optimistic that this report will be taken very

I can't tell you what the response of Government will be to each and every recommendation but we
will be looking at this thoroughly, carefully and I am confident that there will be an effective
response shortly.

ELEANOR HALL: That's the Innovation and Industry Minister Senator Kim Carr, ending that report by
Sabra Lane.