Wednesday, 1 October 2014
Automotive Transformation Scheme Amendment Bill 2014; Second Reading
I rise to speak on the Automotive Transformation Scheme Amendment Bill 2014.
In three years time, Australia will no longer have a local car manufacturing industry. Sixty-five years of proud achievement in manufacturing, employment, research, development, skills and productivity will come to an end. That great site of the first Holden rolling off the assembly line, being delivered to Ben Chifley—now 65 years down the track—gone. This has been a devastating blow for tens of thousands of Australian automotive workers and their families, many of whom work in my electorate. But not content with that timetable, the Abbott government is now determined to drive not only the car manufacturers to the wall, but the entire car component sector, and with it, tens of thousands, possibly hundreds of thousands of jobs, many of them in rural and regional Australia.
The Abbott government's Automotive Transformation Scheme Amendment Bill cuts $500 million in funding for the car industry, ending all assistance by 2017. The only transformation this bill will achieve is to transform the car components sector from an industry that directly employs 50,000 people, and a further 200,000 indirectly, into oblivion.
The news in February that Toyota would join Holden and Ford in ceasing its automotive manufacturing operations not only signalled the end for the local car industry; it was a devastating blow to those employed throughout the car component supply chains. This will have a lasting impact on our economy that goes way beyond the direct jobs lost at the three car makers.
Manufacturing is a critical part of the Victorian economy, and Holden and Toyota sit at the heart of Victoria's automotive manufacturing industry. Australia's car makers directly employ thousands of people, and with around 70 per cent of Australia's automotive industry's component manufacturers based in Victoria, indirect employment through their supply chains results in many more thousands of jobs, many of which are in regional Victoria, many of which are in small and medium enterprises.
In my own electorate of Ballarat, local car component manufacturers produce metal pressings and assemblies, disk brake pads, seatbelts, exhausts and automotive electrical harnesses. There are small companies in very small towns throughout regional Victoria making seat covers, making seatbelts; all of them highly reliant on Toyota, Ford and Holden.
The jobs, design expertise, manufacturing skills and investment provided by our automotive industry flow through the economy and into other sectors. Without a local car industry many of these businesses will simply not have enough work to be viable. The wilful destruction of the automotive industry rips the heart out of manufacturing in Australia, cascading through the economy like a series of dominoes. That is why Labor believes our automotive industry is vital for our economic future and it is vital for Australia to stay at the forefront of innovation. This government's decision to compound its destruction of local car manufacturing by slashing the Automotive Transformation Scheme, and then terminating it in 2017, is a further betrayal of the small businesses in the car components sector, and tens of thousands they employ.
Holden's Managing Director, Gerry Dorizas, has warned that suppliers are extremely vulnerable without the additional $500 million worth of funding originally allocated by Labor under the Automotive Transformation Scheme. He points out that suppliers have invested based on the ATS to break even: 'They needed this kind of subsidy and, at this particular time, they're in dire straits,' Mr Dorizas said. And, without this support, the car industry might not be able to even continue in this country until 2017, because, without the supplier base, nobody will be able produce cars, especially for the parts that are specific to Australia.
About two-thirds of the parts in a Ford Falcon and a Ford Territory are made locally, and up to 70 of the parts in a Toyota Camry. Even though less than half of a new Commodore is now made with locally produced parts, the reality is that those vehicles cannot be built here without Australian-made components. Without this support not only will car manufacturing be driven out of Australia, but so too will the car component sector. People who have invested their life savings in businesses that supply the car makers now risk seeing everything gone. Workers who have spent their lives training to work in manufacturing now risk seeing their jobs taken away with little prospect of alternative work. Anywhere that occurs is devastating for the businesses and those they employ; but outside the major cities those effects are multiplied, with the crucial skills base that supports regional economies like my home town of Ballarat lost forever.
Labor has always supported a strong local car industry because it has always been about so much more than Falcons and Camrys and Commodores. Government co-investment in the automotive industry has always delivered far more in return that was ever put in. That investment delivers a return on jobs, a return on the multiplier for local economies and a return for design and innovation across the entire manufacturing sector. The $2.7 billion that Labor invested in the industry has seen $26 billion in new investment. The car makers wanted to stay in Australia and wanted to continue to invest in this country—invest in manufacturing, invest in innovation, invest in jobs and invest in local communities. Instead, we had the Treasurer taunting them to leave, insulting their contribution to this nation and casting aside 65 years of a proud local industry.
Everyone in this parliament would have driven a locally produced car at some time in their lives. For many it was their first car. My first car as an 18-year-old was a cyan blue HQ Holden. My brother did his apprenticeship at Fishermans Bend as a fitter and turner. Holden has been very much a part of my own family's story and history. My brother-in-law still works on the assembly line at Toyota today—but not for much longer. For other families it was Ford or Toyota. Particularly in recent years Australians took great pride in knowing that the locally built cars they drove were as safe and as well made as those they could buy from overseas—in fact, even better.
In recent years the car industry has struggled with changing tastes—families have abandoned the traditional big six for an SUV—and especially the high dollar. In many ways the car industry has been forced to pay the price for the success of our resource economy. But with modest government support it still had a future building cars here and driving employment, research and development, and skills and innovation in Australian manufacturing.
The facts are that, even today, four of the 10 best selling cars in Australia are still locally made; 50,000 people are directly employed by Ford, Holden and Toyota and their 150 component manufacturers; and the auto industry is still the largest R&D contributor in the Australian manufacturing sector, contributing almost $700 million annually. These are hardly the vital signs of an industry in its death throes. But still this government, which is obsessed with ideology above common sense, has decided it as industry Australia could best do without. The reality is that it will cost taxpayers many times more to let this industry fail than it would have cost to support it. Modelling by the University of Adelaide shows the loss of the industry will cut our economy by $9 billion, or about two per cent of GDP. Higher welfare payments and lost tax revenue will exceed $20 billion and it will be a decade before the economy overcomes this shock.
In South Australia and Victoria it could be nearly two decades before the local economies overcome the loss of a critical part of their manufacturing base—and it is even worse for regional communities. In Ararat, for example, the local car component factory there is one of the only employers in town. What do you do to the economy of that town when you rip that out? Do you tell people who have been employed for 20, 25 or 30 years in that particular components factory that they could go into retail or the services sector? What do you do in Ballarat, which already has a higher than average unemployment rate? Where are the next jobs coming from? The cascading effect for regional and rural communities, particularly for car componentry in Victoria and South Australia, is going to be quite staggering for our local economies. What is so disappointing about the government's decision to rip this money out of the car componentry sector is the compensation and assistance to transform our economies. Do think that is going to make its way to Ararat and to Ballarat? It might make its way to Geelong and Broadmeadows, but I can absolutely assure you that we have not seen one dollar come into our local councils and economic development groups to assist those smaller communities to deal with these shocks.
And it is not as though the Abbott government have not seen this coming. Indeed, they have been repeatedly warned of the consequences of their $500 million cut in assistance for the industry and what effect it would have on the automotive manufacturing industry and our economy. They were warned before the election when they announced that this was their policy, they were warned when they shut down the car industry, and they continue to be told how damaging this policy is now. My most immediate thoughts are with the businesses and employees who are going to be directly affected by this decision. Within the next three years thousands of workers who have produced world-class cars will through no fault of their own be staring at the loss of their livelihood.
In the years to come the destruction of this industry will spread across Victoria and South Australia as many workers and businesses not directly employed by Ford, Holden and Toyota—small to medium enterprises in this sector—experience the shockwaves of this collapse. Many of them are in small regional communities. They were established as family businesses. They have worked really hard to win contracts to supply our major car manufacturers. They have worked incredibly hard to deal with the shocks of Chinese manufacturing and the high Australian dollar. They have diversified what they have been doing within the car componentry sector. But literally overnight they have been told that they are not getting any more support from this government.
Many of these companies have been looking to diversify, to find new contracts that will allow them to survive and continue to grow their business and their workforce. This is precisely why the early winding up of this scheme is so devastating. With just a little support and some certainty, many of these businesses might have been able to find a way to transition from cars to other forms of manufacturing, despite the best efforts of the Abbott government to finish them off. I have seen examples of car component companies that started to look at how they might actually engage in renewable energy manufacture particularly in the solar area. Good luck with that under this government as well! Instead, many now risk premature closure, being forced out of businesses even while Holden, Toyota and Ford still seek to build their final locally produced cars. Having finished off locally produced cars, the Abbott government now seems determined to rid this country of all evidence we even once had a car industry.
Labor will stand up for manufacturing jobs and the tens of thousands of Australians employed directly or indirectly by the industry and the 150 car component manufacturers. We will stand up for jobs and businesses and innovation and do everything in our power to stop this ill-judged attempt to hasten the demise of our car industry by cutting suppliers off at the knees before they have a chance to reposition themselves. This bill and the cuts to this assistance, particularly to the car componentry sector, will have a devastating impact on communities across this country but particularly in my home state of Victoria, in South Australia and in rural and regional economies. The fact that the government has failed to engage with any of those communities about how we may transition our economies, how we actually deal with what is a substantial shock to the manufacturing base of these economies, is, frankly, appalling. It is easy on the headlines. We know that there are large-scale job losses in Broadmeadows. We know the large-scale job losses in South Australia and we know the large-scale job losses in communities like Geelong who have had many, many shocks. But this bill and the implications of this bill for the hundreds of car component employees and the hundreds of businesses that have been feeding those industries, and the failure of the government to effectively transition those through our economies right through country Victoria and country South Australia, frankly, show that this government has absolutely abandoned them. It is not interested in manufacturing jobs or in growing regional economies particularly when it comes to manufacturing—those great jobs that allow us to earn a good living and provide a great opportunity for young people to be trained and stay within their local communities. Frankly, this government should be ashamed of the decisions it is making when it comes to regional and rural Australia.
Once again, Mr Deputy Speaker Goodenough, it falls to Labor members to stand up for workers in this country—stand up for workers, their families, their livelihoods. It will not surprise you, Mr Deputy Speaker, that I oppose the Automotive Transformation Scheme Amendment Bill 2014, as does every member on this side of the House.
This bill, if passed, will give effect to a $500 million cut to the Automotive Transformation Scheme, which will now end effectively in 2017. It is certainly one of the most callous attacks on an industry which has really been in this government's focus for some time, notwithstanding the fact that they came to an election a little over 12 months ago promising to give everything they could to support the automotive industry in this country to make sure that it flourished. Ever since taking up the power they have done everything possible to ensure that this industry retreated out of this country. As a matter of fact, along with that they have ensured that a lot of the high-grade manufacture that we have been noted for in this country also goes by the wayside. This bill will also give effect to what is a termination of the Automotive Transformation Scheme in its entirety and beyond 2018 this will effectively mean another $400 million cut.
These have been investments which have been quite well thought out in supporting an industry. They have not been well thought out in terms of giving a handout to an industry, but in giving an industry the opportunity to coinvest particularly in terms of research and development. Since coming to office, this government has done nothing except oversee the slashing of many thousands of jobs and taking thousands of dollars out of the pockets of pensioners, families, job seekers, university students and TAFE students.
This is a heartless government. But when it comes to an issue of advanced manufacture in this country, this is something that goes to the country's future itself. If we lose the strategic ability for advanced manufacture, we lose a lot of our strategic ability right across the wide parameters of our economy. One of those areas can be looked at in terms of the construction of submarines. If we lose that ability, we will be dependent on foreign powers to provide our defensive ability for the future. But I will not digress onto submarines on this occasion.
This bill is going to leave not only the automotive manufacturing companies, which are winding down but still producing quality cars here—as you can see from our Comcar fleet, Mr Deputy Speaker—but importantly, it will leave the component manufacturers in this country with no support. I do not know whether people opposite appreciate this, but not everything in a car is actually made by Holden, Toyota or Ford. They access the instrumentation, the fabric and the paint, for example. These all come from other forms of manufacturing within the Australian economy.
The list goes on. As a matter of fact, when you look at the amount of componentry that goes into a vehicle, it sustains something like 200,000 people in this country at the moment. We know that they will not all be working in the automotive industry into the future, but we want to make sure that they have the ability to transfer into other areas of advanced manufacture, and this is where a level of coinvestment, strategising and assistance is required to help these companies target future markets both in this country and abroad.
We have very good-quality trade skills in this country when it comes to component manufacture. We do not want to lose that by turning off our ability to give assistance to these companies and help them target other markets and help their staff acquire the skills necessary to transform their positioning for the future.
We are talking about something that has really come very quickly. Bear in mind that it was the Labor government in 2008 that responded to a downturn in the industry, a downturn in the dollar, to ensure that there was investment being made in the automotive industry of this country and, more importantly, to ensure that the automotive industry would continue to employ people. It was not just about employing the people of Broadmeadows, Elizabeth, Geelong or other areas where the manufacture of vehicles took place; it was about employing people from all over, including from areas in my electorate of Fowler. If people opposite started looking around their own electorates, I can assure you that they would find that there are many companies in their electorates that have downstream aspects associated with the automotive industry. This is something that members opposite should not close their minds to simply because they have the view that they do not support vehicle manufacture in this country.
Whilst we might have brought in the scheme initially to help stabilise the industry and the challenges faced by the global financial crisis, the fact is that this scheme, the ATS, has been particularly important in encouraging co-investment. This scheme was never a blank cheque. It was never a government gratuity. It applied where there was co-investment—where there was investment being made by the industry in its own future. In Australia, we pride ourselves on trying to develop as a research and development hub. The fact is that the automotive industry in this country is the largest R&D contributor in the country. These are things which should not be taken for granted and they are certainly things that we should not be rushing to try to close off as quickly as possible.
It was not all that long ago that we had discussions about the likelihood of Holden remaining in this country. Ford had indicated some time back that it did not see its future in manufacturing here—but Holden did not and nor did Toyota at that stage. It was the incoming Treasurer who goaded Holden on whether they wanted to stay here or not. It was all based on whether there would be investment from the Commonwealth, public funds, in a company such as Holden. The truth of the matter is that every advanced country that produces a motor vehicle all invest in and subsidise to an extent manufacture.
On last count, I think, there are only about 13 countries in the world that have the capability of mass production of motor vehicles. At the moment we are fortunate—we are one of those 13. That is why I get very angry when those opposite just want to rally around this call that, 'If you cannot produce at our insistence and at our costs and under our conditions, then get out.' This is not just about Ford, Holden and Toyota getting out of our country; it is also about the fact that they are going to deprive the development of many of the skills needed for those skilled jobs in the industry—skills that can actually be transferred into other areas into the future. They are the skilled jobs which are being closed off here and now.
That is something about which members opposite should hang their heads pretty low. To be able to say that one of the things they have been able to achieve in government has been to drive out of existence in this country not only the manufacturing of motor vehicles but also the component manufacturing industry is not something to be proud of. No-one should be rushing to take credit for that, because it is something that goes to our very future.
Holden were goaded by the Treasurer as to whether they should stay or go and whether they could 'stand on their own two feet'—as, I think, the Treasurer put it at the time. It is interesting to note what the current managing director of Holden, Mr Gerry Dorizas, had to say only last week. In focusing on the components industry, Mr Dorizas was quoted as saying:
… underlying component suppliers—not car manufacturers—were most vulnerable without the additional $500 million worth of funding originally allocated by the Labor government under the Automotive Transformation Scheme.
This is the reason why we're actually very focussed on the supplier base, because if that happens then nobody will be able to produce cars, especially for parts that are specific to Australia.
Similarly, last week, the Federal Chamber of Automotive Industries put out a press release that said that this will have 'serious consequences for the 45,000 workers directly employed, and the more than 100,000 workers indirectly employed in the automotive sector, around Australia.'
The chief executive of the chamber, Mr Tony Weber, went on to say that it 'was important the government realised the impact any cut to the scheme would have on the Australian automotive supply chain, who have already factored ATS funding into their long-term business plans.' He was talking about how they are using the funds that are there—the funds that they have relied upon—to target future markets. This is not about propping up an industry; this is about supporting an industry that is important, in my humble submission, to our future.
It just beggars belief that it was only 12 months ago that the Prime Minister, Tony Abbott, said:
I want to see car-making survive in this country, not just survive but flourish.
If you look what they have done ever since that comment, it certainly belies any sense of reality, because everything that they have done has gone the exact opposite way. They have chased Holden out of the country and Toyota has followed. When it comes to not protecting but now supporting the manufacturers of advanced componentry, even the industry is saying that it is important to them to be able to reshape their operations to target markets in not only the automotive industry but other areas in advanced manufacturing itself. This is something that should not just be glossed over.
I know the speaking list for this debate has changed somewhat and not many from the government wish to speak on this legislation, but if they start talking to people in their electorates I think they will change their minds. I know that all members at least have car dealers in their electorates and I suspect most members have received letters such as these. I have received letters from two car dealers, Lansvale Holden and McGrath Holden. They wrote to me about the changes the government is proposing to allow large-scale importation of second-hand vehicles into the country, primarily from Japan and Korea. They make the point in their letters that this will have an impact on the local second-hand car market. It will basically make your second-hand car worthless and certainly drive its value down as a trade-in. In addition to that, they wanted members of parliament to focus not only on what their dealerships do but on what they support in the automotive industry throughout my electorate—and this point would apply to other electorates. A number of jobs are supported locally through local mechanics and local suppliers of various componentry for vehicles, whether it be tyres, radiator repairs, gearboxes or transmissions. These car dealers make the point that, when we talk about cars, it is not just about what you get in, drive and get rid of when you want to change the colour; this industry sustains many, many jobs on an ongoing basis.
They say that from the point of view of their car dealerships and yet we are sitting here this evening ignoring the position that the industry overall is putting—and that is to retain skills in this country. We will not retain these skills if we do not invest in the transformation of this industry. We need to give it a competitive footing so it can go on and do good things for this country, sustain employment and provide us with a future.
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.
I will pick up where the previous speaker, the member for Charlton, just finished. Thirteen countries manufacture cars from beginning to end. All of them had some form of co-investment. Our nation that had the lowest. Now our nation, because of this bill, will have no co-investment. That is the final nail in the coffin of an industry that currently employs 50,000 Australians.
This bill and this government's vision for this industry is not only unfair—because it places thousands upon thousands of Australian families onto the unemployment line—it is also economically reckless. It will cause the rapid withdrawal of those high-skilled wages from communities that can least afford those wages to be withdrawn. It is an economically silly reason as well as being a socially silly reason.
As I said, Ford, Holden and Toyota currently employ 50,000 Australians. There are 150 component manufacturers, including some in my electorate. In Bendigo we do not have as many as other electorates. There are lots of electorates throughout Victoria that have car component manufacturers. Their entire markets have been the big three—Ford, Holden and Toyota—and those jobs are also at risk. Once those manufacturers lose that market we will lose an entire industry and those jobs.
About 200,000 jobs rely directly on the business created by the auto industry—from fields including metal manufacturing to scientific services. In my own electorate we have a small manufacturer that creates some of the mufflers. Another manufacturer creates some of the rubber components. They are looking to new industries and new opportunities because they do not want to close their doors.
One in four of Australia's top selling cars is made locally. That is a point that the government has failed to highlight. This is not an industry that just exports. This is an industry that makes our own cars. Australians are quite proud to own a car. I am not too old but I can remember the debate people had when they first got their licences: would they buy a Holden or a Ford? Is was a classic debate—a debate that has gone on for generations. At the time it was a debate about Australian cars but in the future it will be a debate about cars that are imported.
As I mentioned, only 13 countries including Australia make cars from beginning to end. That is something that we have always been quite proud of in this country. Auto is the largest contributor of R&D in the manufacturing sector—contributing almost $700 million annually.
This government keeps saying that workers will go from good jobs to better jobs. What jobs are they talking about? What are these better jobs that they keep talking about if we lose our R&D capacity and our science capacity? The government talk about jobs being created in the construction industry—an industry that they quite like to demonise. The union is in there working to ensure that jobs in the construction industry are high-skilled high-paid jobs. This government likes to criticise them for being union jobs but at the same time the government says they are highly skilled and highly paid. But they are temporary jobs.
As has been mentioned, members on the other side of the chamber keep talking about the jobs that they are going to create with the dud tunnel—the East West Link tunnel. Again, they are temporary jobs. What happens when that tunnel is built? Do we build another tunnel? Do we just keep building tunnels? Building tunnels is not a decent policy for creating jobs in this country. We actually need to have industry.
It is really simple economics. If you want to have a service industry, you need another industry for that industry to service. If you are someone who works in hospitality, if you are someone who works in cleaning, if you are someone who works in one of our many service based industries, there needs to be other people employed in other work for you to actually have a job. The strength of any economy is its diversity. That means having a strong manufacturing sector. That means having a strong service sector. That means having a strong retail sector. That means having a strong agricultural sector. We need to be doing well across the board. You cannot put all your eggs, all your jobs, in one basket and say, 'That will be how we keep Australians employed.'
This government fails when it comes to having a vision for industry. It also fails to acknowledge that government has a role to play in income investment. The reports from both academics and industry show that it would cost the government more to see industry fail than it ever would cost in support. That is that pragmatic economics policy that this government fails to have and which previous government on the other side did have—that pragmatic, economic view where it will cost more economically and it will cost the budget more long-term if we fail to support the industry.
The greatest impact will be in my state of Victoria, where an estimated 100,000 jobs will be lost—and that is in the same state where youth unemployment is already at a 15-year high. If we go more locally to where these jobs are—in the seats of Corio, Corangamite, Hotham, in parts of Dandenong and my own electorate—we see that youth unemployment is even higher, because, due to the uncertainty created, employers in the component manufacturer industry have not been taking on young people.
That is my next point on youth unemployment. We need industry if we want to have skilled people in the future. One of the reasons that we do not have as many apprentices today is that they do not have an opportunity to get an apprenticeship. One example of where this really stands out in my own electorate is Bendigo Thales. In their day, when they were an Australian defence manufacturer, they had 100 apprentices—25 in each year level. There was a fraternity of apprenticeships and an apprenticeship system. Today they have two apprentices. Where are we going to be in a generation's time if we are not recruiting, training skilling up apprentices? What this bill does, and what this government is doing, to the auto industry is shutting down another avenue for skilling up future tradespeople.
Again, I call on the government to explain exactly where they plan to get these better jobs from. Being in government has to be more than just about rhetoric. If you are going to stand up and say that people are going to go from a good job to a better job, then you need to say what that better job is. It cannot just be construction jobs; there has to be some other form of better jobs. We are seeing attacks on universities, attacks on TAFE and attacks on industries that are high skilled. We are seeing job cuts in the Public Service and job cuts in the CSIRO—the scientists who are working in this space of innovation—and cuts to any single form of innovation fund. Where exactly is this government going to create these better jobs?
The gross regional product in Adelaide and Melbourne will not recover until 2031. That is nearly two decades away. That is what the academics are saying about completely losing this industry—again, another example of pragmatic economics and how bad this decision is for this country. Employment levels will not recover until 2020 in some of these areas. Yet, with, the panic going on in Geelong, we get, 'That is okay; we'll put our hand up for the Land 400 contract—a defence manufacturing contract.' At best, that contract will have 200 high-skilled, high-tech jobs—not production jobs. That does not make up for the 2,000 people currently working for Ford. That does not make up for the 50,000 people working for Ford, Holden and Toyota, and it does not make up for the tens of thousands of people working in components manufacturing. So that solution is not going to help solve this problem going forward.
The Automotive Transformation Scheme was legislated to encourage investment and innovation in the automotive industry. This scheme was about keeping up with the other 12 countries that manufacture cars. These are countries that have high labour costs—countries like Germany and Great Britain. Because their governments actually had vision, they were able to work in partnership with industry to ensure that they continued to have an auto industry. This scheme provides assistance to form co-investment to firms for the production of motor vehicles and engines and to invest in eligible R&D, plants and equipment. If this bill is passed it would cut $500 million in funding from the ATS between now and 2017 and, in the government's shocker budget, $200 million will be cut instantly.
It is critical for this government not to pre-empt the closure of the industry and put at risk an early closure. That is another point: this bill, coupled with the bill that was debated yesterday in the House, the fair entitlements guarantee legislation and the recently negotiated Korea-Australia Free Trade Agreement accelerates the withdrawal of this industry. It will cause a knock-on effect in this industry that will quickly place more people on the unemployment line. That is the thing I find really frustrating about this government. Rather than seeing a growth in an industry, rather than seeing it survive—or the slow wind-down of an industry and transformation to a new industry—what we will see as a result of this government's bad policy is a rapid knock-on collapse. When you have a rapid knock-on collapse and loss of jobs very quickly you create panic and unemployment, and it will not allow some industries, in the components sector, to survive and find new markets.
Cutting millions of dollars of funding from the ATS now risks premature closure of motor-vehicle producers and hundreds of firms in the auto supply chain, sending thousands of jobs offshore. It is as though the government's policy is about creating jobs offshore not about creating jobs onshore. The wilful neglect of this government is a major reason behind the decision for Toyota to end its car manufacturing in Australia. To foster industry you need to have multiple people in the space to create industry. We are seeing from this government a lack of understanding of that very basic principle.
The Prime Minister will go down in history as the Prime Minister who cost Australia its car industry and changed the direction of this nation for the worse. This is because it will take a generation—decades—for these regions to return from very high unemployment and to return economically. The PM's vague talk about boosting road-infrastructure projects and replacing good jobs for better jobs will not see people from the car-components area employed. You cannot just down tools on building a Ford car and pick up new tools to become an electrician on a construction project called the East West Link Tunnel. You cannot just go from being a painter of a Holden car and pick up a hammer and nails to start constructing a tunnel. They are two very different skill sets, two very different apprenticeships and two very different jobs. For one to replace the other is just not possible.
This government does not have a jobs plan. What we are seeing from this government is attack after attack on our industry. If this government is serious about creating better jobs it needs to work with industry—not shut the door. We need a government that believes in investing and partnering with industry and the community to ensure that we have good jobs, jobs that people can count on into the future.
This bill is further evidence that the Abbott government's fundamental solution to our economic woes is cutting baristas' wages so that we can get a cheaper cup of coffee and save a few bucks going out on New Year's Eve. That seems to be their vision—cheaper coffee is what is going to drive our economy.
We know that is complete nonsense but, when we look at their action here today, the introduction of this Automotive Transformation Scheme Amendment Bill, we know it is really the limit of their perspective. It displays a massive misunderstanding of modern economies and what modern economies need to drive themselves forward. This piece of legislation demolishes the assistance to automotive manufacturers. I note in passing that it will have a direct impact in WA. There are about 2,000 Western Australians who are directly involved in supplying the automotive industry. Our state is not a major player, but it will have that impact. The real issue is not the loss of jobs but the loss of advanced manufacturing capacity and skills and the impact this will have on playing a role in the development of emerging industries.
We should be very clear that the automotive sector involves advanced manufacturing with highly developed robotics technology, which will be a massive growth area in manufacturing. If we look at the various reports, the number of data systems driven out of the automotive sector is huge. We are not talking about propping up an industry that belongs to an industrial museum, we are talking about cutting out an involvement with an industry that is driving forward much of the R&D.
My friend the member for Bendigo made comment about this too, that the auto sector is the largest R&D contributor to the Australian manufacturing sector. It delivers over $700 million worth of R&D annually. That is massive, if you think about the skill sets involved in this. The importance of the automotive industry is not simply in having the capacity to produce motor vehicles per se. It is about the production of these motor skills, of doing the R&D that is embedded in that manufacturing process. It creates a skill and research base that can be leveraged off to generate new technologies and products. We need those skill sets to be here, in a sufficient volume, in order to allow us to participate more fully in future industries.
As has been pointed out by many of my colleagues, it is precisely for that reason other developed countries financially support their car industries. As has also been pointed out, our contribution is relatively modest. Per capita, Australia gives $17.40, Germany gives $90, the US gives $264 and Sweden gives $334. These are economies that are not frightened by investing in this sector, because they understand that that advanced manufacturing capacity and research base that is constantly being driven in the automotive industry is critical for other industries.
Putting aside even that long-term impact, it is interesting to note that the direct loss for the industry will be a significant depressor. We have had University of Adelaide modelling showing that the impact of cuts contained in this legislation will produce a negative annual impact of around 29 per cent, or around two per cent of Australian GDP. They are pretty big figures. Already we have seen Australian manufacturing losing ground, despite the falling exchange rate. I think it is interesting to note that just today the Australian Industry Group performance of manufacturing index for September slipped to 46.5. That is edging further below the 50.0 level which separates expansion from a contraction. So we are very much into the contraction phase. This is notwithstanding the steep falls we have had in the Australian dollar. Particularly alarming—again, notwithstanding those steep falls in the Australian dollar—in the index that was released today was that manufacturing exports experienced a large deterioration, dropping a whole 11 points to 42.4, which is the lowest reading in 18 months. It is interesting to note that it is the Australian Industry Group that has made the assessment that it is the winding back of Australia's automotive assembly that has been one of the principal reasons for that. We have to be concerned. This is not some fanciful projection about the role of this industry; the role of this industry has been widely understood in the Australian economy and we are already seeing the decisions made by the government at the end of last year already feeding through, in the view of the Australian Industry Group.
If I can pick up some other comments made by the member for Bendigo previously, she was talking about the Abbott government's view that instead they can go and build a tunnel, do all this infrastructure work—'We'll go out and borrow and build.' That is really to misunderstand the significance of manufacturing. At the end of 2012 the McKinsey Global Institute produced a paper on the role of manufacturing in modern economies. I just want to quote some of this to help us understand the importance of manufacturing and the reason we should not be scrapping manufacturing and saying that everyone can just go and make cups of coffee or go and lay a bit of bitumen. Their conclusion was:
Manufacturing makes outsized contributions to trade, research and development (R&D), and productivity … . The sector generates 70 percent of exports in major manufacturing economies—both advanced and emerging—and up to 90 percent of business R&D spending. Driven by global competition in many subsectors, manufacturing's share of productivity growth is twice its share of employment in the EU-15 nations and three times its share of US employment.
So if we want real productivity, we are not going to get real productivity by cutting the price of a cup of coffee; real productivity is going to come from investment in the manufacturing sector. They go on to comment:
The role of manufacturing in the economy changes over time.
… … …
As economies mature—
as in Australia—
manufacturing becomes more important for other attributes, such as its ability to drive productivity growth, innovation, and trade. Manufacturing also plays a critical role in tackling societal challenges, such as reducing energy and resource consumption and limiting greenhouse gas emissions.
So here we have got, again, a demonstration of the complete lack of a sophisticated understanding of how an economy works and the need for innovation. Unfortunately in Australia we are not performing well in terms of innovation. On the surface we may feel we can be a bit complacent, because we are ranked 17th on the global innovation index and 15th on OECD research collaboration. But as Dr Paul Jackson from Edith Cowan University points out, these measures can be very misleading. At an aggregate level we look quite good but when we break it down into innovation efficiency—that is, the translation of innovation inputs to outputs—we actually do very badly. So, while we might be providing the precursors, we are showing a very poor capacity to translate those innovation inputs into outputs. Dr Jackson goes on to comment that one of the major problems is the level of direct funding for Australian business, which is one of the lowest in the OECD.
There have been cases where we have seen Australian companies driven overseas because we have failed to support those companies. We had a very interesting case where an Australian company had, using the innovation fund, developed a technology for the treatment of the symptoms of Parkinson's. It was a small Australian company which took on a research project and developed a product which is being marketed in 12 countries, which is a great measure of success. The company is called Global Kinetics Corporation. They say it would not have happened without the $1.3 million of federal government funding from Commercialisation Australia, a fund which has now been scrapped.
Likewise, on Friday I was speaking at a rally supporting the architecture around renewable energy and carbon abatement. I was approached by a Western Australian entrepreneur who had developed a very innovative energy-assessment tool that gives a very fine-grained assessment of energy outputs, down to the individual valve level, at a very cost-effective price. They had developed this technology in Australia. They were wanting to sell it in Australia. They have now been advised that, since we have dismantled all the infrastructure to do with carbon abatement, there is no longer going to be a significant market in Australia for this fine-grained, powerful assessment tool for energy-use assessment. Their financiers have said they should now move their company over to the United Kingdom, where companies are required to do these energy assessments, and produce for those companies great cost savings because they can more readily identify their energy outcomes.
The point here is: we need an advanced manufacturing industry. We need it because it brings with it inherently strong R&D facilities. That R&D capacity, and the advanced manufacturing skills that go with it, is what we require as a mature economy to drive our industry forward and create the jobs of the future. That is not all going to come out of cheaper cups of coffee generated by lowering the overtime rates of baristas.
What we are witnessing today from the coalition is an attempt to camouflage cowardice. What we are seeing are these after-the-event explanations occurring. They did not extend to the Australian public the decency, as they were leading up to the election, of saying what would happen after the election in reference to support for the auto industry. Bear in mind that, as much as you hear members of the coalition suggest today that they are doing the right thing—that we can no longer extend this type of assistance and it is not right for us to support one industry over another—prior to the election, they were making out they would be the friend of the auto worker. They were making out that they would be there in tough times to support people.
We heard this from no-one less than the Prime Minister who, in the weeks leading up to the election itself last year, said, 'I want to see car making survive in this country, not just survive but flourish.' There is no way in the world, when you reflect on that quote, that there is any suggestion this would be a piecemeal level of support; rather this would be, as suggested by the coalition, a level of support that would allow the sector to flourish. It would allow the sector to continue. It would ensure that jobs remained in the sector and that the coalition would be there when the auto sector needed it. What did we have afterwards? We witnessed a number of things. For instance, knowing that decisions would need to be made by the auto manufacturers by Christmas, instead of backing up the sneaky words they used to try to snare votes from people concerned about the future of the auto sector—instead of backing those commitments up—what we had was the coalition trying to refer things off for further studies or Productivity Commission reviews.
They were not there to allow the industry to flourish. There were not there to allow the industry to survive. They were basically building the edifice, the framework, with which they would stab auto workers in the back. They did not fulfil the commitment they made back on 21 August 2013 when the then opposition leader, now Prime Minister, was saying he wanted to see car making not just survive but flourish.
As a result we see this bill before the House now referring to the Automotive Transformation Scheme, which is a legislated scheme encouraging investment and innovation in the sector. It is supposed to provide the form of support that would be evidenced through co-investment by firms in the production of motor vehicles and engines and in eligible R&D and plant and equipment. This bill amends the Automotive Transformation Scheme Act 2009 and we oppose it. We oppose it strongly because, if it is passed, it will see $500 million cut in funding from the ATS between now and 2017, and effectively terminate the scheme from the end of 2017 with no support whatsoever for surviving component companies.
What does this mean for the 200,000 Australian men and women who rely on the auto manufacturing industry for their jobs? We will see those jobs put under direct threat. The opposition has argued that it is critical that government does not pre-empt the closure of the industry and risk the early closure of firms before 2017 through this reduction in funding. The proposed early closure of the scheme ignores the fact that dozens of component manufacturing companies employing thousands of workers will still exist. The intention is that they will exist post 2017, so it is absolutely vital we have this scheme in place so we can work with an industry in transition and ensure we rebuild jobs and maintain capabilities.
But this government is not interested in that. This government now, having deceived the Australian public, has no intention of fulfilling their commitment to seeing this industry survive. And, in fact, I was stunned to see the Treasurer of this country stand at that dispatch box and basically goad Holden out of the country, not prepared whatsoever to support those jobs. The government now put on this brave face; they don courage now and claim that they want to see public funds spent in such a way that they are not picking winners and that they are not there supporting particular industries. But they never had the decency to say that before the election. They never had the decency to look people in the eye and say, 'We will not be there for you when the crunch comes.' And then we had the Treasurer goad GMH out of the country and refuse to support them.
What are the government actually there to do to support the economy? They want to see the end of auto manufacturing; they are happy to see the decline of manufacturing. They are not there for innovation. You see them now basically pulling back on the NBN and slowing down the rollout, despite the critical need for us to invest in better broadband infrastructure. We have those on the other side cheer that they will get better mobile phone coverage, but, for the actual critical infrastructure of the nation in broadband—which will help support the growth of the digital economy, as the rest of the world is basically getting ready for the digital era—the government is slowing down the rollout. They are not interested in that level of innovation. On anything that has to do with innovation policy, they are either delaying, avoiding or not making decisions that will help support it. Basically, all the government want to see this country do is mine stuff, shear stuff and bank stuff—and that is it. They do not have any plan for or any notion about where they want to see the economy go into the future. And they are happy to see people's jobs go in the meantime because they have no direct capacity and no direct plan themselves.
In the now nationally archived Real Solutions document—now shredded, hidden from view, and in some sort of witness protection program, not to ever see the light of day—they promised, they made a commitment to, one million jobs. It was never done through any economic work. It was merely, as has been evidenced now and as is on the public record, a plucked-up figure. It has basically been picked out of the air: one million jobs created—or, the intention is, to be created—by this government. And what have we seen since they came to office? We have seen unemployment rise higher than what was experienced in this country during the GFC. The unemployment figure in this nation has now got a six in front of it, and it is going to stay that way for a considerable period of time. So you would think that a government which has been confronted by that unemployment figure would actually want to do everything it can to either protect jobs or find new ways of lifting jobs. And what do you see? You see this bill being placed before the parliament, with 50,000 direct Australian jobs in the car industry now at risk and a further 200,000 jobs which rely indirectly on the industry on the line. We think that there is a fight worth having in this country not only to protect Australia's manufacturing capabilities but to ensure that the people who have jobs in this sector keep them. And we will do everything we can to stop these cuts to the Automotive Transformation Scheme. We are certainly calling on the crossbench and minor parties to stick up for Australian jobs, too. We think they are worth fighting for, and we believe that they should fight for them as well.
It is also worth noting and bearing in mind, as to maintaining the sector, that four in 10 of Australia's top-selling cars are locally made. People want to see Australian cars produced. Certainly, the impact of the dollar cannot be discounted. It has increased production costs to the tune of 30 per cent, and Holden has had to confront that, as have other companies. But only 13 countries, including Australia, can make a car from start to finish. Every single one of them supports their industry. In this country, the amount that we support the sector by is a mere $17.40 per capita. That is the cost of the car-industry support for Australians. What are they doing in other parts of the world? If you look in Germany, it is $90. It is $17 here; $90 in Germany. In America, $264 is extended to the auto industry. If you are in Sweden, it is $334. So, to save the mere per-capita cost of $17.40, this government is withdrawing that support and, as a result, seeing those jobs go.
The government are happy to see those jobs go because they want to pursue ideology instead of protecting people's jobs right here in this country. It is something that people should be well aware of: the government failed to meet their promise of protecting these jobs. People might think, 'Okay, maybe it is a lot to support this sector; maybe we are investing too much', but the minute they recognise that other countries are supporting their industries way more than we are, they recognise that this is not a bad proposition whatsoever but is actually something that is worth following up. You then wonder: 'If those jobs go, what happens to the people who lose their jobs?' Instantaneously, they will need to turn to support, because, bear in mind, there are no jobs in the broader economy to support them now.
As I mentioned a few moments ago, unemployment is higher now than what it was during the GFC. So, if they are turning to support, what will be the cost to the public purse of that? The indication is that welfare payments, plus lost tax revenue from an industry shutdown, are projected to exceed $20 billion. So for the $500 million that this government saves in the short term, we lose $20 billion in total. And it will be more than 10 years before the economy recovers from the underlying hit to GDP as a result of this short-sighted decision—a decision that is founded upon deceit, because it was founded upon a suggestion extended to the Australian public that Tony Abbott, the Prime Minister, would be there in tough times for the auto industry. The minute he got into office, the job he was more interested in was his own and not the jobs of those auto manufacturing workers who needed him to be there. In parts of the country—like Melbourne—gross regional product will not recover until 2031, two decades away. And what are they supposed to do in the meantime?
Now, looking at the reaction from the sector, I have had drawn to my attention an article that appeared in The Age last month—sorry, not last month, in August; we have already hit October:
Holden has warned the local car industry could crash early as a result of proposed cuts to the federal government's funding scheme.
This is what Holden is saying. The article continues:
The company's managing director Gerry Dorizas delivered the bleak assessment on Tuesday, fearing that underlying component suppliers - not car manufacturers - were most vulnerable without the additional $500 million of funding …
This is the funding that I have talked about in my contribution to the House. To quote him from the article:
"Suppliers have invested based on the ATS to break even. They needed this kind of subsidy and at this particular time they're in dire straits," …
He continues by saying:
"This is the reason why we're actually very focused on the supplier base because if that happens then nobody will be able to produce cars, especially for the parts that are specific to Australia."
So, again, I will make the point that there are these flow-on effects from the bill that we are debating right now and there are real jobs on the line, and this will have a complete impact on the sector.
For example, if you look at the Federal Chamber of Automotive Industries, they oppose these cuts. They say:
Reducing the Automotive Transformation Scheme (ATS) will have serious consequences for the 45,000 workers directly employed, and the more than 100,000 workers indirectly employed in the automotive sector, around Australia.
They have called on the parliament to reject this bill. They say that it is:
… important the Government realised the impact any cut to the Scheme would have on the Australian automotive supply chain, who have already factored ATS funding into their long-term business plans.
They also claim:
If the Amendment Bill passes Parliament, it will reduce the Automotive Transformation Scheme by $900 million and intensify the financial pressure on the automotive supply chain, at a time when they are trying to transition their operations into new business area.
So, this government, which says it is therefore jobs, is doing everything it can to affect jobs. On that side of the chamber they have deceived the Australian public and deceived auto workers, and now they are trying to mask cowardice with courage, claiming something that they were not prepared to tell the public before the election.
I rise to condemn the government's Automotive Transformation Scheme Amendment Bill 2014.
The Automotive Transformation Scheme is a legislative scheme that encourages investment and innovation in the Australian automotive industry. Since the Automotive Transformation Scheme Act passed through parliament in 2009 the ATS has provided co-investment to companies for the production of motor vehicles and engines, and for investment in eligible research and development and relevant equipment. The ATS was the cornerstone of Labor's New Car Plan for a Greener Future, which was announced in November 2008. This plan provided $5.4 billion of co-investment support from 2010 to 2020, with the ATS accounting for some $3 billion of that investment.
Our approach provided long-term certainty for the Australian automotive manufacturing industry. The new car plan was not a hand out; it was a co-investment program that encouraged industry to invest in Australian manufacturing. In a difficult economic environment, Labor's new car plan assured business and industry that the Australian government supported automotive manufacturing in Australia. The ATS has been a success story for industry in Australia. It has supported the automotive manufacturing industry and the associated parts industry in Australia, as well as increasing the capacity for research and development in this important sector of Australian industry.
Before the election, Labor announced A New Car Plan for the 2020s. This plan demonstrated to business and to industry that the Australian government had a plan for automotive manufacturing in this country. Labor's new car plan included an investment of $300 million per annum to support the transformation of the industry, to attract new investment and to support research and development, design and engineering from January 2016. The plan supported Australia's high-tech automotive industry and expanded opportunities for young engineers to utilise their trade in Australia. The plan was widely supported by industry and workers.
If this government gets its way, opportunities for manufacturers, assemblers and engineers in the automotive manufacturing sector will all but disappear. In just over 12 months the Abbott government has comprehensively trashed the faith industry had in the Australian government to support automotive manufacturing in Australia. The government's bill today seeks to further tear apart automotive manufacturing in Australia and to imperil the 200,000 Australians who rely on the industry for employment.
The bill before the House would cut $500 million from the ATS over the next three years, with the effect of terminating the scheme at the end of 2017. This bill would withdraw support for components companies and would inevitably result in the closure of hundreds of manufacturers in the automotive parts industry. By ending the ATS at the end of 2017, this government through this bill is legislating to ensure the premature closure of components manufacturers and the offshoring of thousands of Australian manufacturing jobs. This government's proposal to close the ATS at the end of 2017 is nothing short of an attack on Australia's automotive manufacturing industry, an attack on the employees of Ford, Holden and Toyota, an attack on component-manufacturing companies and an attack on the thousands of workers in my electorate who derive their income by manufacturing component parts.
I say to the Prime Minister that automotive manufacturing is not dead in Australia; it is a tough, resilient industry that supports 200,000 Australian workers. Of those 200,000 workers indirectly employed by the automotive manufacturing industry over 98,000 are employed in Victoria, including thousands in my electorate of Isaacs. In the City of Greater Dandenong, 22,800 people are employed in manufacturing industries and it is estimated that the automotive industry injected $2½ billion into the local economy. Let me say that again: in the City of Greater Dandenong, 22,800 people are employed in manufacturing industries and it is estimated that the automotive industry injected $2.5 billion into the local economy. That is a staggering number of workers who are being cast aside by this government and it is an astonishing economic contribution to the Victorian economy. If this bill is to pass, it will be a catastrophe for the 200,000 Australian workers who rely on automotive manufacturing and associated industries for their continued employment. It would be a disaster for Australia, for Victoria and, in particular, for south-east Melbourne, where so many workers are employed in manufacturing.
There is a concerning and dangerous narrative that this government is perpetuating here. The narrative is that subsidised industries are failed industries, and this is simply untrue. Only 13 countries, which will include Australia for at least a couple more years, can make a car from start to finish. Australia, for a little while longer, will have one of the last remaining complex supply chains to exist in the world. Every one of these 13 countries subsidise their automotive industry. The per capita cost of car industry support around the world includes $90 in Germany, $264 in the United States and $334 in Sweden. The per capita cost for supporting automotive manufacturing in Australia, an industry that supports 200,000 Australians, is $17.40. I will repeat that: $17.40. And yet for this contribution, Australia derives enormous benefit. Two hundred thousand Australians owe their jobs to the automotive manufacturing industry; automotive research and development contributes almost $700 million annually to the Australian economy. The cost of abandoning this industry too is staggering.
Modelling from the University of Adelaide shows that the loss of the industry will lead to a negative annual shock of $29 billion by 2017, or about two per cent of GDP. Welfare payments and lost tax revenue from an industry shutdown are projected to exceed $20 billion, and it will be more than 10 years before the economy recovers from the underlying hit to GDP. Gross regional product in Adelaide and Melbourne is projected to not recover until 2031—17 years away—and yet this government is saying, in effect, that the Australian public cannot afford to support automotive manufacturing.
What is most baffling is that while the Prime Minister can decry industry support to the Australian automotive manufacturing sector, support that ensures the employment of 200,000 Australians, the Prime Minister and the government happily continue to subsidise many other industries. The Australian government has long subsidised industries as broad as mining, banking and tourism. One of the primary roles of the Australian government is to keep Australians in work, and if that requires subsidies and if these subsidies have a net benefit to Australia, as they do with the automotive manufacturing sector, then it is the responsibility of the government to support that sector. But this government has now turned around and said that it will no longer offer support to automotive manufacturing for one of the key industries of Australia, and in particular Victoria. This is a repudiation of well-founded economic and social principles in favour of a dangerous and extreme free market ideology.
If this bill passes and automotive manufacturing does in fact die in Australia, Australia will be worse off. We will be economically worse off and socially worse off. Regions like Melbourne's west and south-east, which already have above average unemployment, will be dramatically worse off, with thousands of workers lining up in dole queues as a result of the abandonment of their industry by this government. On 21 August 2013 the Prime Minister, when he was the then Leader of the Opposition, said in the middle of the election campaign:
I want to see car making survive in this country, not just survive but flourish.
It is clear that this is a Prime Minister who says one thing and does the other. If it was ever in doubt, this bill confirms the utter contempt that the Liberal and National parties hold for the Australia automotive industry.
In the barely 12 months since the Prime Minister's statement, this government has done everything it can to tear down the automotive manufacturing industry. It has removed industry assistance and goaded Holden to leave Australia. It is now trying to gut what is left of automotive manufacturing in Australia by trashing the ATS. There is no economic benefit in passing this bill. It will hurt thousands of Australians and deliver no long-term economic windfall. Apart from ticking a box for the Institute of Public Affairs, one must wonder why the government would pursue this at all.
Manufacturing is a key industry in my electorate. Last month I visited a manufacturing plant of TI Automotive in South Dandenong, in my electorate. TI Automotive, like so many businesses in my electorate and in south-east Melbourne, is facing a difficult future. With Toyota and Holden and Ford to cease manufacturing in Victoria in the coming years, TI Automotive is in the position where it has to compete with similar businesses for a dwindling number of local contracts. Appropriately, TI Automotive is investigating what new products their skilled workforce and modern plant can be turned to. A small amount of government assistance at this time may mean the difference for TI Automotive, and so many components manufacturers like them, between their whole workforce being dismissed and their business continuing to exist. Unlike this government, the operators of TI Automotive and other components manufacturers care about job creation in south-east Melbourne and care about Australia's ability to maintain a strong, economically viable automotive manufacturing industry.
Manufacturing is the lifeblood of south-east Melbourne It has provided employment opportunities for generations of Victorians and I find it deplorable the government would turn its back on such a large and significant section of our community. Make no mistake: this government has abandoned automotive manufacturing in this country and small automotive parts manufacturers, their employees and the communities where those employees live, such as south-east Melbourne, are the victims of this abandonment. It would be a disaster for Australia, and particularly for my electorate of Isaacs, which has the nation's fourth-highest proportion of residents employed in manufacturing, if this bill were to pass. I say to the component parts manufacturers across Australia, and to the 200,000 Australians employed indirectly by Australia's automotive manufacturing industry: Labor stands with you.
In government, Labor's investments in automotive manufacturing ensured that Australia maintained its automotive manufacturing industry in the face of the GFC, global industry restructuring and a record high Australian dollar. We ensured continued employment for many of the 200,000 Australian workers whose jobs are derived from the automotive manufacturing industry. Labor are proud of our record on supporting industry and we will stand with workers and industry against these terrible cuts. The Abbott government's refusal to help an industry that is responsible for the livelihoods of nearly 100,000 Victorians is a prime example of this government placing its extreme free market ideology above social and economic common sense. Unlike the Abbott government, Labor believes in jobs and in the social and economic benefits that meaningful employment brings. Labor will continue to fight for Australian workers in manufacturing and we will oppose this bill.
I want to start by saying how proud I am tonight to hear some of the contributions that have been made on this very important Automotive Transformation Scheme Amendment Bill and to say to the member for Isaacs, the member for Chifley and to those who have spoken in the debate that I stand shoulder to shoulder with Labor people on this side of the House and shoulder to shoulder with the thousands of people in our respective electorates who will lose their jobs directly as a result of this, one of the most wantonly destructive acts that we have seen from this government.
I am one of the younger members of this House, but I am a pretty keen student of history and when I look back I am actually very hard pressed to find a government that has such a shockingly destructive record in their first year in office. I think Billy McMahon is probably the big competition on this one. We can look at some of the things that have happened in the last year, for example: the ham-fisted attempt to introduce a tax on sick people; the obvious and rather pathetic attempts to demonise young Australians who are without work to justify leaving them for six months without any government support; regressive changes that will see much larger numbers of Australians from lower socioeconomic families struggle to make ends meet and be able to go to university. These are some of the destructive acts that we have seen. But of all the things that have happened, forcing the car industry to leave Australia is one of the most wantonly destructive and certainly one of the ones that has the most real and immediate impact on the people that I represent in Hotham.
For those of you who have not been following this closely or perhaps may not remember the events, I sat in this chair as a new member of this House last December and watched with genuine horror and dismay when the Treasurer of this country, the economic leader of Australia, stood with all of the bluster that he brings occasionally into this parliament, pointing his finger and goading Holden to leave Australia. The government had already announced the withdrawal of some $500 million of support—this was of course after the Prime Minister said during the election that he was going to do everything he could to keep the car industry here. Despite that, there was the removal of $500 million of support. Effectively, what we saw was the Treasurer get up and say that they were withdrawing their support and that Holden needed to make up its mind whether it wanted to stay or go, and they may as well get out. That was the effect of his words.
And what did we see after the Treasurer's performance in this chamber in December? We saw that he got his way. Just a day later, I believe—or it might have been a little bit longer—a company that has provided employment for thousands of Australians over multiple generations decided that it would leave the country. That has had a cascading effect of course. Later we saw Toyota make the decision and the announcement that they would be leaving, and on the ground in electorates like the member for Wakefield's electorate and in my electorate of Hotham there was a ricocheting effect.
I am sure that the member for Wakefield is having the same experience that I am already when we go around our communities and talk to people. We are starting to find people who have lost jobs because of this very bill before us, this bill that gives effect to the decisions that have been already made. The government has said in the wake of these appalling decisions that it will do all it can to support affected workers and local economies. They are very hollow words, I have to say, looking at the bill that is before us. Not only was that $500 million of support withdrawn by the government last year in MYEFO, but again, in this most recent budget of the Treasurer's, $400 million of industry support has gone. It just beggars belief. These companies, the component parts manufacturers that are dotted right around my electorate are struggling so much that to then have the government come in and essentially kick them while they are down is appalling. I just cannot believe it.
I will provide a bit of a picture of what it looks like in my community, because I know that a lot of people who will get to talk about this in the caucus rooms over periods of time may not see the impacts of some of these decisions. But we do out in the south-eastern corridor in Melbourne. Nearby, on one the main roads in my electorate, I have an excellent component parts manufacturer who was employing around 400 people. The factory that made the component parts was one of the slickest factories I have ever been to in my life. The efficiency in that place was absolutely astounding—best-practice management, all of the things you want to see in a first-class Australian manufacturer. What I see when I drive past now is a huge 'For lease' sign at the front. They have had to rent out vast amounts of their factory and have already had to start letting workers go. This is what we are seeing in terms of the on-the-ground effects in our electorates, which have been given effect by the bill that is before us today.
The impact of this bill and the fact that like other types of tragic economic circumstances the impacts are not spread evenly around the country, mean that parts of Australia will be much more affected by the decision that is before us. About a thousand people who live in the electorate of Hotham are employed in the car industry. Probably there is one family in every two or three streets in my electorate for whom life will be profoundly changed by this act of wanton destruction by this government. When I think about the suburbs in my electorate, there is Clayton, Mordialloc, Clarinda, Springvale, Springvale and Springvale South where a lot of migrant workers work in the industry and there are people with kids at the primary schools that I so much enjoyed visiting—Clayton South Primary School, Clarinda Primary, Springvale Rise, St Joey's—where these families live and send their children to school. So when I do go out there now and talk to the schools, one of the biggest issues they raise with me is the dire economic circumstances that are being felt by a very large number of families in the electorate who are without a job or who will be over the next couple of years.
We should not forget also the knock-on effects that this will have. We know that there are about 50,000 Australians directly employed in the car industry in one of the big companies or component parts manufacturers. But in areas like Hotham which I represent, and, again, in the member for Wakefield's electorate, there are small businesses that rely on people who are employed in the car industry for their livelihood too. We know that there are about 200,000 people in Australia who may get their income indirectly through auto manufacturing. These are small businesses, corner stores, chemists, bakeries in my electorate that are also going to suffer because of these acts of wanton destruction.
One of the few consistencies that we see with this government is a certain coldness to economic change, which I think really separates the two parties in Australia. I really want people to understand, through the words that I speak today, that these are real people who are being affected by the changes we are seeing. The cruel reality of economic change is that, while we get some benefits, the people who lose their jobs—as we will see through those who lose their jobs through the car industry—often do not get many of the benefits that may open up as a consequence. These are the very people that the government should be trying to protect.
But what do we see from this government? Instead of the trying to protect these people, we see their industry being destroyed by an arrogant approach and act of this government—particularly the Treasurer—and we see all these other forms of social support that exist to try to make sure that everyone in Australia benefits from the economic change being stripped away. It is easy to understand why there are people out there in my electorate, and right around Australia in some of these communities, who are asking why this government has it in for them. They want to know what the government is trying to do. First, the government takes these astounding steps to take away their form of employment and then it bullies them and says that they are sitting at home munching Cheezels because they are taking unemployment benefits. These outrageously contradictory things are happening—and I am very proud to be in the Labor Party, where we are fighting so hard against them.
One of the other important points that gets lost in this debate is the fact that we are actually very good at car manufacturing in Australia. That is one of the real frustrations about the change that is being made. When we look at the different levels of industry support provided to the car manufacturing industry around the world, we see that the per capita cost of car industry support in Australia is about $17.40. That per capita amount in Germany is $90, in America it is $264 and in Sweden it is $334.
There are only about 13 countries in the world that have the capability to make a car end to end. Australia is one of them. There are huge amounts of R&D. The car industry in Australia are leading experts in R&D. What has been so unfortunate is that the governments has been trying to trash the credentials of our automotive industry and our manufacturing industry in Australia in an attempt to justify this withdrawal of support which we believe is so unjustified.
There are issues around the car industry in recognising that we were good at manufacturing cars, but I think there are other things that we need to think about as well—that is, the broader knock-on effects of not having a car manufacturing industry in Australia. We know that economies are ecosystems and when you change one thing in the economy many other things change too. When you talk to people who are experts in innovation policy, all of them will tell you that having a manufacturing industry in this country is essential for Australia to be an innovation economy. But what we see on the other side of the House is ignorance, or ignoring, of these factors.
The other thing that is important is capability. What are we going to see now? We will see a generation of people who have got quite a lot of skill in car manufacturing who, most likely, will have to retrain and learn to do something completely different—and all those skills that we have worked so hard on over so many years just lost.
I want to make a final point on a broader economic issue and about what this indicates for the workforce in Australia. I think that is one of the lesser discussed elements of this act of wanton destruction. One of the biggest issues that we face in Australia in terms of the impact of economic change is the issue of the quality of jobs for people who have low to medium levels of skill. A generation to three generations ago, young people who left school—who maybe were not particularly academic, although, some of them were very academic—and decided not to go into tertiary education went into manufacturing. In general, those young people were able to walk into a full-time well-paid job in manufacturing and spend their lives making something and doing something important and something of value. What we are seeing is that, as manufacturing declines in Australia, those jobs are not being replaced by other terrific high-quality permanent jobs. Instead, many of these people are having to take jobs that are not only lower paid and with worst conditions—so this idea of increasing casualisation of our workforce—but also in industries where they are not going to ever get to that level of wage, because the value that is being created is simply not at the same standard as we saw in manufacturing.
Although there is a prevailing narrative in Australia about economic rationalism and us not getting too involved in the economy, there are lots of reasons that manufacturing is incredibly important. We have to address the question of what we are going to do for young people in Australia now. We see very large unemployment rates for young people in certain areas of Australia. What jobs are these young people going to do? I want to leave that question hanging with the government over there—the people who are meant to be in charge of some of this deep thinking. What are the young people of the future going to do when we have the approach that we see so on the other side of the House, where the Treasurer feels that he is entitled to stand up and goad a company that has employed thousands of Australians over generations in jobs where they got to make something of value? We need to think about the future—not just right now but what the Australian economy is going to look like in a generation—and whether we are happy to live in a country which does not have a manufacturing industry. I, for one, am not.
We talked a little bit before about Billy McMahon and so I want to finish with a quick anecdote. There was a funny instance where Billy McMahon at one stage, close to the end of his term, was asked about what his view was on the future of Australia. He rummaged through a very weighty briefing document that his department had prepared for him and then ended up saying to the journalist, 'No, nothing on the future here.' Today, that is how I feel about the bill before us and how I feel when I look across the chamber at the government. And I say that Labor will not stand for this. We will fight. We will continue to fight for the people we represent to whom automotive manufacturing in this country is worth so much and is so important.
I was waiting to see the member for Kennedy cheekily rising to speak. I am sure he is going to make a very fine contribution, because he, like members of the opposition, has grave concerns about this bill. If enacted, the Automotive Transformation Scheme Amendment Bill 2014 will see the acceleration of the death of the car industry and will have a terrible impact on automotive components companies, which, of course, rely upon the car industry. We believe, firstly, that, even with the decisions made by the major car manufacturers, there is a future in this country for this sector of our economy, but that will made be all the harder if we allow what would be $900 million, but over the forward estimates $500 million, to be taken from this sector of our economy, which is the central purpose of the proposed legislation. This would see many, many companies that, I think, can do well—not only survive but thrive—suffer and, indeed, hit the wall.
The concern I have is shared by other members—the member for Wakefield, the member for Hotham, who just made a very fine contribution, the member for Isaacs, the members for Ballarat and Bendigo and others who have contributed to this debate. The concern we have is that this government has no regard for a sector that employs so many Australians. What is most galling about the government's position is the way in which the Prime Minister chose to stand before manufacturing workers all through the last parliamentary term in putting his position on carbon pricing. As we can all recall, the Prime Minister stood in these manufacturing companies, sometimes making comments about a range of public policy matters, using as a backdrop these workers, and talked about how he was going to protect their jobs. He was going to stand up for those workers and their jobs—and he made these statements on countless occasions throughout the entire previous parliamentary term, when he was Leader of the Opposition.
Yet, upon election, the Prime Minister, aided and abetted by the Treasurer of this country, turned his back on the manufacturing sector in such a stark and brutal way. Other members who have contributed to this debate have already referred to this. First, we saw the Treasurer, at the dispatch box in December, effectively goad Holden to leave Australia. If you think that such decisions are based on a variety of factors, not least of all whether the government of the nation wants you actually to be in this country, wouldn't you think that such a comment by such a senior politician as the Treasurer would weigh into the decision making of that company? We saw the Treasurer in December goad Holden to leave, and the next day Holden decided to leave our shores for good—an iconic company employing thousands of Australians and, indeed, as a result of its existence in this country, creating employment in other companies. It was an awful demonstration of arrogance and indifference towards so many workers in many parts of this country. That certainly led me to conclude that all of the comments—all of the statements by the Prime Minister when he was Leader of the Opposition visiting workplaces—were utterly hollow, disingenuous and a fraud perpetrated upon those workers. We are seeing that now writ large in legislation proposed in this House.
This legislation will remove the support required for an industry. There is nothing new in governments in other countries providing support for their manufacturing sectors, particularly developed economies. In fact, every other country that makes cars provides support for that sector of the economy. In fact, if you look at the amount of support we provide per car, it is far less than that of other countries that are prepared to stand by their workers, their industry and their companies. However, we have a government that has chosen instead to do otherwise.
It is not just the opposition who have concerns with this; it is not just the member for Kennedy; it is not just unions representing those workers that have raised concerns, though indeed they have raised some very compelling arguments against the removal of such support. The industry itself and employer bodies representing employers in the industry have attacked the government. Firstly, the Federal Chamber of Automotive Industries, in a release on 24 September, said:
Reducing the Automotive Transformation Scheme (ATS) will have serious consequences for the 45,000 workers directly employed, and the more than 100,000 workers indirectly employed in the automotive sector …
I think they are conservative in those figures, but they make it very clear that they can see a decision, if determined, to allow this legislation to proceed contributing to adverse consequences for the employers they represent. They, therefore, called on the parliament to reject this bill and have quite rightly, I think, raised concerns publicly about the decision of the government.
… remain steadfastly opposed to the federal government's intention to cut $500 million of funding from the Automotive Transformation Scheme over the next three years and the proposed early closure of the scheme.
They go on to say, 'Reducing funding of the ATS by 66 percent in 2015 and by a further $150 million each year in 2016 and 2017 will have serious implications for the continued operations of many firms within the automotive supply chain.' These are statements made by employer bodies representing employers who are foreshadowing the closure of companies in this sector of our economy.
We have an unemployment rate in excess of six per cent. In fact, the Prime Minister presides over the highest unemployment rate in 12 years.
It is a big achievement! I know he is being ironic, but the last time it was as high as this was when the Prime Minister was the minister for employment.
So it is the highest unemployment rate we have seen since this government has come to office. The labour market is softening. There are areas in our country where people are having real difficulty finding work. And yet we have a government turn its back on a sector of our economy that employs tens, if not hundreds of thousands of workers. That is the point that is most important to this debate. Will the government provide any support whatsoever for a sector that has been struggling in order to make sure that it can recover and thrive?
Think about this: the car industry and the automotive components sector of our economy have struggled through very challenging times. They have had to deal with a dollar that has been at US$1.10. It is now down to about US86c and falling, and—not that we want to see it fall massively—that is a very significant fall. At around the mid or high 80s, that is providing a very stark relief for our manufacturers to make sure that they can compete when exporting. In other words, if these companies can survive when the exchange rate is 20 per cent plus higher, clearly they have a greater opportunity to survive. That has been one of the great challenges of our manufacturing sector—and not just the manufacturing sector but also tourism and other sectors of our economy. Manufacturing certainly had major problems because they were affected by the very high dollar. I think that is something we should take into account.
I understand there are global pressures, and the opposition understand that there are decisions to be made about how you dedicate taxpayers' dollars, but there is a situation where this exchange rate provides opportunities for this sector of our economy. And yet we have complete disregard shown by the government in relation to its support. I think that is really an awful indictment of the government's regard for jobs in this country and for manufacturing. The fact is that they chose to announce, effectively, the death of the car industry—in fact aiding and abetting the death of the car industry—and accelerated with bills such as this the closure of smaller and medium enterprises that have relied upon the car industry when in fact they should be providing support for them to innovate and adapt to new circumstances so that they can be successful.
So this bill will really hit many companies very hard. This bill if enacted will at best accelerate the closure and at worst see the end of automotive components operating effectively as a critical mass in this nation. We say to this government to rethink its position in relation to the car industry and manufacturing generally to ensure that it not only creates the opportunity for employment but works with, not against industry to provide those opportunities. I am afraid, however, that that advice will fall on deaf ears. The government does not seem to be heeding advice from the employers who have made clear that this bill will really hurt their companies. They are not listening to unions who represent workers who are going to lose their jobs as a result of the removal of this funding. They are not going to change their position, and therefore I dare say it is likely we are going to see very significant job losses as a result.
The one thing people have to understand is that we have seen the unemployment rate go up and up and up. It has a six in front of it. Whilst there have been announcements made about job losses, those job losses have yet to take effect in most instances, so you are still going to see losses in Holden and Toyota. Qantas have made an announcement of 5,000 effective full time—that is about 8,000 people, by the way. That is yet to take effect. You are going to see these very significant company announcements on job losses taking effect throughout the remainder of this year and into the next year. That is going to compound the challenges that face this nation, because what are we going to do with those workers who have been working in this sector of the economy for many years?
I do not see a training and skills agenda. I see an industry minister; I do not see an industry policy. I do not see investment in skills and training to provide opportunities for people to reskill and go into emerging areas of the labour market. I do not see a jobs plan whatsoever from this government to provide opportunities for those workers who are going to lose their jobs and for young job seekers who are trying to enter the job market. All we have seen from this government is an assault on job seekers and turning its back on the car industry and other industries in the Labor market. This bill, if it is implemented, will see half a billion dollars taken out over the next few years. As a result, firm after firm will hit the wall. I cannot see why the government would want to do that. It seems purely ideological. They should rethink their position.
I am quite fascinated by the government of Australia. There is a new book out, The Rise and Fall of Australia, by Nick Bryant. He said he got very worried about this country when, on his second day in Australia, he was taken to the cliffs of Sydney. There was a big sign up next to the cliff, which is 80 feet high, saying, 'Anyone who jumps off this cliff will be fined $150.' He said, 'I had serious worries about what sort of government we had in this country that I had come to.' The book is a very interesting book.
We live in a country that will have no manufacturing base. Every report that I have seen says that when the three motor vehicle companies close 72 per cent of Australia's manufacturing base will go down with them. We have already lost most of our manufacturing but if we take another 72 per cent out we will live in a country that will have no ability to produce anything much at all.
In the agricultural sector, as I have said on many occasions in this place, within seven years this country will become a net importer of food. No-one believes me but anyone can go down and get the figures. There has been an increase in imports over the last 10 years of 125 per cent. You can pick whatever starting point you want. There has been a 125 per cent increase in imports and a 28 per cent increase in exports. Clearly the country wants to become a net importer of food.
Someone has some great idea that we are going to build all these dams in North Queensland and produce all this food. The farms that are on the dams that are there are closing down. They cannot make a quid. They are seeking subdivision in all cases. So you have no manufacturing base, a collapsing agricultural base, and the party is over for coal. Indonesia is now the biggest exporter of coal in the world. We are yet to see Mongolia come on stream; that will happen over the next two years. There will be a massive production of coal in Mongolia when the railway line is completed at the end of next year.
So where are we going to get our jobs from? Where are we going to get our income from in this country? We imported $1,000 million worth of oil 12 years ago. Now we import $25,000 million worth of petrol. Where is this money going to come from? Where is this $16,000 million you are going to need to buy your cars from overseas? Where is that money going to come from? Where is the $25,000 million going to come from to buy all your petrol from overseas?
I can tell you that it is not going to come from agriculture. That is going down. It is not going to come from manufacturing. That is completely collapsing. It is not going to come from mining, because what you have now is what you have got. There is one more iron ore mine to come on stream, and then nothing will be happening in this country in mining. You can talk about the Galilee Basin. I represent the Galilee Basin. I can scream with frustration, but there has not been a rock moved into position to start coalmining in the Galilee Basin. In any event, it is 320 kilometres from the sea.
There are 180,000 new jobs created every year in Australia. There are 300,000 new jobseekers every year in Australia looking for those jobs. For some reason that I simply cannot understand, this government—as have successive governments—will bring 500,000 people in. Hold on! You have 300,000 jobseekers and 500,000 people coming into the country and you only have 180,000 new jobs. I hope you have a lot of money banked up in welfare payments, because you have another 100,000 coming down the line when the motor vehicle industry closes. And there is a multiplier effect of three. For every job you take out another three will be taken out of the economy. I am rather interested to see where you are going to get the money from.
For the first time ever I have been a Cassandra in this place. I have cried out, again and again, 'Don't you see that your country will be left with nothing? Agriculture is collapsing, manufacturing is vanishing.' And you may say, 'Well, what can you do about it?' I am not going to canvass all of the issues; I am going to confine myself, as I should, to the motor vehicle industry. I live 5,000 kilometres away from the motor vehicle industry, but I would like to think that I am an Australian.
When the first Holdens became available for sale in Queensland—I think it was the first 100—my daddy bought one. He was determined to be one of the first owners. He would have liked to be the first but he was only one of the first. He kept walking around the car saying, 'This is Australian. We built this car. Look at the clearance. Look at the size; see how many people you can fit in it. It is the cheapest car on the market in Australia. This car is fabulous!'
My father was so excited. Way up there in the middle of nowhere in Cloncurry he was so excited that his country could build a motorcar. In my book, An Incredible Race of People: A Passionate History of Australia, over the last century, Sir Laurence Hartnett was one of the great heroes. There were seven or eight others including Essington Lewis, who founded the steel industry in Australia. The steel industry will close down, of course; it will go down the chute with the car industry. It will be gone.
You may ask: what do you do about this? Where did the problem come from? I will tell you where the problem came from. In this country 1987, 86 per cent of the motor vehicles were Australian made. So what the hell happened here? I will tell you what the hell happened: Mr Keating happened. He announced that he was cutting in half the tariffs on motor vehicles. And, for reasons best know to himself, he came in and did the right thing: he allowed the dollar to free float. It went down to 49c, and I said, 'God bless Mr Keating. He's my hero. The dollar has come down to 49c.' For unknown reasons he then started to prop it up through the bloody roof.
Mr Costello did exactly the same. Mr Costello came in and free floated the dollar. It went down to 51c, where it should be, of course. If the dollar free floated to 49c under Keating and 41c under Costello, I dare say that is where it should be. But Mr Keating doubled the dollar. I will not go into how that was done, but everyone knows that the control of the dollar really comes from the Reserve Bank, and the government controls who is on the Reserve Bank and what their policies will be. Any government does.
In Australia, we have gone from 86 per cent of motor vehicles being Australian made to 19 per cent. I will tell a quick story. I have only been overseas once and it was a quick ethanol tour. Louis owned the luxury car service in Sao Paolo that the Australian government uses. I said, 'Louis, this is an Australian car.' He said, 'I always buy Holden Caprices, but this is the last one I would buy.' At the time I think the figure was $36,000. He said, 'I bought my fleet for $36,000 per car.' He said, 'The General Motors Brazilian equivalent is not as good a car, in my opinion, and it is a little bit cheaper, but I've always bought Holden because I think they are really good cars.' But he said it was the last one he would ever buy. I asked him: 'Why, in the year of our Lord 2006'—or whatever it was—will it be the last car you buy?' He said, 'Because the dollar has doubled and it's $72,000 now and it is only $32,000 to buy the Brazilian equivalent.' That is the profound effect of the dollar.
Then there is the issue of interest rates being 1,000 per cent higher than the rest of the world. Anyone can go to the library and ask them, but the average interest rate for the rest of the world is 0.27 per cent. The average interest rate in Australia is 2.8 per cent. That is a 1,000 per cent difference. I was in charge of the State Bank in Queensland. If there was a 50 per cent difference I would have had the CEO in and carp at him. If there was a 100 per cent difference, I would sack him. If there was a 1,000 per cent difference, I would seek the highest building in Brisbane and jump off it. But it does not worry the government that Australia is a 1,000 per cent out of step with our competitors.
The tariffs were 50 per cent in the mid-1980s when Mr Keating started and then the Liberals finished off the job—with the complete removal of tariffs. So we remain the only country without ethanol. We are the only country with interest rates 1,000 per cent higher than the rest of the world. We are the only country in the world without any subsidy support for farming. That is fine. That is a good idea; I agree with it. But, when the rest of the world's farmers are getting 40 per cent of their income from their government and our farmers are getting no income from the government, I do not hold out too much hope for our farmers.
I will climb back to the very interesting specifics on this particular case. I have got to say that I am disappointed with some of the trade unions involved here. I am a very strong supporter of trade unionism, so I regret to have to say this. There are 20,000 direct workers in this industry. If they were to put in $25 a week, that would be $1,300 a year. So that is $26 million a year. That can support a loan of $260 million. Are you going to tell me that you are not going to get one of these workshops for $260 million? What is it? It is a heap of scrap iron and some real estate that has to be cleared—though, it would cost you a bloody lot of money to clear that scrap iron off it, I can tell you. So $260 million will buy you one of these plants.
So who are you going to sell the motor vehicles to? Twenty-five per cent of motor vehicles in Australia are purchased by government. I was very surprised to find that the Catholic schools in Queensland, for example—and I presume the Anglican schools and the Lutheran schools—purchase their cars under a government contract. So 25 per cent of all motor vehicles are purchased by government. Need I say more! If you get 25 per cent of 600,000 motor vehicles that are sold every year, you are laughing all the way to the bank—and someone has got 150,000 motor vehicles that he can sell to this Australian manufacturer.
Like every other government on earth, all this government have to do is say that, if it is a government vehicle, it will be an Australian made vehicle. But they say, 'Well, that's inconvenient.' Well, yes it is. I thought Toyota vehicles were made in Australia. I thought I was buying a Kluger and that it was therefore made in Australia. I found out, to my horror, that it was not. I do not think the Ford Escort is as good a machine. Well, too bad for me—it is an Australian machine and I should be made to drive an Australian motor vehicle. So I should be made to drive the Ford Escort. All of us should be driving Australian motor vehicles and, by protocol, all of us in this parliament should be driving Australian motorcars.
So there are the answers. They are not very difficult. For these workers, it is $25 a week versus the dole. That is what they are facing. There are no jobs in Melbourne or Adelaide. There are definitely no jobs there. So where is the government going to find the money to look after these 50,000 people that are going to be thrown out of work? Where is the money going to come from? As the great exchequer who resigned from Margie Thatcher's government said: 'I just could not convince her that if you closed all of the coal mines then you had to find welfare for 100,000 employees and their families and the cost of that was infinitely greater than the cost of running those mines at a loss. Whether she could not add up or whether she was just pig-headed, I do not know. But that is the reason that I resigned from the government.' That is also the reason that the people of Great Britain slaughtered her in the subsequent election. She preserved herself by shooting a few Argentinians there for a while and showed very courageous leadership. I have to give her full marks for showing courageous leadership, but shooting a few Argentinians should not get you re-elected.
Mr Deputy Speaker, I rise on a point of order. Can I just make the point to the House that, regardless of what we think in terms of combat operations, to say to a major ally that they invaded a sovereign nation to win a few electoral points is beneath us all. Member for Kennedy, you are a better member of parliament than that, sir.
I will withdraw and apologise to the member if he can produce that. I do not want to talk about that. I want to talk about saving our motor vehicle industry. As a representative of the defence industry, read all the books on the Second World War. The Great Betrayal by David Day is an excellent book, but you can read any book on the Second World War. The quotes I like best are by Jack McEwen. He said, 'I was staggered when I realised that my country could not make an artillery piece.'
Laurence Hartnett, founder of the motor-vehicle industry in Australia, had a battle to get an artillery piece. This country could not make an artillery piece—and it is too bloody late when someone suddenly decides to pick a fight with you, and you go running around trying to figure out how you can make one! We rang the Americans and they said, 'We're a bit busy; we've got a war on here.' We rang the British and they said, 'We're a bit busy; we've got a war on here.' We were left to paddle our own canoe—and we should be capable of paddling our own canoe. We have no ability to build a motor vehicle— (Time expired)
I take this opportunity—as have many colleagues on this side of the House—to speak in opposition of the Automotive Transformation Scheme Amendment Bill 2014. I will look at some of the detail and explain why I am concerned enough to oppose the bill. I will also look at the context of some of the issues facing the automotive-manufacturing sector and manufacturing, more broadly, as a sector in our economy. I will focus on one of the aspects that I am most passionate about and engaged with, as the shadow minister: the skills-development issue.
The bill before us is intended to give effect to the Abbott government's $500 million cut to the Automotive Transformation Scheme over 2014-15 to 2017-18. That was announced as part of last year's MYEFO. The bill also has the effect of terminating the scheme on 1 January 2018, thereby cutting a further $400 million from the scheme, leaving no support for surviving components companies.
Labor opposes the bill. We believe that we need to fight to maintain Australian manufacturing capabilities and jobs—not pre-empt closure of this vital high-tech industry and risk early closure of firms, before 2017, by reducing funding. The scheme provides assistance in the form of co-investment to firms for the production of motor vehicles and engines and for investment in eligible research development of plant and equipment. This decision will put at risk 50,000 Australian men and women who have jobs directly in the car industry and the 200,000 workers who rely indirectly on the automotive-manufacturing industry for employment. It will also have a major impact on their families.
I have spoken in this place before of my own experiences, in my local area, with BlueScope restructuring and the effects that had on the supply chain in the area. We are also a major coal-mining industry. I come from a long line of coalminers and have seen the impact of retrenchment on families and the instability it creates in local communities, so we should be doing everything we can to protect these jobs. The scheme needs to be maintained to enable the government to work with industry, whilst it is in this transition, to rebuild jobs and maintain capabilities. Cutting this funding risks causing the early closure of motor-vehicle producers and hundreds of firms in the automotive supply chain, sending thousands of Australian jobs offshore.
In government, Labor's investments ensured that Australia maintained its automotive industry in the face of the global financial crisis, global industry restructuring and record-high Australian dollar. Labor's approach is based on co-investment in order to provide long-term certainty. It is not a hand-out. The industry only received support when it invested alongside the government. This support was critical in keeping the industry here and attracting new investments, models and capacity.
The Abbott government has demonstrated, through many decisions—but especially through this bill—that they do not care about workers affected by this downturn in the auto industry. They are cutting $900 million from the scheme, ultimately terminating it in 2018. It is part of a broader agenda to axe funding to programs that support workers in such industries. The manufacturing sector, including automotive, is worth fighting for. There has already been work done on how investment in strategies to transition the sector into sustainable long-term avenues can be achieved. One avenue is investment in upskilling the manufacturing workforce.
Recently a report was released on exactly this issue. I draw interested members' attention to a report of the Australian Workforce Productivity Agency: Manufacturing workforce study: skills to grow competitive, high-end manufacturing.In April this year, AWPA released this report on their investigation of the skills needed by the manufacturing industry, more generally, as it goes through this significant transition period. The manufacturing industry is Australia's fourth-largest employer. It has deep links with other sectors, particularly primary production, utilities, construction and services.
The manufacturing industry is a particularly important one in terms of the integration of innovation across all sectors. It is vital to economic activity in many regional areas. Manufacturing makes a disproportionately large contribution to exports and plays a critical role in the uptake and spread of innovation in our economy. As we well know, manufacturing has been in transition for decades, impacted by situations internationally and nationally—tariff cuts, industry restructuring, changing technologies, outsourcing of tasks to lower-cost economies and, more recently, the high Australian dollar and slower productivity growth in the economy. It is true that all these things created challenges and opportunities for our manufacturing sector. AWPA's report notes:
While transition is not new, it highlights the need for Australian manufacturing to focus on high-end innovative products where it has a competitive advantage. The future lies in us shifting from heavy industrial manufacturing to higher value added, technologically advanced production.
I would argue that the car-manufacturing industry sits perfectly within that frame.
In order for us to take advantage of these opportunities our workers will require a high level of skills, particularly the STEM skills—science, technology, engineering and maths. Improved leadership and management skills are necessary for businesses to increase productivity, innovate, adapt to changing business models and integrate into global supply chains.
AWPA made a number of recommendations. Firstly, it said, we need to focus on skills development. It indicated that the manufacturing industry's future lay in advanced and niche manufacturing. It recommended that industry work within Australian government manufacturing initiatives to identify linkages that promote industry-wide collaboration on skills and workforce development. The AWPA report recommended that continued government support be maintained for programs which assist businesses to develop and upskill their workforces, in particular, Enterprise Connect, Workplace English Language and Literacy program and the National Workforce Development Fund .
Sadly, the Abbott government totally ignored the AWPA recommendations and axed the very programs that AWPA recommended to upskill our workers to enable them to face workforce challenges in the future. The WELL program assisted businesses to train employees and to improve their English language, literacy and numeracy skills to help them improve their current and long-term future employment opportunities. The Australian Industry Group's report Getting it right: foundation skills for the workforce also highlighted the critical importance of language, literacy and numeracy. They were very supportive, I must say, of the program.
The National Workforce Development Fund program was part of the Labor government's Building Australia's Future Workforce package. This initiative was designed to link employers and industries to co-investment based funding for whole-of-workforce planning and development. In regard to the car industry I would refer members to two examples of where the National Workforce Development Fund was used very successfully in this way.
The Victorian Automobile Chamber of Commerce worked in conjunction with the Motor Trades Association Queensland and partnered with Kangan Institute to upskill and improve career pathways for 50 automotive technicians. VACC played an instrumental part in linking enterprises with the National Workforce Development Fund's training initiatives, and through its association with the MTAQ was able to assist with the provision of high-quality training for battery electric and hybrid electric vehicle skills.
Another example was the Nissan Aftersales Leadership Certification Program. This program, underpinned by the National Workforce Development Fund, took participants through a Certificate IV in Frontline Management. The program consisted of both on-the-job training and specifically designed modules of learning to enhance a candidate's ability to provide leadership and guidance in their particular role in the organisation. Both programs were well received by those businesses that were directly involved, by the industry organisations that worked to create them and by the participants. If people look at the department's website they will see some direct comment from workers who participated in that.
The second thing that the report said was that we need to position the workforce for adjustment and renewal. That particularly focused on developing the foundation skills but also getting in place some good and effective recognition of prior learning and accelerated training programs to help workers formalise the recognition of the skills they had developed. Again, it emphasised the importance of adapting those strategies for mature age workers, many of whom we see being impacted in the automotive industry.
Manufacturing should be promoted as a rewarding career. The AWPA report indicated that one of the main problems was a perception of manufacturing that was outdated and that it was important to actually have a conversation through industry groups, industry skills councils and trade unions all working together to promote the growing and positive opportunities in the manufacturing sector.
Finally, the report indicated that we needed to get seriously into the business of guaranteeing a supply of capable apprentices. They recommended that many of the programs that were sadly axed in the budget, such as Australian Apprenticeships Mentoring Program, the Australian Apprenticeships Access Program, the Accelerated Australian Apprenticeships Program and Apprenticeship to Business Owner were important to that task. Sadly, they have gone, too. In summary, the AWPA report into manufacturing recommended that this sort of investment would ensure that the workforce available would be positioned for a new and innovative sector in manufacturing more broadly but also obviously in the automotive area as well.
I would like to indicate, too, that one of the things that I do think was unfortunate for some of these industries in transition was the decision by the government to abolish local employment coordinators. In my own area, because of the BlueScope restructuring and its impact, we had one of these positions working closely with the companies and the affected workers to put in place some important programs that connected them with new opportunities but also put in place some training and support for supply chain providers to enable them to find some new markets. I think that was a short-sighted decision to remove those positions. They were very valuable.
Finally, I just wanted to make the point that I think that the decisions that the government made are short sighted. I think the automotive industry had the capacity, working in partnership with government, to have a strong future. I still think that that is a possibility, but this bill will not contribute to that outcome. The Abbott government established a $155 million Growth Fund designed, in their words:
… to generate the jobs of the future for employees and supply chain businesses in Victoria and South Australia affected by the closure of local automotive manufacturing operations.
I just want to highlight to the House that that fund included a $30 million skills and training program to assist automotive employees to have their skills recognised and also to provide them with training for new jobs while they were still employed. To date, we have not seen any information about how employees can access this program, what training options are being made available to them, whether they are able to have time at work to attend any training programs and whether they will be required to pay or for that training. There is much that needs to be clarified about the expenditure of that component of the package. It is important to provide that skilling and training opportunity to the workforce and I hope the government moves on that more quickly than they have done to date.
Sadly, they seem to be doing quite the opposite. The sector more broadly, and the workers in particular, as well as the regions and communities directly affected, deserve far better from their federal government than they are seeing at the moment. This bill is a bad decision and I am sad to be standing here but pleased to say I am going to oppose it.
It was not always the case that the Liberal Party was so hostile toward manufacturing in general and the car industry in particular. You did not use to get the sneering references to 'industry welfare' and 'picking winners' and so on that tend to mark the modern debate. Indeed, the founder of the Liberal Party, Sir Robert Menzies, said—and I go back to 1964 when he was opening the Chrysler manufacturing centre in Tonsley Park in South Australia, in the member for Wakefield's electorate—
I found myself as Prime Minister greatly concerned to see whether we could establish an industry of building motor vehicles in Australia, and this was regarded by a lot of people with some horror and we had all sorts of expert advice. Expert advice is the very devil. You want to have at least a hundred experts and then conduct a Gallup Poll among them and then think out the answer for yourself. That's my firm belief.
The experts said, 'Oh, but you can't do it. Nobody could build a car in Australia … Well, it is only twenty-five years ago that that was happening. I remember it very well. There were all sorts of misconceptions, there were all sorts of expressions of anxiety and inferiority on the part of people, and today we have in Australia a state of affairs in which 400,000 new motor vehicles go on the roads every year.
That was Robert Menzies back in 1964—a giant compared to some of the free-market pygmies we deal with now. He continued:
I don't need to be told that there are quite a number of people here, as I go around who are what we used to call New Australians, who are people who migrated here since the war. There are millions now anyhow, something well over a million in Australia and every large factory I go to contains a high percentage of people who have come in in these years. There could not have been a n immigration policy or programme without employment on this scale in industries of this kind. The rural industries, vital as they are to the survival of Australia, can't employ people by the scores of thousands extra every year, we know that they can't. It is industries of this kind which enable the migration programme to continue, and the fact that the migration programme continues, that you have this remarkable increase in the population year by year has given strength and tone and optimism to the people who run retail stores in Australia, to all sorts of other manufacturers who produce things that in demand by stores and which are bought by them because they are in demand by their ordinary customers. This is a whole interwoven structure.
That was Sir Robert Menzies saying you cannot have migration without manufacturing. This government is unravelling it—killing off manufacturing in general and the car industry in particular. Mark my words, this is not going to end well for Australia—this narrowing of our industrial and economic base.
…this is a great moment in the history of this State, and it is a very welcome occasion in the history of the economic and industrial growth of Australia. It is, I assure you, for me a stirring experience to go around this country as your Prime Minister and see in all parts of Australia in one form or another … Australia's developmental strength and our industrial growth.
… … …
In formally declaring this Lonsdale Plant open, I convey to you on behalf of my colleagues of the Government my own personal good wishes, every wish that you will continue to prosper and that you will be a permanent element in a growing and increasingly prosperous Australian automotive industry.
That was Harold Holt. We also had former Liberal Prime Minister Malcolm Fraser, in 1976, saying:
The motor vehicle industry is, obviously, of great importance to Australia's national economy and particularly to South Australia.
… … …
The plans announced by Chrysler are not only important for the industry as a whole and for Australia but they are also of special importance for South Australia where motor vehicle manufacturing is obviously very significant for the industrial development of the State.
Now we come forward to today's Prime Minister who said on 7 September 2013, before he was elected:
I want to see car making survive in this country, not just survive but flourish.
Then—surprise, surprise!—in December he decided to turn his back on our auto industry. He turned his back on the car makers; he turned his back on the 50,000 Australians employed in the sector and said:
Some of them will find it difficult, but many of them will probably be liberated—
His word, 'liberated'—
to pursue new opportunities and to get on with their lives.
This Liberal Prime Minister has seen the car industry vanish on his watch and he should be ashamed he has allowed this to happen, when previous Liberal Prime Ministers were strong supporters of it. Robert Menzies got it; Harold Holt got it; and Malcolm Fraser got it.
The bill before the House amends the Automotive Transformation Scheme. That act was established to encourage investment and innovation in the Australian automotive industry. It gives effect to the government's $500 million cut to the Automotive Transformation Scheme from 2014-15 to 2017-18, which was announced as part of the Mid Year Economic and Fiscal Outlook. It also has the effect of terminating the Automotive Transformation Scheme on 1 January 2018, cutting a further $400 million from the Automotive Transformation Scheme which was announced in the budget.
Labor strongly opposes this legislation. We think it spells disaster for the 200,000 Australian men and women who rely, either directly or indirectly, on the automotive manufacturing industry for their jobs. It is a disgrace that this government is seeking to bury the manufacturing industry as quickly as possible. And we think that this decision to withdraw support for the manufacturing sector through this bill and refuse to co-invest with Ford, Holden and Toyota in continuing to grow a high-skilled manufacturing base, when combined with the increasingly preferred option to build Australia's next generation of submarines overseas, will damage our manufacturing industry and damage Australian companies and Australian workers.
This comes at a time when Australia has high unemployment levels. We have a national unemployment rate of 6.1 per cent and a participation rate of 65.2 per cent. In my state of Victoria, our unemployment rate is 6.8 per cent. Youth unemployment is the highest it has been for the last 15 years. We have high regional unemployment and high long-term unemployment, and yet we have a government which is abandoning manufacturing and thereby abandoning Australian job opportunities.
Following the decision last year by Ford to close, I hosted a Wills Car Industry Forum in Fawkner with the intention of providing local businesses and employees with information and assistance. The decision by the Ford Motor Company to cease manufacturing in Australia in 2016 affects all Australians, but clearly very greatly those in the electorate of the member for Corio, who is here, and also local auto component manufacturers that supply parts to Ford, to its businesses, the local employees and their families in my electorate of Wills and the neighbouring electorate of Calwell. I was very conscious at the time of the difficulties that Ford's decision would cause for some people in my electorate. The forum was an opportunity for people in Wills to share their views and concerns. Residents, employees and business people who were affected by the closure attended. They expressed their views and concerns about the closure announcement. We had speakers from a wide range of agencies and companies, including Austrade. Many of the speakers administered or managed programs that could be of assistance to the car industry and our community. One of the key aims of the forum was to ensure that all of my constituents are fully aware of the range of services that can help them through what are difficult times.
Manufacturing is a critical industry sector for Melbourne's northern region, and it is vital that we work to proactively assist and create new opportunities for local businesses and employees as soon as possible to help support the manufacturing sector, local businesses and local jobs, and maintain strong community and social fabric. This bill will hurt my community in terms of social cohesion, jobs and support for manufacturing industry, and making sure that suppliers and businesses have the time and the support that they need to transition to new markets and products.
I agree with economist Dani Rodrik, who says that:
… countries ignore the health of their manufacturing industries at their peril.
He says that:
High-tech services demand specialized skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. Manufacturing, on the other hand, can absorb large numbers of workers with moderate skills, providing them with stable jobs and good benefits. For most countries, therefore, it remains a potent source of high-wage employment. Indeed, the manufacturing sector is also where the world’s middle classes take shape and grow. Without a vibrant manufacturing base, societies tend to divide between rich and poor—those who have access to steady, well-paying jobs, and those whose jobs are less secure and lives more precarious.
Dani Rodrik says that in the United States the fall of manufacturing's share of employment has been damaging to productivity because labour productivity is substantially higher in manufacturing than in the rest of the economy. The bulk of new employment in the United States:
… has come in 'personal and social services', which is where the economy's least productive jobs are found. This migration of jobs down the productivity ladder have shaved 0.3 percentage points off US productivity growth every year since 1990.
In Latin America, he says:
Redundant workers have ended up in worse-performing activities, such as informal services, causing economy-wide productivity to stagnate …
I want to add my voice to the concerns being expressed about the offshoring of Australian manufacturing. I agree with economist Herman Daly, who says that:
… off-shoring production is not "trade."
He says that:
No goods are traded.
It is absurd that off-shoring should be defended in the name of "free trade".
He says that offshoring increases imports, increases the trade deficit and lowers either employment or wages. The policy of free trade is based on the doctrine of comparative advantage. One of the premises on which the doctrine of comparative advantage rests is the international immobility of capital. But offshoring involves moving capital abroad. And if we were fair dinkum about free trade as a policy, we would be looking at capital mobility and offshoring.
The idea that manufacturing jobs are degrading and that everyone is going to be re-educated to become a mining engineer or an investment banker is delusional. Manufacturing jobs are worthwhile jobs, holding families together and holding communities together, and we should not let them slip away. The Nobel Laureate Professor Robert Solow's growth model showed that the only way to break the bonds of steady state stagnation is through rapid innovation and technological change that lifts the productivity of both capital and labour out of the steady state. R&D represents the seed corn of technological change and innovation.
Regrettably, since coming to office, this government has gone out of its way to trash Australia's automotive capabilities. The government claims that the age of entitlement is over, but we have here a situation that welfare payments and lost tax revenue from an industry shutdown are projected to exceed $20 billion, and it will take more than 10 years before the economy recovers from the underlying hit to GDP.
The greatest impact from the wind-down of the automotive industry will be in my home state of Victoria, where an estimated 100,000 jobs will be lost. And this is the state with the 15-year-high youth unemployment rate of around 12 per cent. Gross regional product in Adelaide and Melbourne will not recover until 2031—nearly two decades away—and employment levels are not expected to recover until the end of the 2020s. In addition to the losses estimated in Victoria, South Australia is projected to lose 24,000 jobs, and New South Wales and Queensland are expected to lose 30,000 jobs. So this is an industry which has been vital in my electorate and vital in Victoria and other parts of the country. I think it deserves better treatment than the treatment it has received from this government.
I strongly oppose the bill—I wish that the government would reconsider its attitude towards manufacturing in general and automotive manufacturing in particular. Labor will do everything we can to stop these cuts to the Automotive Transformation Scheme and we ask the crossbenchers and minor parties in the Senate to stand up for Australian jobs and to block these cuts in the Senate.
I rise this evening to speak in opposition to the Automotive Transformation Scheme Amendment Bill (No. 1) 2014.
This is a bill which stands for a vast difference between the government and the opposition when it comes to the car industry. It is a difference which, in essence, speaks of the coalition being ultimately and consciously opposed to having a car industry in this country and Labor, who have actively and willingly sought to maintain a car industry in this country from the moment that it began.
In articulating the differences of approach to the car industry I want to say that I speak very much tonight on behalf of my electorate—an electorate which has had Ford making cars in it since 1925. They were the first manufacturer in our city, but a manufacturer which has been making cars in Geelong since that time. There are nearly a thousand people today employed by Ford in relation to the car industry and, of course, there are many more who are employed in the car components industry. It is one of the most significant private-sector economic pillars within the local economy.
And it is not just a matter of those people who are directly employed: this goes to the health of the economy within suburbs such as Norlane and Corio, where many of those people live; it goes to the ability of people to run small businesses within those suburbs, which benefit from those people who work at Ford as their customers; and it goes to the question of the very identity of Geelong. When you drive into Geelong you see the big, bold Ford sign, which speaks of a company which has had a longstanding engagement within our city. Indeed, perhaps a neat example of that is that since the 1920s Ford have been sponsoring the Geelong Football Club which, to this day, represents the longest sponsorship arrangement in world sport. Ours is a car town, and it is a town which is bereft by virtue of the decision that has been made by this government intentionally to seek an end to the car industry in this country. And so tonight I very much speak for those Ford workers and I speak for the people in Geelong in opposing this bill.
The practical difference that you can see between the two parties was played out in 2007, before the 2007 election. In July 2007 we saw, under the Howard government, Ford announce that it would close its engine assembly plant. This was intended to occur in 2010. Hundreds of people were going to lose their livelihoods as a result of that decision. Of course, at the end of that year the government changed and by the following year in November 2008—with some hope, with some investment in the people of that town and with some commitment to the car industry—we saw Ford reverse its decision and maintain a car and engine plant at the Geelong premises.
That is a difference between a state of despair under the Howard government about what was seen as a hopeless future for the car industry in this country and the sense of hope and engagement which existed under the then Rudd government. This came from a government which was committed to the car industry and committed to the companies and the people who were within it. Hundreds of jobs were saved as a result of that and, indeed, hundreds more in relation to the contractors who work with Ford. The communities that I have described were radically changed by virtue of the ability for Ford to continue.
I want to make the point that this is not just about jobs, although it is critically about that. It is also, at the end of the day, about the question of the capability of our country—the industry capability of our country. We aspire to have a diverse, productive economy which climbs the technological ladder and which has within it businesses and enterprises which are high tech and innovative. That is, across the board, an aspiration of government in this country. But the highest-tech manufacturing that we do in this country on this day is making cars. It is why it is so profoundly important as an industry to this country.
It is also really important to understand that as an industry in existence around the world that it is an industry which is in effect a public-private partnership. Governments around the world invest in having a car industry. If you look at the 13 countries which can take a car from design stage right through to completion, in every one of them there is a significant investment by the governments of those countries in keeping those industries alive and flourishing.
Indeed, comparatively, the level of investment that existed in Australia in relation to the car industry was quite small and a key part of it was through the Automotive Transformation Scheme. The reason why countries seek to invest in the car industry and to have it in their countries is precisely because of the technological dividend that comes from having an industry of that kind within your country. This breeds highly-skilled workers, this breeds innovative people and this breeds companies who seek to invest in research and development and to improve the technological capacity of the economy as a whole. It is why it is such a fundamentally important industry for our country and, of course, why is Geelong was very proud to have—and still has—a significant part of that industry in our town today and over many decades.
In keeping the industry going, Labor in government did not stop there. We invested in new high-tech industry which would have a role in the automotive sector and other parts of manufacturing. We invested $37 million in the carbon fibre research centre at Deakin University, now known as Carbon Nexus, which in turn is a much bigger facility than simply the $37 million. It represents the high-tech manufacturing of the future. What you also saw from the then Labor government was a government that was not just about investing in high tech, that was not just about making sure that our car industry was able to keep going, but a government that was also fundamentally prepared to get in there and fight for jobs when jobs were on the line. So when in 2012 you saw Alcoa in a really difficult situation, undertaking a review of whether or not it would continue to smelt aluminium in Geelong, you saw the then Gillard government act decisively to provide the support necessary to keep Alcoa going in its darkest hour.
In 2013 we saw Ford make the very difficult decision, the devastating decision from the point of view of Geelong, that it would no longer make cars in this country. It is important to say that no government can save every job, and it was very sad for me that in that circumstance, while Labor was in power, it was not possible to keep Ford going. But there is an enormous difference between a government which has a disposition to fight for jobs and pursue jobs versus a government whose disposition seeks to goad manufacturing out of the country. That is the difference that exists today between Labor and Liberal when it comes to manufacturing in this country, and there is no better expression of it than the bill before this House today that we are talking about right now.
When Ford made the very difficult decision that they made, on the very day that they made it, the then Gillard government committed $15 million towards what is now a $30 million fund to help Geelong transition through the economic shock associated with a decision of that magnitude. As difficult as that moment was, the Gillard government stood up on the day and made sure that it was standing with Geelong to get through a very difficult moment. When we went to the election later that year there was, in effect, a difference in the proposition that was put to the Australian people of $1 billion in support for the car industry—a $1 billion difference in the propositions being put by Labor and the coalition with regard to the car industry. We knew that despite the very sad decision that had been made by Ford, that proposition fundamentally represented a decision or a commitment about whether or not we wanted to have a car industry in this country. That $1 billion would have seen Holden and Toyota continue their production in Australia right now, but if you take that out of the system then what transpires is absolutely inevitable.
In the lead-up to the last election the now Prime Minister, when quizzed about the question of the car industry—indeed quizzed about my home town of Geelong—this was in a press conference in Brisbane—said:
I want to see car making survive in this country, not just survive but to flourish.
We now know that was an absolute and total lie. There is no other word for it. An absolute and total lie. Whether you have a car industry in this country, whether you have manufacturing in this country, is an absolute conscious decision of government, and the conscious decision of this current government has been to let manufacturing go. We thought that would play out over a matter of years; we did not expect to see it play out over a matter of months. We did not expect to see, within just a few months of this government coming to power, the Treasurer goading Holden offshore and then seeing Toyota follow suit. Of course, at the beginning of this year, in a different industry but manufacturing nonetheless, and again in Geelong, we saw the very, very difficult decision of Alcoa, who announced they would no longer smelt aluminium in Geelong from 1 August 2014.
But unlike Labor's response to a decision that involved an economic shock of that magnitude to my city, what we saw from the coalition was absolutely nothing—absolutely nothing. To this day not a single cent has been dedicated to the City of Geelong, by virtue of the decision that Alcoa made, to help us through the obvious transition that has to occur by virtue of that economic shock. We are seeing a government that today has declared war on manufacturing. But not only has it done that, it has also cut funds to research, it has turned its back on science. In this bill we are seeing the government not only give effect to the $500 million cut which was talked about during the election but, over and above this, we are also seeing a decision to end the Automotive Transformation Scheme in its entirety, which involves another $400 million cut to the car industry.
As difficult as all the decisions that Geelong has faced in the past 18 months have been, one thing that has been saved is that Ford's product development centre, which employs more than 400 people in Geelong, committed to be in Geelong beyond 2016. This is the part of Ford that is involved in the design and development of new cars made not just in Australia but also made by the Ford production chain around the world. It is a profoundly important asset in terms of the industrial capability that exists within it for our country. These are highly skilled people. This is the epitome of a high-tech economy. It is this group that would have benefited from the ongoing existence of the Automotive Transformation Scheme, and, by virtue of this bill not just giving effect to the $500 million cut that we saw at the time of the election but also abandoning the scheme in its entirety, we are seeing those 400 jobs being placed at risk.
What we are seeing through this bill is a government that is seeking to complete the job that it started in declaring war on the City of Geelong and in declaring war on manufacturing in Geelong. This is a government that is seeking to dumb down the national economy. This is a government that has absolutely cut my home town of Geelong completely loose: cut it completely loose in the context of what it has done with the car industry; cut it completely loose in the context of providing nothing for the transformation as a result of the Alcoa decision; cut it completely loose in relation to the cuts it is making to higher education, research and development; cutting it completely loose in relation to what it is doing to the social safety net. But what will stop this happening is people in this country voting this government out of office. And as a result of this bill and everything we have seen in this budget, everything we have seen in relation to manufacturing, Geelong stands ready to do exactly that.