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Transcript of interview: Ray Fewings program - 5AA: 17 February 1993

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CANBERRA ACT 2600 TEL. (06) 277 2039 FAX. (06) 277 4989




McLachlan - Good morning Ray.

Fewings - What are you doing up in Queensland today, talking sugar.

McLachlan - Talking to the sugar guys.

Fewings - Why aren't you down here talking to car manufacturers?

McLachlan - Well we had that debate last year and we went right through all of that.

Fewings - But why are you helping the sugar growers and not the car manufacturers with tariff freezes etc.

McLachlan - Well the car manufacturers have various schemes right now Ray, as you know. They have the tariff protection of 32.5 percent, they have an export facilitation scheme which is actually an import credits scheme, which amounts in the end to a taxpayer subsidy. That and the import duty free by-law currently gives them, on top of the tariff, the whole industry, about another $1.5 billion of income

a year, albeit effectively from the taxpayer. So those schemes are there and they are making good use of those and exporting well and getting productivity up. So the sugar growers arrangement is simply a substitute, where in the past the consumers have been paying via the tariff and we have changed that to the taxpayer paying, but it finishes on a diminishing basis in the year 2000 at 5 percent, in line with our


Fewings - Yes, and I acknowledge what you say about the breaks that you've given the automotive industry. But it's now becoming a chorus Mr McLachlan, that the major names, Mitsubishi, Ford, Toyota are basically coming out saying that they'd

rather vote for the Government than the Coalition because they're fearful of their future under a Coalition. Are they being unfair, are they being biased?

McLachlan - Well I don't think that they are saying anything different than car manufacturers have said for 30 or 40 years. I mean they're saying that if on the surface of it we can get a higher tariff out of him than her, or vice versa, that's what we'd like. But let me just say, I've lived in South Australia all my life Ray. I have

watched Mitsubishi with great pride. I've known all those Chief Executives, Ian Webber, Graham Spurling, Mike Quinn and the rest, and I've known a lot of people that work in there and these people were the first to really make the productivity

changes in the car industry. We are not about, and I am not about to let that go to the wall. --_ ^



McLachlan - We are having however a discussion about whether a 10 percent differential in the tariff in the year 2000 will be of benefit, or negative to them. They all agree that up to 1996 or 97 it will all be of great benefit to them because of the tax reductions that we are making. But I might say that the independent study that was done on this showed that we've been having a car buying strike in Australia because cars are too expensive. Our whole purpose, to help Mitsubishi and Toyota and the rest is to get all the possible taxes we can off their backs to make

cars cheaper so that people will buy more cars and we get rid of this car buying strike that we've had going for so long.

Fewings - But nevertheless South Australia is in a rather terrible economic predicament and we can scarcely do without 4,500 thousand fewer jobs, not to mention the jobs in the periphery - those that manufacture parts that are used by Mitsubishi. And it's a very, very delicate situation. People are scared and they're worried. You obviously haven't been able to convince the car manufacturers that you're there in their best interests.

McLachlan - Well let's make it quite clear. We are in an election mode and I have no problem with people, not the car manufacturers so much, but other people, unions and so forth, using that as a bit of a lever. But we have, in the last fortnight, had invitations via Senator Robert Hill who was in Japan a fortnight ago, to go and see both Toyota and Mitsubishi after the election. We will do that. When those invitations arrive, which we expect to happen very soon, we will do that. And that assumes, doesn't it, two things. One, that there is quite a likelihood that we'll win the election. And secondly, that these conversations on this very difficult and very important subject, as you said, will be ongoing.

Fewings - So basically you're saying to the voter who is involved in the car manufacturing industry, 'trust us, we won't let you down'. Is that basically what you're saying?

McLachlan - We won't let anybody down. We're going to get all of those costs off people's backs. Not only the people in the car manufacturing industry, but every other industry. Right now, half of all the business taxes that are paid could go, and we will remove them. That is the main reason why we are changing the tax system, because it is so important to get down not only the cost of making a motor car, so

that they can sell more and the dealers do better and the consumer does better and so forth, but to get down the cost of making everything else so that when we get to exporting them, and defending ourselves against imports, that our manufacturing costs are lower than they were before. That's the most important matter and a matter that the Prime Minister simply forgets to raise, conveniently, every single time he gets on his feet. Those taxes are there now and they should be gone.

Fewings - But you will agree with us, that the commitment of another $400 to $500 million by the parent body, Mitsubishi in Japan, is imperative to the survival of the car manufacturing plant, in particular here in Adelaide. It must happen.


McLachlan - It is imperative. And it is very important to realise two things. That that decision will be made at the end of this year, and that we will be talking to Mitsubishi in Japan and down here on many occasions about that before that time.

Secondly, that that decision to commit that money has not been made under the Labor Party's program. Now that's something that must not be forgotten - whatever people understand, that is the case.

Fewings - But what I want from you, as much as the guarantees you can give, that you will do whatever is required to make sure they invest that money for the future in Australia.

McLachlan - I can't make the Head Office in Japan make a commitment by, if you like, bribing them. But what I can say is that our program of reducing all of those costs to those people is as good or better and has been independently appraised to be better than the Government's program. Now as I said in an election context you can hardly be having conversations with the Head Office in Japan. They have asked us to go there. We will be going there. I think the outcome of that will be very satisfactory to all concerned. And as I said before, as a South Australian, the last thing I would want to see is the demise of Mitsubishi in this State, or in this country. So we'll be working our butt off to make sure that doesn't happen.

Fewings - Mr McLachlan, on the issue of taxes, with the fuel tax, we're told it will save $11, $12, depending on the size of the car, every time we fill up our tank under the GST, that the tax will be lifted on petrol.

McLachlan - Correct.

Fewings - Will there be a road tax? Will there be a tax on every car on the road, and that it would be a sliding tax depending on how big the car would be?

McLachlan - No. That's for the trucking industry. That does not occur until the end of 1996.

Fewings - But it is only for the trucking industry, not for the small, suburban household car?

McLachlan - No, only for the trucking industry. The contribution of the household car to the maintenance of roads, which comes to about $750 million, will be paid by levying the GST on fuel, that amounts to 7 cents. That is why the savings to the

private motorist by getting rid of excise will be 19 cents a litre, and the savings to the business motorist who pays no GST at all, or the business trucker, will be 26.2 cents a litre.

Fewings - Thanks for your time today. So there's no possibility of an about-face closer to the election as far as a moratorium on the reduction of tariffs for the car industry? You believe that the procedures that you've put into place are sufficient to get them through?


McLachlan - I just give you two assurances. One, is that there is absolutely no doubt that these people will find as the programs come into place, that they will be better off under the tax reduction regime that we will bring into place. And including, of course, the ability to run their own industrial relations. As Mr Johnston said yesterday, to have one union, if people so decide. But fancy taking

all these years to have the Treasurer, as he was then, helping you to get one union. All of that could have been done years ago. And secondly, that we will do everything, I will personally do everything I can possibly to make sure that Mitsubishi stays in Australia.

Fewings - Well, it's a key issue here in South Australia, I don't think it can be underestimated. Thank you Mr McLachlan.