Federation of Automotive Product Manufacturers annual conference
15 November 2013
[Check against delivery]
It is a pleasure to be speaking at your annual conference.
If I could perhaps start by introducing myself – I am no stranger to your industry.
As a 15 year old I was selected by Repco to come to Victoria, to their training centre, as an apprentice fitter toolmaker.
I then worked for Repco Tool & Die in Sydney and a large part of their work was of course building the press tools for the body panels for motor vehicles. It wasn’t long after I started there before they then closed up and went broke, but be that as it may…
Minister Macfarlane is unable to be here today and he has asked me to pass on his apologies.
I know he values your industry and the work of the Federation and he was disappointed that he could not be here in person.
No doubt you will have seen the Minister’s comments in the news media following his discussions with Australia’s car manufacturers.
The Minister has met with representatives from Holden, Toyota and Ford ahead of the Government tasking the Productivity Commission to complete a review of the Australian automotive industry.
At the outset, I want to assure you that this is a Government that fully appreciates the value of the Australian automotive industry.
The industry is important to the Australian economy, contributing an estimated $50 billion to national GDP over the last decade.
It is part of our manufacturing base.
It is important to jobs, directly employing over 45,000 Australians, and supporting many more jobs indirectly.
And the industry is also vital to communities and families – particularly those in Victoria and South Australia.
The Coalition has long been committed to ensuring a competitive Australian manufacturing industry including a sustainable and profitable automotive manufacturing sector.
Thats why in 2003 the Coalition Government worked with the motor vehicle industry to develop the $4.2 billion plan, rolled out over 10 years through to 2015.
I might also point out that during the development of the plan, General Motors agreed that this was a transition plan to sustainability that would not require further or ongoing funding beyond the 10 year plan.
I repeat, that the industry would be self-sustainable, and of course that is why, on the back of that, that so many of you invested in your businesses and geared up for the future.
Let me make it abundantly clear, the Abbott Government wants a sustainable future for the industry, as Minister Macfarlane has said to the state governments, now is not the time for partisan politics, but for co-operation.
It is time to work together.
I guess that’s why I am more than a little disappointed at the partisan political media comments today by the South Australian Premier.
Of course the Premier is always welcome to make greater state financial contribution to help address the situation we face.
He can of course address industry concerns on such as payroll tax relief and re assessment of workers compensation costs to assist in sustainability, rather than cheap shot political comments in the paper.
But as Minister Ian Macfarlane stated from the outset, we want to work together, Commonwealth, state, industry and unions to keep this industry viable.
That is why the government has asked the Productivity Commission to examine the best way to ensure the ongoing viability of the automotive sector.
The Australian Government believes the Productivity Commission is best placed to provide a comprehensive report about the Australian automotive industry, and I’ll talk more about that in a moment.
Component Manufacturers
Of course, you, the component manufacturers are central to the Australian automotive sector.
It’s to your credit that the components you manufacture are not only critical to the production of cars here in Australia, but you are also a significant source of export earnings.
It’s also a matter for congratulation that your sector has sought to expand from just manufacturing components for the automotive industry to areas as diverse as health products, building in useful additional capacity.
And with support from the Automotive New Markets Program, companies like SMR are expanding into the manufacture of medical products, Blown Plastics is designing and manufacturing dual-walled plastic glassware mainly for the hospitality industry, and Precision Components is supplying products to the construction sector.
Future of the Automotive Industry
But ladies and gentlemen, ultimately you, and Australia, need an automotive industry that is viable.
And there is simply no getting around the fact that this can no longer be taken as a given.
The Ford announcement made that pretty clear.
And I’ll be absolutely frank with you.
An industry that just scrapes by because of government support is not something we should accept or be aiming for.
We are committed and enthusiastic about a sustainable car industry and we want to give it every chance of success.
And we need an industry that can successfully export and compete in international markets.
Government support may well be an important factor–and we know that automotive industries around the world are supported by their governments.
But government investment should not be seen as the be all and end all.
For the industry to succeed into the future it needs to meet the demands of the market and be dynamic, innovative and drive change from within.
Productivity Commission Inquiry
I know there is a lot of interest in the issue of the Productivity Commission inquiry and we have put out calls for industry to contribute and to work towards the deadline for that decision.
Let me be clear. The government intends for this process to be comprehensive, and we will let the Productivity Commission do its job.
We understand that business and communities are eager for certainty about their future.
But we are talking about major policy decisions and the management of billions of taxpayers’ dollars.
The industry has seen enough of big promises being made and later rescinded – think of the Green Car Innovation Fund.
And it has seen enough of ill-thought through decisions made on the run that have hurt it – think the mooted FBT changes, about which I’ll say more in a moment.
So, we are determined to make a responsible and reasoned decision.
A decision that is based on the best advice, information and analysis possible.
That is why we have—as promised at the election—asked the Productivity Commission to take a thorough look at all aspects of the industry.
The commission’s brief is a wide one.
It will look at the national and international factors affecting the industry, including its current structure, investment, profitability and consumer preferences.
And of course it will take into account the assistance other countries provide to their own car sectors.
We want to arrive at the best possible policies to secure the future of the industry not just for the next few years but for decades to come.
And we want to make sure that any support for the industry is accountable, transparent and targeted.
The inquiry will give us the information we as the government need to be able to do this.
The Productivity Commission has released details about the process for making submissions, and I encourage everyone with relevant information to make a submission to the inquiry.
Fringe Benefits Tax
Ladies and gentlemen, there are some other issues of policy affecting the industry, where the case for immediate action is much more straightforward.
First up, we have already overturned Labor’s proposed changes to FBT arrangements on cars.
The changes were ill-conceived from the very start.
There was no consultation.
The leasing industry was blind-sided and almost immediately hit with job losses.
And the pay and conditions of hundreds of thousands of workers with employer provided salary sacrificed vehicles were put at risk.
Add to this the impact on car sales as estimated by leading commentators and it is clear the policy would have caused the industry total harm.
Commentators and industry practitioners have indicated Labor’s policy would have reduced sales across the board by 10 per cent, and caused an estimated 20 per cent hit to sales for Australian manufactured vehicles.
It was pretty clear that this $1.8 billion tax grab at the expense of the car industry needed to be scrapped.
Government Fleets
Ladies and gentlemen, rather than giving people a reason not to purchase a car it is important to encourage and stimulate demand –especially for cars made here in Australia.
We have a great product, but we also have an industry under pressure.
It makes sense that we in government need to be buying Australian and we support this.
I know that Victoria and South Australia have already preferenced Australian made vehicles and we will be encouraging other states to get on board as well.
Carbon Tax
More broadly though, there are a few other areas where we are acting to give business every opportunity to succeed and perform at its best.
Scrapping the carbon tax will reduce energy costs immediately.
Manufacturing is hard enough without the added impost of an economy wide tax that puts you at a disadvantage with your overseas competitors before you even start.
I doubt there is a manufacturer in Australia that has not lamented the impact of the carbon tax on their business.
Now don’t get me wrong, it’s not that we don’t want to address climate change – we do.
But the carbon tax is not the way to do it.
It is all pain for Australian industry and no gain.
It raises energy prices without reducing greenhouse gas emissions.
Under the previous government’s own figures, emissions under the carbon tax will rise almost constantly for the next 30 years.
In contrast our Direct Action plan is all about meeting our commitment to reduce carbon emissions by 2020 in a practical and effective way.
A way that will protect the planet, but also give industry a fair go.
Draft legislation to rescind the tax is now before the Parliament.
Red and Green Tape
Reducing bureaucratic red and green tape is another area in our sights.
No-one denies that regulation is necessary and desirable, however it is also an issues affecting the established efficiencies of the market – it needs to be addressed.
Excessive regulation is a negative for productivity, efficiency and ultimately lowers the living standards of all Australians.
That is why this government is determined to cut red and green tape and enable industry to flourish.
To do this, we will work closely with the states and territories to create a one-stop-shop to encourage the fast approval and commencement of new projects.
Conclusion
Ladies and gentlemen, the Australian automotive industry is at a crossroads.
It has been part of our economy for the best part of a century and we want it to be part of our future.
We appreciate its value to Australian manufacturing and the role it plays in innovation, and the development and application of new technologies.
Our task is to concentrate on the future and to make the right decisions to help the industry grow and prosper – and that is what the Productivity Commission inquiry is all about.
But no matter how much support is offered, it will be wasted if the industry does not have all of its other settings right.
Amongst other things, success depends upon being productive, efficient and competitive.
And given the size of the domestic market, it means exporting.
Exports are key to increasing production volumes and the benefits and economies that it brings.
Friends, there are no easy answers or decisions here.
But there is a genuine commitment and an enormous amount of goodwill between all parties.
As I stated at the outset today, that means the Commonwealth and states working together, hand in hand with industry and unions.
Together I know we can find a way that is best for all of Australia.
Finally, I want to thank the Federation of Automotive Product Manufacturers for its excellent work in representing the automotive components industry.
You are a vigorous and articulate voice for your members and I encourage people to join and gain the benefits that come with membership.
And I know that your advocacy is valued and appreciated at all levels of government.
Ladies and gentlemen, I wish you well for your conference, and I look forward to seeing the outcomes.
Media contacts: Mr Baldwin's office 02 6277 4200
