Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I, and also on behalf of Senator Madigan, move:

That the Senate notes the importance of an Automotive Transformation Scheme to Australia’s economic prosperity and development.

This is a very important issue and, in the next few minutes, I propose to outline the importance of the Automotive Transformation Scheme and the need for it to be modified in a way that reflects the changing circumstances of our automotive sector and the critical importance of Australia's economy. At stake there are up to 200,000 jobs—not just the direct jobs, not just the 33,000 in the automotive components sector and the 12,000-plus jobs in the manufacture of motor vehicles but all the other associated jobs, the tier 2 and 3 of the automotive component sector, and also the multiplier effect of that on our economy, particularly in Victoria and South Australia, and throughout the rest of the nation.

The Automotive Transformation Scheme or ATS has been a mainstay of Australia's industry policy for at least two decades. Since the car makers made their announcements in 2013 and early 2014 that they would cease car making from the end of 2017, Australia has been on notice. How would Australia deal with the loss of an industry that employed directly over 40,000 people and was also responsible for the indirect employment of about 150,000 more? A massive piece of that answer has to be the ATS.

Originally worth $3.4 billion when launched in 2011—and the Howard government had another scheme in place when they were in government that had a similar function—the Howard government understood the importance of jobs in this sector and did all they could to maintain employment in the sector.

This scheme was always intended for the auto manufacturing sector and, when the car makers made their decision to cease car making, the ATS was the obvious policy lever to turn to. But what have we seen? The government first tried to capitalise on the announcements by the car makers by trying to cut $1 billion from the ATS at the 2014 budget. This was a foolish, economically destructive decision that would cut ATS funding immediately to the auto components makers, raising the risk of an early exit by the car makers and then the destruction of that supply chain in the auto sector. In your home state of Victoria, Mr Deputy President Marshall, there are so many jobs—well over 100,000 jobs—that are dependent on that sector.

But that was blocked in the Senate, and the government saw that its plan would lead to the early closure of car making—and the government still has not acted appropriately in my view. So the ATS remains as it was when the government came to office. It is locked up with restrictive rules that mean it cannot be accessed by auto components makers to diversify their business and secure a future beyond car making once Ford, Holden and Toyota leave this country.

It is estimated that between $700 million and $800 million will be left in the ATS unspent when car making ends in 2017. It is incredibly cynical to say, 'We've reversed a decision on cutting back on expenditure on this fund but, if you don't change the rules, the money won't be spent.' And the rules need to be changed, because we need to take into account the impending circumstances of the loss of original motor vehicle producers in this country.

The government intends recovering these funds as a savings to its budget, but this position is short-sighted and counterproductive and it will lead to a much worse jobs crisis than necessary The ATS is governed by its own act, which currently sits with a Senate committee that will soon report on options for the future. I look forward to joining with my crossbench colleagues and the opposition to look at sensible amendments to change the ATS so that it can save as many jobs as possible in the auto components sector and all the jobs that rely on having a viable auto components sector. The hour is late but we all have a duty to make the best of the situation for the good of the many tens of thousands of Australians who rely on the auto sector for their future.

How did we get here and where should we go? The ATS took the place of the previous auto sector policy, set up under the Howard government, called the Automotive Competitiveness and Investment Scheme, the ACIS. John Howard recognised the importance of car making to the Australian economy in that it provided high-quality, high-paying jobs to upwards of 40,000 Australians directly and created many more times that number of jobs in the wider economy. As experts in manufacturing, such as Professor Goran Roos, have pointed out, a local automotive manufacturing sector also created a critical mass of engineering, research, design and manufacturing know-how that raised standards across the economy, not just in the automotive sector. In fact, I have been told that in the mining sector a number of innovations in terms of productivity improvements have come about as a direct result of improvements in the auto sector. Innovation in the auto sector drove improvements in other sectors of the economy, including the mining sector.

Every industry in Australia, from banking to agriculture to education, requires sound government policy. Manufacturing is no different and successive governments have invested in the sector due to the massive payback it provides to the economy and the country as a whole. The ATS Act was passed in 2009, it took effect on 1 January 2011 and it was to run for 10 years, ending on 31 December 2020. It was worth $3.4 billion and it was split between the main car makers—Ford, Toyota and Holden—as well as the hundreds of car components makers that supported Australia's car makers. The ATS Act was tightly drafted in order to make sure it could not be rorted—and that is fair enough. Recipients had to be bona fide manufacturers of new cars or the components that went into them. Only firms that generated more than $500,000 in revenue a year from parts for Australian-built cars or firms that had 50 per cent of their output go towards car making were eligible. Services such as research and development were also included, so long as they were directed at Australian car making.

The ATS became a crucial policy lever that underwrote innovation and investment in the sector as well as long-term security for the hundreds of firms that contributed to car making. That was all as intended. What happened in September 2013 with the election of a new government was that, for some reason, sound automotive manufacturing policy was metaphorically tossed from the window of a moving car. The new government was aware of what car makers required in terms of auto-making policy and in terms of certainty for investment decisions. They could have read it on the front page of The Australian Financial Review in June 2013. Matt Hobbs, GMH director of government affairs, was quoted following talks between Australian car makers and the then-Labor government. He admitted that trading conditions had worsened since the GFC in 2009 but that further assistance could be delivered in a number of ways. He said, 'There are many ways to skin the policy cat. Money could be one of them.' What was clear then, and what was made clear to the new government later in the year, was GMH's desire to remain in Australia, to continue investing in its operations and to continue making cars here. Ford had already announced that it would cease car making in 2016 and, with the Prime Minister away on an overseas trip, some statements were made in the parliament on 10 December.

On 9 December, Mike Devereux, along with Matt Hobbs from General Motors Holden, gave evidence before the Productivity Commission. Essentially they said, 'We want to stay in Australia. Obviously there has to be a package of measures because there has been an element of government investment and involvement in the sector.' The signals were all strong that they would stay. Then, inexplicably, on Tuesday, 10 December, the Treasurer stood up in the chamber and approached the dispatch box. He said this:

So I would say to the Leader of the Opposition: put Australia first, put the workers first and join with the Acting Prime Minister and the government in calling on Holden to come clean with the Australian people about their intentions here. We want them to be honest about it—we want them to be fair dinkum—because, if I was running a business and I was committed to that business in Australia, I would not be saying that I have not made any decision about Australia. Either you are here or you are not.

It was a bit like that Clash song, Should I Stay or Should I Go. Basically I think he was telling them to go. I do not think it is any coincidence that, within 24 hours, a decision had been made out of GM's headquarters in Detroit to say, 'We're not going to stay here anymore.'

On any objective analysis—and I do not want to be party political about this—I think that what the Treasurer said and what the Acting Prime Minister said in the parliament on 10 December was provocative and rude. It was basically waving a red flag at Holden. It was telling them, 'We don't care if you stay here or not.' We know that these multinationals, as big and ugly as they can be, work on a consensus as to whether they are wanted in a country or not. And what the Treasurer said that day was, in my view, reckless and irresponsible. It was goading by the Treasurer. There was a swift and devastating reply. General Motors announced that it would cease car making in Australia by the end of 2017 and Toyota soon followed, because it was just untenable to have only one car maker in terms of the supply chain. The supply chain would collapse with only on car maker, and Toyota had to go as well.

In 2014 the Treasurer failed to point out a radical move against the auto sector: that the ATS would be abolished and $1 billion recovered by Treasury. I met at length with representatives of the Federation of Automotive Products Manufacturers and the Federal Chamber of Automotive Industries on budget night. It required some work, but it was clear from the budget papers that the government was going to capitalise on the closure of car making to recover approximately $900 million from the ATS. This was well in excess of what it promised at the election and it was decided in secret with no announcement. The government was blocked in the Senate by crossbench colleagues including Senator Madigan—who has been an absolute champion for the manufacturing industry not only in his home state of Victoria but nationally—Ricky Muir, Jacqui Lambie and, of course, the Australian Greens, who shared those concerns. Of course, this would not have happened without the opposition being very clear that their policy on the ATS was something that ought to be maintained, and I agree.

In March this year, the government, I think, quite cynically attempted to claim it had backflipped on the ATS and that it would continue to fund the sector. In reality, the government was simply withdrawing its ATS abolition bill and leaving the ATS in place, along with its narrow regulations that mean funds only go to firms if they make new Australian cars or the parts that go into them. At least it gave some comfort to GMH, Ford and Toyota that their suppliers were not going to get pushed out of business due to the closure of the ATS before 2017. So the ATS Act sits with a Senate committee, and we are looking at that in terms of alternatives.

The government is stubbornly refusing to use it to transition the hundreds of firms that are facing closure at the end of 2017. We will see a tsunami of job losses in this country, particularly in Victoria and South Australia. The consequences will be devastating. The only way to stem those job losses is to rejig the ATS. It has to be reformed so that there can be funding for all these companies with all these workers that have potentially billions of dollars worth of plant and equipment, so it can be used in a very useful way in terms of manufacturing in the global auto supply chain or to do other things, such as at Precision Components in Adelaide, which is headed by Darrin Spinks, who is doing a great. They are making heliostats for the renewable energy industry.

The government says the growth fund for transitioning the industry, at $155 million in total, including $101 million from the Commonwealth, will fix it. It will not. With the closure of car making by the end of 2017, the jobs emergency that will be created will deliver devastating economic and social consequences, at least in Victoria and South Australia. The car components sector, represented by FAPM, employ more than30,000 skilled workers. Where will they go? Many of these businesses, from 20 or 30 employees up to 600, 700 or 800 employees, are in real strife.

The Bracks review of the car-making sector in 2008 estimated the jobs multiplier for each job in auto at approximately 6.2, suggesting the total number of jobs at risk at over 200,000 nationally, just with the components sector. An expert report by Professor John Spoehr of Adelaide University last year estimated the possible overall jobs impact of between 150,000 and 200,000 jobs nationally. The car-making sector has been a part of the Australian economy since the early 1900s. Just how far its tentacles of employment and enterprise reach only time will tell. Greg Combet, the former minister, has estimated that three-quarters of the components sector is likely to close its doors when the last Australian car comes off the line in 2017. I think that is an accurate figure from what other experts have said.

A car industry representative this week informed me that New South Wales, not well known for being a car-making hub, has several thousand jobs at stake. These will be jobs in the so-called tier 2, tier 3 and tier 4 suppliers—firms that make a widget that goes onto another widget that goes onto another part that goes into an Australian car. So every state of Australia faces job losses. That is why the ATS is so important. It is not just the existing component firms that will benefit. Innovative firms serving the automotive aftermarket can make a huge difference—and I believe Senator Muir will address that matter later today. They can soak up some of the skilled labour that will be out of work.

In Adelaide, a small innovative company called Supashock, run by Oscar Fiorinotto, has taken the V8-racing scene by storm this year with its patented smart shock absorbers. These are computer generated. Acting Deputy President Bernardi, as a South Australian, you should check out these shock absorbers. They are world beating. Fiorinotto is one of those supersmart, quiet achievers who tinkered in his shed for years and developed a world-beating invention. He wants to expand. He supplies an F1 racing team. The Ford racing team attributed their success in a recent article in The Daily Telegraph to the Supashock shock absorbers. They can be used in the mining industry for heavy earth-moving equipment to reduce the risk of back injuries because of their computerised shock-absorbing capacity. The four-week drive market is huge in that they can give a very smooth ride on the roughest terrain.

Just last night on Adelaide's Today Tonight on the Seven network his firm was showcased. Because he does not supply a car manufacturer, his company remains locked out of the ATS. That is why I wrote to the industry minister, the Hon. Ian Macfarlane, to say, 'Reconsider changing the rules because there are so many jobs at stake here.' Mr Fiorinotto says that they could easily go up a hundred workers in a matter of months. He has employed some supersmart engineers and designers in his business. They are jobs that could exist in South Australia. My fear is that Supashock will get an offer from the Chinese or the Germans that is too good to refuse and in years to come we will see a Supashock plant, possibly, in Germany with many hundreds of employees who could have employed right here in Australia.

Many submissions have been received by the Senate Economics References Committee into the future of the automotive industry. I want to endorse several recommendations from FAPM, who have been a very diligent and energetic representative of the auto components companies. What they are saying makes sense in economic terms; it makes sense for this sector. The key change to the ATS has to be an expansion of the eligibility rules to include engineering services provided by Australian firms to overseas customers. Australia has a huge store of know-how and expertise in auto making and this can be marketed to the world's car makers.

ATS rules need to be tweaked to allow firms to start moving in that direction. In addition, the Automotive Diversification Program, which is currently part of the growth fund, is into its third round of grants and is totally oversubscribed. This is a clear sign that the sector is crying out for transition assistance right now. The government has to massively increase the funding of the ADP—currently capped at $20 million or, better still, move it over to the ATS and use the $700 million unspent funds there to expand the reach of the ADP.

Finally, it is clear that whatever the parliament decides to do with the ATS there will be large numbers of auto-manufacturing workers out of a job between now and the end of 2017. That is why FAPM's recommendations need to be considered in terms of R&D activity being funded, broadening the definition of automotive services to include the aftermarket sector and customising processes. There also needs to be a tooling investment allowance as a key part of the diversification plan to allow for an ease of movement between ATS registration categories as transition with the industry unfolds.

Studies conducted in the wake of the closure of Mitsubishi in 2007 showed that a large proportion of these workers who lost their jobs at Mitsubishi—ageing men with limited experience—would not find work again. The ATS must be reformed to fund retraining programs and even a dedicated program to guide those who are unlikely to find new jobs into work at existing large employers, for example, in hardware retail chains.

There must be an approach here that understands the crisis that we are facing. We are facing a jobs emergency in South Australia. There will be one in Victoria as well unless we use the money that is already in the kitty—the $700 million to $800 million that will be unspent because cynically the government will not broaden out the funding requirements for the ATS. Because the auto sector is changing we need to change the funding requirements for the Automotive Transformation Scheme to allow for the Supashocks of this world and to allow for all these innovative companies that have great potential to grow jobs very quickly to absorb some of those massive job losses we are expecting in South Australia, Victoria, New South Wales and other parts of the country. I cannot overstate how important it is that we act on this as a matter of urgency. I urge the federal government to reconsider their position, otherwise there will be literally tens of thousands of jobs lost in the southern states of Australia in the next two to three years. That is something that would be not only very bad for our economy but also a national tragedy.

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

I too stand to speak on notice of motion No. 806 moved by senators Madigan and Xenophon in relation to the importance of an automotive transition scheme to Australia's economic prosperity and development. Having listened to Senator Xenophon's very considered contribution on this matter today, I would like to put a couple of things on the record. Firstly, whilst these types of schemes are extremely important when you are trying to transition when you have had a jolt in your marketplace from something as significant as the loss of a major industry sector like the automotive sector, we do need to remember to put it into some level of context. In June alone 8,000 people lost their jobs in our home state of South Australia. When you put that in the context of the number that Senator Xenophon has quoted of people who are potentially going to lose their jobs, or to transition into other areas of manufacture or other areas of employment, 8,000 people in one month seems a lot more significant than that. The reasons why those 8,000 people lost their jobs—and the fact that South Australia has the highest unemployment rate of any state in Australia, including Tasmania—are a very sad indictment of some of the activities that are happening in the state of South Australia. This is not in any way to diminish the significance and importance of the need to ensure that we maximise the smoothness of the transition that we find ourselves in over the next three years to move from a situation where South Australia has had a very large automotive industry—

Senator Gallacher interjecting—

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Order!

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

Even Senator Gallacher, in his interjections, would have to acknowledge that the automotive industry in South Australia and across the whole of Australia has been in a state of some decline for some period of time, exacerbated by the fact that we have had a high Australia dollar. The quantities of cars that are manufactured in South Australia are relatively small, so our capacity to have economies of scale in our production costs is obviously something that other countries can do a whole heap better than we can. We found ourselves in a situation a number of months ago—possibly even a couple of years ago, thinking back to exactly when the announcement first occurred—where we had a declining industry and unfortunately the inevitable did happen. A decision was taken by the manufacturers of Australian-made cars that they no longer intended to make cars in Australia. Let us be very clear about this. It was a decision of the manufacturers and it appears as if there was probably very little that anybody could have done whether it be the government that Senator Gallacher was a member of for six years between 2007 and 2013 or whether it was this government since 2013—

Senator Gallacher interjecting—

Senator Gallacher, it feels like you have been there forever.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Ignore the interjection, Senator Ruston.

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

The Automotive Transformation Scheme has been a very important component in assisting the people in South Australia and Victoria predominately who have been impacted on by the decision for the cessation post-2017 of the manufacture of most motor vehicles in Australia. We acknowledge that this transformation scheme is fundamental to an orderly transition. But the reality is that automotive assistance in this country has been a story of evolution as tariffs and imports have been in decline from 60 per cent in the 1980s to now one of the lowest rates in the world. We have to accept that it was a decision to reduce tariffs that has progressively prevented Australia from being able to compete on a global market for the manufacture of motor vehicles. We have delivered over a billion dollars in investment through the ATS, but the industry has been evolving and it has now evolved to a point where the decision is made that it is no longer going to exist in Australia. As I said, the pressure from a high Australia dollar, a highly competitive marketplace and relatively small production volumes are all reasons that have collectively created the perfect storm to result in the decision by the motor vehicle producers to cease manufacture in Australia. All the manufacturers have been quite clear that the level of government support was not the reason for their decision to cease domestic manufacture.

Between now and 2017 the ATS will provide a very important component for transition, and that is why this government has never moved away from its original commitment—and the original form of the ATS—that it would remain in place until 2017. It will come to a conclusion in 2017 because that is when Toyota and Holden have indicated that they will not continue to manufacture cars in Australia. The fact that we have maintained that all the way through this process, never deviating from our original commitment, we believe has provided some certainty to the automotive industry. It has also provided some certainty to component manufacturers. They have known all the way through what this particular scheme is likely to be able to deliver, how much money was going to be accessible and what outcomes the government was trying to seek by the injection of this kind of money into the capacity or the ability of the industry to minimise their number of job losses by retraining and by assisting industries to move into other areas in the economy.

As you would know, coming from South Australia, Mr Acting Deputy President Bernardi, none of this transition was helped terribly much by the fact that BHP decided that they were not going to continue with their mining pursuits at Roxby. That alone has been a major blow to the South Australian economy. The opportunities that would have been provided by the expansion of that mine, had it been able to be progressed in the time frames originally proposed, probably would have seen almost a negligible impact from the wind-down and eventual cessation of the automotive industry, because there would have been so many jobs created by that mining project and all the associated mining activities that would have gone with that massive expansion. However, that was not to be, and it was another blow to the South Australian economy. Who was to blame for that? We will not go into that, but the fact is that we actually have had a series of activities that have all ended up pointing to a very bad space for us. Only a matter of weeks ago, we saw the decision by Alinta, our power stations in the northern part of the state, to shut down their two power plants over the coming years. So we have had, I suppose, a trilogy of really significant negative events that have seen three very major employment and economic development opportunities either cut short or removed from our economy.

As I said, the decision to maintain the automotive industry transition package as is has provided some certainty, but we all need to remember that it is not just that alone that is impacting on the South Australian economy. There are a lot of other things feeding into this particular issue. So the original $300 million legislated cap on funding for each of the three years, 2015, 2016 and 2017, will remain in place. The policies around the automotive sector have, I think, evolved to fit the economic and investment climate of the day. Today the focus for the automotive sector is on transition, and I certainly acknowledge that. In particular, that means the transition of our vehicle component makers to new products, new markets and new opportunities.

When we look at the new markets, the new products and the new opportunities, we do not have to look terribly far to see the opportunities provided by the free trade agreements that have been negotiated since this government has come into power and to realise the opportunities that we are trying to create offshore and some of the extended programs that we are trying to put in place to enable transition opportunities for not just the automotive sector but all Australian businesses. One thing you can be sure of in a country the size of Australia is that we are never going to get rich selling to ourselves. So it is extremely important that we capitalise on the free trade agreements that we negotiated with China, Korea and Japan.

All I can say is, 'Shame on those opposite for the damage that they are trying to cause to the China-Australia free trade arrangements'—because it is these very arrangements that have the capacity to absorb a lot of the excess capacity that Australian manufacturers have. In situations where we lose an industry like the automotive industry and we seek to transition that industry, those workers, those component manufacturers and the associated businesses support that industry, it is really important that we have markets for those products—and what better markets can we think of than those that are very close to our shores, in China, Korea and Japan? So I think that there is some very positive news in this space, and I urge those opposite to get on board and try to work with our Australian businesses—in particular, our Australian manufacturing industry—to make sure that we take advantage of the opportunities that are presented by agreements such as the agreements we have with China, Japan and Korea.

There are a number of other activities that the Australian government has put in place outside of the transition package to ensure that we have a strong and competitive Australian based manufacturing sector. But 'Australian based manufacturing sector' does not mean to say that we have to sell the products that we manufacture in Australia. Sure, a strong domestic market is always good, and not putting all your eggs in one basket is obviously a very fine motto to have. We are committed to a strong manufacturing sector, but we have to also be realistic about the fact that we have probably one great competitive advantage in this country—one which we perhaps are not taking as much advantage of as we should—and that is that we are extraordinarily innovative. So one of the thing that this government has sought to do is to increase its focus on investment in research and development, to make sure that we continue to be the smartest country in the world when it comes to manufacture and, in particular, to make sure that we the smartest growers of our primary produce.

Australia absolutely can be innovative and it can be competitive and it can be a generator of jobs and investment, but it particularly must be a generator of export products. So I call on those opposite to support the government in its initiatives and its drive to make sure that we open up markets in Asia and the rest of the world for Australian manufactured goods. But, as I said, it is not just about our manufactured goods; there is another industry that is in our home state, Mr Acting Deputy President Bernardi—the home state that is also the home to Senator Gallacher, who I believe will make a contribution when I sit down—and that is agricultural and our agricultural pursuits. Once again, the opportunities that are available for our products in these markets in Asia is absolutely massive. These products do not attract subsidies; they do not attract protection. Our agricultural sector does not have transition packages when we find out that people do not want, for example, naval oranges and they want to mandarins these days. We do not have transition packages in the agricultural sector.

We also need to remember that, if the government is going to put in place the infrastructure so that Australian businesses can flourish, we have to make some tough decisions. We cannot fund everything. It would be very nice to think that we could but, unfortunately—as those in this place have probably heard many times from people on this side of the chamber—we were left with a debt and deficit problem that probably prevented us from spending money in areas that we would have liked to to make sure that we created an environment so that our manufacturing businesses, our primary industries, our service sector and all of our economy were given a much better chance to be competitive in the global marketplace. Those opposite can take the blame for the fact that that was not to be the case. Responsible economic management is something that this government takes very, very seriously.

Since coming to government, we have done a number of other things in support of our manufacturing sector. The abolition of the carbon tax alone has been a significant help to business. The fact that we are now sitting here with the Leader of the Opposition saying what is tantamount to his intending to bring a carbon tax back in should they be re-elected at any time in the future is just extraordinary. Only a couple of days ago, when Minister Hunt announced our targets for emissions reduction, we found that those opposite think we should have emissions targets of somewhere between 40 and 60 per cent by 2030. But they failed to mention that the price tag of those emissions reductions would be something along the lines of $633 billion. That is the total projected debt of this country, and they thought that by this particular action they were going to double it between now and 2030. We need to get this whole discussion in that context.

Going back to the transition package and the particular motion moved by Senators Madigan and Xenophon on the importance of the automotive transition scheme to Australia's economic prosperity and development, the government are doing a number of other things to ensure we assist in the transition of this industry and in the minimisation of job losses and the maximisation of the economic output of those states that will be most affected by this change. Examples include cutting the company tax rate by 1.5 percentage points and cutting $2 billion of red tape out of the economy. These kinds of things all assist to make businesses that are operating within the Australian environment more competitive. Examples of other things this particular government, which I am a member of, has done include the implementation of the $50 million manufacturing transition program. Our ongoing activity in the area of trying to strengthen antidumping laws and regimes is something that had been completely forgotten. Other examples are the implementation of the $150 million growth fund and the pushing forward of the Industry Innovation and Competitiveness Agenda, including the Industry Growth Centres.

One of the things we cannot forget is that, under the previous Rudd-Gillard-Rudd Labor government, one manufacturing job was lost every 19 minutes. We need to make sure that we get in context the trends, the change and the pace in which these things are occurring. As I said earlier, there is 8.2 per cent unemployment in South Australia, 8,000 people will lose their jobs in June and the fact that we have the scaling down of most of the mining activity that has been such an important part of the South Australian economy for so long. Alinta has announced its intention to shut down its two power plants in the northern part of the state. The announcements from the 'valley of death' which, hopefully, we have managed to mitigate the impact of, somewhat, by the Prime Minister's announcement last week of the frigate and surface vessel manufacture in Australia for our defence sector. Hopefully that particular activity will go towards preventing that from being any worse than it already has been. But the cold, hard reality is that it is a Labor government presiding over this 8.2 per cent unemployment and other closures in South Australia.

Let us not forget that a legacy has been left to us by those opposite. Let us not forget that we have not in any way changed our commitment to the automotive sector or to the transition scheme that we have put in place. And let us not forget that this needs to be judged in the context of how bad it would have been had we not come into government and put in place a whole heap of initiatives that, hopefully, are stemming the tide of the bleed of the things that were left to us by those opposite. It is really disappointing, and I am sure the contribution of those opposite is going to be much more negative, but I want to finish on a more positive note.

Recently I attended the state address in South Australia where a number of our leading business people such as Business SA and the South Australian government addressed the crowd about the state of South Australia. Whilst we all acknowledge that there were a number of things—and I have outlined them today—that have had a major detrimental impact on the South Australian economy, one thing was very pleasing. I sat next to a gentleman who worked for one of our leading component manufacturers in South Australia and asked him how he thought the government was handling the transition with the ultimate closure of the automotive industry in 2017. He said he could not have praised the people he had been dealing with highly enough and that he thought the transition package was working extremely well. He said that he and his company had taken advantage of this particular package and he believed that the opportunities that were able to be opened up to him, his company and his business by being able to access the resources—not just the financial resources but also the advisory resources—were something that would make all the difference between his company surviving and it not doing so.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to make a contribution on this debate on the Automotive Transformation Scheme, and I will take the challenge from Senator Ruston to make my contribution not so much negative, but more positive. The reality, though, is that there was an election in September 2013 and a government was elected. Whilst it is fair to say that they can argue that decisions made prior, or no decision made prior, can impact on their ability to govern, they cannot keep trotting out the same excuse two years later: 'Our hands are tied by another government.' You are the government. There is a transformation package and there are two competing views here. There is the economic rationalist view: just chop it, let it burn, let it die, move on, get the workers into another sector of the economy and let it all go.

Let us go back and see what we are talking about here. Let us take Holden—the history of Holden dates back to 1856 when it started as a saddlery business in South Australia. Today Holden is one of only seven fully integrated global General Motors operations that designs, builds and sells vehicles for Australia and around the world. It is a very tight, efficient operation.

We know that Chifley launched the first mass-produced Australian car in 1948. We know that Holden has had its headquarters in Port Melbourne, Victoria, with the engine-manufacturing plant on site and vehicle-manufacturing operations in Adelaide. Holden is represented by 230 dealerships nationally and employs about 3,500 people. We know that, in 2013, Holden began the production of the VF Commodore, the most advanced car ever built in Australia, incorporating light-weight technologies such as aluminium construction, a raft of cutting-edge driver safety and infotainment systems and that it set a new standard for Australian cars. We know that that is what is at risk.

We also know, those who want to listen to the argument, that we are a small country and that 200,000 cars is probably not the economy of scale that the modern global manufacturing motor vehicle sector needs. I know they make a million cars in Thailand. When I visited Thailand, we had the opportunity to meet business people who put together a trade mission to South Australia to talk specifically to the component manufacturers there about refocussing their attention on the emerging opportunities in both Thailand and Myanmar. They came to talk to South Australian component manufacturers who should refocus their attention from Holden, as it is today, Ford or Toyota, to the emerging opportunities in Asia. Despite the best endeavours of Senator Xenophon, Senator Madigan and the Labor Party, we find that these people are not able to turn their activities to the opportunities that may be around, the opportunities that arise from their great skill and expertise in the work they are currently doing.

Senator Rushton was critical of this side of the chamber about free trade agreements. I was fortunate enough to sit through the Japan-Australia Economic Partnership Agreement inquiry and the Korean-Australia Free Trade Agreement. Hopefully I will be around long enough to go through the China-Australia Free Trade Agreement inquiry. One of the things that really struck me in the evidence given, not by someone who is opposed to the free trade agreement but by someone who is in favour of the free trade agreement, representing the Australia Chamber of Commerce and Industry, was that they represent 18,000 companies. I thought that was a really good slice of Australian business. Of those companies, 20 per cent export but 100 per cent face the full competitive effects of a free trade agreement. So the people who are quietly going about their business in Australia, people who do not export but just do things in the economy which makes them a quid, are employed and reasonably happy, but they have no idea what the effects of a free trade agreement will be in their world or that their business could be turned upside down. They are not ready for it. They have no knowledge of it.

The economic rationalists say that competition is good. What competition actually means in a lot of sectors is failure of business, reduction of employment and people exiting. And low and behold, I think that is why you have a transformation scheme. All governments, of whatever colour or persuasion, have a responsibility to mitigate the effects of competition or decisions which they have made on the economy.

Here we have 100 years of history. You have a manufacturing sector which makes motor cars. The simple fact is I am probably the last generation who drives a six-cylinder, rear-wheel drive Ford or Holden. I will not drive anything else. It is quite apparent that younger, more savvy consumers are buying more fuel efficient cars and small cars. Therein you have the problem. Holdens, Fords and large Toyotas are probably not the flavour of the month with young buyers. They are not getting the penetration and the market share any more. I suppose we have to accept that, but we should not accept that the 100 years of expertise and skill which has been generated in the component industry and in the other sectors is just thrown out with the bathwater. We should allow those people to access funds to return themselves to other sectors of the economy where they can also take their skill and expertise. Let me give an example.

There is a warehouse on the road as we speak. There is a truck leaving Melbourne. It will get to Nhill and within a 35 kilometre radius of Nhill, which is half-way to Adelaide, another truck will meet it, they will swap over and the components will go both ways. That trucking activity will stop. That warehouse on the road will disappear. You can argue there is plenty of work in transport, that they will just cart something else, but they are good well-paid jobs. This transformation scheme should be getting to the point, as Senator Xenophon and others have said, where people who have good expertise and good ideas are assisted to continue to add value to the economy; they should not just be laid to waste.

Independent modelling has said that up to 200,000 jobs that will be lost between now and 2017—100,000 jobs in Victoria, almost 25,000 in South Australia and over 30,000 in New South Wales. If consumers have decided not to buy Fords and Holdens and the company has decided, as we hear, not to produce cars here in future, I would contend—egged on and booted around particularly by the Treasurer, Mr Hockey, and Senator Rushton would say it is our fault or some other government's fault—that it is incumbent on any government to look at look at 165,000 potential job losses and have a bit of a think about what can be done. Where is it that we can mitigate? We only have to see the work that has been done in very recent times by the coalition in South Australia in shipbuilding, where the Prime Minister has been dragged kicking and screaming, under the threat of his own job and electoral losses, to announce grudgingly and very late some improvement in the situation. Why doesn't he come to the table here? Why doesn't he get Minister Macfarlane to look into this and spend the money? Make an attempt to let people transition to a better part of the economy without the job losses and without the closures.

It would seem to be a callous and uncaring government that would actually let this happen. They simply look at the forward estimates and at the money saved and not look at the destruction of lives, families, economies and small business. These people will not all be in large businesses; they will be in small businesses, supposedly the heart and soul of the coalition's constituency. They are absolutely callous. When you look at the South Australian small businesses that will be affected both by the valley of death in shipbuilding and at Holden, it is almost impossible to believe that a government could actually do this.

I note that Senator Ruston made a contribution in this debate. I was expecting Senator Edwards, Senator Fawcett or even Senator Birmingham to make a contribution, but they are as quiet as church mouses. The deputy whip got the job of reading the platitudes and blaming the other side—'It is their fault,' 'They did not do this,' and 'They did not do that.' I remind you again that in September 2013 you were elected to govern. It is your job to govern. You govern with the circumstances that you face—and you face potentially 155,000 jobs lost in Victoria, SA and New South Wales. What are you doing about it?

People are crying out for access to funds to transition their small business into different sectors. As I have said, a group from Thailand visited South Australia looking to get the component manufacturers to redirect into that large manufacturing country where they make one million motor cars a year and even to look at the new frontier that is opening up in Myanmar. Let us look at the global motor vehicle supply chain. A classic example of that at the moment is the Takata airbags. A Japanese company designs them, they are made somewhere and they are in every Toyota. They are not going too well. Apparently a number of them are defective so there is the biggest recall in the history of the world of automotive manufacturing.

Why is it that we exclude ourselves from the opportunity to participate in making components and having them in every motor vehicle that is exported around the world? Why are we shutting down our opportunity to continue with almost 60 years of acquired skill and experience? Why are we not endeavouring to retain some of that? I do not know the answer. Perhaps someone from the other side will give us the answer in a later contribution. I have to tell you that the answer is not that it was Labor's fault prior to 2013. That is not the answer. The answer has to come from this government, and I suspect the answer is that the economic rationalists are totally in control. The forecasts of budgetary savings are more important to those in charge of the Liberal Party than the livelihoods of 155,000 people in Victoria, South Australia and New South Wales. I suspect that is the case. If it is not the case, I am sure someone will take up that challenge in debate.

It really beggars belief that there is an automotive transformation scheme that component manufacturers are excluded from, given the fact that diffs are made in South Australia, engines are made in Melbourne, components are made in all different geographic sectors of Adelaide and they are then consolidated at the manufacturing plant. I suppose in Thailand it would be no different. Components would come from other countries and components would come from other regions. Why can't we join the manufacturing world game? We have the expertise. We know from information here that General Motors has only seven plants in the world that do the whole lot—it is fully integrated and global.

We used to sell Camaros to the Californian Police Force. We used to export many status, prestige cars—the Caprice and those sorts of cars—to the Middle East. We know that when the dollar was down at about the level it is now at those opportunities were growing. I can remember driving past the embarkation point for cars on the Port Adelaide wharf and seeing it full of Camaros going to the United States. We know that there have been a lot of trials and tribulations. We know that the zero tariff on cars coming in has precipitated this decision. If you look around the world five per cent is actually equivalent to a zero tariff but in Australia we are so economically pure that our economic rationalists go right down to zero. If you wanted to take a carton of milk into the United Arab Emirates and you were not competing against any dairy industry there, there would be a five per cent tariff on it, but anyway that is probably a debate in another area.

Senator Ruston did comment about our opposition to free trade agreements. We are not opposed to free trade agreements. I think 'free trade' is a bit of a misnomer in some respects. We are not opposed to competition; we are opposed to unfair competition. People need to be aware of what is coming. The evidence from ACCI was quite clear—20 per cent of their people export and not many of those people actually know all of the rules and regulations of export and take full advantage of the export opportunities, and 80 per cent of them do not and hit the full competitive force. In essence, this is what is happening with the Korean free trade agreement. We are getting cars in for zero and it makes it tougher.

There has been an onslaught on our car manufacturers for a lot of years. There should be a genuine transformation package. It has been put often enough in this debate that the coalition has turned its back on the indust

Those opposite have turned their backs on the industry and are just going to let this wash out. It will wash out.

If we return to the debate in question time today where Senator Abetz said it is probably be fine to get a text message or an email saying your job is no longer there, well, if this comes to pass and 100,000 jobs in Victoria, 25,000 jobs in South Australia and 30,000 jobs in New South Wales go through lack of action in this sector, then I would be suggesting that those people may well be sending a text or an email to Senator Abetz and his cabinet colleagues saying, 'We are going to use our best endeavours to make sure your job goes. The day of the election is the day we will tell you about what we think about your actions, sorry, lack of actions in this sector.' I am sure that Senator Abetz has probably had plenty of texts or emails reflecting on that matter so it will be water off a duck's back.

But you cannot destroy a manufacturing sector, you cannot walk away from core promises on building submarines or ships in a small manufacturing economy like South Australia and not pay an electoral price. It is my view that the Liberal coalition and members of parliament in South Australia are going to pay an electoral price for this lack of action. It is also my view that they should turn around and start acting now to put in place remedial action to address the situation that 25,000 South Australians could lose their jobs and 100,000 Victorians could lose their jobs. They need to think it through and get on the front foot. They are the government. They cannot keep hiding behind carbon tax or stop the boats. This is in front of them; it is happening to them.

There is an opportunity to steer small component manufacturers and small businesses into more productive sectors of the economy to give them opportunities to join the global export of components and they should do it now as an absolute matter of urgency. They cannot hide away from this issue. They cannot blame former ministers or former governments. It is their watch, it is their time to act and they should act now.

Ricky Muir (Victoria, Australian Motoring Enthusiast Party) Share this | Link to this | Hansard source

I rise to speak on this general business notice of motion in relation to the Automotive Transformation Scheme. I hope that all my Senate colleagues note the importance of the Automotive Transformation Scheme to local jobs and the local economy. As we just heard, there is a very good chance that we may lose 100,000 jobs in my home state of Victoria and more flowing on through South Australia and so on. I hope that my colleagues do not just notice the importance of the Automotive Transformation Scheme but also what it can achieve today and how it can be adapted to seize opportunities into the future.

We are all well aware that this scheme is critical to ensure the viability for not only the new vehicle producers—Ford, Holden and Toyota—who are winding up their major manufacturing operations in Australia, but the current scheme is also essential to supporting the component, tooling and service producers who are part of the supply chain affected by the departure of these major manufacturers. I am calling on the government to recognise the opportunities to transform the industries in these areas outside of the current scope of the scheme.

Some may be aware of the Automotive Diversification Program and would argue that this is the place for what I am about to call for. Based on industry feedback, the Automotive Diversification Program is limited in its scope and not really fit for purpose. Rather than having two funds which are not really targeting the opportunities before us, should we not consider reducing red tape and roll both programs into a single expanded scheme?

The Automotive Transformation Scheme could be expanded to not only provide the necessary support required now but also seek to invest in the opportunities the scheme does not capture currently. We still have time to better engage with industry and redefine an appropriate scope that maximises the opportunities for local manufacturing and local jobs in Australia. We need to diversify the Automotive Transformation Scheme to cover not only what the poorly defined and implemented Automotive Diversification Scheme attempted to achieve but listen to those who are looking to start up a new and unique automotive manufacturing offering.

Companies such as Applidyne are seeking to develop a new car to a specific market segment. They wish to utilise our local skills in car design and manufacturing. They plan to develop a SUV for the Australian market. They see their target market as the off-road enthusiast. What makes their offering unique is that they are looking to develop an electric off-road vehicle. This company has the local Australian intellectual property necessary around transmissions and suspension design and they are intending to partner with other local industries as necessary. Right now Australia has the capability in car manufacturing that they can access, but for how long under the current government policy?

Applidyne are seeking to create local jobs using a local management and design team with a track record in technology development and commercialisation. Whilst initially starting with a donor vehicle similar to how Tesla started with the Lotus so they can focus on the drivetrain and suspension, in the longer term they are looking to develop a whole vehicle with Australian skill, facilities and suppliers. Their economic modelling suggests that this program will create at least 6,000 direct jobs and 30,000 indirect jobs over 10 years, with export revenue of $3.5 billion per annum in year 10.

All Applidyne is seeking from the government is an investment of $150 million. This $150 million could go towards potentially soaking up some of those 100,000-plus jobs which may be lost in Victoria. They are excluded from the Automotive Transformation Scheme as they are a company in start-up phase and cannot claim their research and development until they are registered as a motor vehicle producer. Applidyne have made representations that the automotive transformation scheme should be amended to support research and development for both existing and start-up automotive companies, and I would be inclined to agree. This is simply one example.

Recently there were media reports about another start-up, Ethan Automotive. They have also been seeking to manufacture an Australian family SUV to fill the void left once Ford, Holden and Toyota depart. Their unique selling point is around their local manufacturing process that will utilise a modular chassis that can be used across three different models.

According to the industry minister, he is of the opinion that industry is not asking him to change the guidelines. His argument is that they are tried and proven. The industry is definitely asking for him to change the scope. However, evidence presented to the Senate inquiry by Applidyne and others about the future of Australia's automotive industry would appear to contradict what the minister is suggesting.

We also have an aftermarket industry that is alive and well and begging for investment. It is a part of the automotive industry that is ready to expand and redeploy some of the skilled workers who will be left jobless when Holden, Ford and Toyota depart. The aftermarket industry has called for the ATS to be adjusted to allow the industry to expand. This expansion will not only help fill the void but also focus on opportunities to export Australian manufactured products overseas. With the inquiry due to deliver its interim report soon, I would hope that there would be a recommendation to alter the scheme to take advantage of these opportunities for economic growth. Of course a recommendation is only a recommendation and I would then hope that the government would act on it appropriately. The aftermarket industry not only struggles to receive any sort of government support to grow its export business but its domestic business is constantly under threat from bureaucratic red tape in Australia.

The federal government has gone to great lengths to harmonise our Australian Design Rules with many other countries for newer manufactured and imported vehicles to ensure easy importation, certification and trade. However, state and territory government bureaucrats cannot work together to recognise a common set of modification standards across our own borders based on these standards. The federal government has provided a set of common modification rules to adopt in the form of the National Code of Practice or NCOP. It is not uncommon for modified vehicles to be driven from one state to another state, be defected and the driver fined simply because the modification rules are different between states. Even after recent changes to the Australian Design Rules to recognise developments in technologies, such as LED light bars, the states are not able to agree on how these are to be mounted or used on a vehicle.

A local aftermarket manufacturer, ARB, has developed a four-inch lift kit for the Jeep Wrangler. It has been extensively engineered and tested to meet safety requirements in Australia. It appears, however, that it can only be legally fitted in Victoria and New South Wales. This is an Australian developed, legally and professionally fitted aftermarket product. A family on a 4WD tour holiday outside of Victoria or New South Wales with this aftermarket product fitted risks being defected and fined for driving over a line on a map, an imaginary line. There is also a risk that they are not insured outside of their home state as the modification is classified as illegal by the local jurisdiction they are visiting.

You can have a legal type of motorcycle helmet in Victoria or Queensland that complies with the required standard there, but cross into another state and chances are that, if it complies with the European standard and not the Australian one, you will be fined. This is absolutely ridiculous and lacks common sense.

I use this opportunity to highlight to various bureaucracies the harm that they are doing to consumer confidence in the domestic automotive aftermarket industry. Motoring enthusiasts have a passion for customising their vehicles and they have the funds ready to invest in the aftermarket industry. But first they need the confidence that they will not be unfairly targeted by law enforcement and possibly have their insurance voided because laws governing the use of aftermarket components are inconsistent between the states.

In conclusion, not only does the federal government have an obligation to listen to the evidence presented from industry and adjust the rules of the ATS to better capture the opportunities presented but, likewise, the states have a part to play by introducing consistent vehicle modification and safety laws to help ensure the future and growth of the Australian aftermarket automotive industry.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to talk on this notice of motion because it is important for Australia, and for South Australia in particular where, as the media has been highlighting, unemployment is an issue. We are seeing numbers there that are the worst in the country and we need to be working to see those numbers reduce. Indeed, that is what the federal government is doing, and we encourage the state government to be working with us, as they are in some programs. We also encourage those opposite and those on the crossbench to work with us in terms of shaping the environment that allows people the confidence to invest in and create jobs in South Australia. I think it is important that we recognise that that environment is important as we come to talk about the automotive industry, the transformation scheme, and importantly the future that this government is seeking to shape.

I will briefly talk about that context before I go on to the initiatives that the government is putting in place for the future because those opposite have been making a number of claims that really do need to be put in context. The claim has been made that the closure of the automotive sector has occurred under this government's watch. Having been in the lower house as the member for Wakefield, between 2004 and 2007, I know that even back then the large automotive companies were very focused on their global programs. I recall going to GM and seeking their cooperation so that we could invest as a federal government—then the Howard government—into research and develop production techniques and battery technology for electric cars so that Australia could play a leading role in developing what was then going to be a niche market. After a number of meetings it became very clear, in fact it was stated quite openly, that as far as GM were concerned they were a global operation, they had their research centres—I think Japan and the US were the two key ones—and no amount of incentive from Australia actually interested them in where they would change the focus of their research effort.

As we step forward, we see the response of the Australian consumer, who decides—and members opposite have acknowledged that people have voted with their feet and their wallets, and over the years they have increasingly moved to cars that are manufactured in Europe or Asia. Whether that is due to size or style or brand, who knows what the reason is? But the fact is that with the volumes that were being produced here, even when we worked hard—and both sides of politics have tried to work hard to get export markets for our manufacturers; Senator Gallacher correctly referred to the period when Holden in fact were able to increase their shifts again because we started to get an export market for cars into the United States—even with that, the global nature of those businesses meant that they made the decisions that it was not economic to continue manufacturing here in Australia. Mike Devereux, who was the CEO of General Motors at the time, said that a decision had been made because of their long-term business case that it just did not stack up and that those decisions were made quite separately from any government policies here in terms of the amount of subsidy or co-investment that we wanted to make.

So it is really important to recognise that there has been a change. Both sides can throw barbs. We can talk about things that the Labor Party did, and they can talk about our approach of supporting free markets, but the reality is that in the automotive sector the change has come about because of the global business model and the decisions—in my case, for South Australia—that General Motors made in the States.

The question is: what are we going to do about that? The Automotive Transformation Scheme is one of the responses that the coalition are sticking with, in that that scheme has been in place, and we are happy to stick with the guidelines on that to provide certainty to the industry because that enables people to plan for the future to transition and look for new opportunities. There are a couple of aspects that I think are important in that. One is that people who are involved in the component-manufacturing sector have opportunities that are being realised right now under the current scheme.

Let us look at Nissan Casting Australia. Everyone thought that, with the wind-down of vehicle manufacturing in Australia by 2017, they would be shutting up shop; their workforce would be dismissed, and those jobs would be lost to Australia. In fact, what has occurred is that, by working with the CSIRO, they have come up with new and improved manufacturing techniques. Working with overseas manufacturers from Nissan, they have made a decision now that they will continue to make parts for the Nissan LEAF, which is their electric vehicle—so that is a vehicle for the future that they will continue to manufacture parts for—and 38 other models. In fact, the demand is so high for them, because of their exports to Japan, the US, the UK, Thailand, Mexico and South Korea, that they are working three shifts, 24 hours a day, seven days a week to meet that demand. So even in this current environment—while people are saying, 'The sky is falling; there's gloom everywhere'—under the current rules, we see component manufacturers who are ramping up their production due to exports to the point where they have continuous operations.

And it is not only in Victoria. In South Australia, my own state, we are seeing the transformation scheme assist people who have been involved in the automotive sector to move from that sector into new sectors. Again, importantly, in terms of finding a market that is large enough that it will sustain production now and into the future, it is not domestic; that market is export. So we see that these people have moved from auto components. Heliostat SA, which is a subsidiary of what used to be Precision Components, now, using a $1 million grant, has moved into producing solar components for the Mitsubishi Hitachi Power Systems corporation. So they are now exporting advanced manufacturing, high-value components overseas to Japan as an alternative.

They are just two specific examples, but I would like to refer the Senate to an article by Peter Gill in March this year in the InDaily, which is a South Australian online publication, where he looks at research that has been done by an international research house into the automotive sector. This has been backed up by work done by the Productivity Commission. Their estimate is that after 2017, into the future, there will still be at least 50 per cent of the auto parts sector that will continue. They put that down to a number of things. One—as Senator Madigan, I think, or it might have been Senator Muir, mentioned—is the aftermarket sector, which is growing at around four per cent per year at the moment. There is the spare and replacement parts market. And, importantly, there is that export market, which, as we have seen, is not only existing but growing.

The potential is there for Australia because we are smart with our innovation. We make consistently high-quality products. That is why we see things like differentials that are made in South Australia being exported around the world—because we can provide consistent, high-quality products into markets in Europe and other places, and compared to Europe our labour costs are no higher. So those markets will continue and, if anything, they have the opportunity to grow, because this analysis that was being reported on by Peter Gill was done at a time when there was parity between the Australian dollar and the US dollar. As our dollar comes off, that makes our products even more competitive. What we are seeing there is that, in almost a worst case situation in terms of exchange rates, the industry will survive and in some sectors grow. They are saying 'around 50 per cent', but as our dollar comes off there is the potential for that to increase even further.

What are the other aspects of what the government is doing in looking to create jobs? The $155 million Growth Fund is one of the areas where we are seeking to work with industry and with state governments to put in place a balanced range of measures targeted to help the industry transition. Particularly for South Australia, one of the programs that has just been announced, which I am very thankful for, is the Next Generation Manufacturing Investment Program. Round 1 of that has been announced, with some $28.8 million to 15 businesses in South Australia. Importantly, one of the features of this program is that we needed to see co-investment by these businesses. They said, 'Look, we have enough faith in what we're doing and what we're proposing in this new market that we'll stump up our own capital.' So these are leveraged complementary investments, and the total investment in new manufacturing capability is around $73.3 million. That is good news.

What it means is that we are providing the opportunity for people in South Australia who innovate to capture the market. We see large primes like BAE Systems, who have acted as a catalyst to feed funding and focus for defence programs—things like titanium milling to support the vertical tailfin production for the Joint Strike Fighter, which is then farmed out to a lot of other second-tier SMEs around Australia who contribute to that. We see companies like Leavitt Engineering, who have won funds under this program and are producing parts for the Joint Strike Fighter engine. We have seen their workforce not only grow but, importantly, grow in terms of the technology they are using and the complexity of the manufacturing they are doing. Not only do they have the Joint Strike Fighter program, they now have the design and manufacturing quality and capacity that opens up future markets for them.

One of the other significant recipients of funding under this program is Seeley International, which is a fantastic South Australian company. In fact, in the past Frank Seeley has been named South Australian of the year for his contribution not only to manufacturing but also to South Australia and our community more broadly. I particularly look at the investment he has made in things like the testing centre at Seeley International. This is an internationally certified and recognised testing centre. So for the first time we can compare different systems under controlled conditions and give very accurate results to companies that may want to design a specific system—and we see this going into everything from wineries, through to commercial premises and educational premises. Sometimes when they have specific moisture requirements, Seeley is able to tailor the design of a product to meet the customer's needs.

Not only is this good for South Australia, but the export potential is huge. By using the natural cooling power of evaporation, this product—the Climate Wizard product that he has developed—dramatically reduces outdoor air temperature with very few moving parts. It is achieved with a 'counterflow, water-to-air heat exchanger'—this is what I am reading from his website—and it is an innovation they hold a world patent on. The reason it is important is that it reduces energy by up to 80 per cent. The clients who have bought this technology can use it as a stand alone, or they can use it to precondition the air before it goes into a normal refrigeration-type system, and they are seeing the energy demand fall by nearly 80 per cent.

At a time when we are concerned about emissions; at a time when our society is, rightly, concerned about the cost of electricity, and about the capacity of our networks to provide, what we are seeing here is funding coming out of this transformation scheme and the next generation of advanced manufacturing investment. We are seeing support and development for this technology that has good environmental benefits; it has good technology benefits, in terms of supporting and growing that innovation; and, importantly, it is creating additional jobs that will benefit workers in South Australia and the South Australian economy. It supports that innovative approach.

The government is not resting on its laurels—it is keeping the Automotive Transformation Scheme in place; providing certainty to the sector; responding to the circumstances that it has inherited; and it is looking to the future. It is encouraging to see the companies that I have named—Heliostat and Nissan—and the study that is saying more than 50 per cent of the sector, in terms of the automotive parts, will survive. That is just in automotive—let alone those that transform into other areas, such as Heliostat. Importantly, the co-investment between industry and the state and the federal government means that we are moving ahead and creating opportunities for jobs, not just now, but jobs into an international market, which provides a much longer-term and more certain opportunity for export and manufacturing work in South Australia and around the nation.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

I will be happy to speak in this discussion about the importance of the ATS to the Australian economy. In starting from this proposition, I acknowledge the comments that have been made the coalition senators in this regard, but in a government that is dominated by Sydney North Shore merchant bankers, one would have to expect that there would be little understanding of how important manufacturing is to this country. One would have to expect that, because of the idea in Sydney that everything west of the Sydney Harbour Bridge can be discarded and what is really important is our place within the international trading system for commodities, the decisions taken by this government to destroy the automotive manufacturing sector were going to always be made.

Prior to the last election, that is exactly the proposition that the Liberal Party announced. They said that they wanted to take $500 million out of the ATS. Then they went further after the election and said $900 million. Do we all have such short-term memories that we cannot recall the actions of the Deputy Prime Minister of this country goading General Motors to leave? Do we forget what actions were taken by the Treasurer of this country in describing our automotive manufacturers as rent seekers? What do you expect from the merchant bankers of North Sydney? You expect an attitude that, essentially, is contemptuous of blue-collar Australia. You expect an attitude that, essentially, is contemptuous of even using the word 'innovation'. You expect an attitude that attracting new investment is somehow or another immoral because, unlike every other part of the world, the free trade Taliban in this country has to operate on the basis of the absolute free market. Of course, nowhere in the world does automotive operate in that way—nowhere. We know that in this country, by international standards, the support for the automotive industry has always been very modest—less than the price of a footy ticket per capita, compared to the hundreds of dollars spent in the United States, in France or in northern Europe. Why have governments, up until this government, chosen to do that? There has been a bipartisan approach. Why was that? Because of the importance of automotive to the future of this nation.

We know the consequences of the decisions that have been taken. We know about the hundreds of thousands of people that are now facing a crisis in their lives. We have heard Mike Devereux being quoted. What we know now is what he said at the time: it would cost more to lose the automotive industry than it would to keep it. Isn't that a chicken coming home to roost?

We know this government makes much of what it is doing to put the bandaid on the enormous gash that it has created in Australian manufacturing jobs. We know it has taken $3 billion out of industry programs in this country. So is it any surprise that we now have the highest level of unemployment in 20 years in this country? This is despite the fact that the dollar has come down so much.

What we have is a new car plan that not only saw the automotive industry in this country prosper at a time when around the world the automotive industry was in retreat but also meant that in Australia we were attracting new investment at a time when the costs were going up by 30 per cent just as a result of the currency movements. What a contrast we see with this government! The diversification program has been mentioned here. What does this government do at a time like this? It cuts it in half. We heard great stories about what has happened in battery technology, among other things. These are the products of the new car plan. We instituted programs that saw the development of new research projects with the CSIRO to give us that cutting edge in battery technology. The new program in regard to Nissan was a direct result of the new car plan.

In the last election, the Labor Party announced $300 million per annum for the ATS that could be used to sustain all operations of the original manufacturers, plus 144 tier 1 suppliers, which of course are underwritten by thousands of other minor businesses. That could all be done for $300 million a year. What do you think the unemployment bill is going to be when we lose the jobs of up to 200,000 people? What is the contrast? Not just extraordinary waste in terms of human dignity and respect that comes from people being forced into unemployment, and not just the extraordinary loss of abilities and creativity in this country, but the loss of capacity across so many other industries. That is the big cost here. The big cost here is to be felt in aluminium, in steel, in glass, in electronics, in carbon fibre and in a whole string of industries. I recently met a lock manufacturer who said, 'Because of the demise of the original motor manufacturers, we'll have to be shutting up shop.' The consequences flow through textiles and plastics. It is quite extraordinary just how profound this decision by this government to destroy those manufacturing operations of General Motors and Toyota will be. It is just extraordinary to think about it.

The cost to this nation in social and economic terms, of course, needs to be understood: $29 billion of GDP. The biggest impact is in Victoria: at least a $13 billion hit to the state's regional product by the end of 2017. In New South Wales it is $5 billion and 30,000 jobs. In South Australia it is $3.7 billion and probably up to 25,000 positions. For a state like South Australia, that will be even more profound than the loss of 30,000 jobs will be for New South Wales. This was presented as a cost-saving exercise. Nothing could possibly be further than the truth.

We know that this industry is a powerhouse of innovation—of engineering, design, research and development. But I maintain this proposition, and I think Senator Fawcett was correct in this regard: those that attempt to assert that there will be no automotive industry in this country are wrong. Even after the very best efforts of the economic vandals from the merchant banking brigade in this government, there still will be an automotive manufacturing industry in this country. We know that there will be an industry. The scale and scope of it will ultimately depend, however, on government policy, as it is in every other part of the world. So the question of the future of the ATS is critically important.

The government suddenly have discovered that we are going to keep the ATS now. Having been faced with the electoral backlash and the political odium of their actions, they say, 'Oh, we'll keep the ATS.' Of course, it is another one of those 'fool's gold' exercises, because they simultaneously say, 'Of course, come 2017 there'll be no original manufacturers and therefore it'll collapse by itself.' So when they say, 'We don't want to change the guidelines; we want to provide stability,' it is a ruse, because they believe that their budget savings can be achieved by another means.

The reality is that the ATS is vital to ensure that we are able to attract the new investment that we so desperately need. There is an opportunity here, and I firmly believe that we can attract new investment into automotive in this country. That needs to be done with government support. In the farming communities, there can be drought, a natural disaster. In fact, we spend more money on sheep and goats in this country than we do on motor cars. When there is an economic crisis in farming communities, we say the state has responsibility to stand by those communities, but, when it comes to manufacturing, the view is, 'They can sink,' no matter the social consequences. We see, when the Productivity Commission produces its tables, that it never produces the full range of support that is available to some sectors, but it runs an ideological agenda, particularly against manufacturing.

We have a Senate committee looking into this matter. Its interim report next week will consider a number of issues. One of the key issues will be the maintenance of the ATS through the legislative time line, which is not 2017 but 2021. That is well after the next election. We will have an opportunity to consider this matter in some detail in that election. The interim report provides us with an opportunity to canvass the issues around the purpose of the ATS and whether it should be repurposed to include attracting investment through production and promotion, particularly in advanced automotive manufacturing, components and materials, the aftermarket specialist vehicles, electric vehicles and gaseous fuel vehicles. These types of issues are appropriate for us to consider in such a report; whether there should be a change in the definition of automotive services, particularly with regard to the aftermarket and specialist R&D services; and whether there ought to be changes in regulation with regard to the ability to develop products in global supply chains. At the moment, there are restrictions on that.

These are the types of questions the Senate has the opportunity to consider and make recommendations to government on. In due course, my expectation is that there will be a private senator's bill to consider those matters. When the government says, 'We don't want to see any changes,' suddenly it is discovered that stability and certainty is so essential. In fact, what they will be faced with is the proposition where the government will have to make decisions. I spend a great deal of time visiting firms; I do it as often as I can. Recently, for instance, I visited Unidrive in Clayton, in Melbourne's outer suburbs, and Harrop in Preston. Those are two examples. Harrop makes brake fittings and superchargers and supplies directly to the OEMs at the moment, but it has a substantial export market in its own right. They provide engineering and R&D services to produce niche products for specialist markets. They customise brake assemblies of their own design, for instance, for Toyota LandCruisers. They will do the entire fleet for a mine, where the brakes wear out every week. They will be able to provide assistance to the mining industry in a way that demonstrates the creativity and engineering skills of the Australian industry. They need the ATS to continue. They have been able to get assistance from the ATS, but, if they lose eligibility, the first thing that will go is their design and engineering department. We simply cannot allow that to happen. With regard to Unidrive, 50 per cent of their product, using carbon fibre for drivetrain componentry, was supplied directly to the United States. They have existing contracts, but they will need to change the regulations in such a way as to allow them to continue and to develop the business case for new investment. That is a firm that has been operating in this country for many years and has been operating in Europe for centuries.

What we know is this: in the United Kingdom after Margaret Thatcher the doomsayers said that the United Kingdom automotive industry was dead, but it did not die. It is now flourishing. It is probably the largest automotive export country in Europe. Both sides in British politics came to understand, as this country once did, the importance of industry and particularly the foundation that the automotive industry provides for manufacturing capability more generally. As a consequence, the British conservative government is one of the biggest investors in automotive capacity that we see in Europe.

Senator O'Sullivan interjecting—

They have that bipartisanship because they understand that it is not just an economic question. But you do not see that here because the Liberal Party is dominated by merchant bankers who have an entirely different view about the way in which society works.

Senator O'Sullivan interjecting—

They certainly would not be dominated by the doormats of the National Party. They only get called in when required. When the dog whistle blows, in you come. There is nothing inevitable about the destruction of automotive manufacturing in this country. There is no—

Senator O'Sullivan interjecting—

Under Labor, under our New Car Plan, we survived at a time of global crisis. Expansion in automotive investment occurred here, when around the world—the United States, for instance—countries were in a state of bankruptcy.

Senator O'Sullivan interjecting—

You ought to go back to your farm on that. What we need to do, as a country—and I trust that this will happen—is develop an understanding again of how important it is to attract investment to manufacturing, particularly automotive manufacturing. Broadening out the ATS so that component manufacturers like Harrop in Preston have the security to continue their investment program will be critical to ensuring that we maintain the capabilities in this industry to attract a broader range of companies to the industry.

This is a government that has failed to appreciate that simple proposition. We need to ensure that we preserve our capabilities to create and sustain the high-wage, high-skill jobs to ensure that the prosperity that we have a right to expect in a country like this is actually spread right throughout the community. The Motor Traders' Association of Australia, for instance, has noted that there is no clearer path to meeting this aspiration than to retain the ATS so that manufacturers and components and parts suppliers continue to innovate, products can be delivered and businesses can be regenerated. The industry as a whole and the Australian government should identify a long-term policy framework for the entire industry—focus on the entire automotive industry—and I believe that the Senate inquiry will provide this chamber with the opportunity to take that up.

I am looking forward to seeing exactly what conservative senators say in this inquiry. But the government will be required to act, because, I can assure you, come the next election this will be a very important question. Stopgap politics will not work. Deceptive attempts to claim that you are suddenly a friend of the automotive industry again will not wash. And we know that the people of this country value manufacturing and will cast their vote on these types of issues. People want to know that their political parties have something to say about issues like high-quality jobs and industrial capability. The Australian Automotive Transformation Scheme must be but one tool in ensuring that we can meet our responsibilities to expand quality job opportunities in this country.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I am really pleased today to be rising to speak on the importance of an Automotive Transformation Scheme to Australia's economic prosperity and development. If there is one thing our current government has shown itself to be good at it is holding back the industries of the future because of an ideology that is based in the past. One of the biggest casualties has been the Australian automotive industry, which is, as we have heard this afternoon from speaker after speaker, an industry in crisis. And it is coming at the cost of Australian workers and their families. The failure of successive Liberal and Labor governments to deal with this issue has had a really serious flow-over effect. Serious money has been poured into the Australian car industry, but it has failed to create the sustainable jobs that we need as we move into the 21st century.

It is a disaster. We have seen the major car manufacturers—Ford, Holden and Toyota—make the decision to end operations here. As the component manufacturers that have been part of the supply chain for these companies close, downscale or shift offshore, this government could well oversee the loss of tens of thousands of Australian jobs. I do not think the consequences and the reality of that has really struck home for people.

South Australia and my home state of Victoria are going to feel the brunt of this. I think of Altona, where I grew up, which is home to the Toyota manufacturing plant. And I think of how much employment in the western suburbs is currently dependent on the automotive industry—Toyota and the parts suppliers that are supplying it. I think of the city of Hume, where I worked for two years prior to becoming a senator, which is based around Broadmeadows, where Holden is based. The consequences of this massive loss of jobs in both of these areas, already suffering extremely high unemployment, is almost unthinkable. It is hard to think of what it is going to mean to the social fabric and the wellbeing of people in these parts of Melbourne.

The Abbott government is just waiting for this to happen. They have poured petrol on this fire with their plans to cut the Automotive Transformation Scheme and no real plans to support the industry's transition. And it is even worse than that, because the vast majority of the $900 million that is currently set aside for the ATS will not actually be spent on supporting these workers. With the car manufacturers making a quick getaway, the government is set to actually pocket around $800 million of that $900 million, which should have been and could be spent on the industry's transition. Workers in the car and component industries are driving towards a cliff while we are missing the opportunity to innovate. We just cannot keep sitting on our hands. The Labor Party seems to want to wait until the next election before proposing an alternative, but it will be too late then. The car manufacturers will have gone. We will have gone over the cliff. We have to act now.

The Greens have a plan to shift the industry to the jobs of the future. We see it as critically important to have socially and environmentally sustainable jobs in sustainable industries. This government is refusing to make any serious attempt to cut emissions while the rest of the world is making the move to reduce pollution, including creating incentives to shift to electric vehicles. Electric vehicles are a very substantial part of the trajectory Australia needs to be on to act strongly and powerfully on climate change. We know that in order for Australia to be part of the world community in reducing its carbon pollution we need to be reducing our carbon emissions by 60 to 80 per cent by 2030 to be consistent with what the science says.

Fossil fuels have served us well in the past, but they are of the past. We need to be shifting to clean, renewable energy. Clean, renewable solar and wind are what can be powering electric vehicles. Australia can take up the opportunity to be part of the global electric and alternative fuel car industry.

We want to see the establishment of a Green Car Transformation Scheme and redirection of the existing Automotive Transformation Scheme funding, which the government is currently pocketing, towards that scheme. This new scheme would support the component, engineering and design sectors of the industry by removing the current requirement for Australian component manufacturers to be producing components for Australian major vehicle producers in order to be eligible for assistance. We would want to see the component manufacturers being able to supply components into the global market and for them to be eligible for assistance.

We would focus assistance on auto parts makers that are seeking to be part of the local or global supply chains for electric, hybrid or alternative fuel vehicles. We would provide support for any major vehicle producers that are established and invest in South Australia or Victoria. We would favour applicants who commit to hiring workers from existing car or component makers and we would enable eligible participants to receive payments in quarterly instalments.

Globally, sales of electric vehicles and hybrids are expected to exceed half a trillion dollars by 2025. We need to make sure that Australia gets a slice of this. That is why we would extend funding to 2025 to give the industry the certainty it needs. With the proper support, some workers in the industry could make the shift into a growing component sector that is oriented towards the global supply chain of electric vehicles.

It is estimated that the automotive industry employs 45,000 workers directly and over 100,000 workers indirectly. Our Green Car Transformation Scheme would give hope to these workers and their families. The future for the car industry is electric, and encouraging this shift would have enormous benefits for a green economy, green jobs and for the environment.

Electric vehicles are cleaner and when they are powered by renewable energy they can have zero emissions. They can contribute to electricity demand management by providing battery storage to the grid, and they reduce the pollution that blankets our major cities. They really tick all the boxes. Importantly, of course, moving to electric transport is a necessary shift to combat dangerous climate change.

We know that already some Australian-based component producers are joining the world's electric car revolution. In 2012, after receiving government support from existing green and clean energy funds, Nissan Casting Australia, based in Dandenong South, secured ongoing contracts to produce several complex powertrain castings for Nissan's all-electric Leaf. This company continues to grow and has a secure future.

Another good example is Australian car parts maker Futuris, which has won a major contract to supply seats for the next generation Tesla battery-powered car, due to go on sale in Australia this year. Tesla is taking the motoring world by storm. Engineering for the program is done in Port Melbourne, and it comes on the back of previous contracts with Tesla.

There are other examples. There is a company in Adelaide that is now, hopefully, about to sign a contract with a solar manufacturer in India, and jobs that were previously in the car industry are now going into the production of solar technologies. There are also opportunities in the production of niche vehicles—vehicles that are not made in large volumes, like electric buses. We have bus manufacturing that is ongoing in Australia. We could be shifting that production and encouraging the production of electric buses. Electric trucks also have a major future that the Australian industry could be part of.

I had discussions with another manufacturer in Adelaide in recent months that is looking at the manufacture of four-wheel-drive vehicles to produce police and emergency service vehicles. I was thinking of this manufacturer recently when I was on the parliamentary delegation to Papua New Guinea, Vanuatu and Fiji. We were hearing stories of how the police in these countries often do not have sufficient funding to be able to put fuel in their vehicles. The people I was talking to were women suffering from domestic violence, who wanted to call the police out but had to pay the police for the fuel to put in their vehicles. I was thinking that, given the problems for these governments of having sufficient funding, this is going to be an ongoing problem as the cost of oil rises and the amount of oil and diesel in the world decreases. I was thinking, with electric police vehicles, what an opportunity to be lining up our foreign aid with sustainability objectives and encouraging the rollout of electric vehicles throughout the developing world and throughout the Pacific as well.

These are the sorts of opportunities that we should be thinking about quite creatively—taking the opportunities, seeing where these opportunities arise and really making the most of them. That is what a successful automotive transformation scheme would look like. It is not merely about propping up an industry of the past. It is about looking to the future and thinking, 'What next? Where are the opportunities? Where are the jobs of the future going to come from and how can we best support this transition?'

The Greens' Green Car Transformation Scheme does this. It will be good for a green economy, good for drivers and, most importantly for this discussion, good for Australian workers.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I too rise to speak on this motion. We have heard a lot of table thumping from some industrial and economic dinosaurs in the opposition who really want the government and taxpayers to keep indefinitely supporting uncompetitive industries which, instead of creating new national wealth, will continue to deplete it. In stark contrast to those opposite, I rise to say that manufacturing in Australia does have a future, but not as it has been done traditionally in many parts of this country where manufacturing methods have remained virtually unchanged for over 60 years, if not for over a century.

Globalisation and technical advances today are moving so fast. Our economy must continue to transform, to compete and to be productive. The automotive industry is an example of an industry that has failed to transform and adapt to meet contemporary economic circumstances. All states and territories must support, develop and understand their own competitive advantages. Every single state and territory has its own competitive advantages. The big difference in many states is that politicians, business and unions do not work together enough to take advantage of those competitive advantages and to implement the change needed to realise them.

I am extremely proud to be part of a government that is committed to supporting a strong and competitive Australian based manufacturing sector, not a sector that is based on subsidised, inefficient industries of the past. It is a government that is supporting innovative businesses and industries of the future to generate new national wealth and jobs and to provide the resources required for the standard of living that we all want and would like to see into the future. We are a party that does not just thump the table, as we have just heard from Senator Carr. We are a party that does not just talk, pontificate and screech about it endlessly. This is government that is acting, and it is acting responsibly.

Australian manufacturing can be innovative. It can be competitive and it can be a significant generator of jobs, investments and international exports, but not in the way that it is done in some of the states. However, a competitive manufacturing sector does need a government that creates the incentive for private sector investment and job creation and an environment in which industries can be productive, innovative and internationally competitive. But it does also require unions to work with employers and governments to adapt and reform so that economies evolve, so that industries do not die and so that the nation has the jobs and revenue to provide the standard of living and the life we all want here in Australia.

I am proud that the Australian government is helping manufacturing by abolishing the carbon tax, by cutting the company tax rate by 1.5 percentage points and by cutting around $2 billion in red tape, not to mention negotiating three new free trade agreements with some of our biggest trading partners. The coalition is also implementing the $50 million Manufacturing Transition Program, creating a level playing field for manufacturers by strengthening the antidumping regime, implementing a $155 million growth fund and pushing forward with its Industry Innovation and Competitiveness Agenda, including the industry growth centres.

Let's have a look at the facts. We hear a lot of rhetoric and a lot of angry, old-style union verbiage from the last century. But the facts are that under the previous Labor government one manufacturing job was lost every 19 minutes. Where were those opposite then? Where were the trade unions then? We did not hear a peep from them. One manufacturing job was lost every 19 minutes. And nationally our average yearly growth over the last 14 years has sat at 0.4 per cent. That is why we were losing jobs.

However, in Western Australia, our average growth in manufacturing has been 4.8 per cent per annum for the last 14 years. Nationally, there has been 0.4 per cent growth in manufacturing jobs. In Western Australia, there has been 4.8 per cent growth, clearly demonstrating that high-end manufacturing and innovation of the future can be done in Australia, rather than the way in which manufacturing has been done in states like South Australia and Victoria.

The question in this current debate is: why? That is what I would like to share now with my colleagues in the Senate. What can we in Western Australia share with those other states that are still struggling to modernise their manufacturing industries? Endless task forces and interventions and subsidies were not the right answer—they were never going to be the right answer—but Labor and the unions stubbornly refused to accept this. Not only did they not order a single ship in six years of government—resulting in the current valley of death and the current unemployment for ship workers in South Australia and Victoria—but their policies resulted in the loss of one job every 19 minutes.

Over the last 14 years, WA manufacturing industries have grown by an average of 4.8 per cent per year. What does that mean? Total direct employment in Western Australia's manufacturing industries increased from 75,000 in the early 1990s to just under 90,000 in 2014-15. That is 90,000 workers directly involved in competitive and productive manufacturing in our state of Western Australia. In addition to those employed directly, there are 8,900 employing businesses involved in manufacturing. I will say that again in case anyone misheard the numbers. Not only do we have over 90,000 workers directly employed in manufacturing in Western Australia, we also have 8,900 employing businesses involved in manufacturing, and most of those are small businesses manufacturing high-end, bespoke engineering products.

With that much manufacturing industry, what is the value of manufactured exports in Western Australia? Last financial year WA exported manufactured goods totalling $19.7 billion, which accounted for a full 18 per cent of the state's total exports. I find that quite remarkable given the exponential growth of WA's commodities over the past decade. Prior to this growth over the last decade, manufacturing exports from Western Australia accounted for over 20 per cent of the state's total export earnings. Those figures alone demonstrate the fallacy of the arguments of those opposite that ongoing government subsidies and other protection measures are needed to be competitive in Australia today. WA has clearly, for the last 14 years and more, demonstrated that we can compete in a global market and that we can manufacture high-end complex and bespoke equipment, but just not in the way that has been done in the past.

As everybody in this chamber would know, over the past decade there has been a steep change in the size and scale of major resource projects in Western Australia. This has also generated a significant additional capacity in the management and execution of major manufacturing and development projects in what are some of the most technically challenging operating environments in the world. Over the last 10 years to 2013-14, business investment in Western Australia has totalled $484 billion. As of this June quarter, the top three projects by dollar value alone were the Gorgon LNG project, at $61 billion; the Wheatstone LNG project, at $29 billion; and the Prelude LNG project, at $12 billion—all largely constructed and built by Australian workers across Western Australia. From the Gorgon to the BHP Billiton and Rio Tinto expansions, Shell's Prelude and Hancock's Roy Hill, there is a significant pool of businesses and individuals who have been involved in multibillion-dollar greenfield and brownfield projects which have significant manufacturing and construction elements. These activities include managing suppliers across different jurisdictions and time zones, following strict time schedules and being intimately involved in the transition to operational phase—which, again have large manufacturing and construction components. Despite an often simplistic view of the work we do in Western Australia to mine and export our natural resources, the reality is that these operations span logistic chains of hundreds of kilometres—and sometimes thousands of kilometres—employing the most technically innovative and sophisticated systems in the world. We also have the manufacturing hubs and the industrial hubs to support our high-end manufacturing to provide internationally competitive exports.

For example, the Australian Marine Complex at Henderson is a world-class centre for excellence in manufacturing, fabrication, assembly, maintenance and technological development. It services the marine, defence and resource industries. Since its opening in July 2003, the Australian Marine Complex has delivered 373 major infrastructure and manufacturing projects, worth in excess of $1.75 billion and generated directly, in Henderson alone, more than 26,000 jobs. Today, more than 150 businesses are located within the Australian Marine Complex, which is made up of four main precincts: maritime, technology, support industry and fabrication. Australian workers are doing work on internationally competitive projects every day. The common user facility at the Australian Marine Complex also includes a dredged, deepwater harbour, a state-of-the-art fabrication hall with 24-hour, all-weather access; a ready-to-use on-site project office; workers' amenities; and 40 hectares of laydown and construction land. It also has five wharves—a load-out wharf and a marine services wharf with capacities of 3,000 and 15,000 tonnes respectively. And there is a newly developed marine wharf, a floating dock and all of the facilities required to build internationally competitive and cost-effective ships. In fact, as of today, more than 250 ships have been built and delivered at the Henderson facilities. Currently Austal, one of the shipbuilders on location, is not only building 15 per cent of the US naval fleet but also building naval vessels for overseas countries at Henderson facilities. They are doing it on time, on budget and with Australian workers. They are using Australian engineers and metal trade workers. But, again, we are doing it in a competitive way and not in the way that has been done, and that those opposite still pine for—for the workforce and work practices of the past.

For Western Australia, manufacturing represents an important opportunity to build on our established primary industries and to diversify our economy, just as it does nationally. There are opportunities for local manufacturers to meet the demands of emerging and established markets, particularly under the new free trade agreements and in emerging economies in our own region. While much has been made of the manufacturing sector being in decline nationally, this is not the case in Western Australia. Even though manufacturing is not the dominant sector of the Western Australian economy, it is still a solid base and it is still growing strongly and has much greater capacity to grow—again, not to grow in a subsidised, old-style, table-thumping union style but to grow in a competitive and productive fashion where the unions, the businesses and the government are working together to make sure that the industries can flourish.

Again I will just remind people why it is an absolute fallacy that industries here need to be subsidised indefinitely and that they can just rest on their 50-, 100- or 200-year-old industrial relations and ways of doing business. In Western Australia, manufacturing accounts today for 17 per cent of our export earnings. Not only have we been manufacturing multibillion-dollar projects in Western Australia for Western Australian oil, gas and mining companies but also we have been exporting $21.9 billion every year worth of manufacturing exports. There are 8,900 employing businesses in manufacturing. Eighty-five per cent of those have an annual turnover of less than $2 million, but those that survive and thrive are innovative and productive to make themselves internationally competitive. The industry in Western Australia directly provides 91,000 specialist jobs, making manufacturing the state's seventh largest employer, which is pretty amazing given all of the other pressures on the workforce in Western Australia. Manufacturing contributes 4.9 per cent of gross value to the Western Australian economy. But why is manufacturing so different in Western Australia from the rest of the country? Why have we been increasing nearly five per cent per annum over the last 14 years, when nationally it has been less than half a per cent?

To find the answer to that you really have to go to the history of Western Australia. Western Australia has always been a trade exposed economy and, right back to Federation, it never relied on the subsidies that eastern seaboard colonies received post-Federation for their already protected manufacturing industries.

In Western Australia, it developed instead into industries geared towards primary industries and exports. From 1829, our economy focused on wool through to sandalwood, whaling, fishing, timber, pearling and gold; and, more recently, to nickel, iron ore, alumina and natural gas. These were all commodities that relied on sales on the open market internationally and not our domestic market, which was so much of the economies of the eastern seaboard colonies.

Western Australian manufacturing, as we recognise it today, began to develop and expand during World War II. After the end of the war, growth opportunities were limited and states such as Victoria and South Australia grew a heavy industry base servicing the domestic Australian market. Manufacturing represented a substantial component of our national economy and, by the late 1950s, it accounted for 29 per cent of Australian GDP.

But this national industry policy affected WA manufacturing very differently. Due to the size of the nationwide manufacturing centres, national industry policy ended up focusing on areas where plants and employees were concentrated. This pattern of industry never arose in Western Australia. As I said, WA has always been trade and export focused.

While a large-scale manufacturing industry was not created in WA, as it was in the Eastern States—which are now in the process of adjusting and downsizing, and the subject of much hand wringing and eternal angst from those opposite with very few solutions on how to change it—the WA manufacturing industry emerged in the 1950s and 1960s as the agricultural and resources sector rapidly expanded. It was at this time that resource development was prioritised and important industrial hubs such as Kwinana emerged. These allowed for WA manufacturers to capitalise on support services and draw on the expertise concentrated within these local industrial and business hubs. Focusing on the requirements of WA primary industries encouraged other manufacturers to become more flexible and efficient in meeting the needs of niche industrial products, which is a trend that has continued today—again, not subsidised but innovating to meet not only the domestic requirements in Western Australia but the international market.

Despite the primary sector experiencing booms and busts during the second half of the 20th century, by the mid-20th century, a small but focused manufacturing sector had successfully adapted to major economic change while accommodating WA's needs. While WA's economy has flourished in recent years on the back of the significant expansion in the resources sector, it has provided a range of benefits for the wider community, including a world-class internationally competitive, export oriented manufacturing sector.

While ultimately it is the private sector that will determine manufacturing's future in Australia, the government must create the best environment to foster success but they cannot do it alone. It requires the support of business and also the unions to make sure that we are able to make the changes, transform and make the hard decisions which some states clearly have not been able to do to date.

In summary, it is for these reasons and the example from Western Australia that I support this current program, the ATS; however, like any programs, it is a transition program. It is not a program that is there to be a hammock forever. It must finish so that the industries that it is helping to transition are able to stand on their own feet.

The manufacturing sector, as I said at the beginning, has a very viable and bright future in Australia. It can provide skilled jobs and revenue for the long term for the Australian economy. Western Australia is living proof that it can, but complaining and continually seeking subsidies and refusing to take decisions will not deliver reform. (Time expired)

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

In the few minutes available to me, I would like to say that I support this motion that is being put forward today. I am a big supporter of the Automotive Transformation Scheme that was introduced by the Labor government in 2009 and has been eviscerated by the coalition government.

I note that Senator Reynolds gave us a lengthy speech on the history of the manufacturing in Western Australia but made very little mention of the subject of this motion, which is the automotive industry. I also take issue with the fact that she failed to acknowledge that the Western Australian situation is completely different to that of South Australia and Victoria, who are not as geographically blessed as Western Australia. They have not had a massive resources boom which has enabled the huge investment in manufacturing and resources in her state. I also take issue with her assertion that somehow the workers in the automotive industry in Australia are the architects of their own industry's demise. Nothing could be further from the truth.

The workers in the automotive industry deserve the support and not denigration by the coalition in this place. Those workers are highly skilled and highly effective. It is not their fault that competition has been introduced into the automotive sector around the world and is going through a significant restructure at the moment.

We should all be here supporting the transformation scheme introduced by the Labor government. We should be moving to amend the scheme so that the money left in there—cynically left in there—by the coalition government, and virtually inaccessible to the automotive industry and ancillary industries, is freed up. Workers in the automotive industry in my home state of South Australia and in the state of Victoria should be able to access that money to transform the industry, continue provide good jobs for working Australians and provide skilled industries for Australians. We accept that the car industry now, unfortunately, because of the action of the coalition government to force Holden out of this country—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

What about Mitsubishi?

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

That situation has left hundreds of thousands of workers around Australia desperate to find out where they are going to have a job in the future. What have you ever done about it, Senator Back? What have you done except sit there and pontificate.

Opposition senators interjecting—

Stephen Parry (President) Share this | Link to this | Hansard source

Through the chair. On my left! Order! Senator McEwen, you have 15 seconds—very passionate it was too.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I am passionate about this industry, because in my home state of South Australia it is the workers in the northern suburbs of Adelaide who are directly affected by the inaction of those opposite, and they will remember it come the next election.

Stephen Parry (President) Share this | Link to this | Hansard source

Order! The time for the debate has expired.