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Transcript of joint doorstop interview: Canberra: 22 March 2012



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Transcript of joint doorstop interview, Canberra

THU 22 MARCH 2012

Prime Minister

PM: A great day, a great announcement. I’m sure you’ve got some questions, so we’ll take questions on Holden.

JOURNALIST: Prime Minister, where is this money coming from?

PM: It’s coming from the $5.4 billion New Car Plan, it’s a very important investment for the future. As I said just a few moments ago, the choice we faced earlier this year was whether or not Holden would continue to be here in Australia. Whether we’d have the jobs, whether we’d have the skills, whether we’d have the innovation that comes with having Holden right here in Australia through the announcement that we've made together today we know Holden will be here through to 2022, a decade of transformation and change.

We're dealing with different global economic conditions than the past. A high Australian dollar, an Australian dollar that's going to be around parity with the US, that puts pressure on but we've responded to that. We're going to see manufacturing here with two new generation motor vehicles produced right here in Australia.

JOURNALIST: Prime Minister, was that put directly to the Government, that Holden could pull out of Australia if this investment wasn't made?

PM: It's the no secret that at the time, when Premier Weatherill and then Minister Kim Carr, then being the Minister for this portfolio, were over in the United States speaking to Holden, that it was a very real possibility that there would be no more Holden manufacturing in this country.

JOURNALIST: Prime Minister, these two new models, are they going to be designed and built in Australia, or are they just part of the global platform of GM?

PM: I'll get Mr Holden to talk about the models, Mike.

MIKE DEVEREUX: Absolutely. So these are two new global architectures that we'll be putting into the Adelaide assembly plant. In terms of the engineering of those products, one of the things that we're going to transition over time is what we have our engineers globally doing.

And gone are the days when you can engineer a car for one country and hope for that to be economically feasible, so we'll putting our engineering and design talent to work, as they already are in terms of the Camaro.

You've seen some of the product of our engineering organisation that never even gets sold in this country. We'll continue to work on global products in Port Melbourne and frankly, as Prime Minister Gillard said, be part of that new reality in the global auto industry.

JOURNALIST: Will all of the current models continue to be made at Port Elizabeth?

DEVEREUX: Pardon me?

JOURNALIST: Will all of the current models being made at Port Elizabeth continue to be made?

DEVEREUX: Yeah, one of the tough things - and we talk about this quite a bit, as we have been negotiating this package, is you're looking out into the second half of this decade.

So from a commercial sensitivity standpoint, the last thing I want to do is tell Ford, Toyota, Nissan, Honda, what my plans are.

So I’m not trying to be evasive, but really commercial in confidence.

JOURNALIST: Commodore is an iconic brand in this country, as you know, what about the prospect for Commodore? Will it survive?

DEVEREUX: Well the next-gen Commodore actually is launching next year, so we're going to focus on getting our VF Commodore into the Adelaide plant.

It's a fantastic new upgrade for that model and we’ll talk about five years from now, maybe a little bit closer to five years from now.

JOURNALIST: You haven't given up on Commodore?

DEVEREUX: Absolutely not.

PM: I think what Mike is saying is with some enthusiasm you'll be able to go to one of those car shows where they whip the sheet off the new model and that's the first time you see it.

Yes. Phil.

JOURNALIST: Would you like to see, Prime Minister, Commodores continue to be made and their (inaudible) guaranteed?

PM: Look, Mike is the person to talk to you about future models. What's vital for me, as Prime Minister of this country, is that we have a strong manufacturing sector, with all of the jobs and skills and innovation that comes with that.

And car making is so vital to the continuation of manufacturing employing more than a million Australians, so why we have been involved in this is we understand how important auto is to the whole of manufacturing.

We understand how important it is to jobs and we wanted to hold those skills and that capacity for innovation in our nation and we have.

Phil.

JOURNALIST: Prime Minister, this funding - are future governments, Labor or Liberal, contractually bound to deliver this co-investment?

PM: We'll certainly be entering into agreements with Holden with all of the details of what we've worked through, but you're raising with me the opposite view and the opposite view is that you would have slashed half a billion dollars out of the fund that has made this possible.

If you cut half a billion dollars then you can't fund today's announcement. Today's announcement a total package of $275 million, could not be funded if you were hacking away at the support to the Australian car making industry and that’s exactly Tony Abbott's plan, to

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hack away at that support, though this industry employs more than 50,000 Australians and supports the job of 200,000 Australians across the supply chains.

JOURNALIST: Prime Minister, is the co-investment model now a permanent model or will this be the last time you could (inaudible)?

PM: We as, a Government, consider co-investment depending on the outcome for Australians and when we see a co-investment that means jobs, means the continuation of manufacturing here, means that what is an icon manufacturer in Australia, like Holden, continues with all of the feed in to the economy, the supply chain, skills and innovation that that makes possible then we are prepared to be involved.

JOURNALIST: Prime Minister, the Treasury Secretary said in February, Martin Parkinson, said if you replace quotas and tariffs with other interventions, no matter whether to create national champions or support so-called strategic industries, you’re replacing producer interests (inaudible) consumers, it's still akin to protection. How does this fit with what Mr Parkinson says?

PM: Well, we see these kind of investments made around the world and they’re made around the world for good reason, because of the benefits that flow from having car making in your nation.

Now, I want to see us be a world in which, as a great trading nation, we can continue to exploit all of our skills and all of our capacities and end up being a huge winner in this Asian century, that’s the future for Australia that I see - high skills, high wage, great opportunities for export in the growing region of the world in which we live.

In order to do that we've got to make sure we've got a strong manufacturing sector as well as services booming and resources booming. We want to be an economy with many sources of strength and that's what today's announcement is about.

JOURNALIST: Prime Minister, and Premier Weatherilll as well, you talk about the value of this package for jobs. What sort of numbers are you talking about? Do you have increased jobs or are you talking about protecting jobs that are already in the sector?

PM: The basic rule here for people to think about is we are in a circumstance where Holden could have gone, all of those jobs could have gone, or we could have worked together to secure Holden for the future. That's what we've done.

Holden will be here for the next decade at least.

JOURNALIST: Minister Combet mentioned steps will be taken to help Holden compete with a parity dollar. Can you outline what steps are going to be taken to allow Holden to compete?

PM: The basis of these discussions is that Holden will be here for the next decade at least and it will be making cars and competing in economic circumstances where we expect the Australian Dollar to be round about parity with the US dollar.

That means the business model they are working with now has to take that into account.

Now that's different from any other period in our nation's history. I mean, we're all - well, Joe's a bit younger than me - but we're all old enough to remember when the Aussie dollar routinely traded just over 60 cents against the US dollar. We're all old enough to remember that.

We've seen a sharp appreciation in our currency against the US dollar. Now that's as a result of our economy being strong and it's got its tremendous up sides. It literally means everything we earn and everything we own is worth more in the eyes of the world than it was before and many Australians are directly experiencing that as they choose to take overseas holidays which are comparatively cheaper for them to do.

But it's got tremendous pressures which flow too. Pressures which flow on manufacturing and which are at risk of breaking business models that have been factored with the Australian dollar at 80 or 85 cents against the US dollar.

That's meant great manufacturers have had to rethink their business model. It's a time of transformation and change. Holden's up for that transformation and change and continuing to manufacture here and employ people here and we're working with them to do it.

JOURNALIST: A question for Mike. How is Holden (inaudible) from July 1 and how much (inaudible) average price of a Commodore?

DEVEREUX: The whole notion around efficiency, and that's really what Prime Minister Gillard was just talking about, as a business person - and I'm sure lot of people listening to this event and listening to us talk right now say, well what is it all about in term of being able to compete in a new reality of a parity dollar.

Well what it means is that John Camillo, John Gee, Ian Jones, all of our union partners, along with Holden, have to be able to have a profitable business model for the long-term with the set of economic conditions that we've got right now.

Now our earnings will be announced in about a month or so's time and at that point in time I'd be happy to even talk a little more about how it is that we can actually be able to transform our business model to be viable for the long-term, because that’s exactly what we're doing here.

JOURNALIST: Mr Devereux, there was some concern a couple of months ago about design jobs in Melbourne. Will any of those jobs be lost or will this package save those jobs?

DEVEREUX: The notion of what we're going to do with both our engineering and our design organisation is that there's a bright future for both of those groups.

Not only will we work on things that we happen to manufacture in this country, but we're also going to be working on things not just for North America, but as Prime Minister Gillard says, this is the Asian century. There's no debating it, there’s no doubt about it and we need to connect ourselves much more directly to some of the massive growth markets that we've got not only in China, but in places like India and the ASEAN region, so without disclosing the types of products that we’re actually going to be designing and engineering, we will be much more tightly connected to GM's international operations for design and engineering going forward.

JOURNALIST: So will there be any jobs lost beyond what you've already announced in past months?

DEVEREUX: Well, Premier Weatherill and I have just been talking about this this morning and the funny thing about it is if you can tell me what the Australian Dollar is going to be seven, eight, nine years from now, what my all competitors are going to do in terms of launching cars, how many cars might be sold in Australia, what interest rates are going to be, I might be able to tell you how many vehicles I’d be able to produce, and therefore how many employees that I might have.

If I knew that I certainly wouldn't be running a car company. I don't think any of us would be doing what we're doing today.

JOURNALIST: In the short term though, will any jobs be lost?

DEVEREUX: Again, it’s going to be a decision at the time. Right now we think we have a pretty strong business model. We're proud of our workforce in Adelaide and the entire Holden team and we're going to run a smart business to make money for the long-term.

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PM: Just before we take any further questions, can I just, building on what Mike said, as a Government we've spoken a lot to the Australian people about this Asian century, about the pressures in our economy now that are being brought by a high Aussie dollar, but about the opportunities for the long term.

Here today I think you can touch and feel a bit more what that means. This a business that has experienced pressure.

They've never had a business model before for car making in this country, where you foresee that the Australian Dollar is going to be around about parity the US dollar, but even in those circumstances, we can continue to do great things in manufacturing and even in the days when that pressure is on you can see remarkable opportunities in the future as our region grows and we are right here with the opportunities and capacities to exploit that growth.

Now to get there means you've got to get a set of major economic decisions right, everything from bringing the budget to surplus, to making sure we've got the benefits of new technology like the NBN, to getting your skill settings right, to seizing a clean energy future.

And that's precisely what the Government's been doing.

Phil Coorey.

JOURNALIST: In a budgetary sense, the Commonwealth’s contribution, which years is that going to be paid to Holden (inaudible)?

PM: Look, I'll go to Minister Combet, but the allocation is from the $5.4 billion New Car Plan and obviously we have partnered with the South Australian Government and Victorian Government.

MINISTER COMBET: The straight forward answer to that, Phil, is that from the announcement today, negotiations now pick up, if you like, with General Motors Holden for the terms of the contract that will be entered into and obviously in partnership with the South Australian Government and Victorian Governments as well.

And that will establish the milestones, the conditions, if you like, against which the contract payments will be made by Government.

JOURNALIST: (Inaudible)

PREMIER WEATHERILL: I think the better example is the Cruze, where there was a co-investment program, which has secured the future of Holdens. And so we’re here today talking about the future of Holdens because it still exists.

I think that’s the critical issue here. What we were faced with was a base case proposition of the closure of Holden. We did some modelling on that and the estimates were up to 16,000 jobs would be lost in South Australia.

So not only the jobs within Holden, but all of those associated component manufacturers, and of course the multiplier effects throughout South Australian economy, having a dramatic effect on South Australian revenues and of course our economic growth.

And perhaps more critically, stripping out a manufacturing base, which would mean it would be very difficult to achieve our ambition of an advanced manufacturing sector.

One of the things that we firmly believe is that without a manufacturing sector it's almost impossible to build one. So it's absolutely crucial that we secure a future for Holdens and obviously a lot of this program is about changing the way in which our car manufacturing industry operates, so that it has a secure future not just for the next 10 years, but beyond that.

JOURNALIST: Prime Minister, is that it for industry assistance for the car industry? Do you rule out Ford and Toyota coming back to you looking for more money as well?

PM: Look, we've worked with Ford and you would have seen a package we announced earlier this year. We've work would Toyota too. But we've got an ongoing program to engage with the car industry. That's why we created it New Car Plan.

JOURNALIST: Longer term, do you think that your car package will mean that in 10 years time Holden won't need further assistance or is it simply that Australia is not good at making cars without Government assistance-PM: I think that's a completely ridiculous proposition. We are incredibly good at making cars.

We have in incredibly highly skilled workers, we have good productivity in our vehicle manufacturing industry and a business like Holden, that could put its manufacturing anywhere in the world, can make choices, global company, can put its manufacturing anywhere in the world, has chosen to keep manufacturing here because we're good at making cars and because we've taken the co-investment approach.

JOURNALIST: Prime Minister, I’m not sure if you’ve been asked about it, but Clive Palmer's comments on the CIA and the Greens campaign, any thoughts on that?

PM: Well I think the attitude of the Government to that was made clear in question time yesterday.

I’d have to say what concerns me more about Mr Palmer is when he speaks as the ventriloquist the words come out of Tony Abbott's mouth.

JOURNALIST: Prime Minister, Bob Carr, his comments on the Brazilian student's death, was he merely just not across his brief or was it just an unfortunate- he didn't know what was happening?

PM: Look, I've seen reports of this today and I've seen Ms Bishop's comments and I just want to say I think it is really very inappropriate to be playing some politics around the death of a very young man.

Thanks very much.

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