Senate debates

Wednesday, 3 February 2016

Statements by Senators

Automotive Industry

1:28 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

I rise to take part in the statements and join Senator Canavan on his unity ticket about jobs. I suppose the only difference is that Labor is trying to pin a tail on a donkey of his colour about the destruction of jobs.

The headline is: 'Our 115-year road trip nears a sad end'. One hundred and fifteen years of manufacturing motor vehicles in South Australia, Victoria and other parts of this great country will come to an end in October this year, with Ford to shut its local factory, followed closely by Holden and Toyota. By 2017 Australia will become a sole importer of motor vehicles.

I have no problem with the macro-economic strategy that, if we cannot do something efficiently and people do not want to buy it, we probably should not be subsidising it. But, that said, in the argument it has not been well known that Australia has been a very successful exporter of motor vehicles. I just want to take a few moments of the Senate's time to put some absolute facts from our good friends at the Parliamentary Library on the record. In 2005-06, there were $2 billion worth of exports of motor vehicles and components to the Middle East. In 2006-07, there were $2.144 billion of exports to the Middle East. In 2007-08, there were $2.112 billion of exports to the Middle East. In 2008-09, there were $1.7 billion or thereabouts. In 2009-10, there were $1.5 billion. In 2010-11, there were $1.1 billion. I will get to the point in a moment. In 2011-12 there were $1.105 billion, in 2012-13 $1.3 billion, and in 2013-14 $1.269 billion. But, most importantly, in 2014-15 we were growing back to $1.4 billion worth of exports to the Middle East, which comprises 20 per cent of our net trade with the Middle East. Twenty per cent or thereabouts of our net trade with the Middle East has been in the form of manufactured motor vehicles.

The reason I raise this and put this on the record is to underpin the great work that the manufacturing workers of Australia have done in producing a car of sufficient standard and interest that about $1.5 billion worth of exports to the Middle East every year for the last decade are attributed to it and it comprises 20 per cent of this nation's exports to the Middle East. In all of that decade, the critical factor has been the Australian dollar. When we look at the lower exports in that period, we know that the Australian dollar in 2009 was at about US88c for the entire year, in 2010-11 it was at US99c, it was at US$1.03 in 2012, in 2012-13 it was US$1.02 and in 2013-14 it was US91c. But importantly, in the year that we started increasing our exports to the Middle East, it was back down to US82c. So we know that the critical factor in all of that was the currency exchange.

Where is that exporting of motor vehicles to the Middle East going to be taken up from? It is probably going to come from Thailand, Indonesia or Malaysia. Those are the booming places for assembling Toyota Camrys and the like. And where do we sit in all of this? We have a government that raced in and told General Motors to commit or get out, and they promptly agreed and got out. But we have $700 million allocated for the Automotive Transformation Scheme, and we know that the budget papers for 2015-16 forecast that the government will only allocate $105 million between 2014-15 and 2020-21 in Automotive Transformation Scheme funding, and the remaining underspend will be moved to consolidated revenue. So they have decided we are not making motor vehicles. They have hounded the companies out of the country. We are now left with component manufacturers looking at an uncertain future—component manufacturers who are at the top of their game in a world-standard manufacturing chain. They are not able to access the money to move into the export chain into Thailand, Malaysia or Indonesia and still contribute valuable export dollars to Australia. They have not been encouraged to do that. In fact, $600 million is being taken out of the bucket and put back in consolidated revenue.

I may say that, were the motor-vehicle-manufacturing industry to have a decline or demise under a Labor government, we would not be walking away from people in the chain. We would not be walking away from innovative companies who could, with a bit of assistance, focus on exporting and becoming part of the global chain. It is a global chain now. We know that there are component manufacturers in China making axles for BMWs that are assembled in Malaysia or Thailand. We know these things, and anybody with any understanding, or who just picked up some industry literature, would know that. But we have a national government which looks different, because we have a new Prime Minister, but is exactly the same. There is still no money for our component manufacturers and nothing on the table to allow them to transition, keep their employment figures up, make some money and move into other areas.

This is a great quote in an article by Clare Peddie in the great, august journal the Adelaide Advertiser:

They are companies that just get on with life, they don't crave to be in the limelight, they're just getting on with business and doing a great job.

But they are not able to access a modicum of government assistance to do exactly that—to contribute to the global manufacturing chain in automotive vehicles. Their expertise is beyond question. Their ability to contribute is well proven. They just need to be able to link with Indonesia, Malaysia or Thailand. It is still a Toyota Camry or whatever it will be in Chevrolet terms. They are global cars, and our companies do it really well. They do it sufficiently well to have been at the top of the manufacturing excellence chain, and we have a government which under Abbott and—I was going to say 'Costello'—Hockey told them to get out of town, and they have moved out of town. Of $700 million that was allocated in 2011 to the Automotive Transformation Scheme, $105 million is now allocated and $600 million goes back to consolidated revenue. The companies are left in limbo.

That is before we go to the immediately affected workers who are looking down the barrel of redundancy and early retirement or getting themselves a job in an ever-changing economy. You might be 54 or 55 years old, and you have to go out there and battle for it until you are 67. Before we even talk about those people, they are not even helping the people who would be their natural constituents—innovative firms who are cracking along and are diverting now into medical technology and engineering in the defence space. They are not even giving them a leg up to take their workforces with them. They are just putting $600 million back into consolidated revenue. The small component manufacturers can go jump and the manufacturing workers can jump. It is pull the chain and sink or swim; if you cannot swim, bad luck! That is the attitude this government has towards South Australian manufacturing. That is even before we get to the defence industry, which I have a lot of things to say about.

In the very short time I have left, to recap: these are great, world-leading, high-standard manufacturing component makers. These are excellent manufacturing workers. Their skills are beyond par. It is well known that GMH regarded the Elizabeth facility as being right at the top of their innovation. We have a Prime Minister that talks about innovation, but there is no money. The $600 million is going back into consolidated revenue. 'Sink or swim' seems to be the message to component manufacturers. 'Sink or swim' seems to be the message to those redundant workers. It is an absolute disgrace. This Prime Minister, if he really cares about innovation, should allow this sector to innovate and get into the global chain. We have designers who design stuff globally—we will retain them, we believe. Get the component manufacturers and those excellent manufacturing workers into the global manufacturing chain. Please give them an opportunity; release the $600 million.