Senate debates

Wednesday, 13 November 2013

Matters of Urgency

Australian Automotive Industry

4:12 pm

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

At the request of Senator Moore, I move:

That, in the opinion of the Senate, the following is a matter of urgency.

The failure of the Government to acknowledge the urgency of the crisis facing the Australian automotive industry, or act to avert it, and the anxiety this is causing for tens of thousands of Australian workers and their families about the future of the auto industry and their jobs.

I move this motion to bring the attention of the parliament to an emerging but preventable social catastrophe in this country. I speak here of the imminent demise of the Australian automotive industry. This has come about as a result of the government's inaction to meet the fundamental question about co-investment in the automotive industry.

What we do know is that the General Motors Investment Committee has been meeting for some time about the future investment of $1 billion for the Australian automotive industry. This is investment which would help modernise the plant and ensure the production of two new models and secure production for General Motors through to the middle of the next decade.

What we also know is that in October after the election of this government, the General Motors board met in Detroit to consider the decisions that the government in Australia had indicated it was prepared to make. My understanding is that the international board members looked upon the announcements, the public statements of members of the newly-elected government, as somewhat bizarre because nowhere else where General Motors produces motor cars—and there are over 20 countries in the world, over 168 plants across the globe—is there a discussion about whether or not those countries actually want an automotive industry. But in Australia that seems to be the case.

In the last few days the Executive Vice President Consolidated International Operations of General Motors, Mr Stefan Jacoby, has been in Australia to discuss with the local management the decisions and actions of the government in Australia. Along with Daniel Akerson, the CEO of General Motors, he is charged with making a recommendation to the board of General Motors to consider whether or not they proceed with the $1 billion investment in the General Motors plant and whether or not General Motors actually makes the decision to cease production in Australia. Those board discussions are underway on a monthly basis but the decision in terms of the actual investment may well be made as soon as December.

This is according to timetables that are well known in the industry; well known to the Liberal Party; well known to the Labor Party. Before last Christmas, the Liberal Party in opposition was fully briefed on the investment plans of the company and fully briefed on the business model that the company was preparing; as was the government. The government took those investment plans through, with some rigorous analysis, and made the decision that we would as a government reach a settlement with General Motors about the future investment, and we did announce before the election a new car plan for the 2020s to secure the investment in Australia for the future of the automotive industry. We made those decisions based on a very careful analysis of the social and economic consequences of not investing. What is very clear in this industry is that it actually costs you more to let the industry collapse than it does to sustain the co-investment.

So, when we look at the situation the way it is now, it is not some Mexican stand-off; no-one is holding a gun to anyone's head—as government ministers have been stating. The coalition's theatrics have in fact sought to obscure some simple facts. The international automotive companies are bound by the investment decisions they make at an international level. But competition for investment capital is actually very scarce within the automotive industry. Automotive companies make decisions not only in competition with one another but against other countries. The decisions made with respect to the global production schedules are made on the basis of international decisions, not on the basis of meeting some local parochial concern, like a provincial election, such as we have in the state of South Australia.

These are schedules that dictate the critical decisions which are made to underpin the new investment, to bring the new technologies, to secure the new jobs for Australia. That timetable has been set down with plenty of knowledge and with the full knowledge of the current government and with the full knowledge of the current opposition.

Over 12 months the coalition has been fully advised of the schedules. Two months ago, the new government would have also been advised by the new department—the Department of Industry—as to what those schedules would be. They would also be fully briefed on the business case that had been put forward and the analysis that had been undertaken to support that business case. Yet this government fails to act. They fail to appreciate the urgency of the situation, because the government is in the business of playing chicken with the international automotive industry. They risk billions of dollars in foreign investment in this ideological witch-hunt, because some elements of the government think this is the time, this is the opportunity, to walk away from the automotive industry.

We know in this city, particularly amongst the bureaucracy, there is a school of thought that says industry policy is bad. But when it comes to the automotive industry there are people in this bureaucracy who happen to believe that there is something evil about the automotive industry. It is a deep ideological divide within the bureaucracy. That division is also reflected throughout the editorial pages of our newspapers, but it is particularly reflected within the coalition. The merchant banker mentality of the North Shore of Sydney, as reflected in Mr Hockey's position, of course is at one end. Mr Macfarlane's views, representing in many respects people who have some experience of the realities of international investment and the realities of the way manufacturing works, show an appreciation of what is actually required.

The right-wing ideologues who have been spurred on by the Institute of Public Affairs, by the editorial writers at the Financial Review, by the editorial writers at TheAustralian, by the 'New Right' agenda, which of course is now a very 'Old Right' agenda, about withdrawing government support from manufacturing. What we are seeing here is a position being taken by the government which is in fact by proxy no action. The result of that is to threaten the future of hundreds of Australian businesses; tens of thousands of Australian workers; tens of thousands of people across every state and territory of this Commonwealth. Every region of this Commonwealth would be affected by the loss of the nearly 200,000 jobs which would come if this industry were allowed to fail. The anxiety which is being created by the inaction of this government while they play out their ideological games means that decent hardworking Australians are being thrown a period of great uncertainty.

The simple question is: if the manufacturing industry—which of course is dependent upon automotive componentry and production, which is at its core—fails in this way, where will the jobs be found? Where will the new investment be found? We know for instance that over 13,000 people are employed in the automotive industry in South Australia. There is 6.6 per cent unemployment in that state at the moment. What would the consequences be for the collapse of General Motors? And not just General Motors; what about the 33 prime contractors that underpin General Motors, and the 1,700 subprime contractors. The implications in South Australia are huge.

But in the state of Victoria, which I represent in this chamber, the situation is even worse: 33,000 workers in my home state would be lost; 1.4 per cent of gross regional product would be lost. The gross regional product would not recover—if this industry falls over—for almost two decades. Employment losses would of course take much longer to recover; they would be equal to the loss of 33,000 jobs by 2018.

So we know what this government is facing. We know that this government is not prepared to face up to its responsibilities and we know that the cost to the budget in terms of lost taxes, increased social security and lost investment would actually be much, much higher than any co-investment arrangement which we are currently providing. Any co-investment arrangement would be much, much less than the social and economic costs to this nation if the automotive industry fails as a result of the inaction of this government in their desperate bid to get past the South Australian election in March next year. (Time expired)


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