House debates

Wednesday, 1 October 2014


Automotive Transformation Scheme Amendment Bill 2014; Second Reading

12:14 pm

Photo of Paul FletcherPaul Fletcher (Bradfield, Liberal Party, Parliamentary Secretary to the Minister for Communications) Share this | | Hansard source

I am pleased to continue my remarks on the Automotive Transformation Scheme Amendment Bill. At the point before the debate was interrupted last night, I was observing that the economic realities in the fundamental uncompetitiveness of the Australian automotive industry do not make the transformation that needs to be faced any easier. It may be a reality, it may be inevitable but that does not make it an easy transition for those in the industry, for employees, for the businesses or, of course, for the affected communities. But while it is not an easy transition, the status quo is simply not a viable status quo and this is something that any responsible government must recognise.

Tragically, the previous Rudd-Gillard-Rudd governments refused to recognise the reality and instead preferred to keep throwing taxpayers' money at an unsustainable industry. Labor consistently refused to acknowledge economic reality. Indeed, in 2013 then Prime Minister Gillard insisted that the car manufacturing industry remained viable in Australia. She reassured the workers of Ford that the government would make a special effort to assist them. There were continuing handouts to the automotive industry with $42 million of taxpayers' money paid to assist the development of two Ford Eco vehicles which, unfortunately, failed to meet the requisite environmental criteria for some state government fleets.

You would have thought that the Labor Party would learn from experience. Suggesting that additional money be thrown at industries which are unviable and unsustainable and, critically, businesses whose management teams had decided to exit Australia in such circumstances is the height of folly, the height of irresponsibility. You would have thought that the Labor Party would have learnt from experience and would have recognised that reality. But unfortunately that was not the case.

When we saw the announcement from General Motors just before Christmas that Holden would cease manufacturing vehicles in Australia, what was the response from the Leader of the Opposition? In February 2014 he said:

Government subsidies for car makers are essential for keeping manufacturing alive.

He was determined to keep throwing taxpayers' money at that industry. He was determined to wilfully close his eyes to the evidence even from the managers of the businesses themselves that this was not a sustainable industry.

What did we hear from former Rudd government minister Senator Carr—Kim Il Carr as he is known quite appropriately? He made the completely unsubstantiated claim that the coalition could save Holden for as little as $150 million a year and could secure the entire Australian automotive industry by spending double that—just spend a bit more. Despite the fact that the management teams of these companies were saying 'this is not a sustainable business', as far as Senator Kim's car was concerned, if we just spent a little bit more and a bit more then we could solve this problem. It was a wilful refusal to acknowledge reality.

It is very important to acknowledge that senior General Motors executives said the decision to exit manufacturing in Australia was driven by basic scale economics, not by government incentives or by reductions in them. The decisions to exit manufacturing in Australia by 2016 in the case of Ford and by 2017 in the case of Holden and Toyota, were taken by the manufacturers themselves. All three manufacturers indicated that the level of government support was not the reason for their decision to cease manufacturing vehicles in Australia. But the Labor Party remained wilfully blind to the economic realities. Why? Because in part, as usual, they were dancing to the tunes of the union masters.

What did we hear from the former secretary of the Australian Workers Union? In 2012 he gave a speech at the National Press Club complaining that manufacturing jobs had disappeared. What was his solution? Unsurprisingly, it was more government assistance for the car industry and for the manufacturing industry. He went on to say:

The Australian Workers Union does not want to see Australian industry lose. We want Australian industry to win. We want Australia to rediscover its industrial policy vision.

What is that code for? I will tell you what that is code for: that is code for more taxpayers' money being shovelled in to subsidise an industry which is manifestly uncompetitive. Let us be clear. Of course we want Australian industry to succeed. Of course we want Australian manufacturers to prosper. But it is a fool's paradise to imagine that manufacturing can prosper on the basis of subsidies from government. Manufacturers need to be competitive and they need to be world competitive if they are to survive. There are plenty of instances of Australian manufacturers being innovative, being world competitive. But they need to find market segments where they can compete and they need to do it on the basis of their own expertise, knowledge and capacity—not on the basis of decisions made in Canberra. The Abbott government recognises that competitiveness is critical for our economy. To promote competitiveness, we need to move away from a mindset of dependency and play to our strengths.

This bill is one which will make sensible savings in public expenditure by reducing an ongoing subsidy to an uncompetitive industry. The automotive transformation scheme will close from 1 January 2018 after motor vehicle manufacturing in Australia ceases. This bill amends the automotive transformation scheme legislation to give effect to this decision. Savings of some $900 million in total will be achieved and will be directed to repairing the budget bottom line, filling the yawning chasm of deficit we were left by the previous government and to fund other important government priorities. But approximately $700 million remains in assistance for this industry.

This is an important bill which secures economies and recognises the economic reality, the reality that the other side of politics wants to stay wilfully blind to. This is not an industry in which we can remain competitive on the present terms.

12:22 pm

Photo of Nick ChampionNick Champion (Wakefield, Australian Labor Party) Share this | | Hansard source

It is my very sad duty to speak on the Automotive Transformation Scheme Amendment Bill 2014. The bill obviously involves a $500 million cut to our automotive industry and, in particular, to the components industry that lies behind it. Let's make no mistake: this bill continues with the vandalism that this government has wrought on what was and still is today a very important Australian industry and a very important industry to my electorate, and, obviously, to my state and the southern part of Australia—and to the rest of Australia too. It importantly represents one of our key manufacturing industries and one that so many other industries took their skills and R&D from.

This $500 million cut, as exposed by the Federal Chamber of Automotive Industries last year, jeopardises an industry that provides the economy with about $21 billion worth of investment and other economic benefits each year. For that $500 million, you were getting $21 billion—that is what the Federal Chamber of Automotive Industries said in their press release on 4 November 2013. This is an industry which is not just important for investment, jobs, our national capacity, our ability to manufacture things like cars but a whole range of other products in this country.

The previous speaker, the member for Bradfield, talked about what Mr Devereux said at the time of closure. He talked about volumes but he began with the high cost of the Australian dollar—and this was referred to by the member for Melbourne in his address. This was the No. 1 issue affecting not just Australian automotive industries but Australian industries generally. It did not matter in my electorate if you talked to farmers, people who owned wineries who exported wine or people who made and exported cars: the persistent high value of the Australian dollar from about 2006 onwards has been a real issue for Australian industry.

We all know the economic fundamentals that led to that: high commodity prices and a disruption of the world's currencies caused by the global financial crisis. The persistent high value in the Australian dollar was only ever going to be an event that lasted for a period of time. It is important that we understand that the dollar was the real issue behind the difficulties that the automotive industries and a whole lot of industries had. It wasn't wages. It wasn't the workers. It wasn't work practices. It wasn't unions. It wasn't consumer preferences—all these things like straw men that have been thrown up in this debate; it was the effect of the Australian dollar. It was the effect of currency movements: an appreciation of the Australian dollar while many of our competitor countries depreciated their currencies at the same time to lift their exports.

The Australian car industry faced a situation where the dollar was persistently high on one hand, but the yen plunged as a deliberate act of Japanese government policy on the other. Japanese cars became $5,000 cheaper in six months not because of anything other than currency movements.

We should not have those opposite coming into this place and saying: 'It's the straw men. It's the workers. It's the unions. It's the Labor Party. It's industry subsidies' and all that sort of nonsense. It was the Australian dollar that caused many of the issues. It did not just cause issues in the automotive industry; as I said before, I have spoken to many other companies which have had the same problems.

The dollar has now come down quite a bit—I think it was 87c in recent times. That proves the point that the government has made reckless decisions, engaged in reckless vandalism and spurned foreign investment in our country—in this case by multinational automotive companies—based on a situation that was transitory. Because once the dollar falls below about 92c or 93c, the Australian industry can export. I know this, because Holden will be able to export rear-wheel drive cars to the United States for the police car market and the luxury market. They will be able to make money where the dollar is at the moment. It was a niche capability and it is that capability that gets you around some of the issues of volume which the member for Bradfield raised. The only answer to getting around those volume arguments is to fit in a niche manufacturing place within the global production chains of these automotive industries. And we could have done that, and Holden was interested in doing that.

It is interesting that, for all of the rhetoric and the quotes from previous members, they should remember that on December 10, 2013, Holden's Mike Devereux created the rather unique situation of going public in an article to the Sydney Morning Herald. The headline was: 'It's in the government's hands, says Holden.'

Holden was interested in investing in Australia—and I know this because they bothered to come to see me to talk to me about it and I know something about investment windows. I know something about the opportunity that we had to secure Holden in this country until 2022. That opportunity was there and at least the government for a moment might have realised this, because Ian Macfarlane made a big fuss, came down to the factory, did a big tour and posed in photos with workers. You would have thought that, if the government thought what the member for Bradfield just said, they would not have done that. It was pretty cruel to wander around a factory, giving hope to people, if you did not think the opportunity was there to invest.

Of course the opportunity was there to invest. But it needed a minister and it needed a cabinet. It needed a Prime Minister that was serious about keeping the car industry in this country. It could have been done. The opportunity was there for it to be done. Holden would not have gone through all of the things they went through—going to the workers, doing an enterprise agreement, getting a whole heap of cuts, making a whole lot of sacrifices at the shop-floor level—why would they do that if they did not want to invest in Australia? Why do it?

GM is not there to mollycoddle people. They have closed factories around the world at different times, and when they close factories they are quite clear about it. But they did not do that in this case. They did an agreement with their workers to try and leverage off that investment. All they needed was a government to step up to the table and do what governments around the world do for their car industries. But the thing about this is the government just did not want to.

I have showed this article to the House many times before—the Financial Review article from 11 December: 'Hockey dares GM to leave'—bells the cat. It was the government that made the decision about the car industry. Today, in this bill cutting $500 million out of the Automotive Transformation Scheme, they risk even further accelerating the job losses, accelerating the timetables, and making the situation far worse than it needs to be.

A different article in the Financial Review, also by Phillip Coorey—a very good journalist—is titled, 'Abbott bowls a blistering spell of line and length'. This is where the bragging of the Prime Minister comes in—and there is a quote in there:

'It was Abbott who put the torpedo in the water over Holden,' …

Given all the rhetoric on submarines, given their lies on submarines to South Australia—we know the damage they are going to do to that industry as well—it is an odd bit of language to use.

It was the government in this bill, it was the government last year, who closed the Australian industry, putting 50,000 jobs at risk. They are devastating the manufacturing base of this country. Why? Because of their prejudice. It is not just me who thinks this. In the Financial Review, on 11 February this year, Mr Sardelis, who makes car components in the suburb of Netley, in the member for Hindmarsh's electorate—it is good to see he is not speaking on this bill today; he will be scurrying about, hiding in his office, under his desk—said he was angry at policymakers. He said: 'In the end they did not want an industry and they have got what they wanted.' That is a quote that bells the cat on policymakers like the member for Hindmarsh and others in this government—people who basically put this industry to the knife, put it to the sword. Now, with this $500 million cut, they jeopardise every component company in this country and they jeopardise bringing forward that 2017 date. Make no mistake; that is the consequence of this $500 million cut.

I heard the member for Dawson making a speech. I just about fell off the chair in my office; I could not believe it. Here was a Queenslander railing against subsidies to the car industry and railing against subsidies to the multinationals. But there is just one thing: I remember keeping an article on the member for Dawson, from the Financial Review from the same day, 11 February 2014: 'Nationals fight razor gang over ethanol'. It describes the member for Dawson as 'fighting for ethanol subsidies'. He comes into this House and gets stuck into car workers, car companies and foreign investment, and there is all this emotive language about multinationals, but apparently, if you want to hand over a huge subsidy for ethanol, that is okay; that is just helping everyone out.

If you are going to get up and get stuck into corporate welfare, you need to be consistent. You cannot be against corporate welfare everywhere else other than in your home patch, because no-one will take you seriously. I guess that is where this debate is left, sadly—for all the seriousness of it. It is an industry, put to the sword on the basis of prejudice, on the basis that it is unionised, on the basis that its workers are organised, on the basis that it needs support because other industries are supported around the world, on the basis of the prejudices of the government and the high cost of the Australian dollar. They have decided it is all too hard and they have walked away from it. They pushed Holden away. We have the situation where the member for Dawson makes these ridiculous contributions, and then the member for Bradfield says: 'Oh well, that was inevitable. There was nothing we could do.'

Really, when you get down to it, this government has acted with extraordinary malice to a great Australian industry, an industry that defined us. It certainly defined my electorate, because we were able to build and make cars here—one of only 13 nations in the world—and we did it well. We could export when the dollar came down, when the economic circumstances changed.

But we now have the government becoming a farce. The youngest member of this House ever, the member for Longman, Wyatt Roy, has put a picture of himself on Facebook—I am happy to table it. The picture has him there, with some rather nice looking young ladies, in the party room, with Tony Abbott in the background. He has a V8 Supercars thing in the background. The caption is 'Debating the big issues facing the nation: Ford or Holden?'. This is this government's attitude to the car industry. They put an industry to the sword at the same time that they send thousands of hardworking Australians into the unemployment queues. And they cannot even take it seriously. On the one hand, the Nationals use it for rhetoric; and, on the other hand, the member for Longman uses it for a joke. That is a problem with this government.


12:37 pm

Photo of Ewen JonesEwen Jones (Herbert, Liberal Party) Share this | | Hansard source

I like the member for Wakefield. He is a good man. But I think I counted about seven bells around that poor cat's neck; it is not sneaking up on anything; it is not moving at all; it was belled so many times it was dragging along the ground.

I want to get into what we are doing with this bill and why we are doing it. The member for Wakefield was talking about exporting motor cars overseas. Holden Australia were exporting motor cars until the parent company, GM, said no. It is common knowledge in the automotive industry—

Mr Champion interjecting

You had your chance, Nick. In the race of life back self-interest. I understand the hubris. The reason you are standing up here is that you want to make sure you have another term because you do not have anything else to go to.

Mr Champion interjecting

You are singing to the choir, mate.

The Automotive Transformation Scheme is a legislated entitlement scheme which provides assistance to registered participants for the productions of motor vehicles and engines. I would like to go through the substance of the bill and then make some personal comments at the end. The ATS allows investment in allowable research and development and allowable plant and equipment. There are two types of assistance—capped via special appropriation and uncapped via an annual appropriation.

The coalition announced its intention to reduce the ATS in February 2011—so this is not a surprise. These intentions were brought to the 2013 election—once again, not a surprise. The local motor vehicle producers—Ford, Holden and Toyota—announced that by the end of 2017 they will stop local vehicle manufacturing in Australia. During Labor's tenure in government Ford and Mitsubishi said they would do the same. What did the member for Wakefield say at the time? I would like to go back and have a look at that. Therefore, assistance through the ATS will no longer be required from 2018. Labor members and Senate crossbenchers are likely to oppose this bill—and why wouldn't they? They oppose absolutely everything. They opposed their own budget measures!

Labor hit manufacturing with a carbon tax bill of $1.1 billion, hit the car industry with a fringe benefits tax bill of $1.8 billion, provided a last minute $215 million to GM Holden and granted Alcoa $40 million pre-closure as they pushed through their carbon tax. In their last three years Labor spun 14 ministers through the former Department of Industry, Innovation, Science, Research, Climate Change and Tertiary Education—14 ministers! Labor's legacy is one of instability, inconsistency and indecision.

The Federal Chamber of Automotive Industries have publically called on the parliament to oppose the government's savings measures—but why would we? GM Holden's Managing Director, Gerry Dorizas, warned in August 2014 that the cuts to the ATS would result in an early closure of the car manufacturing industry costing 50,000 jobs. I do not know how you get 50,000 jobs out of that—but that is the rhetoric we have to deal with.

A Productivity Commission report was handed down in March 2014. The report showed the automotive industry was handed about $30 billion in government support between 1997 and 2012 in the form of tariffs and budgetary assistance—have a look at the number of small engineering firms in my electorate that could have done with a slice of that. Over that period there were 5,186,765 vehicles manufactured locally. This equates to approximately $5,784 of government support per vehicle during this period. That is approximately $164,000 of government support a year for every job—man woman and child, cleaner and CEO—in the motor vehicle industry. Imagine what people out there could do with a government subsidy of $164,000 per job in their business. You would not have too many worries, would you? You would probably be able to provide something people actually want! Despite this the Australian automotive industry has failed to survive in a highly competitive global market.

This bill gives effect to the government's decision to reduce the ATS by $500 million over three years from 2015 and finally closing it on 1 January 2018 as announced at the 2013 election. The total amount of capped assistance for stage 1 will be reduced by $200 million to $1.3 billion ( 2011-2015) and in stage 2 it will be reduced by $700 million to $300 million (2016-2018). This will provide $900 million in savings to the budget. This government has made a longstanding commitment to get this budget under control. The decision to return the $400 million allocated for 2018-2020 to consolidated revenue was set out in this year's budget—no doubt opposed by all and sundry on the other side of the chamber and the crossbenches.

The government believes there is a future for manufacturing in Australia but only in those areas where we have a competitive advantage: food and agribusiness, mining equipment, technology and services, medical technologies and pharmaceuticals, oil and gas and advanced manufacturing. To take advantage of these opportunities many Australian firms will have to change the way they do business and run their companies. This is why we are focused on creating the economic environment that will support and encourage private sector investment and jobs growth. We are reforming vocational education and training, improving incentives for business to invest in technology and research and development, cutting red tape by $1 billion per year and helping transition manufacturing to the smart, high-value, export focused industries of the future.

The government has a way forward post car manufacturing. We believe that by supporting industry, innovation and competitiveness, targeting Australia's strengths and identifying ways to foster national competitiveness and productivity we will create long-term sustainable jobs. The government has established a $155 million growth fund to help automotive workers find new and better jobs. We will assist businesses to diversify into new markets and invest in infrastructure projects. A key part of the growth fund is the $20 million Automotive Diversification Program, which will assist automotive supply chain firms to diversify and invest outside of the automotive industry. The first round of the program is already underway.

The growth fund also includes a $30 million skills and training program to assist automotive employees and have their skills recognised and provide training for new jobs. There is $15 million to boost the Automotive Industry Structural Adjustment Program to provide careers advice and assist automotive employees to secure new jobs. There is a $60 million for the Generation Manufacturing Investment Program to accelerate private sector investment in high-value non-automotive manufacturing sectors in Victoria and South Australia, and there is $30 million for the Regional Infrastructure Program to support investment in nonmanufacturing opportunities in affected regions.

The $42 million Automotive New Markets Program is a joint initiative of the federal, Victorian and South Australian governments to help automotive component producers win work in non-automotive markets domestically and internationally. The federal Minister for Industry, Ian Macfarlane said—and I will not do the voice—

Photo of Russell BroadbentRussell Broadbent (McMillan, Liberal Party) Share this | | Hansard source

It is actually against parliamentary procedures so don't risk it.

Photo of Ewen JonesEwen Jones (Herbert, Liberal Party) Share this | | Hansard source

I know. That is why I said I would not do it. The minister said:

These grants will help automotive firms remain viable by diversifying into non-automotive markets and ensure that vital manufacturing capabilities remain in Australia.

The projects to be funded include: manufacturing cycling training simulators; casting metal components for the aerospace and defence industries; transforming production lines to producing new packaged goods for the food and medical or pharmaceutical industries; and producing emergency pipe repair clamps for the oil and gas industries.

The government has given a $50 million boost to the Export Market Development Grants scheme. The grant will help small- and medium-sized businesses to reach their potential and assist them in establishing markets when they go overseas. In June 2014 Minister Truss said:

Farmers and business developers in southern parts of the country will be eyeing the opportunities in the north to expand and diversify their interests. This has been part of our plan to put regional Australia at the heart of the national economic recovery.

The government wants to: develop a food bowl, including premium produce which could help to double Australia's agricultural output; build an energy export industry worth $150 billion to the economy with a major focus on clean and efficient energy, providing major increases to resource exports; and grow the tourist economy in Northern Australia to two million international tourists a year.

On 14 February 2014—on Valentine's Day—the Courier Mail said:

The local content of Australian-made cars was already in decline. Just 30 per cent of the parts to make a Holden Cruze were sourced locally, and the Commodore was only 50 per cent Australian in the end, according to figures supplied by the car maker. Toyota had a Japanese image but the Camry had up to 70 per cent Australian-made parts, the same as the Ford Falcon.

Australia now looks beyond car manufacturing. At the moment, over 50 per cent of world trade is now in components, that is companies and countries making things for a product that is finally assembled somewhere else. The Boeing 787 Dreamliner is a great example of that. The wing flaps are made in Melbourne and parts of the wings are made in other countries and they are all then flown to Seattle for final completion. But the value of the wing flaps being made at Fishermen's Bend is three billion dollars in contracts to Boeing. That sort of fibre composite technology was common in the auto industry and we need to transpose it into other industries. Boshe Australia are diversifying into new sectors and technologies in the food manufacturing and biotechnology industries.

Passage of this bill provides certainty for ATS participants about the level of assistance available for the final three years of the scheme, which will also assist their future business planning and decision-making. Approximately $700 million in ATS assistance remains available to the industry over the four years from 2014-2015. The Australian government is determined to ensure a strong, long-term future for Australian manufacturing.

I think it was the Kelly review in 1998-1999 that said that we were a high-wage country, that the profitability of the firm had nothing to do with the wages we were paid. You can be a high-wage country, and I support that 100 per cent, if you have low input costs and high productivity. If you have both of those you can be competitive in any market. Take one of those out and you are gone. Whilst we were reasonably competitive in productivity when it came to car manufacturing, import costs in Australia went through the roof. That, coupled with the high Australian dollar, is a blister on everyone's backside at the moment, and I think we have to deal with that.

But we made a decision as a government when we came in here that corporate welfare has to come to an end. As I said, $164,000 per employee in the motor vehicle industry is the Australian taxpayer subsidy to that industry. We are talking about 1,600 jobs in fact here. Labor will say that it is the end of manufacturing in the whole country. Everyone is going to be out of work—50,000 jobs, 100,000 jobs, all gone—and the whole state is going to shut down. But in Queensland over the last couple of years we have seen 14,000 jobs exit the mining industry Ten thousand engineers in Australia have lost jobs in Queensland over the last four years and there has not been the sort of corporate welfare that has been handed out to the good burghers of South Australia and Victoria in this same industry.

It gets down to what is important here. Do we just keep on digging a hole for ourselves as a country? Do we just keep on digging it down? Did we just keep on spending the money until we just completely run out and go completely broke?

Dr Leigh interjecting

I know the member for Fraser has been on the road to Damascus and he has had a serial conversion on everything, but even he must understand the basic nature of cause and effect. If you keep on doling it out, if you keep on doing these sorts of things, they do not get any better.

We are a high-wage nation, and I have no problems with that, and this government is working to lower the input costs in everyone's industry. That is the secret of us being competitive in this. That is the secret of transitioning these things. You guys would still have us making crap carriages! We cannot have any industry die, we must keep on supporting it. Even though no-one wants the bloody things—pardon me—we have got to keep on building these things. What we must do is make sure that we have opportunities for people and that we do transition out of these areas to things that people can do and can make a living out of.

In a lot of ways, the best thing we can do in shutting these things down is just get on with life, and that is what I am calling on the people of the motor industry to do—get on with their lives. No-one wants to lose their job, but sometimes the best thing you can do—and it has happened to me on a couple of occasions when I have lost a job—is to recognise that one door closes and another door opens. They say that opportunity only knocks once. Opportunity knocks all the time—you have to open the door. That is what we are saying to the people involved in the car industry, because there is opportunity everywhere here in this country and it does not take the taxpayer to pay you $164,000 a year on every job to get it done.

12:52 pm

Photo of Tim WattsTim Watts (Gellibrand, Australian Labor Party) Share this | | Hansard source

In this debate on the Automotive Transformation Scheme Amendment Bill 2014, I rise to speak on behalf of the 2,500 Toyota workers directly employed in my electorate, who have had to pay for the Abbott government's reckless and arrogant approach to the automotive industry. I speak on behalf of the 2,500 workers who were promised before the election that their industry would 'not just survive but flourish' under an Abbott government and that an Abbott government would be no threat to their jobs. I speak on behalf of the 2,500 workers who saw these promises broken in less than three months after the election; who saw $500 million ripped out of the Automotive Transformation Scheme, or ATS, in October, the mechanics of which can be seen in the bill before us today; who saw the announcement that Holden would cease operations and believed that their government would work as hard as they could to ensure they did not suffer the same fate; and who then watched as the government ignored the calls from the auto industry for a commitment before the end of the year and then blundered into the new cycle, attacking complex union negotiations at a sensitive point.

I speak on behalf of the 2,500 workers who saw the true meaning of the Abbott government's intent on a Monday afternoon in February: that, despite the strength of the skills and expertise of our auto workers and despite the research and innovation that has gone into the plant in Altona in recent years, Toyota would cease operations in Australia by 2017. These workers received more promises from our Prime Minister at that time—promises that there would be assistance from the government in reskilling workers and finding them alternative jobs; promises that, in these turbulent times, their government would provide them with a path to a new career. Once again, these workers have seen these promises broken.

They have seen the government treat the review into the assistance program with the utmost disdain—even keeping the preliminary report sitting on the minister's desk for a month before any attention was drawn to it. They have seen another $400 million ripped from the ATS in the budget in May, bringing total cuts to $900 million. They have seen the introduction of a weak $100 million growth fund to address the closure of the Holden and Toyota plants, with only a $30 million investment into reskilling workers—an investment made entirely by Holden and Toyota, with not one cent contributed to by the government. It is these workers, Prime Minister, who you need to answer to. You need to answer how you could treat these workers' futures with so little care. You need to answer how you could place in jeopardy not only these workers' livelihoods but also the livelihoods of thousands of component manufacturers throughout my electorate and the Australian automotive ecosystem. These component manufacturers are another casualty of the bill before us today.

The bill under consideration decreases government investment in the automotive industry by cutting $500 million from the ATS over the 2014-15 year period and it stops investment in the ATS on 1 January 2018—that is, two years earlier than planned and reducing the ATS by another $400 million. The ATS was an initiative designed to encourage investment in our automotive industry. It allowed for investment to car manufacturers for producing vehicles, undertaking research and development and investing in capital such as plant and related equipment. It recognised Australia's proud history of auto manufacturing and the wealth of highly skilled manufacturing talent we have on our shores. Australia is one of just 13 countries around the world that are able to make a car from start to finish—well, we are today—and that, when it comes to auto manufacturing, Australians get more bang for their buck.

Car industry support in Australia is $17.40 per capita, compared to $264 for every American and $334 for every Swede. Despite this, the ATS was not a free handout. Every company that received funding from the government had to invest an equal amount. So government was working with the businesses to expand our auto industry for the future. The auto industry was committed to this long-term future. It was the largest contributor to research and development in the Australian manufacturing sector, contributing $700 million per year. This research and development was paying dividends by creating a manufacturing industry in Australia that was world-class. Indeed, last month Ford Australia announced that they were doubling their design staff due to the wealth of research and development talent in Australia. CEO Bob Graziano stated:

Australia is a centre of excellence in the Asia Pacific region for Ford product development and design.

But the ATS was not just crucial for Holden, Ford and Toyota; it was also critical to the livelihoods of many manufacturers of component parts.

These component manufacturers are already looking at a difficult transition period away from the major car manufacturers and towards new clients and new industries. They planned their business models and hired their staff with the ATS in mind. Now, with these cruel cuts to the ATS, the component manufacturers have to immediately deal with increased international competition for the parts that they already manufacture and lose the support needed to enter new markets and transition away from the auto manufacturing industry. The sad result is that some businesses will survive, but many will not and will be forced to close. Up to 30,000 people in Australia in the component manufacturing sector, including many businesses in my electorate, could be hit by these changes.

The Federation of Automotive Products Manufacturers have been unequivocal about the impact of the Abbott government's changes to the ATS. They have stated that the cuts contained in the bill under consideration:

… will have serious implications for the continued operations of many firms within the automotive supply chain.

The managing director of Holden, too, has stated bluntly the effect of the ATS on the component supply chain. He indicated:

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.

What is even more concerning is that, with the cuts to the ATS, these component manufacturers might not even be able to rely on work from Holden, Ford and Toyota until 2017. Holden and Toyota have indicated many times that they want to perform a soft exit from Australia and they want to give as much support as possible to the workers who they are leaving behind—workers who have given much of their loves to these companies. But their business plans are designed with the existing ATS in mind. With a decrease in government funding, Holden and Toyota may be forced to make a quicker exit than they had hoped or planned for.

The effect is more insecurity for our auto workers, who are faced with the possibility of walking through the doors of the Altona plant for the last time sooner than they expected. It is another blow for them from a Prime Minister who has stood by and done nothing while the auto workers of Australia have suffered; a Prime Minister who arrogantly announced to his caucus that he has 'started the roads', but failed to mention that he has abandoned the men who built the cars to drive them; a Prime Minister who stated blithely that these workers would feel 'liberated' by the loss of their jobs—'liberated' by a government decision to take them out of the Toyota Altona plant and into a Newport Centrelink 10 minutes away!

But the shattered remains of the government's promise to look after the auto industry—to provide for an auto industry that would not just survive but flourish under the Abbott government—does not just affect the workers in my electorate. The shock of this decision will reverberate across the country for many years to come.

According to modelling provided by the University of Adelaide, up to 200,000 Australians will be affected by the loss of the auto industry; 100,000 jobs will be affected in Victoria alone. We will see another 30,000 jobs affected in New South Wales and Queensland, as well as 24,000 jobs affected in South Australia. Overall, we will see a hit of $2.9 billion to the Australian economy by 2017, equivalent to two per cent of Australia's GDP. The welfare payments alone from the auto industry's sudden collapse are estimated to cost over $20 billion. Most horrifically, we will not see the recovery of employment levels until the end of the 2020s. That is an entire generation of workers who will not see the days of full employment until they are 15 years into their careers. For many of these workers, it means they will be cut out of a job in the manufacturing sector altogether. For those who have already been working in the manufacturing sector for some time, it means there is little chance they will find a similar job at any point in the foreseeable future.

The flow-on effects across our community with mass unemployment of this kind will be severe. Studies from similar situations in the US bear repeating here. Workers in these situations suffered a 15 to 20 per cent decrease in their earnings over the long term. The life expectancy of these workers declined by one to 1½ years.

But the Abbott government has done little to support the transition of these workers through training in skills. In fact, in the May budget this year—the budget most workers hoped would contain the government response to the loss of Holden and Toyota; a budget that would send a signal to these workers of their government's support—how much do you think was included in skills retraining for auto workers? Zero. That is right: nothing. In fact, the Abbott government actually cut funding for skills training. Five point one million dollars was cut from vital skills and training programs for auto workers in the May budget. Instead, all the government has committed to is a measly $100 million 'growth fund' for these workers, with most of the money stumped up by Holden and Toyota, as well as the Victorian government. In fact, the miserable amount of Commonwealth money that is contained in the fund is geared towards unemployment services, which means these workers will have support as they fill out their 40 job applications in an increasingly desolate job market—particularly the youngest employees of Toyota and Holden. But it does not create the jobs that the workers will need. It does not train them for alternative work should no manufacturing jobs re-emerge.

It is the classic short-term approach of a government that is determined to cling to free-market extremism, even when faced with the evidence of the effect this deranged attachment is having on the lives of Australian workers. It is a government that not only ignores the workers it has promised to help but treats these workers with the utmost disrespect in doing so. It is a government that started off with a mealy-mouthed pledge to see the car industry flourish in Australia, but the result has been the largest car manufacturers being the ones developed in the pursuit of science alone.

Labor will never let the Abbott government off the hook for their behaviour towards the auto workers in Australia. I speak on behalf of the 2½ thousand workers in my electorate today when I say that this broken promise will never be forgotten in my electorate. I and my Labor colleagues will continue to fight for the rights of these workers. We will continue to fight the cuts to the ATS at every opportunity. We will call on the crossbenchers and minor parties to do the same—to answer the free-market extremism of the Abbott government with economic sense. We will continue to speak for the auto workers of Australia until we finally get through to this arrogant Prime Minister. The automotive workers of Melbourne's west did not vote for this bill, and they do not want it.

1:03 pm

Photo of Sarah HendersonSarah Henderson (Corangamite, Liberal Party) Share this | | Hansard source

I rise to make a contribution to this debate. Before the member for Gellibrand leaves the chamber—I notice he is scurrying out very quickly—he might care to back my petition for jobs, because we as a government are focused on delivering the jobs of the future. The East West Link project, to which we have contributed $3 billion, is a vital project for western Melbourne. The people of western Melbourne currently have a member of parliament who is not supporting a project that will deliver in excess of 6,000 construction jobs. In my electorate of Corangamite and for Geelong residents, this project will cut peak-hour commuter times between Geelong and Melbourne by three hours a week and deliver those vital jobs that we and our community need—that the people of western Melbourne need; that the people of Geelong and south-west Victoria and the people of Ballarat need. Members opposite are standing in the way of one of the most significant infrastructure projects in Victoria's history.

So today I ask everyone in the Geelong and Corangamite region to go onto my website and back the jobs of the future by signing this petition so that we can call on the House and all federal Labor MPs, including the Leader of the Opposition, the member for Gellibrand, the member for Corio and the member for Ballarat, to get the blinkers off, look at the jobs for the future and back the East West Link project. What Daniel Andrews has done in threatening to tear up the contracts on this project is an absolute disgrace. Not only does it jeopardise $3 billion of federal funding from that project; it also jeopardises our great state as a place to do business. God help us if he manages to get across the line at the state election.

I return to the debate today on the Automotive Transformation Scheme Amendment Bill 2014, and I propose to do so in two ways: by setting out the rationale for the government's decision to close the Automotive Transformation Scheme on 1 January 2018 and by reflecting on our government's commitment to advanced manufacturing and to investing in the jobs of the future, particularly in my electorate of Corangamite and across the Greater Geelong region, which has in the manufacturing sector gone through some difficult times and continues to do so.

It is extraordinary—and I reflect on the member for Wakefield's contribution. He talked about the car industry being in the government's hands. I refer to a report in the Geelong Advertiser on 24 May 2013 with the headline 'Shattered'—because that is what happened in my electorate when Ford decided to close manufacturing, as did Mitsubishi. Of course, in typical Labor fashion, in January 2012 the then Prime Minister, Julia Gillard, came down and threw $34 million at Ford, announcing that there would be another 300 jobs. What did we get in return?

Three hundred and thirty jobs were lost some eight months later. So what we saw with members of the reckless previous Labor government was the attitude that the more money you throw at something the better something will get. Unfortunately, it does not work that way.

We saw the beginning of the demise of the car industry under the previous government, very sadly. Whenever we talk about the end of Ford manufacturing in my region I talk about the 490 jobs that remain, including the 190 jobs that remain at the proving ground. There is some incredible work being done by many fine men and women who work for Ford in Geelong at their engineering and design plant and at the proving ground. We need to champion those jobs and the opportunities that those jobs deliver to our region for the future.

I do take particular issue with the member for Corio saying we will have a dumber nation as a result of the end of car manufacturing. I can assure him that we are focused on building a brighter, smarter nation, particularly smart manufacturing and the many opportunities that that presents the region I represent and our nation.

It is not enough to throw short-term dollars to get a political fix. We saw that with previous Prime Minister Gillard in January 2012 and we saw the most disgraceful example of that when $40 million was delivered to Alcoa. That was nothing more than a political fix. The Labor Party simply needed to get through the election. They were not prepared to face the hard decisions, particularly the hard decisions about some of their policies that had impacted so dreadfully on manufacturing in this country. The carbon tax was a $1.1 billion hit on manufacturing every year. It was one of the most toxic policies of the previous government that caused enormous damage in my electorate and throughout the Geelong region.

The decisions to cease manufacturing in Australia by 2016 by Ford and by 2017 by Holden and Toyota were made entirely by the vehicle producers themselves. I note the member for Wakefield was talking about the member for Hindmarsh slinking under his desk. I think the only one who should be slinking under his desk is the member for Wakefield. In a report in the Adelaide Advertiser on 8 August 2013 he was accused of misleading voters with his claim that he had 'secured guaranteed support for GM Holden Elizabeth, ensuring production until 2022'. At a time when Holden was currently weighing up its future in Adelaide he sent an incredibly misleading letter to his voters bragging and claiming that he had fixed the car industry in his region. Nothing was further from the truth. Unfortunately, again we have seen a fairly poor contribution from the member for Wakefield.

I have to add that the member for Gellibrand has demonstrated that he has really not researched his material very well at all. The point has been made in the House today that there has been incredible support for the car industry in this nation. The Productivity Commission has estimated that the automotive industry has received about $30 billion in government support between 1997 and 2012 in both tariff and budgetary assistance. Over that period there were some 5.1 million vehicles manufactured locally, equating to approximately $5,784 per vehicle of government support during this period. So, despite the most incredible amount of assistance, the industry has been unable to survive in a highly competitive market. When you reflect on Labor's record and the money that was thrown at the car industry and then reneged upon we can see that when an industry is struggling no amount of money will get them out of that struggle.

Let me reflect on Labor's record with the car industry. Back in 2008 it promised $6.2 billion in funding for the auto sector. Over 13 years it was called the New Car Plan for a Greener Future. By 2011 the cash for clunkers program was gone and the Green Car Innovation Fund was cut from $1.3 billion to only $439 million. The LPG vehicle scheme was cut by $96 million. Of course, we know that Labor slugged the car industry with $840 million in carbon taxes over a decade and $1.8 billion in FBT changes. Just before the last election, former Prime Minister Kevin Rudd joined the member for Corio and Darren Cheeseman, the former member for Corangamite, in Geelong and he promised $2 billion, despite the fact that Ford had shut up shop with its manufacturing and Holden was also on its knees. Here was the government recklessly throwing another $2 billion, irrespective of the fortunes of the industry.

Our government's focus is on what we can do for jobs. We recognise that we need to invest in the jobs of the future. We are doing that by investing in infrastructure. The East West Link project that I have referred to has $3 billion from the federal government. The western section will be an enormous boost for our economy. There is $2.9 billion of federal funding for the regional rail link. Yes, of course some was contributed by the previous government, but between 2013 and 2014 another $1.12 billion is in the budget and in this year's budget there is $331 million. So there is very strong investment by both our government and the previous Labor government in the regional rail link that will make an enormous difference to the people of Geelong.

Planning is underway to duplicate the Princes Highway between Winchelsea and Colac. There are a few issues with the stretch between Waurn Ponds and Winchelsea. It is running a bit behind time. Again this is very important investment in infrastructure and in jobs. There is also our $50 million upgrade of the Great Ocean Road, combined with $25 million from the state. That is another infrastructure project that Labor opposed.

Let us look at our investment in advanced manufacturing. I reflect on the member for Gellibrand's ill-informed comments about the growth fund. The Commonwealth is contributing $101 million of a $155 million growth fund. That is contributing—clearly the member for Gellibrand had not read his notes—$30 million for skills and training, a $20 million automotive diversification program, $60 million for a next-generation manufacturing investment fund and $30 million for a regional infrastructure fund. So there will be very significant investment in skills and training.

The Geelong Region Innovation and Investment Fund is also making very significant contributions to jobs in my region, and delivering, once again, hundreds of jobs. Locally, we have recently launched our $500,000 Geelong Employment Connections program and a terrific series of workshops called the Front Foot. As well, we have recently funded the Jobs for Geelong Jobs Fair, because we are also focused at the grassroots level on what we can do to help manufacturing workers transition into the jobs for the future.

And there are enormous opportunities through our $484 million Entrepreneurs' Infrastructure program and $476 million—nearly half a billion dollars!—in our Industry Skills Fund. Our Work for the Dole program has been received very positively in the Geelong region, where there are some pressures on certain sectors of the employment market, because that is a program that will help develop skills as well as confidence. There is relocation assistance for jobseekers of up to $9,000 and a jobs commitment bonus of $6,500 for young people who remain in work for two years.

Then, for employees aged 50 and over who have been on income support there is a $10,000 restart bonus for businesses employing older employees. So, whether it is in infrastructure, our investment in advanced manufacturing or in our many programs which are working to help people get into work, our government is making a very strong investment in the jobs for the future.

I have enormous confidence that the Geelong region will become a premier hub for advanced manufacturing—for smart manufacturing. If you look at industries like the Carbon Nexus investment and a wonderful company called Carbon Revolution you see a company that is producing state-of-the-art carbon fibre wheels for the global market. They have identified an area where they can prosper in the auto component sector—where they are leading the world. That is where we need to focus.

As I mentioned, our growth fund, our Geelong Region Innovation and Investment Fund and our $50 million Manufacturing Transition program are all about ensuring that we grow the jobs of the future, because I know that across the Geelong region and in Corangamite there are many men and women who work in manufacturing, who are concerned about their futures.

I want to send a very strong message that, each and every day, as the member for Corangamite I am in there fighting for jobs—whether it is fighting for a half-million dollar fund to roll out a number of local programs to assist workers transition into new opportunities and identify new skills or being part of the Victorian Economic Review Panel. That was the panel chaired by Minister Macfarlane, where we identified the sectors that we need to invest in as a government to ensure that we can continue with the strong jobs growth that we have seen across this country. I commend this bill to the House.

1:18 pm

Photo of Joanne RyanJoanne Ryan (Lalor, Australian Labor Party) Share this | | Hansard source

I am delighted to follow the member for Corangamite in the second reading debate on this bill. Obviously, I rise to oppose the bill. I had the pleasure of listening to the member for Corangamite as she demonstrated political gymnastics at their best—on the one hand celebrating the demise of the car industry, and on the other, showing her professionalism, claiming the regional rail link without even blushing. It was an extraordinary performance.

On this side of the House we are all for jobs. Sometimes that means providing extra assistance for jobs.

Ms Henderson interjecting

Photo of Rob MitchellRob Mitchell (McEwen, Australian Labor Party) Share this | | Hansard source

The member for Corangamite has had her turn and will be quiet, please. I will not warn her again.

Photo of Joanne RyanJoanne Ryan (Lalor, Australian Labor Party) Share this | | Hansard source

That is why, in 2009, Labor in government introduced this legislation. It saw the value in a scheme that encouraged investment and innovation in the Australian automotive industry—a scheme that did not provide handouts, but provided co-investment with car manufacturers to improve production and drive research and development. The industry only receives support when it invests.

The bill we are debating today seeks to cut existing funding. It seeks to cut $500 million between now and 2017, and then it seeks to end the scheme altogether. Although this seems incongruous to good sense, it is not surprising. This coalition government has form in this area. One of their first acts was to see off the Clean Energy Finance Corporation and Labor's Clean Technology Investment Program, condemning other industries, besides the car industry, to the dust bin.

This is in their DNA. This is a party that proudly wants to let the market rip—as if this is a blessing on the populace. It is Tea Party economics—survival-of-the-fittest economic policies. And Australian workers are left wondering where the trickle-down might fall. This government does not believe in direct assistance or in co-investment, or support for workers. It has no plan for jobs.

But do not be fooled. This government's actions do support the wealthiest in our nation while condemning industries that provide good jobs to the dust bin. You can follow the tracks of this government believes through their priorities.

Its failure to implement measures that would have ensured multinational companies pay their fair share of tax in this country is one indication. The government's fanatic derision of, and repeal of, the mining tax is another. No, this government and its legislative program gives us a clear idea of what is and what is not important to this government. Good jobs are not important. Manufacturing is not important. The automotive industry is not important. The renewables industry is not important. This bill clearly shows that the hardworking people of my electorate of Lalor are not important either.

I will share with the House some of the things that have been going on in Lalor around this area. In the Wyndham Star Weekly, on 11 June this year, Laura Michell wrote:

More than 4000 Wyndham residents will lose their jobs in the next three years as a result of Australia’s auto industry closures, a University of Adelaide study has found.

The article went on:

The study of the Australian Workplace Innovation and Social Research Centre and National Institute of Economic and Industry Research analyses direct and flow-on job losses resulting from the closure of Toyota, Holden and Ford plants. The study predicts 200,000 job losses nationwide, with about half of those in Victoria. It finds Wyndham residents will be among the states hardest hit with the municipality likely to record the fifth highest number of job losses by employee residents. It is expected that 4,360 Wyndham residents in the auto industry will lose their jobs by 2017.

I would add: if the automotive industry survives that long. The article continues:

In a bid to reduce the impact of job losses on Wyndham, the council has joined other western suburbs councils, the state government and advocacy group, Lead West. They commissioned research on businesses that will be affected by the closures and will use the research to promote the creation of local jobs. The Wyndham council's economic development unit is meeting companies to discuss the issues they are dealing with and to identify training opportunities. The council's research found there could be flow-on losses from the auto industry closures, forcing Wyndham manufacturers to close their doors. Manufacturing accounts for 14.4 per cent of total employment in Wyndham, so any downturn in that sector will have an impact on the resident workforce.

They are not my words, but are taken from my local weekly newspaper.

It is never pleasant to pick up your local paper to see headlines that outline over 4,000 jobs will be going. This measure will have a dreadful impact across Australia, with estimates of around 200,000 job losses. The impact is broader than just the employment in the automotive industries. The impact will flow through to a variety of businesses, from the laundries that service the Toyota plant to the contractor technicians and cleaners and to the local cafe where the workers stop to get their morning coffee. The reduced money flowing through the community will impact on small business and retailers. The unemployed do not buy new white goods or furniture, they do not renovate or improve their homes and they do not eat out or take holidays. All this will impact our economy broadly.

I celebrate that our local government engaged so quickly with others to put a plan in place, to commission work that would outline the impact locally so that a response could be devised and implemented. What I am not happy about—and certainly not celebrating—is the lack of support for my area, for that local government, for the people of Lalor and for the whole of western Melbourne from the state and federal LNP governments. Yesterday's local paper, with its headline 'West left in the lurch: taskforce says region missed opportunity for support', had some interesting points to make. I quote:

Industry in the west has been overlooked for a $24.5 million fund designed to create new jobs, despite losing hundreds of manufacturing jobs in the past two years.

A local is quoted:

When Toyota exited, we thought it would only be fair if Melbourne's west had a similar job stimulating funding pool, but our worst fears have been realised as there is no appetite from this government for doing that.

There are no funds for my area despite the impact and no support for the west of Melbourne through the Innovation and Investment Fund.

The Abbott government seems to have taken great delight in running down our automotive industry. Some businesses in the industry will, however, survive despite this attitude. These ongoing companies employ thousands of workers, and we must find ways to continue to support them. This view is shared by many of my colleagues on this side of the House. People like my fellow western MPs, the members representing Western Sydney and those in the north of Adelaide share my view that supporting jobs in the local economy is vital.

Labor is committed to working with all industries to maintain and create jobs. We recognise the unemployment numbers are increasing, with youth unemployment at a 15-year high. We recognise that Victoria will be the worst affected state. That is why we oppose this measure. Contrast this with Prime Minister Abbott, who in this place on 12 February said, 'Governments do not create jobs.' Indeed, this government has no intention of even trying—no jobs plan and no support. There are a list of budget measures that support this view: cuts to apprenticeship programs, cuts to training programs, cuts to schools and the cruel cut to those under 30 in accessing Newstart.

Given this, it is difficult to understand why those opposite are not more vocal in defending jobs. People like the member for La Trobe, the member for Aston and, indeed, the member for Casey must surely receive feedback from their local constituents like I do. The University of Adelaide's study referred to in my local paper indicates that Wyndham will not be the worst affected area; indeed, the worst hit municipality will be Casey, where 6,734 residents will become unemployed. I would be very interested to hear what those members opposite say in the privacy of the caucus room or the Minister for Industry's office about unemployment in their areas. It is telling that so few government speakers have risen to speak in favour of this bill. Does that give some insight into their views?

Currently four of Australia's top 10 selling cars are manufactured locally. Australia is only one of 13 countries in the world that can manufacture a car from start to finish. All of those 13 countries provide industry support for automotive manufacturing. Contrary to the assertions of the member for Corangamite, it has not been 'money down the drain' to support a major manufacturing industry. The current support per capita in Australia to the automotive industry is $17.40. This compares with $90 per capita in Germany, $264 in Sweden and $334 for every Swede. So currently we have a modest $17.40 payment that had the potential to support 200,000 jobs—a small price to pay, especially when you factor in unemployment, retraining and job support costs that the government will potentially need to provide. Studies have also shown that the cost of welfare payments and the lost tax revenue will have a $20 billion impact on the government's budget. It is estimated that the economy will take at least 10 years to recover from the underlying hit to the GDP.

It is not just Labor that rejects this measure; industry experts also view this move as short-sighted. What Australian workers need at the moment is a plan—a plan to secure their future. In my area, the best the coalition can point to is the controversial East-West project. Somehow they believe this piece of very expensive road infrastructure will support workers in the west of Melbourne.

The support we need locally is deeper than that. We need projects that are long-term and ongoing—projects like the Bay West project—that can bring jobs during construction and then ongoing support jobs, and jobs in transport and logistics, for many years to come.

Debate interrupted.