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Transcript of interview on 5AN



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Transcript of Interview on 5AN - 24 November 1992 Chas Allen, General Manager, Government Relations, Mitsubishi Australia Ian McLachlan, Shadow Minister for Industry and Commerce

Journalist - Ian McLachlan, Shadow Minister for Industry and Commerce, has joined us.(Chas Allen, Public Affairs Manager for Mitsubishi Australia). Mr McLachlan welcome to you. These figures would suggest that there's no turning around for Dr Hewson, that he'd be more than happy to proceed down the path of zero tariffs now.

Ian McLachlan - Well I think the first thing to say is that we don't disagree with Chas Allen that we need a car industry, it's just we're talking about a disagreement on the margin I suppose. But I would have said that these figures, asked in the broad way the question was asked, which was 'do you believe tariffs in the car industry should be reduced to near zero levels by the year 2000', really indicate that there's a surprising amount of awareness in the Australian population that tariffs don't do anybody any good in the long term.

In fact, in that question there was no mention of the fact that we are going to reduce business taxes by 50 per cent, that's probably well over $100 million for the car industry alone, no mention of the fact that personal income tax would come down by 30 per cent giving people more money in their pocket and no mention of the fact that fuel tax will come off for both business and private people so it's quite an interesting result I think.

Journalist - But there's still a basic feel, wouldn't you concede, that for many people, particularly in Adelaide whose jobs indirectly rely on the car industry, the thought of no protection is a frightening concept isn't it?

Ian McLachlan - Yes, and the word protection, I mean the word protection itself indicates that you get some safety there. But as Chas Allen said, I mean they agree that protection has to come down, what an independent consultants view, that is the ACIL consultants who the car industry themselves used in their submission to the Industry Commission in 1990

ACIL said that under our policy you'd be better off than under the Labor Party's policy, mainly because if the price of cars come down then people will be able to afford more cars, we'll no longer have our car purchasing strike so to speak, and that not only will the consumer obviously be better off but so will the dealers and so will the car makers and quite frankly I imagine that will be true.

Journalist - Well I suspect strongly that a company like Mitsubishi may well argue that they can't afford to bring their prices down any more.

Ian McLachlan - Well I think Mitsubishi's future, and Chas will probably agree, depends very much on how well they go in the international market and I can only wish them the very best of good fortune, I'm told that their wagons have been very well received in the motor shows and so forth in Europe and the UK so that's great. And of course what they need is throughput and it depends on how many of those vehicles they can add to their current supply.

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Journalist - Well can I put that back to Chas Allen. Mr Allen could the company possibly lower car prices in Australia to a lower point than what they are now?

Chas Allen - Certainly if we improve our efficiencies and the general economy improves its efficiency.

Journalist - By how much could you lower them?

Chas Allen - Well I think we're talking over the period to 2000 we talking about $2,000 a car, something of that order, $2,000 to $3,000 a car is achievable.

Journalist - Well what's keeping the price inflated at this stage then?

Chas Allen - Well the reason it's inflated is that we have just moved from a period where we have had high levels of protection, and we therefore have inefficiencies in our industry which we're getting out at a very fast rate. We have to get that out at a rate that we can rely on the rest of the economy to improve as well. It's not just the car companies that have to improve it's suppliers and the suppliers to them. There's something like 30 per cent of the cost of a car is Government taxes and charges, and they have to be taken out as well.

All this takes time. But the critical factor is that we get investment in our industry to make those improvements and our overseas shareholders don't believe, well they believe that it's easier to import cars into Australia to supply the market than ... lose their money in America or Europe or Malaysia or Indonesia where they have to

invest, they've got no alternative in those countries because they cannot export their cars directly into those countries in the volumes they want.

Journalist - But ultimately you believe that we can compete in international markets.

Chas Allen - Certainly. We've got a strategy which we believe will get us to be an integral of Mitsubishi's worldwide manufacturing capabilities. But that's going to take time and that's all we're asking Ian and the Liberal Party to give us, a little bit more time so that we can convince our shareholders to keep investing and so we can make those improvements.

Journalist - Mr McLachlan, Chas Allen's research says that 30 per cent of car costs going in Government charges. How would those charges be affected say under a Coalition government.

McLachlan - Well he's right and it's absolutely outrageous. But some of those charges are payroll tax, there will be no payroll tax under our plan. Some of those charges are to do with things like electricity. Now I remember very well that the South Australian Government, I think it was last year, maybe the year before, put up electricity charges to Mitsubishi by 18 per cent.

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It's outrageous and all I can say to you that in the reduction of our business tax package we have managed to remove half of all the business taxes, that is, not only Mitsubishi but all of their suppliers and other people in other parts of the servicing industry will be paying less half, less business tax.

And the answer to that of course is that governments should, and we will, leave no stone unturned to reduce the cost of doing business in the country that they're governing and that is absolutely our policy and that is why we have changed to a GST because we want to get rid of all the business taxes that is possible to remove and of course to get rid of personal income taxes and fuel taxes and so forth which impinge on people's ability to buy things.

Journalist - So in summary Chas Allen, would our local car manufacturing sector be better off under a Coalition government.

Chas Allen - Well certainly there are some policies of the Coalition government that we applaude. All we're saying is that ensure that our shareholders want to invest in Australia versus other countries around the world where they have to invest behind barriers, that we just are sensible in the rate that we reduce the tariff.