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Thursday, 21 August 2003
Page: 19260

Dr EMERSON (9:59 AM) —The ACIS Administration Amendment Bill 2003 provides assistance to the automotive industry amounting to $4.2 billion by extending the Automotive Competitiveness and Investment Scheme arrangements to the year 2015. It provides welcome certainty for the industry, which is one of the success stories of Australian manufacturing. I want to take this opportunity to provide a brief historical perspective on the progress that the automotive industry has made in this country over the last couple of decades. In the very early 1980s the automotive industry in Australia was in deep trouble. It was heavily dependent on high tariff barriers, with a base tariff of 57½ per cent, and the restriction of imports to just 20 per cent of the local market. Notwithstanding those high levels of protection against imports, the automotive industry was in deep strife. It was producing vehicles that were not by any means world class; in fact, they were substandard. In addition to that, the component manufacturing sector was only a small part of total manufacturing in this country. So an industry that was in desperate need of some sort of vision, some sort of plan for the future, is the best way to describe the Australian automotive industry at that time.

Upon the election of the Hawke Labor government, serious early consideration was given to the future of the industry. A number of reports had already been prepared and the Hawke Labor government began an extensive consultation process with employers in the industry and trade union representatives. As a result of that extensive consultation process and the commitment of the Labor government to developing a long-term view of the automotive industry, a plan was put in place for the industry. It became known as the Button plan because Senator John Button, the industry minister at the time, had put a lot of good hard work into charting a future for the Australian automotive industry. Essentially, it involved gradual and predictable reductions in tariff protection over time. But the view within the Labor government was that this industry could survive those reductions in tariff protection and could be a viable industry. As a consequence, positive assistance was put in place in the form of payments, in particular through the export facilitation program.

That program was directed both to the assembled motor vehicle sector and component manufacturers. The whole purpose of it was really to see if government could reorientate the industry away from one that was reliant on a small, fragmented domestic market to one that could be globally competitive, and there was every confidence that this was possible. But it could not have been done without a long-term plan and without bringing along in that process the workers in the automotive industry. That was done and, as a consequence, the plan was put in place. The gradual reductions in tariff protection took place and the export facilitation program produced sensational results. It is fitting to pay tribute to all those who were involved in developing that plan, especially those who were involved in implementing it: the working men and women of Australia who were employed in the automotive industry, both in the car-making sector and the component-manufacturing sector. Over time, that industry did flourish. It did turn around from an inward focus on this narrow domestic market to the reality that it could have the confidence to compete internationally.

Upon the election of the present government in 1996, the thrust of that industry plan was maintained, and I am very happy to acknowledge that. The export facilitation program was replaced by this particular scheme, the Automotive Competitiveness and Investment Scheme. As I understand it, the export facilitation program was ringing alarm bells in terms of our obligations under the World Trade Organisation, and as a result the export facilitation program was replaced by the ACIS arrangements. They have remained in place up to the period of 1 January 2005 and this legislation extends them from 2005 right through to 2015, providing a decade of certainty for the industry. It is true that the funding for ACIS phases down over that period but, again, in very predictable ways and in ways that have been accepted by the industry and also by employee representatives in the industry.

It is a success story. We do have concerns about the other aspect of the arrangements that will apply post-2005—that is, the tariff regime that is proposed in this legislation. The Productivity Commission report into the Australian automotive industry involves some modelling that was commissioned from Econtech and the Centre of Policy Studies at Monash University. There were two different models but they basically produced the same conclusion—that is, there were not any significant net national benefits from tariff reductions post-2005. Tariffs will fall from 15 per cent to 10 per cent in 2005. The industry commission examined different scenarios of ongoing tariff reductions thereafter, but it is fair to say the modelling questioned the net national benefits of those ongoing tariff reductions.

Nevertheless, the government has gone ahead with the plan to reduce tariffs to five per cent in 2010, but I do acknowledge that it has put in place a further review in 2007-08. We think that that review is very important because a lot can change in an industry in a relatively short time. Certainly between now and 2010 a lot can change. External market conditions can change. So we had argued in our representations to the Productivity Commission that those ongoing tariff reductions had not been justified by the economic modelling and that, therefore, a further review was necessary. The government has picked up that suggestion and has committed to conducting a further review in 2007-08. Having said that, I would like to foreshadow a second reading amendment, which will be moved by the shadow minister in the Senate, which is in these terms:

At the end of the motion, add:

However, as the opposition indicated in reviewing the outcomes of the Productivity Commission inquiry into the industry last year, there was little or no justification provided by the government for reducing the tariff levels in the industry from 10 per cent to five per cent in January 2010. As a result, the Senate is of the view that:

(a) any decision to make further reductions in industry tariffs post 2009 should be determined by the review process into the industry that is to be undertaken in the financial year 2007-08;

(b) the automotive industry is at the core of Australia's future as a knowledge nation with high levels of research and development, a skilled work force, strong upstream and downstream linkages, exports of $5 billion and the prospects of doubling that by 2010—this is an industry that represents the future of manufacturing in this country; and

(c) as the automotive industry is also a global industry with high levels of excess capacity and significant levels of global support and intervention from government in other nations, it is appropriate that decisions on the industry's future post 2009 are determined following the review in 2007-08.

They are the reservations that Labor have about this particular piece of legislation before the parliament, but we are not opposing the legislation because, to a very significant extent, it picks up Labor's suggestions. As shadow industry minister at the time when the Productivity Commission was producing its interim and then final reports, I had argued strongly that there needed to be some reorientation of the positive assistance through the ACIS arrangements to facilitate and encourage research and development in the automotive industry. It is only by going to the high-quality end of the market and constantly innovating that Australian automotive producers will continue to be successful. That is well acknowledged by the automotive industry.

The government picked that up in part by providing a separate fund of $150 million. It is a research and development fund for motor vehicle producers, and that funding will be drawn from the motor vehicle producers pool of ACIS. So there is at least some recognition of the importance of research and development in the automotive industry. We have seen some of our producers certainly commit to that—for example, Mitsubishi in Adelaide and Toyota in Altona, Melbourne. Again, I am delighted to pay tribute to the success of the four car manufacturers in this country—Holden, Ford, Mitsubishi and Toyota—because they are all doing a fantastic job. But we do need to take the high road, and we do need to ensure that the industry continues to innovate. We know that, with a capital intensive industry like this and with Australia's relative geographic isolation, we need to produce world-quality vehicles to sustain the transport costs as we export vehicles and as we export components. While the domestic market is a good base for establishing the viability of the industry in this country, the industry cannot sustain itself and does not even seek to sustain itself on the basis of that domestic market alone. It is the springboard, and it is the base from which the real prosperity of the industry is developed—that is, the prosperity associated with the export of both assembled motor vehicles and components.

This is a spectacular success story. The export projections are really quite exciting for this industry, and it is the flagship of Australian manufacturing. It shows that, in a country like Australia, we can take the high road to high skills and high wages instead of seeking to compete constantly with the countries of East Asia on labour costs. It is quite obvious that China will be a manufacturing powerhouse of the world and certainly of this region in the coming two decades. China has very low wage costs, and it also has the capacity to produce on a massive scale. China is also becoming very good at logistics, inventory management and delivering on time. That is an advantage that Australian producers have had over China in the last decade or so, but even that advantage is being eroded over time as China becomes much more adept at producing goods on time and of a high quality. The way of the future for Australian manufacturing is the highroad of high skills and high wages, constantly innovating and injecting funds into the skills development of the Australian work force.

I would like to make a few comments relating to that task of injecting extra effort into skills formation in the automotive industry because along with innovation they are the keys to success, the keys to the future of this industry. There has been some casualisation of the work force in the Australian automotive industry, and I would argue to the automotive producers that they know very well the value of a skilled work force. If you have a highly casualised work force, then it is very difficult to invest in the skills of that work force, because people come and people go. If you have a permanent work force that feels it has a lot to gain from the success of the enterprise, then it seems to me that that is the way forward: a permanent work force that is committed to the enterprise and committed to the production of high-quality vehicles and high-quality components for the export market.

How do we achieve that? We do that by on-the-job training and off-the-job training. I would urge the automotive companies to think very clearly about the future of their work force and to invest in their work force. There are very encouraging signs here but, as a general policy, we should consider the work force of this country to be an asset, not simply a cost. It worries me that this government is always into minimising the cost of labour instead of regarding working Australians as an asset into which investment should be made for the purpose of skills formation. Instead of that, we seem to have a government that is more intent on prophesying about a very poor industrial relations environment.

I turn directly to the issues in my current portfolio as shadow minister for workplace relations. During the Productivity Commission review, the Minister for Employment and Workplace Relations publicly stated time and time again—and also privately made strong representations to the automotive industry—that the industry was not doing enough in terms of muscling up to the automotive industry unions. He prophesied that there would be rampant industrial disputation in this industry, because at the time a bargaining round was imminent. The minister was saying that there were going to be all sorts of industrial disputes because Australia is afflicted with militant unions that are not interested in outcomes.

Of course, the minister would be disappointed that his prophecy has not come to bear. In the bargaining round, there were around 500 individual enterprise bargains directly in the automotive industry, and there were more than 1,100 in those industries that could be regarded as being associated with providing input into the automotive industry and the component manufacturers. So there were upwards of 1,100 enterprise bargains and virtually no industrial disputation. In enterprise bargaining, trade unions have a right to put forcefully the case for advancing the interests of the employees in the workplace. That is precisely what the trade unions did. They went into serious negotiation with the car makers and the component manufacturers, and the minister for workplace relations is disappointed that his prophecy of rampant disputation has not become fact. While I am here paying tribute, I would like to pay tribute to the trade union movement, to the unions that are involved in the negotiations, because the negotiations have been on the whole very successful and have not led to any significant industrial disputation whatsoever.

I was therefore very alarmed last week to learn through the media that, having got to the point of moving to the other side of this round of enterprise bargains, which will last for three years, the minister has written to the four car makers on the basis of a report from the Institute of Public Affairs that says that there is not enough flexibility in the automotive industry. You would think that the experts on flexibility in the automotive industry would be the employers and the employees in the automotive industry. You would think that the minister would spend some time speaking to the employers and the employees of that industry discussing the flexibility arrangements that they have so that the industry is capable of meeting the challenges of the tough international market over the next decade. Of course, the industry and the employers are acutely conscious of these challenges. But instead of conducting that dialogue, instead of trying to be a minister who understands and works with the employees and employers of an industry, the minister shot off four letters to the car manufacturers saying, `You're not flexible enough, and I have a report from the Institute of Public Affairs that says so.'

As far as I have been able to ascertain, this report from the Institute of Public Affairs is a desk job: someone has just gone through agreements and bits of paper and made their own judgments about whether there is enough flexibility in the workplace. That was good enough for the minister—a shoddy piece of work from the Institute of Public Affairs, some sort of exercise that could be described as little more than a desk job. On the basis of getting that, the minister wrote to the four car manufacturers saying, `You haven't got enough flexibility. You haven't muscled up against the unions.' That shows his disappointment. It is unnecessarily provocative, because we are virtually at the end of this bargaining round and the minister is disappointed. So he shot off a letter saying how disappointed he is and that the car makers ought to muscle up to the trade unions. If the minister for workplace relations is going to intervene in anything, he should do so to resolve conflicts or to avoid conflicts. But, instead, he intervenes to inflame conflicts and, where there is no conflict, to create one.

Tony Abbott would have to be one of the most partisan ministers for workplace relations that this country has ever seen—and that is saying something, because his immediate predecessor, the infamous Peter Reith, was heavily partisan himself. In a speech, Mr Reith said, `We are on the side of capital.' You would think he would be on the side of Australia. The former minister was on the side of capital in some sort of class war against the working men and women of Australia. That was his pitch to the business community—a very chilling pitch indeed.

You would think that when Mr Reith went down the gurgler with his uniquely Liberal approach to the use of telecards the Prime Minister would say, `We've had enough of this divisive approach to workplace relations,' and put in someone who is a bit balanced and a bit moderate. But of course the Prime Minister of this country did not want to do that, because workplace relations—or industrial relations, as it was then known—is his baby. He wants to see, and for 25 years has wanted to see, the trade union movement of this country crushed. He wants to see large employers negotiate individually with workers. I use the word `negotiate' quite liberally, because through the Prime Minister's favoured device, Australian workplace agreements, AWAs, there will be no negotiation at all. It will be a take it or leave it document: `If you want to work here, you sign this agreement.'

The Prime Minister's nirvana is a situation where there is no collective bargaining in this country. Already the 1996 legislation has removed the right to bargain collectively and removed any requirement to bargain in good faith. The government has been very systematic in what it has been doing. The Prime Minister did not, therefore, replace Mr Reith with a moderate. He replaced Mr Reith with the current workplace relations minister, who is positioned over on the far Right in a `them and us' battle. By `them and us' I am not simply referring to Liberal versus Labor, I am referring to employers versus unions.

Fortunately in the automotive industry the employers have greater vision, greater foresight and a good work force. By and large the automotive industry enjoys a good relationship not only with the employees but with the employees' representatives—the trade unions—who have coverage of the automotive industry in this country. I urge the employers—the big four car manufacturers—not to succumb to the bullying tactics of the workplace relations minister, who seeks only to create industrial disputation where no industrial disputation to speak of has occurred. He is very disappointed with the outcome of the 1,100 enterprise bargains because they have not produced the sort of industrial chaos that he so enthusiastically predicted.

Labor support this legislation. We consider that the future of this industry is very heavily in the export of both assembled vehicles and components. The industry has done very well in that regard, but further reductions in overseas trade barriers must occur. There are countries that have restrictions on imports, such as Thailand with an 80 per cent tariff. The government is trying to get those import restrictions down through individual bilateral agreements—so-called free trade agreements—with Thailand, the United States and, as has most recently been foreshadowed, China.

Labor's position is that the Doha round is where all the action is. The Doha round can result in 144 free trade agreements. It can result in all of the other countries to which we are seeking market access reducing their manufacturing tariff barriers. That is our approach. We see the Doha round as the main game. We do not like the idea of pursuing negotiations individually where those negotiations can detract from the Doha round—that is the real risk of bilateral deals that are preferential by nature. They are preferential to the countries that are party to the deal but lock out those countries that are not party to the deal.

I call on the government to reorient its efforts towards the Doha round of multilateral trade negotiations. There is a meeting in Cancun in Mexico very soon and I would like to see this government put real effort into that multilateral forum, because that is where you can have 144 free trade agreements. The fact is Australia has already done the hard yards in reducing tariff barriers. It did it over the last two decades. We really do need better access, where other countries follow suit. That is where the effort must now go. We have done the hard yards.

We have serious reservations about the scheduled reductions in tariffs in 2010 for the automotive industry of this country, from 10 per cent to five per cent. That is why we wanted the inquiry in 2007-08—an inquiry that the government has agreed to—but I have to point out that tariff reductions that would occur after that inquiry have already been legislated. That seems to be a highly pre-emptive way of dealing with an inquiry: announce one for 2007-08 but legislate for its outcome in 2003. We would argue that the government has got that the wrong way around.

Nevertheless, in respect of other key components of the package of legislation that is here before us, we fully support the $4.2 billion that has been allocated through ACIS in this policy. We support the creation of two pools. Again, it was a recommendation from Labor to the Productivity Commission that there should be one ACIS pool for the car makers and another for the component manufacturers. That has been picked up. We argued strongly, for the reasons I have outlined here today, for research and development to be a key consideration, a key criterion, in the allocation of the ACIS funding. The government has picked that up but in part only. Nevertheless, we will not oppose it. It has picked it up through the identification of $150 million for the car makers as a subcomponent of ACIS of that pool for the car makers.

Overall it is a reasonable effort. We are concerned about the reductions in tariffs that seem to have been preordained for 2010. I say to this government: go for the main game. Go for Doha. Get the other countries to reduce their tariff barriers. Could the minister, just for a moment, relax a bit and acknowledge the fact that there are good workplace relations overall in this industry, and please stay out of it. If you cannot say anything constructive, do not say anything at all.