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Monday, 14 September 2009
Page: 6455

Senator MILNE (7:45 PM) —I rise tonight to make some remarks on behalf of the Australian Greens in relation to the Automotive Transformation Scheme Bill 2009 and related bill. The Automotive Transformation Scheme could really just be called the ‘Automobile Gravy Train Transformation Scheme’, since it is a transformation from one gravy train to the next. Members of the Senate will be aware that when I was first elected and took my seat in the Senate in 2005 I immediately moved for a Senate inquiry into Australia’s future oil supplies and alternative fuels. We had a very substantial Senate inquiry looking at the fact that we were approaching peak oil—I believe we have reached peak oil globally—and at the need to move to a major investment in public transport and fuel efficiency. I said that we ought to be advocating that people drive less and that, when they do drive, they drive more efficiently. Ever since then, the Greens have been arguing for mandatory fuel efficiency standards so that we get what is required, and that is not only investment in public transport, cycleways and the redesign of cities so that they are more pedestrian friendly but that we transform the automobile industry.

In 2006 when I gave my speech in reply to the budget, the then Treasurer, Mr Peter Costello, got up and gave out $61 million in subsidies to the car industry, not tied to vehicle fuel efficiency, not tied to anything. It was just another trip past on the gravy train as the automobile industry put out their hands. At the same time as they did that, arguing that they needed the assistance and that this would take them to some sort of greener future, they brought Hummers into Australia for a big motor show so that they could show off the largest petrol guzzlers in the world as the centre of the motor show that year.

I have been arguing ever since then that unless you set rigorous standards for this industry, unless you have mandatory vehicle fuel efficiency standards, this is a recipe for making sure there will be no jobs in the automobile industry in Australia. It means that if you get so far behind the rest of the world in producing what the rest of the world wants then you will automatically shed jobs because people will not want to buy the vehicles that you produce. I remember having an exchange with the minister, in estimates, asking: ‘Why are we building cars that the rest of the world doesn’t want to buy? Everyone wants to buy smaller, more fuel-efficient vehicles. Why are we in Australia continuing to produce vehicles that the community don’t want to buy?’

Governments actually hold up the system through their procurement policies. Look at Mitsubishi in Adelaide. You see the large cars that Mitsubishi used to produce driven round by public servants and politicians because of procurement policies by government. It is the same at the federal level. If you get rid of the fringe benefits tax for motor vehicles, if you start talking about proper procurement policies and getting rid of the fleet fringe benefits, then you will end up with a scenario where you might actually drive a transformation to smaller, fuel-efficient cars.

Twelve months ago I had a meeting with one of the German MPs responsible for quite significant shifts there. He was flying back to Germany at that time to take possession of his plug-in electric car. This was at a time when Australia was still struggling with the notion of hybrids, let alone a plug-in electric car. We are so far behind the rest of the world when it comes to innovation. China had the good sense to bring in a mandatory vehicle fuel efficiency standard that was so high that Australian vehicles would not be acceptable in the Chinese market. They did that in order to protect their own industry. Of course they did. But they knew that if they set high standards they would produce a small, efficient car that would be cheap enough to drive an export industry for them. The Europeans went to the fuel-efficient, luxury end of the market, and that squeezed countries like Australia and the US. That is why we have seen the train wreck—or the car wreck, I should more appropriately say—in Detroit and here in Australia.

Australia is not doing what the Americans have now been forced to do, and that is have a radical rethink about what their car industry should look like, what it is that they are trying to produce to ensure a sustainable industry into the future. Former Mitsubishi Motors Australia Managing Director Graham Spurling said recently of the Green Car Innovation Fund here in Australia:

It’s the same old ship with the same old deck chairs ... The industry has undergone huge changes overseas and I think Australia needs to understand that there is a need for a substantial paradigm shift. The current automotive regime is becoming outdated.

Furthermore, former Mitsubishi executive Bob Manning said that US President Barack Obama had demanded radical restructuring from car giants General Motors and Chrysler in exchange for industry assistance. He said:

We don’t seem to have any idea of the shape of the industry we want, or (one) that can be viably maintained in Australia, and then how we might spend public funds to achieve it ...

The whole point is that by allowing this industry in Australia to set mediocre standards, we are guaranteeing that it will go out the back door. That is the reality of the car industry in Australia. It gets held up all the time with rescue packages in order to save jobs in electorates, because people rush to say, ‘You can’t put this number of people out of work.’ That is absolutely right. The way to avoid putting people out of work is to set high enough standards that they must meet, to drive innovation in the industry and make them competitive. So does this massive injection of funds, yet again, make this industry competitive? The answer is no. We will be back here again with more rescue packages, probably sooner than 12 months. We will hear then from the government how this has not worked and how we need more. What I find extraordinary is that the government tell Australian primary producers every day of the week that they have to compete on a level playing field, that they have to cut their costs, that they have to be globally competitive, whilst they rush out with the gravy train for some of the biggest multinationals on the planet—for Ford, for GMH and for Toyota.

I want to put some facts on the public record. Data from the Productivity Commission shows that the motor vehicle and parts sector received $4.5 billion in budgetary assistance from the government from 2001-02 to 2007-08—so they have already had $4.5 billion from the public purse. An additional $4.6 billion worth of assistance has been provided from the imposition of tariffs on this sector. Total ATS expenditure will be an additional $3.4 billion between 2011 and 2020, comprising a capped amount of $2.5 billion for the total sector, of which 55 per cent will go to Toyota, General Motors Holden and Ford and 45 per cent to the 297 smaller component manufacturers. That is the problem here: there are so many smaller businesses dependent on the fortunes of these three multinationals, who make their decisions about what they do anywhere but in Australia. Another $850 million is set aside just for Toyota, GMH and Ford. An additional $79.6 million is set aside for transitional assistance, which we are dealing with here, to help the sector move from ACIS to ATS—in other words, as I said at the beginning, to move the money from one gravy train to another.

Today I learned in a briefing that the average age of a car in Australia is a little less than 10 years. Turnover is slow, but this policy is relying on a strategy of incremental improvement as people upgrade their cars over time. The reality is that that will not lead to innovation that the government talks about. They keep saying that innovation in the car components sector will spill over into the clean energy sector, but the point is that we should be putting money into innovation in clean energy regardless of what we do in this sector.

Today I heard in the briefing that we should be supporting this in spite of the fact that the devil will be in the detail of the regulations and I was told that in the regulations there will be the environmental outcomes that we expect to get from this massive amount of taxpayer money going to the automobile industry. But what do I find in terms of environmental outcomes? What do they have to do to prove environmental innovation and improvement? Well, the only thing they have to do is annual reporting—they have to report on the extent to which being a participant in the scheme is improving their environmental outcomes as demonstrated by but not limited to a reduction in the environmental impact of the participant’s manufacturing process. They look at more efficient and sustainable energy sources, recycling measures for waste products, environmental upgrades of plant and equipment and the use of sustainable materials. But do they have to actually do anything? No, they just have to report on what they may or may not have done.

It is the same with the input into the development or manufacture of more environmentally sustainable cars, where they look at alternative fuels, mass production of components for hybrids, environmentally sustainable materials and increased fuel efficiency, but not mandatory vehicle fuel efficiency standards. Equally, they just have to tell you whether they are participating in government environmental programs—for example, Retooling for Climate Change or the Green Car Innovation Fund. So they just have to do a report.

We have had enough of reporting. We have seen it with the Energy Efficiency Opportunities legislation in this place—all they have to do is report. Half of them are exempted from reporting anyway, but the ones who report are not required to do anything; they just have to report. Is it a revolution when people just have to write a report on what they may or may not have done rather than on what they have actually implemented and what they are required to do? How does this compare with what China is doing, with what Europe is doing and with what the US is doing, where government assistance is conditional on them meeting these standards?

In Europe, the European Commission has just brought down a new directive not only on vehicle fuel efficiency but also on pollution standards on emissions from the vehicles themselves. The fact of the matter is that the fastest innovation in automobiles is coming out of China and Europe—Europe for the luxury vehicles and China for the lower priced vehicles—and everyone else is scrambling to catch up. As for this nonsense about having a green car built in Australia, the car that was being talked about was one that only had average vehicle fuel efficiency compared with what was happening in Europe. So let us not pretend that we are suddenly going to have Australia making green cars; we are not. That is because there is no commitment from the government or the coalition to mandatory vehicle fuel efficiency standards. If you are going to drive people, that is the way to drive them.

I guarantee that we will be back here in 18 months with the car industry saying: ‘We’re not competitive anymore. Look what they did in the US. Look what they did in Europe. We need another bucket of money.’ They have already had billions and billions. I asked Senator Carr, the Minister for Innovation, Industry, Science and Research: ‘Why are you making these cars that nobody wants to buy? What about the fringe benefits tax? What about getting serious about this?’ His reply was, ‘You don’t have any evidence for that.’ Well, perhaps the almost complete fall-over of the industry in the US is enough to indicate that I was, in fact, right about that.

As for announcing the green car fund at the same time as rushing off and trying to make a free trade agreement with Middle Eastern countries so that we can dump six-cylinder gas guzzlers into the Middle East, what a fabulous idea! It is totally hypocritical and in total contradiction with where we need to be in terms of a future in the automobile industry. I want to see innovation, but I believe that it only comes when governments mandate standards that drive that innovation—that make money conditional upon that innovation actually being achieved. So, like the coalition—who have got a second reading amendment, I believe in relation to transparency—I too have a second reading amendment—

The ACTING DEPUTY PRESIDENT (Senator Crossin)—Senator Milne, are you seeking to move that now?

Senator MILNE —Yes, thank you, Madam Acting Deputy President. I move:

At the end of the motion, add:

and further consideration of the bill be an order of the day for three sitting days after a draft of the final regulations relating to this bill, which according to the Government will set out the requirements relating to economic sustainability, environmental effectiveness and workforce training that the automotive industry is expected to meet, are laid on the table.

In other words, they are saying, ‘Parliament, hand over billions tonight to the car industry in Australia, owned offshore, and subsequent to that, in October, we will bring in draft regulations which we will circulate to the industry and try and get their agreement to those regulations’—and if they do not like them, no doubt they will water them down—’and after that we will bring in regulations here.’ They are saying, ‘Taxpayers, you give the car industry the money and, car industry, you tell us what conditions you want applied to that and we will just agree with them when we bring in the regulations.’ That is entirely the wrong process. If the government has those regulations ready in October to go out for consultation to the industry, then we should be delaying this legislation until we see those regulations ourselves so that we can see whether the government’s rhetoric about the conditions that they are going to impose in terms of economic sustainability, environmental effectiveness and workforce training actually mean anything or whether they are just to put some sort of gloss over what is effectively a transfer of wealth out of the pockets of Australian taxpayers into the pockets of, largely, three multinational corporations. That is what is going on here with this legislation.

The component manufacturers are important in this, and I understand that: we want to keep those regional jobs. But the best way to keep them is to bring in some accountability, some standards and some requirements that have to be met—not a whole lot of pussyfooting around with a few words that might describe something in the way of environmental effectiveness. And I am amused by the government’s choice of language here, because I would remind them that it was in fact originally ‘ecologically sustainable development’, the ESD process. Development was not supposed to be sustainable; it was meant to be ecologically sustainable. Now we have dumped all that, so it is economic sustainability that we want for the car industry, and environmental effectiveness and workforce training are just tacked onto that.

We are in an age of peak oil. We are in an age of climate change. The only vehicles that people are going to want to look at in the future are those that have the highest vehicle fuel efficiency, and plug-in electric cars will rapidly be the way the world goes—plug-in electric cars from renewable energy. Countries like ours that have refused to bring in feed-in tariffs, that are still a mile behind the rest on renewables, are going to suffer rather badly. We will be paying higher oil prices or other energy prices, because of the carbon costs embedded in that energy, because we did not move soon enough to where we needed to be and did not redesign our cities to make them urban villages linked by rapid mass transit with highly efficient plug-ins run from the renewable energy that we installed. We will be uncompetitive in a world in which the oil price will go to $200 a barrel. Let us see what that does to food production; let us see what that does to the way that cities are run; let us see what that does to aviation fuel, because that is what we are headed for in the not-too-distant future.

I am really disgusted by the sloppiness and the laziness shown by this rush to sandbag the multinationals in the car industry. They have not served Australian workers and communities well. They have put off workers willy-nilly as it suited them, in terms of not being competitive. Who is holding them accountable now for refusing to move with consumer sentiment? Where is the government education program encouraging the community to buy energy-efficient cars? It is not there, because the government has actually been subsidising, through its procurement policy and its fringe benefits tax, the manufacturing of vehicles which are uncompetitive and which lead to people losing their jobs. Every worker who has lost their job in recent times from the car industry or the car component manufacturing sector should be holding previous Liberal and Labor governments accountable for handing over taxpayers’ money without picking up the trends, without recognising where the world was going in terms of innovation and consumer sentiment.

Frankly, I think it is time we got real with the car industry. It is time we had a revolution in Australia about how we spend taxpayers’ money on industry development. I think it is lazy and rather tragic that we have such weak language around the basis on which we hand over billions of dollars, yet again, to this industry.