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Transcript of Ian McLachlan MP Shadow Minister, Industry and Commerce and John Fotheringham Chief Executive of the RAA on Radio 5AN

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Keith Conlan: John Fotheringham, the attitude of the RAA to bringing in cheaper second hand cars, importing them from Japan. ‘

Fotheringham: Keith, we think there is a lot of emotion about this. We don't want second hand Japanese hand me downs in this country, but from a consumers' point of view, there are a few positive arguments. Firstly, the car park in this country is getting older and older - the average age is something like ten years or so. We have therefore got a lot of old cars that are not efficient, that are probably less safe than modern cars and so on.

Conlan: The other day we learned that six out of 10 cars are still using leaded petrol.

Fotheringham: That's right. Now the cars coming in from Japan are second hand cars run on unleaded petrol. They are more fuel efficient, they are safer because they meet Australian design standards. So there are all those sorts of good arguments.

Conlan: Isn’t that one of the arguments against - th a t they don't necessarily satisfy Australian design standards?

Fotheringham: My understanding is th at they do Keith. This went back to 1989 when the Federal Government said 'if you are going to keep bringing these cars in, they must meet Australian design rules and in fact th at is taking place.

Conlan: Do you have any fears for the industry as it stands - the new car industry as a result of this which sounds to be a pretty attractive arrangement?

Fotheringham: I don't see it threatening the new car industry a t all. As far as the second hand market is concerned it will have an impact because there is probably about two and a half million second hand cars sold every year. My understanding is that the company bringing these cars in is talking about 50,000 cars per year which is only about two per cent. I don't think it is going to have that dramatic an impact. You will probably hear arguments about the impact it had in New Zealand. I don't accept all of those arguments either.

Conlan: Let me just put to you the figures from a Wheels magazine article which looked at both sides of this. It suggested th a t in 1991, there were 55,000 new cars registered in New Zealand and 58,000 imported cars registered. It sounds like if the gates are open there will be plenty of takers.



It has dramatically affected the new car market in New Zealand.

Fotheringham: Keith cars in New Zealand were even more expensive than they were in Australia and New Zealand does not have a manufacturing industry; it has an assembling industry. So the impact over there is quite different from here.

Conlan: But would you accept th at on the numbers, it has dramatically affected new car sales in New Zealand.

Fotheringham: It may well have done that but in New Zealand, taking these cars into New Zealand, there are no Australian design rules for example so that the safety implications are different in NZ as well. I don't think it is comparing like with like.

Conlan: So on balance, the RAA and your fellow organisations around the country are basically in support of bringing in second hand Japanese cars.

Fotheringham: What we have said is that we have heard the dealers and we have heard the manufacturers and we believe that there should be a more detailed enquiry along the lines of the Industry Commission enquiry of a couple of years

ago into the whole question of tariffs. Second hand imports were not part of that Industry Commission enquiry and we believe they should now be looked at in that light and let's really get down to some detail and understanding objective detail. I think that at the moment the debate is pretty emotive.

Conlan: John Fotheringham, Chief Executive of the RAA. Ian McLachlan joins me now. You have heard the RAA view on this. Does th a t line up with

Opposition Policy at this stage.

Ian McLachlan: Yes, we believe there was a lot of emotion about it and we believe that a $12,000 tariff on top of the existing tariff was just a punitive brick wall and there would never be any cars coming in and we were getting a lot of

emotional argument. We couldn't find what we regarded as reliable evidence from either side really and we thought that the best thing to do was to have an Industry Commission enquiry to look into three aspects.

1. Was there for example any explicit or implicit - effective really - new car subsidy in Japan because they have some pretty punitive arrangements up there which realty reduce the price of second hand cars and we wanted to know whether that was in effect a new car subsidy.

2. What would be the likely effect on the industry in Australia - that is the dealers, the manufacturers and so forth and

3. What was the likely effect on the consumers.

Now everybody would have their chance to put evidence to th at enquiry and then we would get some proper answers.

Conlan: On balance at the moment it seems like a good deal for consumers but it sounds like we might get a four year old car for many thousands of dollars cheaper than we can at the moment. Would you agree? ‘

McLachlan: I am not convinced that it is going to be many thousands. John Fotheringham mentioned the new Australian Design Rule standards th at were brought in in 1989 and they so far as I understand it, only one firm has managed to comply with those. My understanding is that it is somewhere between $2,000 and $3,000 to get a car to comply, it costs you $1,000 to get them here from Japan and it probably costs you $2,000 to get the car out of Japan with its new tyres and things on it, so you are up for $6,000 to $6,500 before you put a profit on it. At the moment, the only cars that are in big volume are Mazda 626, so

there is probably some profit but I don't think they are going to be enormously cheaper. But nevertheless, we need to find out the answers to all of those problems by a proper enquiry. We couldn’t get the answers from our sources.

Conlan: Ian McLachlan, thank you.