Pat Conroy (Charlton, Australian Labor Party) Share this | Hansard source

I rise proudly to oppose the Automotive Transformation Scheme Amendment Bill 2014. This bill represents the final nail in the coffin of the automotive industry in this country. It is a bill that demonstrates yet again the rank duplicity of the Liberal Party and the Prime Minister—a Prime Minister who said before the last election:

… above all else, without a motor industry is not an Australia that makes things any more and is not a first-class economy.

He also said:

I want to see car making survive in this country, not just survive but flourish.

These are the two statements that the Prime Minister chose to make on the auto industry before the election. Unfortunately, we have gone from Prime Minister Chifley, who built this nation and drove the first Holden off the assembly line, to this shadow of a Prime Minister. While we have President Obama in the United States, who killed Osama bin Laden and saved GM, we have Prime Minister Abbott in this country, who killed Holden and saved glib slogans.

The ultimate tragedy of this bill is that the death of the auto industry was not inevitable. It could have survived and prospered. Before I turn to why it was not inevitable, I would like to highlight the massive contribution the auto industry makes to our economy. Those on the other side in this debate have derided it. We even had the member for Herbert claiming, ridiculously, that only 1,600 jobs were at stake because of this bill, which is patent nonsense.

This industry employs 50,000 workers directly and most studies have identified that around 200,000 indirect jobs depend on the manufacture and assembly of automotive components and vehicles. It spends $700 million on research and development annually. To put this in context, this is four times the total business expenditure on R&D conducted by the entire agricultural, forestry and fishery sector—four times that entire sector's investment on R&D. It is equivalent to the investment in R&D by the entire media and telecommunications sector. That is a sector that people perceive as much more innovative and high-tech than the automotive sector, yet almost exactly the same amount of R&D is conducted by the automotive sector as by the entire media and telecommunications sector. The automotive industry contributes 4.1 per cent to Australia's total BERD—business expenditure on research and development—10 times its contribution to total employment. In other words, it punches well above its weight. The auto sector employs more researchers than the scientific research and services industry, for example. The industry spends a disproportionate amount on training. Many skilled tradespeople I have met in other manufacturing industries undertook their apprenticeships in the auto industry and then went out to work in other industries or set up small businesses in metal fab industries or the engineering sector. They got their start in the automotive sector. The auto industry has also been responsible for the adoption of advanced production techniques that have modernised our industries and boosted productivity.

Lean manufacturing and 'just in time' production methods were pioneered in this country in the automotive sector and then spread not just to other manufacturing industries but to other sectors of the economy. The automotive industry provides critical mass for the machine tools industry, metal-processing industries and many other industries. Without the automotive industry, these upstream industries will take a hit. The multiplier effect of automotive employment is much higher than in other industries such as mining. It is an industry that is much more deeply embedded in our economy.

These are all positive economic spillovers that economic flat-earthers never acknowledge. Commentators who argue that all jobs are equal and that people and capital can flow seamlessly from one industry to another not only have no idea how the real economy operates but also ignore the significant theoretical advantages modern economies enjoy from an advanced manufacturing sector such as the automotive industry. We will miss it when it has gone. As other contributors to this debate have noted, modelling from the University of Adelaide has found that its death will be a two per cent hit to gross domestic product.

And the tragedy of this debate is that it was not inevitable. We are one of only 13 countries in the world that can design and produce a car from start to finish, and every one of these nations recognises the huge positive spillovers associated with this industry and provides assistance to support the industry. The difference is that our level of assistance was comparatively low. It was the equivalent of $17.40 per capita compared to $90 in Germany and $264 in that bastion of free enterprise the United States. The truth is our industry can compete.

We need to make an important differentiation between the plight of companies such as Ford and Mitsubishi versus General Motors Holden and Toyota. Those on the other side have been trying to throw in the face of the Labor Party that Ford and Mitsubishi ceased production under a Labor government and therefore we are equally culpable for the death of the industry and are all hypocrites. Nothing could be further from the truth. The real truth of this matter is that Ford and Mitsubishi either never had or lost their export mandate.

By the end of their production Mitsubishi was producing around 10,000 vehicles in this country purely for the domestic market. It was clearly unsustainable. Another issue with the Mitsubishi departure is the timing. Mitsubishi announced it would cease manufacturing in early February 2008, around two months after the election of the Labor government, and it is well known that they made that decision prior to the 2007 election and gave a commitment to then Prime Minister Howard not to announce it during the election period so as not to politicise the issue. I am not criticising that decision. I am not even criticising the request from Prime Minister. But it has been well known that Mitsubishi was on its last legs for a number of years under the Howard government.

When Ford chose to cease manufacturing they were producing around 30,000 purely for the domestic market. They did not have an export mandate, which was a crucial weakness in their business model. The last time they had a real chance at developing a sustainable presence in the Australian manufacturing market was in the early 2000s when they were looking at exporting Ford Territories—an excellent SUV; I drive one—to the Thai market, where there was perceived to be a market gap for what would be considered medium-size SUVs that handle like a car. Much hope was pinned on the Thai free trade agreement to give them this access to enter that market. What we saw was another dud trade deal by the coalition, who have a history of getting signatures on paper but rarely getting deals that follow through with real, concrete economic benefits.

With the Thai FTA we saw a reduction in tariffs between the two countries on automotive goods reduced to zero almost overnight. This was seen as a great hope for getting Territories into that market. But the Thai government changed their motor vehicle registry and licensing scheme to apply a much higher licensing charge for vehicles with large engines. It effectively established a much higher barrier for Territories getting into the market than the tariffs that previously applied. This is an example of behind-the-border barriers that often are much more significant to export chances than the nominal tariff rates. This was the last hope that Ford had of winning an export mandate and having a sustainable manufacturing presence in Australia.

So let's have none of this attempt to divert this debate by talking about what happened to Ford and Mitsubishi. The truth is that both Toyota and General Motors had strong production presence in this country. They were producing well over 100,000 vehicles in Toyota's case and slightly under 100,000 in Holden's case. Toyota was exporting more than half their production of Camrys to the Middle East. It was a Camry that was seen as the best-quality Camry outside of Japan. Holden was in an excellent position to export more of their vehicles once the Australian dollar had dropped as it now has.

In the industry it is well known that, once the dollar drops below 85 or 90 US cents, Holden is then in a great position to export tens of thousands of vehicles to the United States and other countries. In the US they love our large rear-wheel-drive sedans. They are very popular as police vehicles, as high-end limousines and, in fact, as relatively comfortable taxi cabs. The leadership of Holden were very confident that, if they got through the strong headwinds of a high Australian dollar and the need for renewed capital investment, they would be in a position to export tens of thousands of vehicles to North America and would be in a great position again.

But what these companies needed was strong support for co-investment to make the large capital investments necessary to update their production line and increase efficiency. What had happened was the Liberal Party broke the bipartisan commitment to this industry that not even Prime Minister Howard dared to break. Holden was very clear that, if the Liberals followed through with their threat to cut $500 million from the Automotive Transformation Scheme, they would have to leave. Holden's head of government affairs, Matt Hobbs, stated in June 2013 that they would cease manufacturing if there were any reduction in taxpayer support. When asked about this comment, Holden's then GM, Mike Devereux, said that this was absolutely true. It is exactly what happened.

The disgraceful bullying and bellowing by the Treasurer did not help either. I remember those days in question time in parliament in December or late November where the Treasurer of this country dared General Motors to leave this country. He bullied them and dared them to leave this country. Once Holden left there was no critical mass of suppliers to keep Toyota in this country. What is worse is that this bill not only represents a $500 million cut to the ATS but also embodies a $900 million cut to the ATS. It is in fact the final nail in the coffin for the automotive industry.

What we have seen since this announcement have been glib words and slogans from the government—pandering, patronising words to the workers affected. We have the Prime Minister of this country talk about auto workers. He said many of them will be liberated to pursue new opportunities to get on with their lives. What an offensive, patronising comment. We had the member for Herbert in this place today saying that workers should get on with their lives—like the termination of this industry and loss of at least 50,000 jobs, if not hundreds of thousands of jobs, is somehow something like a football team losing where you get over it quickly and get on with your life.

The truth is that, not only will these workers and their families be devastated; communities will be devastated. The impact of this loss will be very severe. A survey of redundant workers in the components sector following a couple of mass shutdowns last decade found the following: the unemployment rate amongst these people six months after they were made redundant was 48.2 per cent. Fifty per cent of workers six months after losing their jobs were still unable to find work. Only 41.4 per cent of the workers who had managed to find jobs were able to secure employment in the manufacturing sector, and 31 per cent of the workers who found jobs had to accept casual jobs. Of those lucky enough to find employment, 89.7 per cent suffered a reduction in wages, with the average reduction being 28.3 per cent.

Let me repeat that. Half of the workers impacted could not find jobs. Of the half that were lucky to find employment 90 per cent suffered a wage cut, and the average wage cut was almost 30 per cent. Exactly half of those who were made redundant believed that their long-term financial security has suffered significantly from this redundancy.

This survey's findings was supported by outcome data from the Mitsubishi labour adjustment package. Of the 1,117 workers who exited Mitsubishi, one year later 20 per cent had retired. Of the 936 who received support services, 261 have been unable to find a job, representing an unemployment rate of 27.9 per cent compared to the general South Australian unemployment rate of 5.1 per cent at that time. So to tell these workers that they will be liberated to pursue new opportunities when they are facing years, if not decades, of unemployment is offensive and patronising in the extreme. It demonstrates, yet again, that this Prime Minister is out of touch with what everyday Australians face in the community. It is appalling behaviour.

And there has been hypocrisy by others in this debate. For example, the member for Dawson was railing against automotive subsidies when he was recorded as standing up for ethanol subsidies very recently. The member for Corangamite was equating this mythical 6,000 temporary construction jobs that might accrue to the East West Link if it ever begins construction with the 50,000 direct long-term sustainable jobs of the automotive sector. So the contribution of those on the other side has been, at worst, middling but in reality quite appalling.

A future without assembly operations is very dire for components producers and R&D. There are real advantages that accrue from collocation, and I fear for the rest of the industry once general assembly finishes in this country. It is symbolic of who really controls the cabinet, because it is well known that the Minister for Industry tried to fight for this industry but he had zero influence in cabinet and got rolled, yet again, just as the Minister for the Environment gets rolled time and time again. I sometimes wonder why the Minister for Industry and Minister for Environment bother showing up to cabin given they have zero influence on it.

The truth is that this bill represents the final nail in the coffin of a once-proud industry—an industry that both sides of politics profess to support; an industry that the Prime Minister said was a test of a modern economy. You could tell that Australia had a modern economy because we had an automotive sector. Well, under his watch and under the watch of the Treasurer, the member for North Sydney, we have lost that industry. We have lost the claim that we were one of 13 countries that could make a car from scratch. This country will be poorer for it. Workers, their families and communities will be devastated, and it will be the epitaph of this government.

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