Senate debates

Thursday, 4 February 2016

Adjournment

Automotive Industry

7:35 pm

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

I rise tonight to talk about an issue going on in my home state of South Australia, an issue of vehicle building, car making or whatever you would like. As you would understand—and you have been involved in the political theatre for long enough to know—this is a very sensitive issue, Mr President. I must say that we have all been excited by talk of Punch Corporation's prospective buyout of GMH in Adelaide, a plant scheduled to close next year with the loss of thousands of direct and indirect jobs. It is early days in the context of any such arrangement, and I understand that no formal offer has yet been formulated. And, in the event that there is likely to be, there will be many considerable hurdles to overcome. Therefore, I urge restraint. It would be very unfair—and I repeat: very unfair—to build up false hope among the workforce and to have that dashed, all because political opportunists in this place irresponsibly inflate community expectations in order to improve their own stocks in the electorate.

I have had the opportunity to visit Adelaide's Holden plant a number of times, and I have seen firsthand the various systems involved in a highly complicated process of automotive manufacturing. The workers at the GMH plants, both in Adelaide and in Melbourne, know this only too well.

All of these systems have specific intellectual property, and intellectual property is a valuable currency—as you are well aware, Mr President—for a business like General Motors. We know that when General Motors sold Saab, they certainly did not relinquish their intellectual property and it is hard to envisage them giving it away at this time here in Australia.

I urge caution because I do not see a way that General Motors would grant intellectual property associated with their Zeta vehicle, which I understand will continue to be used in a number of other Holden products, to what is after all a global competitor. We have to understand that companies guard their IP because without it they would struggle to compete. It would be hard to imagine Apple, for example, licensing out their intellectual property for an older, superseded iPhone just as it would be hard to imagine Toyota licensing out their hybrid engine technology to a competitor. For Punch Corporation to develop future IP for themselves, it would cost billions of dollars.

The autosupplier base is already beginning to shut down and will accelerate when Ford closes in October. Resurrecting that and ensuring stable supply for the low volumes Punch Corporation would ultimately want to build would be difficult in the extreme.

We have to consider that three of the biggest global automakers, with all of their expertise and experience, were unable to make car manufacturing in Australia work and to profit from it in today's trade and economic environment. In 2005, Holden sold 90,000 Commodores in Australia. Last year, that number had declined to about 34,000 vehicles and the large-car segment continues to shrink after a decade of market fragmentation.

Now, while Punch Corporation might successfully make transmissions in another country, successfully building cars is an altogether different proposition, so is distributing them, marketing them, selling, servicing and repairing them. Another perhaps underappreciated challenge is the capacity to offer proper warranty protection and the capacity to financially back any recall that might occur in the future.

Such a venture by Punch Corporation relies on it delivering extensive expertise and financial capacity if it is to succeed where such eminent others have not. This is a complex business and we must not understate the challenges any proposal would face. I join with South Australian Premier, Mr Weatherill, in acknowledging that while this is a proposition we must take seriously, it nonetheless seems unlikely, and we must remain realistic in order to avoid giving Holden workers false hope.

Mr President, you come from a state like mine which is challenged economically. That is why I have put forward a proposal to the South Australian nuclear fuel royal commission. That is something that I feel strongly about, that will propel South Australia's economic future. I find it somewhat sad when I see parliamentarians from this chamber politicising and, maybe, cruelly raising expectations of things which are infinitely complex and are of a global scale. So I urge caution and I give that message to the people of South Australia. When somebody comes to town with gifts of riches and other, we should be cautious. We should be careful to evaluate the message and to evaluate the business proposition.

At this stage, South Australia is surely in a state where it wants to know that it can prosper and it is somewhat desperate to know that it can do it in industries which it has been involved in. But I urge caution. I wish everybody luck in the talks with it. I will provide my shoulder to the wheel. However, I urge politicians in this place to not leverage that on the basis of an electoral environment which is needy in the extreme.