Senate debates

Tuesday, 10 December 2013

Matters of Urgency

4:05 pm

Photo of Stephen ParryStephen Parry (Tasmania, Liberal Party) Share this | | Hansard source

I inform the Senate that Senator Moore has withdrawn the matter of public importance which she had proposed for today. The President subsequently received the following letter, from Senator Moore, proposing, pursuant to standing order 75:

"The need for the Government to make a unified commitment to Australia's automotive industry and make an urgent offer of co-investment to GM Holden to secure the new investment, jobs and technology for Australia".

Is the matter supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

4:06 pm

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

I move:

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

"The need for the Government to make a unified commitment to Australia's automotive industry and make an urgent offer of co-investment to GM Holden to secure the new investment, jobs and technology for Australia".

This is a proposition that actually asks the Senate to call on the government 'to make a unified commitment to Australia's automotive industry and make an urgent offer of co-investment' to General Motors-Holden 'to secure the new investments, jobs' and the technologies for Australia. What we have seen, and this would be the sixth day, is minister after minister reported in the press undermining the industry minister, undermining Australia's automotive industry and undermining the tens of thousands of people that work in that industry. I do not believe the incompetence that has been displayed by this government on the automotive industry has actually been replicated before in the history of the Commonwealth. I have never seen anything like it. We now see that senior executives of General Motors, and indeed those of international companies right around the world, shaking their heads at the spectacle of what this government, our newly formed Abbott government, is actually putting on. You can just picture the leaders of other car-making countries staring in wonder at the sheer stupidity and recklessness that has been on display.

While other countries and other governments are doing all they can to compete for international investment, the Australian government want to have an argument as to whether or not we actually want an automotive industry in this country. They are in fact thumbing their nose at the international automotive industry. I think the evidence is now overwhelming that the free-marketeer, economic fundamentalist group within this government is actively seeking to dissuade investment in the automotive industry in this country.

We see that the Acting Prime Minister, Mr Truss, has written to Holden today asking them to urgently clarify their position. This is after six days of speculation generated by this government on their position. I have not seen a dedication to game-playing by government—the preoccupation with the tricky things that has been involved in these issues—quite like it before. What of course has occurred is that the coalition has now discovered that this is not quite so simple, that things have not played out as planned. The issue is in fact spinning out of control but, unfortunately, the sycophantic and subservient and unimaginative group that now makes up the coalition MPs from Victoria and South Australia has done nothing about actually preserving the jobs in the automotive industry. These MPs have allowed these tricky game-playing ministers to go about undermining any effort to actually secure investment in this country. I ask, in regard to Mr Truss's letter, how it can possibly be the case that General Motors be asked to clarify speculation generated by the government. How are they able to actually make a call on their future plans when the government refuses to reveal its plans?

We have had a position where the government initially said, 'Well, it's up to the Productivity Commission. We can't possibly respond to the Productivity Commission.' We now have the Prime Minister and others saying that they do not want to spend any more money. We have Holden's Mr Devereux explaining today, at the Productivity Commission hearing, that the government has had before it since it came to office the files on what was actually required to ensure the investment takes place in this country. Furthermore, despite the repeated efforts to verbal this company, the company has actually said yet again that no decision has been made in regard to future operations. In fact, we are told that there is plenty of money available. Well, that is not the case of course because what we do know is that, in terms of the profile of the new car plan money, which I was very proud to introduce, the program comes to an end in 2020, as it is a terminating program. The profile for that funding is: $150 million in 2015-16, $300 million in 2016-17, $258 million in 2017-18, $175 million in 2018-19, $91.7 million in 2019-2020 and $25 million in 2020-21. So there is a very sharp tail-off. The issue of the future of the industry rests very much on the question of investment certainty.

How can a business case be put together on the proposition that there is no money in the program after 2020? Therefore the company asks a simple question: around the world, what is the situation? Governments co-invest. But only in Australia do we have a conservative government now saying they will not co-invest into the future.

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

You've never used the word before.

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

Never co-invest before this time; we have never been in this position. We know the historic position in this country has been a bipartisan approach—

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

To transitional assistance.

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

to ensure the future national development of Australia in the automotive industry. We have known this for generations, but now this coalition walks away from that commitment. It walks away from 200,000 workers in this country.

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

You're just making it up again, Kim!

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

It walks away because it is obsessed with the ideological battles within the Liberal Party about ensuring the free market policies it should pursue. Up to 200,000 workers in this country are to be sacrificed on the altar of economic rationalism so that a few, like Senator Ryan here, can pretend that they are all hairy-chested when it comes to the market principles of economics. Nowhere else in the world does this apply—nowhere!

In fact, Australia's support is incredibly moderate—less than $20 per person, less than the price of a footy ticket is what we support the automotive industry with. Up to $300 per person is the rate in the United States; $90 in Germany. Even the United Kingdom, a Conservative government, is putting billions of dollars extra into its automotive industry because it understands the basic principles of economics when it comes to this industry.

What we have noticed is that the Productivity Commission's former chairman described the car companies as 'just rent seekers'—never mind the extraordinary wealth the industry has brought to this country. I quote from the material that was put before the commission today:

From 2001-2012, Holden generated $32.7 billion of economic activity in Australia.

During that period, Holden received $1.8 billion in … Government assistance, returned $1.4 billion to the Government as … income tax revenue and paid $21 billion to other businesses in Australia for supplies …

For every dollar spent by the Commonwealth, it had a return of $18 to the Australian economy.

And what does the Productivity Commission ask today? 'Oh, is that a fair return?' Of course it is! Has this government woken up to that yet—that is, for every dollar the Commonwealth puts in, $18 is generated across the economy? And of course the cost of closing this industry down would be so much more than that: the costs to social security, the costs of lost income tax, the costs of lost investment—and of course the auto industry being at the core of manufacturing is also a cost.

Of course we know the simple facts. The number of workers involved in this industry has declined because productivity has improved so much. Productivity has gone up from one worker producing 10.9 cars in 1991 to one worker now producing 19.6 cars. That is the situation. Wages in this country are very similar to manufacturing across the board—$54,548. It is a fraction more in automotive as a rule. So the claims being made that it is the workers' fault are completely wrong. What we have is an ideological obsession by the economic dries in the Liberal Party aiming at driving this industry out of the country. They see this as a great victory, as a great success, as something to be celebrated. They ought to hang their heads in shame.

4:15 pm

Photo of Scott RyanScott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | | Hansard source

Here we go again. We have the irrational ravings of Senator Kim Carr. I agree with Senator Carr on one thing—when he accused me of being an economic rationalist. After all, what is the alternative? Senator Carr is profoundly irrational on this because the truth is we believe in a competitive car industry in this country. Yesterday I outlined my own family's experience in the automotive sector. To have the confected moral outrage of someone who oversaw some of the most profound damage to the car industry in Australia while he was minister in the last government actually pushes this beyond the pale.

Labor are seeking some sort of political purpose. There was bipartisanship in dealing with the motor industry. It was bipartisanship that started under the late Senator John Button. It was bipartisanship that saw transitional assistance provided to this industry to make it competitive. Yet what we have had over the last few years and today is the Labor Party walking away from that bipartisanship as they desperately seek some sort of political opportunity and as they reverse what occurred in the 1980s when Labor saw the wisdom of letting markets do their work, not because of an ideological commitment but because they work.

The car industry had an effective protection rate of nearly 70 per cent with tariffs at 57.5 per cent. Before the reductions started under the Labor Party, before John Button's car plan, which was a transitional plan, we made some of the worst cars in the world at some of the highest prices. Who paid the price for that? Blue-collar workers. They paid for it because everyone in Australia paid more for a worse car. Yet now we have Senator Carr come in here and throw out that history of bipartisanship and the history of opening up Australia to the world—the very economic reforms overseen by both sides of politics, until the election of the Rudd government, that ensured we survived global economic downturns, the tech wreck, the Asian financial crisis and then the most recent banking crisis in North America and Europe. Contrary to their belief, it was not the Labor Party building school halls that pulled Australia through; amongst other things, such as demand for our minerals from China and Asia, it was the fact that we have an open economy. Now Labor seeks to turn that back. We all know that Senator Carr wishes that never happened.

Senator Carr, as minister and in this place in opposition, has always made promises that cannot be delivered by any government—a promise to protect the jobs. You only have to look at the interviews with former Labor Treasurer and Prime Minister Paul Keating on the ABC in the last few weeks to see what he had to say about that attitude. Yet the modern-day Labor Party walks away from that. So let us not hear confected outrage about the coalition changing its view. The coalition has remained committed to the transitional assistance for the car industry that has been in place since the first Button car plan of, I think, 1991.

Yet what we have here from the Labor Party is the language of 'co-investment'—and it only ever appeared in the lexicon of public policy in this country after it was put up by the head of GM and Senator Carr adopted it. That has never been accepted. It has never been policy. It has never been part of the bipartisan consensus that sought transitional assistance for the car industry, because what Senator Carr and the Labor Party will not say is where you stop. What they will not say is the number they will baulk at. Or are they saying we should make an open-ended, eternal, unlimited financial commitment to one industry because we made a commitment to support the ATS?

What Senator Carr does not tell you is that the money in the ATS could actually be restructured to give extra money to the car industry because the car industry is not taking advantage of all of it as production volumes are down. Let us not go into any conspiracy theory as to why production volumes are down. Australians are simply choosing other cars. Unless the Labor Party are proposing that that choice be taken away from families around Australia, then what are they saying? That this needs to be an open-ended, eternal, bottomless commitment to one sector?

This sector has nowhere near 200,000 workers. Senator Carr misled this place again because in estimates in this place we were told it is under 50,000. The 200,000 people employed in the automotive sector include the people servicing VWs, Mercedeses, Mazdas and Nissans. Everyone knows those jobs are about cars; they are not about locally manufactured cars. Those jobs are just as valid as the jobs of people working at Holden, which are important. I feel for the workers and families, but the Labor Party is trying to promise the undeliverable, which is that the government can protect industries from competition.

Senator Carr made promises when he was the industry minister. With the Green Car Innovation Fund he made all these promises to look after the workers. Some 19 months ago we had Holden here with the industry minister, the Premier of South Australia and the Prime Minister saying it was all sorted out. Yet we are back at this position now. One of the prime reasons for that is what Labor did to this industry. Senator Carr made promises and the money was stripped away. They brought in a carbon tax that hits energy-intensive industries. Their performance betrays their true agenda.

We cannot make a bottomless commitment to any industry in this country unless people are saying that all Australian workers should be taxed to provide an eternal, endless, bottomless amount of money for one sector. Labor need to answer that question. What is their limit? Where will they draw the line about supporting this industry?

The Prime Minister said last week that there is no more money. That could still mean that more money is available to the car sector, because Ford has pulled out and all the money in the budget is not being accessed. But we are told that somehow we have to move from a period of transitional assistance to a so-called public-private partnership or so-called co-investment. The strange thing is: the taxpayer never sees a dividend from that investment, like a shareholder might. It is misleading language. It is a subsidy. Subsidies sometimes have their place. If we have social policy objectives or if we believe something is in the national economic interest, those measures are brought on budget and not supported through hidden mechanisms like tariffs and quotas, where the cost is not transparent. But Labor uses misleading terms like 'co-investment' to somehow imply that the government can make money out of it. No. It is a subsidy.

Let us have a debate about the appropriate design of that program and the appropriate limit to that subsidy, unless Labor are promising a bottomless, endless, eternal program, a program to which there is no limit. Labor are confecting a lot of outrage here, but we have a responsibility to the workers in this sector to not promise what is unpromisable. This is a matter for Holden. It is a matter for Toyota. It is a matter for individual companies. We have a responsibility to the economy. I could go on about the deadweight costs of raising taxation for subsidies. I could go on about diverting resources. I could go on about the flawed economic models that say that people in this sector will never be employed again. But this government has a responsibility to all of Australia. This is why the mob opposite were thrown out.

4:24 pm

Photo of Penny WrightPenny Wright (SA, Australian Greens) Share this | | Hansard source

I rise to support this urgency motion, because this issue of co-investment with the automotive industry is urgent. It is urgent because it poses a serious question for Australia that we have grappled with periodically without coming to a clear conclusion: do we want to be a nation with manufacturing capacity? It has been pointed out that we are currently one of only about a dozen nations which can manufacture a vehicle from start to finish. The motion is also urgent because this issue has human consequences. The automotive industry in Australia employs about 46,000 people, and a further 76,000 are employed in transport equipment manufacturing. If General Motors makes the ultimate decision to shut down operations in Australia, there is the potential for horrendous job losses—let us not shy away from that—as well as the loss of skills and our manufacturing capacity.

In my home state of South Australia, Holden is a major employer, employing 1,700 people directly, and it creates far more indirect employment, in the northern suburbs of Adelaide and in other associated industries. It has been estimated that the closure of Holden would cost the South Australian economy $1.24 billion and cost 13,200 jobs. I am very conscious that these workers are facing a distressingly uncertain future as speculation and predictions about the closure of Holden are rife. This Christmas they will be heading into a summer break with the knowledge that their livelihoods are again and increasingly in limbo.

Doubt and uncertainty are not strangers to the automotive manufacturing industry in Australia, of course, nor indeed to its parent industries, especially when it comes to Holden's parent company, General Motors in Detroit, which faced imminent bankruptcy in the global financial crisis. Looking into the future, even with a subsidy it is very obvious that business as usual in the vehicle-manufacturing industry in Australia is not a realistic option. With the known contribution of fossil fuels to dangerous climate change and the looming prospect of peak oil, we must urgently confront issues of car dependency and our addiction to fossil fuels. There is no doubt we must move swiftly to an economy based on renewable energy, energy efficiency, smart technology and innovation. But these trends have been known for some time.

Let us be very clear: the history of General Motors on adaptation and facing these challenges has been woeful. For years, their competitors developed more efficient cars, spurred by high fuel costs in the rest of the world. Protected by low oil prices in the United States, however, General Motors continued to manufacture massive, inefficient vehicles until the height of the global financial crisis. They were only saved from bankruptcy by a bailout of taxpayers' money, reportedly to the tune of $49 billion. Their subsidiary Holden have shown a similar approach, failing to adapt sufficiently to changing market signals and ultimately failing to manufacture the cars that Australians want to buy.

That said, there is justification for government support for an industry which is important to our manufacturing capacity and provides crucial employment for tens of thousands. The Australian Greens know that subsidies for carbon-intensive industries like car manufacturing are not, in an economic vacuum, the best value for taxpayers' money. However, we also know the enormous social costs we would incur in the event that Holden withdrew from Australia. The transition to modern, efficient industries must be carefully managed, and communities must be supported in this transition. People's skills must be developed.

It is regrettable that the history of government support for the car industry in Australia has been a series of sadly missed opportunities. Successive governments in Australia have failed to use support for the auto industry to drive innovation. The Greens are on the record as supporting co-investment in the car industry, on the condition that it adopts goals and milestones for electric vehicle development and manufacturing, moving us to the future. If exercised in a principled, thoughtful and far-sighted manner, co-investment offers the opportunity to set us on a better path, but we can and we must set appropriate conditions on our assistance to firms like Holden which will create the right investment climate for jobs and technology in Australia, and there must also be transparency about the quantum of any support and accountability for how it is used. Our support for co-investment in Holden has the clear aim of supporting the communities that are involved in car manufacturing, but we call for this investment to have conditions and criteria that are as clear-eyed and as hard-headed as our vision. Holden must be held to account for their own sustainability and viability, and for how they will continue to support communities like those in South Australia.

4:29 pm

Photo of Gavin MarshallGavin Marshall (Victoria, Australian Labor Party) Share this | | Hansard source

I should start by saying how disappointed I was in Senator Ryan's contribution to the debate on this urgency motion on the automotive industry. He had 10 minutes to tell us what the government might have planned for the car industry and supporting that industry, but he just went on a rant for 10 minutes about how our position was wrong, how it was the fault of the car industry itself and how we should not be supporting subsidies, and he talked about bottomless pits, which was simply a nonsense argument. The thing we do know and should understand very clearly is that, for every dollar of government investment in this industry, the economy gets an $18 return. That is a great return on anyone's measure, and it is an important return back into the economy because it supports jobs. It supports skills. It supports businesses. That is what, unfortunately, the coalition is walking away from.

I am not surprised Senator Ryan did not have much to say about the government's plan; what we have seen over the last week or so are government ministers—who have quoted anonymously in the paper but who identify themselves as government ministers—leaking against the car industry. They are doing that to undermine the car industry. They do that because they know their government has no plans to continue to support this industry, support the investment, support jobs in our economy and support those businesses that rely on the vehicle industry as well. They do that because they want to create a public view that the car industry is over, and it becomes a self-fulfilling prophecy. It is a very dishonest strategy. It is one that betrays everybody who works in the vehicle industry and those businesses that rely on it. I am very disappointed.

The car industry is a big employer, but it is not just about those jobs that are directly in the car industry. The car industry creates a critical mass in a whole range of skills, enterprises and innovations. There are many companies that began work as component suppliers in the vehicle industry and have now built their businesses, diversified, used the technology and skills they have learnt—a lot of research and development they have taken directly from the vehicle industry—and expanded into other things. Many of those businesses would not be in existence today if it were not for the co-contribution and partnership they had with the vehicle industry at that time. And that will continue to happen; it continues to happen now. Lots of components manufacturers partially supply the vehicle industry but rely on the critical mass of vehicle industry orders to keep their businesses afloat and to enable them to supply areas of our manufacturing industry.

So it is not just about those jobs, although we say they are crucially important and we absolutely want to defend them. It is also about the skills transfer. The vehicle industry is at the forefront of lots of different technologies. Look at the way cars have developed and the quality of vehicles that are built today, the componentry that is being placed in vehicles; some of these things were unheard of 10 years ago. We have automatic parking technology. We have all those things that used to be enormous add-on extras and are now standard components in most vehicles. We have all sorts of safety technology built into all cars that we are building now. So they are at the forefront of that research and development. Most of that in this industry, especially in Holden, happens here. We create this skill base of engineers, researchers and designers who do not always continue to work purely for the vehicle industry. That creates a skill mass which other industries then call upon. It gives people opportunities to go open up new businesses using those skills they have learnt with those technologies.

You only have to look at the trades areas. The vehicle industry is a huge user of robotics. Some of the robotics in these vehicle industries are at the leading edge of technology. If you are thinking of building a business here that is going to involve robotics, you do not do it if there are no skills or experience in robotics available at all. What the vehicle industry does not only in robotics—it is just one of many examples—is create that skill base for our economy, that skill base for other businesses to draw upon, that skill base that allows innovation and enterprise to flourish in our economy.

That is what we are about. We are about keeping those skill bases. This is part of not only the $18 returned to the economy for every dollar invested but also that skills investment and return. They are big employers of high-skilled workers. It is not just tradespeople and engineers. Look at process workers. Unfortunately, the people on the other side have no idea how they work. These are high-skill jobs. The quality control mechanisms and the skills those people learn through quality assurance in those companies are enormous. There are enormous amounts of training, and these people have these skills which make them incredibly valuable employees for other industries, whether they are start-up companies or others who may not be in the position to train workers from scratch. They are able to call on the workers that have been trained and invested in by the vehicle industry. That is human investment. That is skills investment. That is something this country desperately needs. If we are going to watch a major employer, a high-skill trainer, a high-tech industry leave this country and that investment, those skills will be lost to this country. We will not have the capacity to move forward. It will have wide-ranging consequences outside of the vehicle industry and its component manufacturers themselves.

That is what the economists in windowless rooms in Canberra fail to see. They want to just look at pieces of paper for returns and what a pure economy should do. We in this place are here to do what is in the public interest. If we wanted to hand the running of the economy, our public interest and the government, that is what the government should say. They should admit that that is what they are going to do. But we on this side believe that our society is bigger than that. Our society needs to have jobs. It needs to have good jobs. It needs to have high-skill jobs. We need to ensure that the economy has those skills being trained now by the vehicle industry. We need to ensure that those businesses have the opportunity, if they want to start up something new, to call on those skills. The vehicle industry is large and provides the critical mass of skills training for much of the rest of the manufacturing industry, so from our point of view this is absolutely crucial.

We have the vehicle industry, so it is not only about the jobs that will be lost but also about the hit that will be taken by the economy if a company like GM walks away. It will take us 20 years to recover from that hit to the economy. Some estimates are around a $20 billion hit to the Victorian economy straightaway.

You only have to listen to those of the government's political persuasion in Victoria. The Victorian Liberal government are absolutely determined to support the vehicle industry. Why? Because they are much closer to working people than this federal Liberal government could ever dream of being. So they support the co-investment. They understand the impact to the Victorian economy. They know that it will drive my state of Victoria into a recession. They do not want that, and that is one tick in their favour. But they will not stand up to their big brothers and sisters here in Canberra, and that is a bitter disappointment because they do not have the courage to do so. They say all the right things, but when it comes to walking into Mr Abbott's office, thumping the table and seriously arguing the case for Victoria they have gone missing.

So it is only Labor governments that will do that and it is only the Labor Party that will defend this industry. We want to defend those jobs. They are good jobs. They are important jobs. We need not only jobs for workers now but a viable industry to provide jobs for our kids as well. As I argued earlier, it is not just direct employment in the vehicle industry; it is all those flow-on service industries that follow. It is the support industries. It is the industries that began in the vehicle industry or the component industry and have grown into bigger and better things. It is the driving of technology and innovation in plastics, in textiles, in metalwork, in electronics and in all sorts of areas where the spin-off from that R&D enables other businesses to grow. It is one of the cornerstones of our manufacturing industry, and it would be an absolute disgrace for this present government simply to sit on their hands, do nothing and walk away as Senator Ryan has suggested.

4:39 pm

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

This is an incredibly important debate that this Senate chamber is having. I am sorry that it is being done in the partisan terms that those opposite want to structure this debate in, but I am happy to come in here and have this discussion, because I appreciate fully the importance of the car industry to Australia and especially to my home state of South Australia. I appreciate its economic importance and the millions of dollars that multiply throughout the economy.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Well, do something to save it.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

I will come to that, Senator Farrell, because we saw a pretty strong demise under your mob. So we will come to that. I appreciate the innovation from the industry, I appreciate the employment and the jobs and I appreciate the social impact. I grew up not far from the Holden plant in Adelaide. I went to school in the neighbouring town. My parents still live there. I know that part of Adelaide well. I know that right now, even with Holden operating, it has youth unemployment in excess of 40 per cent and that, if Holden were to close, a terrible situation in that part of Adelaide would only get worse. So I fully appreciate that there are serious consequences from this debate and from the decisions that General Motors out of Detroit and Shanghai will ultimately make about whether or not they continue to operate a business in Australia. I want Holden to stay. I want those jobs to stay. I want all employers to stay. But we have to accept that the way governments have been going about this—the so-called co-investment approach and the blank cheque approach that those opposite might advocate—has not been working.

We seem to have a complete whitewashing of history from those opposite. There seems to be no acknowledgement of the fact that during their six years in government Mitsubishi closed its Australian operations and Ford announced it was closing its Australian operations. Two of the four—50 per cent of the car manufacturers in this country—decided in the Labor Party's term of government to close down. Very clearly, the policies that were being applied previously were not working to keep jobs and this industry in Australia. When Labor took office there were some 335,000 cars produced every year in Australia. By the time they finished it was down to 221,000. When they took office there were 200 businesses operating in the automotive sector. Now there are fewer than 150. Twenty-five per cent went out of business on Labor's watch. So do not come in here, Senator Marshall, Senator Farrell or anybody else, with some sanctimonious lecture about how the industry must be saved, because huge tracts of this industry left on your watch and the erratic policymaking of those opposite did absolutely nothing to help. The on-again, off-again approach—'We'll have a Green Car Innovation Fund, then we'll cut it not once but twice, and then we'll axe it altogether and take out around $1.2 billion in funding that had been promised'—generated and delivered a level of uncertainty in the car industry that obviously impacted on decisions made by those global businesses about whether it was worth staying in Australia.

Add to that the increased cost of doing business and the impact of the carbon tax—around $460 million across the automotive sector—and then, at the eleventh hour of the government, the announcement of the new fringe benefits tax, a $1.8 billion tax slug across the entire car sector. All of those factors contribute to making the entire economy a more expensive place to do business, where all Australian businesses face increased costs and it becomes so much harder for any of them to justify staying open and continuing to employ Australians. That is why we want to get the cost base for doing business in Australia down for every single business, and it is why the Labor Party would be well advised, if they care about jobs, to get out of our way and to allow us to enact the policies we promised, which will make it cheaper for people to do business in Australia.

To give Senator Carr—who comes in here with great hysterics and theatrics on a regular basis to rant and rave about the manufacturing sector—one iota of credit, at least when he wrote his book recently he acknowledged that the previous government's policy failures had an impact. As he said in that book:

Unfortunately the Green Car Innovation Fund was abolished, leaving international company executives wondering just what they had to do to get a consistent government policy commitment in Australia.

That was Senator Carr reflecting on the governments in which he served; on the governments in which, for the bulk of the time, he was the industry minister; and in the governments that saw 50 per cent of Australia's car manufacturers decide to leave and 25 per cent of Australia's automotive industry components suppliers shut up shop. That is the track record of the previous government. Let us not whitewash history and let us not pretend that the model that has been in place has been working because it has not. It has failed miserably to keep business in Australia and it has failed miserably to protect jobs. If we are to have any chance of protecting jobs in future we very clearly need to take a different approach.

We were elected to government being very clear about the approach that we would take. We were open and honest in saying that we would go through a process with the Productivity Commission undertaking a thorough assessment of how the car industry should be supported if it is to stay in Australia. That Productivity Commission review is not one just looking at the quantum of money that might need to be available to keep the car industry here. It is worth noting there is a large quantum of money still on the table, some $1 billion on the table between now and 2015-16 and a further $1 billion on the table beyond that. There are big bucks on the table from government to support industry but the Productivity Commission's brief is a wide one: the national and international factors affecting the industry; the industry structure; the structure of investment; the profitability in the industry; the changes in consumer preferences; and indeed, the workplace practices and arrangements in place. All of those are factors that contribute to whether or not we can have a viable industry in Australia.

The Productivity Commission in looking at that will come up with a reasoned and considered analysis to identify how, if the industry stays in Australia and if government continues to so-called co-invest in the industry, to hand money over to the industry. We will get a situation where we are not handing over money simply to watch a continued demise because that is what infuriates many taxpayers and that is what disappoints people like me, where we put good money after bad and still watch the jobs walk out the door. That is what has been happening: good money thrown after bad and jobs still go.

It was not that long ago that the former Prime Minister and the Premier of South Australia were declaring that Holden was secure until 2022. Then we saw more job losses under your watch, Senator Farrell. The approach of the previous government simply saw more jobs leave, and we need a different approach if we are to get a different result in future. That is why Holden should be committing to stay put until at least the Productivity Commission process is complete. Let us see then—

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

After the state election in South Australia.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Senator Farrell, you could have signed up a deal with them if you wanted to and you did not.

Photo of Mark FurnerMark Furner (Queensland, Australian Labor Party) Share this | | Hansard source

Order! Senator Birmingham. Order!

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

You did not have the courage to actually follow through, Senator Farrell, did you? You sit here now from the comfort of the opposition benches—

Photo of Mark FurnerMark Furner (Queensland, Australian Labor Party) Share this | | Hansard source

Order! Senator Birmingham, take your seat. Order on the left. You know interjections are disorderly. Senator Birmingham, I will ask you to direct your comments through the chair.

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

People like Senator Farrell just want to play politics with these jobs. If they were serious about it, they would have done something about it when they were in government and they did not. They just watched the jobs march out the door. I would like to see the jobs saved. I hope Holden commit to see the process we are running through so we can have sensible discussions to find a better way to make this industry work in future where we do not continue to throw good money after bad but where we actually invest to keep jobs in Australia for the long-term.

4:49 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I only have a few moments to cover this very important issue. Yet again we are speaking about Holden. This is not just about Holden; it is not just about South Australia; this is about the future of manufacturing industry in this nation. In the auto industry there are something like 50,000 direct jobs, good jobs, decent jobs throughout the nation. It is worth reflecting on what University of Adelaide Associate Professor John Spoehr said very recently:

If the industry's competitive position improved as a result of a decline in the dollar—

And I think the forecaster is saying that is what will happen—

then the losses would be greater because there would be an increase in economic activity and employment.

Professor Spoehr's study paints a bleak picture of state based losses: Victoria, 23,850 jobs by 2020; South Australia, 11,688 jobs; New South Wales, 15,000-plus jobs; and over 8,000 jobs in Queensland. These are conservative figures. Professor Spoehr said:

The reality is, in isolation (government funding to the car industry) does look like a big number, but you have to balance it against the losses from the collapse of the car industry as a whole.

I agree with Professor Spoehr in relation to that. We must stop the blame game. We as a nation are at the crossroads. We need to decide whether or not we want an auto industry in this nation with all the associated benefits, skills and innovation that actually saves the mining industry in this country many millions of dollars each year. These are the big questions we must ask.

I am grateful for the work that Robert Debelle, formerly from the University of South Australia Centre for Advanced Manufacturing Research, has been doing with me on this and for his assistance. We need to be smart and innovative and drive this forward to produce a car not just that more Australians want to buy but a car that can be exported to the world.

We also need to look at free trade agreements, which are not fair trade agreements. The fact that a Ford Territory costs 2½ times in Thailand what it costs here in Australia, despite the free trade agreement, because of non-tariff barriers is a disgrace.

We also need to address the issue of the carbon tax which, according to the Leader of the Government in the Senate in question time today, adds something like $400 to the cost of a motor vehicle. We also need to address matters that go beyond the carbon tax such as the high price we pay in this country for power, which is a significant input for this sector, and that is because the energy market rules and because of the way that energy infrastructure in this country has been gold plated, particularly network charges. That in itself would make the cost of a vehicle hundreds of dollars greater. These are important issues.

We also need to address head-on the claims made about industrial relations practices. I know that Grace Collier, a well-known commentator on these issues from The Australian, made a number of claims and assertions. Rather than being dismissive of those, we need to deal with them in a calm and rational manner to work out what the best way forward is. I do not accept for one minute that John Camillo, head of the vehicle builders division of the AMWU in South Australia, is anything but a reasonable, moderate and sensible pragmatist. He is not a radical union leader; he is a decent man doing his very best.

We must support, and the coalition must support, in totality the work and the efforts of industry minister Ian Macfarlane. I still have confidence in Minister Macfarlane, who I believe is genuinely doing his level best to save this industry. If any backgrounding to the contrary is occurring from government ministers to the media or anyone else, it is completely destructive.

Finally, I make a genuine plea to Prime Minister Abbott—someone whom I had a good working relationship with in opposition and a constructive working relationship with in government: do not abandon the hundreds of thousands of voters who supported you at the last election. Those voters who were once Howard battlers went back to the ALP and then became Abbott battlers. Do not abandon them, because the consequence of abandoning the motor vehicle industry in this country is that, in the lead-up to the 2016 election, every week there will be a plant that will close down, whether it is a component manufacturer or an associated industry. You will see lay-off after lay-off. I do not think that the Prime Minister wants to have that as part of his legacy. This industry is too important for us to abandon it. We can make it work. It is in the national interest to do so.

4:54 pm

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

I rise to speak on this motion of urgency that deals with the issue of the automotive industry. When Prime Minister Abbott was elected on 7 September of this year, he made a very positive and forceful statement that Australia was open for business. When he made that statement, we thought that he was talking about South Australia and, in particular, the automotive industry. What we now find is that he was not talking about South Australia or the automotive industry. In fact, we find a divided government and a divided cabinet on the issue of support for the automotive industry.

I was dumbfounded to hear Senator Ryan talk about the lack of bipartisanship in respect of the automotive industry. There is nothing more bipartisan, certainly from this side of the parliament, than the expected and accepted need to support the automotive industry in this country. We would happily sit down with Prime Minister Abbott and his cabinet today to do whatever it takes to ensure that the automotive industry in this country survives.

I think I heard it right that during question time the Acting Prime Minister, Mr Truss, announced that he had decided to write a letter to Mr Devereux the General Manager of Holden after he gave evidence to the Productivity Commission today. I find it absolutely remarkable that Minister Truss would do that. If Minister Truss is really interested in saving the automotive industry in this country, he should not write a letter to the general manager; he should find out his telephone number, ring him up and say: 'Listen mate, we genuinely want to save the automotive industry in this country. Can we sit down and work out how we do it?' Why hasn't he done that? Why is he writing a letter rather than making a phone call?

Senator Payne interjecting

If he is serious about it, Senator Payne, he should ring up and say, 'We want to sit down and work out how we save this industry in the interests of manufacturing in this country.'

Photo of Marise PayneMarise Payne (NSW, Liberal Party, Minister for Human Services) Share this | | Hansard source

How did that conversation go with Mitsubishi for you guys?

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

It is not me who is making this criticism, Senator Payne. The Liberal Minister for Manufacturing in Victoria, Mr David Hodgett, has said:

My message to my federal colleagues is that any speculations on Holden's future is just not helpful.

He is talking about his Liberal and National Party federal colleagues. He goes on to say to the people on the other side of this chamber:

My message will be to cease and desist …

He is dead right. The more the government fail to make it clear that they are in support of keeping automotive manufacturing in this country, the more they fail to clearly defend the automotive industry and, more particularly, the more the government fight amongst themselves over this issue, the more damage is being done to great iconic Australian companies like Holden.

We know Minister Macfarlane supports Holden staying in this country. We know he supports the manufacturing industry. We want to hear the rest of the Liberal cabinet, particularly the sole South Australian in the government cabinet, Minister Pyne, come out and say they support Minister Macfarlane. In fairness to Senator Birmingham and Senator Ruston, who is going to say a few words if I finish early enough. We need to put pressure on Mr Pyne and the rest of the cabinet to come out and clearly state that we need a manufacturing industry in this country and that we need to be able to make cars in this country. Holden and the other manufacturers are too important to fail. We need to take some action. We need to take some action now, not next week and not in a letter. We need to get on to Mr Devereux and talk to him. We need to make it clear that we need a solution to this problem. (Time expired)

4:59 pm

Photo of Anne RustonAnne Ruston (SA, Liberal Party) Share this | | Hansard source

Indeed, on the comments by Senator Farrell: as a South Australian, the car-manufacturing industry is an extraordinarily important industry in South Australia and I can assure Senator Farrell that all of my counterparts and colleagues on this side of the House want to see a viable manufacturing industry in Australia. That goes for the car industry in South Australia as well.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Minister for the Centenary of ANZAC) Share this | | Hansard source

Put pressure on Minister Pyne! Send him a letter!

Photo of Anne RustonAnne Ruston (SA, Liberal Party) Share this | | Hansard source

There is absolutely no doubt that the car industry is a hugely important industry in South Australia. And I do not think that there is anybody in this place, no matter whose party they belong to, who would argue with that at all. I am sure Senator Farrell can remember the sad day when Mitsubishi closed its doors in South Australia. It was a terrible day for South Australia, and certainly a similar decision by GMH would be a devastating outcome for the state. South Australia is a beautiful state, although it has a very small population.

Can I just take issue with some comments that have actually been made by the South Australian Premier in relation to this issue? This morning I was listening to the debate, as I am sure everybody else was, about this particular issue and Premier Weatherill came out and said that if GMH closes it will be the first step towards turning South Australia into being nothing more than a quarry or a farm. I have to say that as a farmer in South Australia I take great offence that he would belittle the farming sector in South Australia and the mining sector in South Australia, which have proved to be the backbone of the South Australian economy for ever and ever. I think that we really do need to recognise that the farming sector and the mining sector have sustained our economy through some pretty tough times recently. For Premier Weatherill to say that, I was very disappointed.

The other thing I would like to point out is that much of the downward spiral of GMH—the loss of jobs and the shrinking number of cars being produced in South Australia—have occurred on Premier Weatherill's watch. I bring to the attention of the Senate that this morning the difference in cost of manufacturing a car was noted—and this came out of the GMH figures: it is $3,750 more expensive to produce an average Holden in South Australia than it is overseas. So let us have a look at some of the costs that contribute to why a car would cost $3,750 more to manufacture in South Australia than it would in an overseas destination.

Since Labor came to government in South Australia in 2002 electricity prices have increased by 137 per cent, gas prices have increased by 126 per cent, the price of water in South Australia has risen 227 per cent, payroll tax has almost doubled, land tax has tripled and land tax and stamp duty are currently 40 per cent above the national average. So I think that if you want to sum that up into one sentence, South Australia is the highest-taxed state in the nation. How on earth can an organisation like GMH hope to start on an even footing when they are already starting behind the eight ball because of the amount of additional burden that is placed on them by doing business in South Australia? This is directly as a result of the actions and policies of the Labor government there.

We then look at some of the other costs to manufacture in Australia that we might like to start doing something about. It would be remiss of me not to mention the impact of the carbon tax. I notice that Senator Xenophon also raised this issue in some of his media statements about removal of the carbon tax and the direct positive impact that would have on the cost of manufacturing in Australia.

Another great cost to South Australians trying to do business, of course, is our excessively high WorkCover and all the red and green tape that we encounter. But one of the most specific things—and I think this government has every right to question the validity of some of the comments from across the chamber—is what were those opposite thinking was going to happen to the car industry when they decided on the FBT changes prior to the election? Immediately after that decision it was made very clear to all and sundry that it was going to have an immediate and negative impact on the car industry. It was estimated at the time that it could have the effect of reducing the number of cars sold by 100,000. Of course that is going to have a major and immediate impact on the car-manufacturing industry in that state.

The urgency motion that is before us today is for the government to make an urgent offer of co-investment to GMH. Can I reiterate that as a proud South Australian I certainly want to see the car industry in South Australia continue. As I said, no Liberal member, no National member, no Labor member, no Green member and, I am sure, Senator Madigan would disagree. We have just heard from Senator Xenophon—every single person wants to see the car industry continue in South Australia. But where I perhaps differ from them and the comments made by those opposite is that I believe there is a different way to achieve it from just injecting money.

If we can decrease the burden on industry and the cost of doing business, we have a tick. We can ensure that the company that is seeking assistance is operating as efficiently as possible—certainly, has GMH looked at itself to decide whether it is actually operating at its most efficient before it puts its hand out and asks the government to provide additional funding? If we want to keep the car industry in Australia, or any other manufacturing industry for that matter, we need to put incentives in place so that they can stay. Just handing over money with no strings attached will do nothing more than delay the inevitable. Just remember the last time money was given to GMH—they put off 400 people only a matter of a few months later.

Question agreed to.