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Transcript of interview: ABC P.M.: 16 February 1993

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CANBERRA ACT 2600 TEL. (06) 277 2039

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Well the Coalition's Shadow Minister Ian McLachlan shares Dr Hewson's scepticism about the car makers' claims. Furthermore, Mr McLachlan points out that the vehicle industry is already the recipient of generous taxpayer subsidies via the export facilitation grants and he says those amount to over $1 billion dollars. Our

chief po litical correspondent Maxine McKew caught up with Ian McLachlan who was also in North Queensland today.

McKew - Ian McLachlan, Dr Hewson has said today that he's never had a good argument put to him by the car industry as to why they should get assistance. That must be news to car manufacturers?

McLachlan - Well, I mean we've had many discussions with the car manufacturers and of course the car manufacturers do get a lot of assistance right now, diminishing assistance albeit, as the tariff comes down. But they get a 35 per cent tariff, they get export facilitation which is really a taxpayer subsidy paid on the value added that they put into things that finally go to export. As a matter of fact they're doing quite well out of all that. What John Hewson is saying is that in the end, when all of these programs of assistance have worked their way through, then we expect that by the year 2000 that a ll industries will be on the same base.

McKew - Isn't the argument though about closures and job losses pretty persuasive?

McLachlan - Well it would be I think Maxine, if it was a stand alone argument. But I mean as you know, the reduction of the value of the Australian dollar has more than swamped any reduction in the value of the tariff in the last 10 or 15 years. So it makes it very difficult to sustain that argument. In other words, they've been made more competitive by the reduction in the currency.

McKew - Why is it then that people like Chas Allen say that if there's no back-down in the Coalition policy, Mitsubishi will have to close, the decisions about where their new cars are made will be made elsewhere.

McLachlan - Well I know Chas Allen said that, I mean they're not saying anything new, they've been saying that for some time. However, let me tell you that when our Shadow Minister for Foreign Affairs, Robert Hill, was in Japan within the last fortnight, Mitsubishi said to him that they would like to see us after the election, to

have a discussion on the whole issue,

McLachlan - So that presumably assumes that the decision hasn't been made and

secondly that we've got a fair chance of winning the election. And secondly I think it's worth saying this, that Mitsubishi have not made the decision either to go ahead or not to go ahead with the new model. They've not made the decision under this Government's plan, nor have they made the decision not to do it under our plan. And the same applies to Ford. So whatever they're saying in advance of those

decisions, I think you've got to wait until the decision is made.

McKew - Well the car manufacturers are saying yes, let's lower tariffs, they accept that argument. But they're saying let's lower at a rate that will ensure there's an industry at the end of it.

McLachlan - They were also saying a few years ago, and not many years ago at that, that productivity increases of 3 and 4 percent would be a mighty thing to strive for. Last year some of them got 9, 10, and 11, and even in some areas 12 percent internally. Now those are the sorts of figures that are possible. I think that a lot

of manufacturers in this country are understanding that when they set out to do things, they can do things that they never thought were possible within the rigid circumstances. And as industrial relations and other things free up in this country we will see those sorts of figures coming out. Especially as firms increasingly move towards worlds best practice.

McKew - So what, you're convinced that this is all bluster, that there will be a viable car industry with your tariff policy?

McLachlan - Well, you keep on referring just to the tariff policy and you don't bring in the fact that we remove payroll tax, we remove wholesale sales tax, we remove fuel tax, that customers will have 25 percent more in their pocket because their tax comes down.

McKew - But presumably the car manufacturers have factored all those things in and they still think they'll be worse off.

McLachlan - Well it's interesting you say. I'm sure they've factored them all in, but they factored them all in 3 or 4 years ago and they factored them all in some years before that when they used to complain every time the tariffs came down. Look, I think the car manufacturers have done a very good job in the last 2 or 3 years. I mean they really have gone into the productivity business, they've got their costs down. What we've told them time and time again is that we will do everything in our power to get their costs further down and that's why we're bringing all these business and input taxes down and we're going to do it for the whole of industry in Australia.

McKew - And we won't end up with the local industry being replaced by imports?


McLachlan - No, I don't believe so. I believe that the only industries, the industries that survive in this country are the ones that get to best practice and become internationally competitive. That will be no different in the sugar industry or the car industry or in the computer manufacturing industry or the software industry or

any other. If we do not get to that standard then one way or another, whatever protection systems we put there, we will go. I don't believe that that's the way Australia will go. I think we are increasingly becoming competitive and we will make the grade very quickly once we get rid of such things as the stultifying

industrial relations system and so on.

McKew - Ian McLachlan thank you very much.