Senate debates

Tuesday, 5 September 2017


Automotive Industry

8:40 pm

Photo of Stirling GriffStirling Griff (SA, Nick Xenophon Team) Share this | | Hansard source

I rise today to talk about the state of Australia's automotive industry. People might think that the end of car manufacturing in Australia means that this is a dying industry. In fact, the automotive industry is striving to innovate and adapt. It still employs more than 360,000 people, is worth $37 billion a year and continues to contribute over two per cent to Australia's GDP. This industry is not even close to death, but it is struggling.

One of its main problems is a dire lack of skills. According to a report released last month by the Motor Trades Association, skills shortages within the automotive industry are at their highest level ever. Nationally, the industry currently has more than 27,000 jobs that it cannot fill. Just think about that for a minute: 27,000 jobs available right now. By next year, there will be an incredible 35,000 empty positions across the country in repair shops, car detailers, new and used car yards, tyre and spare parts retailers and vehicle manufacturers. The biggest shortage is in light vehicle mechanics. If you are finding it takes a long time to get your car booked in for a service, this might tell you why. The other badly-hit occupations include vehicle spray painters, car sales people, panel beaters and automotive electricians. If you are interested in the full list, you will find it in the MTAA's new report Directions in Australia's automotive industry: an industry report 2017. At the launch of the report, the association's national CEO, Richard Dudley, revealed that a number of businesses had given up looking for spray painters two years ago because it was such a futile task. These desperate businesses had instead turned to the 457 skilled visa program's Consolidated Sponsored Occupations List. This was helping to plug the gap, until April, when the government summarily, and with no consultation with industry, decided to dump vehicle painters from the skilled migration list.

This is a government that says it stands up for businesses, yet all it has done here is get in their way. This financial year the industry estimates there will be a shortage of almost 3,000 vehicle spray painters around Australia, and the government has tied the hands of the industry by closing off one solution to this skills shortage. There is no pathway for this occupation under any Australian skilled visas. I would like to understand the logic behind the move and the advice that led to the decision to not include spray painters on either the medium-term or long-term strategic skills list or the short-term skilled occupations list. Fortunately, at least jobs like motor mechanics, automotive electricians and panel beaters remain on the new skills list.

The reason for the skills shortages are familiar ones: mainly problems with attraction and retention. Luring the right candidates is proving to be another big issue. The MTA says there is employer disenchantment with the pool of candidates on offer. It states that unambitious students and those with learning difficulties are being steered towards the motor trades. But the industry is not looking for grease monkeys with poor school results. It actually needs students with sound STEM skills who can understand and repair modern vehicle technology.

The automotive trades are also under pressure because of dwindling numbers of new apprentices. The industry estimates it needs 14,000 new entrants each year just to balance out the industry's natural attrition rate. However, it is currently taking on only just under 11,000 apprentices and trainees a year, so you can see that this situation can only become worse unless action is taken. The soon to be introduced apprenticeship mentoring scheme, brought about by my lobbying to government, will go some way to helping alleviate the shortages. The scheme is modelled on the Australian Apprenticeship Mentoring Program, which ran from 2011 to 2013. The program was scrapped for the sake of short-term budget issues. It ignored the fact that the program actually helped industries improve their apprentice completion rates. In the two years it operated, over 3,000 apprentices and trainees were mentored nationally.

The program helped 84 per cent of apprentices continue their training. In my home state of South Australia, completion rates for motor trades apprentices surged from an industry average of around 50 per cent to over 90 per cent under this program. Ninety per cent—that is an incredibly strong result. The Motor Trades Association in South Australia told me that, after the program ended, completion rates dropped once again to roughly one in two apprentices emerging with a qualification. The program was focused on apprentices in their first year of training, when they were most at risk of quitting. It was primarily targeted at industries with skills shortages and gave priority to apprentices from regional and remote areas, Aboriginal and Torres Strait Islander apprentices, apprentices with a disability, apprentices in non-traditional occupations, school based apprentices and apprentices who were considered vulnerable youth. It worked. It was needed. When it was abolished, industry groups like the MTA begged for it to be reinstated, but this fell on deaf ears.

We listen to industry. We acknowledge that for a modest investment the industry got some pretty substantial future returns. NXT is proud that we were able to work with government to secure $60 million over two years in the May budget for industry specialist mentoring for Australian apprentices. The aim of the program is to support 45,000 apprentices and trainees in their first two years of training, when they are most vulnerable to quitting. The funding is meant to kick in this financial year, and we will be keeping a keen eye on this to ensure the program starts this year and the full funding is delivered as promised.

I was struck by how much this modest funding meant to this industry, just one of the industries which will benefit from the program. Unfortunately, despite its contribution to jobs and the economy, this industry is not benefitting from a consistent response or dedicated support from government. It only saw a fraction of the $900 million promised in the Automotive Transformation Scheme, and it is still waiting for the government's response to the Senate Economics References Committee's 2015 report on the future of the Australian automotive industry.

The committee's report made some strong recommendations to underpin the industry during this time of massive change, including maintaining the Automotive Transformation Scheme funding through to 2020-21 and broadening its objective to support industry-wide diversification and transformation. It also recommended the establishment of an automotive industry taskforce to develop and implement a national automotive policy to help the industry meet the challenges and opportunities associated with alternative fuels and emerging technologies. Industry minister Arthur Sinodinos acknowledged that this is a key sector and that it is going through unprecedented change. The government has recognised this with a $100 million Advanced Manufacturing Fund to be delivered over five years. However, we still need an overarching strategy to help the industry navigate this time of upheaval.

I'm sure the minister is sincere in his goodwill towards the industry. However, it has been more than 18 months and, more importantly, two federal budgets since the committee handed down its report, and we have yet to see an effective response from government. When my colleague Nick Xenophon asked during question time last month about what, if any, progress had been made and when the government would respond to the report's recommendations, Senator Sinodinos had to take the question on notice. While the current funding commitments are necessary and welcome, we still don't have a guiding national policy or overarching strategies to support the industry's evolution during this time of transition. I urge the government to continue its support of the industry by urgently responding to the recommendations of the report on the future of Australia's automotive industry and considering what other concrete and coordinated actions it can take to support the industry's ongoing transition.