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Monday, 19 March 2012
Page: 3362

Mr KELVIN THOMSON (Wills) (22:16): Thank you, Mr Speaker, and I am really pleased to have been able to listen to the member for Swan's contribution, as his personal story and that of his family is quite inspiring.

I have mentioned before in the parliament the importance of a strong manufacturing sector in a nation's economy. I have referred to the views of economist Dani Rodrik, who has said that countries that ignore the health of their manufacturing industries do so at their own peril. He says high-tech services demand specialised skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. Manufacturing, on the other hand, can absorb large numbers of workers, providing them with stable jobs and good benefits. For most countries, therefore, it remains a potent source of high-wage employment. Indeed, the manufacturing sector is also where the world's middle classes take shape and grow. Without a vibrant manufacturing base, societies tend to divide between rich and poor: those who have access to steady, well-paying jobs and those whose jobs are less secure and lives more precarious.

In January I inspected the Ford factory in Broadmeadows to welcome the announcement of an Australian government and Victorian government grant to boost fuel efficiency and emissions performance in the Ford Falcon and Territory. Everyone who either works in or relies upon the local automotive industry will be delighted at this decision, which will ensure that the Ford Falcon is produced here until at least the end of 2016. Ford has been an iconic Australian automotive and manufacturing brand for decades, providing many people in the northern suburbs with jobs and strengthening our community. The total investment by Ford to upgrade the Falcon and Territory at Broadmeadows in Melbourne is in excess of $103 million, with the Labor government contributing $34 million.

All countries with auto industries understand their value to their economies and provide support. Australia's is actually amongst the lowest. We have the third-lowest tariffs on cars, and government assistance is less than the price of a footy ticket on a per person basis. We provide US$18 per person compared with US$28 per person in the UK, US$90 per person in Germany, US$96 per person in Canada, US$147 per person in France, US$265 per person in the US and US$334 per person in Sweden. It is important we continue to support our manufacturing sector, including Ford, which plays an integral part in the local economy and provides economic benefits in the region and right across the state, and also in light of the fact that unemployment is running at 13 per cent in Broadmeadows. The latest available census statistics show 6,263 people who live in Wills are employed in manufacturing. Manufacturing accounts for 10 per cent of total employment in Wills. In their book Seeds of Destruction, Glenn Hubbard and Peter Navarro, say:

A strong manufacturing base spurs the technological innovation necessary to boost productivity, wage growth, and consumer purchasing power. Manufacturing is critical because the innovation process is primarily driven by R&D expenditures. In fact, U.S.-based manufacturers account for fully two-thirds of all private R&D in America. This manufacturing-based R&D leads to a ripple effect that creates new products, more production, additional jobs, higher productivity, and more wealth.

Manufacturing remains very important in my state of Victoria, and I do not want to see us following the American malaise. Josh Gordon in the Age has reported that in the six months to the end of February Victoria lost 27,700 jobs. That is over 1,000 jobs a week. The Australian government's policies to support manufacturing also include a new R&D tax incentive, which represents the biggest reform to business innovation support in more than a decade. The 2010 ministerial report on the OECD Innovation Strategy examined the impact of R&D on productivity, finding that innovation accounted for the bulk of labour productivity growth in OECD countries.

The establishment by the Labor government of a manufacturing task force is also an important initiative. This task force will map out a shared vision for the future of Australia's manufacturing sector and help strengthen local firms as they adapt to changes in our economy, including the rise of Asia. The task force will identify a plan for how best to leverage existing efforts, including government policies and programs, to best capture the opportunities and respond to the challenges facing manufacturing.

In welcoming the establishment of the task force, ACTU President, Ged Kearney, said:

Manufacturing must be part of Australia's future, if we are to keep a balanced economy that does not rise and fall solely on commodity prices. But it is essential that we support the industry and the workers that rely on it to make a living.

I strongly support the government's measures to support our manufacturing sector, which supports local jobs for Wills's residents.