Interview with Fran Kelly, ABC Radio National Breakfast

Future of Holden and the automotive industry

JOURNALIST: Minister, welcome to R.N. Breakfast.

IAN MACFARLANE: Good Morning Fran.

JOURNALIST: Ian Macfarlane, you said yesterday, you were shocked when you got the call from Holden. Didn’t you see this coming?

IAN MACFARLANE: No I didn’t - I knew it was a chance and I knew we were up against it when we began the process. But I was ever hopeful that as we put together a long-term plan for the industry that Holden would decide to stay in Australia and would decide to build their next model. But unfortunately GM in Detroit, which of course is a much different car company than it was before the GFC and is now virtually owned by a hedge fund, is making economic decisions in relation to its return on investment and between that and the fact that they were closing plants across the world and pulling brands out of Europe, Australia fell victim to that mood change.

JOURNALIST: Now you were shocked and fair enough, but I do contrast that with Joe Hockey who said in Question Time that no one should be surprised Holden is shutting up shop and the Prime Minister this morning saying Holden's been sending signals for some time. Do you think that they are sending the signals? What you saying, you are still hopeful that Australia would persuade them to stay?

IAN MACFARLANE: Well I’ve been in a few negotiations in my time and perhaps the signals were that they were going. I read them as signals to say that we needed to put together a car plan and that they’d be prepared to consider it. But look in the end whoever thinks they read the tea leaves the best, the challenge now is to take the opportunity to transition people out of these industries and into long-term jobs and that's the challenge that I'm looking at and one that I will work on until we solve the problem that we have now.

JOURNALIST: I want to come to that challenge but all sorts of accusations are being thrown around since this decision, including Bill Shorten accusing Tony Abbott of sabotage. I notice that the South Australian Premier has said this morning that you were warned by him and by Holden about what they needed. They needed the guarantee of ongoing funding by December and once you were clearly missing that deadline, you knew that they would pull out. You were warned, he said.

IAN MACFARLANE: That is simply not correct Fran, and we need to be clear on this. At no stage did Holden say that to me because the timeline was a timeline that I laid out from the day that I started as Minister and we started on this on this challenge. Everyone understood the deadline was going to be March/April next year, perhaps as late as May. Holden at no time raised that as a showstopper and we need to be clear on this. I think in hindsight everyone’s a genius, but in reality there were no signals from Holden that they couldn't accept the timeline that we laid down.

JOURNALIST: But there were plenty of signals from the Government that it gazumped its own timeline because in the last week the Prime Minister and the Treasurer said there was enough money, no more money, no more [inaudible].

IAN MACFARLANE: Well there’s a billion dollars on the table. In fact more than $1 billion on a table between now and 2015, sorry between now and 2020, the reality is between now and 2020 … [cut off]

JOURNALIST: [Inaudible] … they need longer than that, they told you that.

IAN MACFARLANE: Everyone comes to me and says they need money. What I say to them in return is let's sit down look at what the long-term outcome of that money is going to be. Are you going to build a car that is competitive, are you going to build a car that can be exported, are you going to ensure that you’re building a global car that people want to buy. Let's have a measured, strategic approach to where we go with taxpayers’ money. There is over $1 billion available to the industry between now and 2020. We need to make sure that money is spent in a way that sustains the industry, not just sprayed out at some request on whim, which has been the past practice in the previous Government.

JOURNALIST: And will most of that money now go to Toyota, to save Toyota?

IAN MACFARLANE: Well that money will go to Toyota and to the component industry, providing they accept the plan that is worked out through the consultation process we have both with the PC and also of course with the industry itself. We have a process, the PC report next week as it as it moves to its next stage of its reporting, taking into consideration the fact that Holden will no longer be making cars post 2017 and then it will present a final report at the end of March. All those factors have to be taken into consideration. The money is there, the Government is committed to that money. What we need to do is make sure that money is spent in a way that ensures that the car industry survives here.

JOURNALIST: And the car industry will be reduced to as you say the component makers and Toyota. But Toyota has said Holden’s departure quote “will place unprecedented pressure on our ability to build cars in Australia”. How confident are you that Toyota is here for the long haul?

IAN MACFARLANE: Well no one should underestimate the challenges, but if you look at what Toyota has been doing in its own plans and have walked through its plant, I’ve spoken to its workers, I’ve looked at the cost-cutting measures that they are putting in place to save production costs to get that cost differential down on cars which currently stands at $3000. They are about halfway to achieving that in terms of the difference between making a car here and say, making a car in Kentucky in the US. They have further to go on that. They have an EBA vote on Friday and the workers need to make a very considered decision. If they continue with work practices that for instance require time off to give blood and a three shut down over Christmas on top of their annual leave, then the ability of Toyota to be competitive in the long term is going to be severely impinged. Everyone … [cutoff]

JOURNALIST: It’s not really fair to blame the workers though is it …

IAN MACFARLANE: I'm not blaming the workers …

JOURNALIST: I noticed that Mike Devereux went out of his way yesterday to acknowledge what the workers did do to help the company stay afloat.

IAN MACFARLANE: And Fran I've acknowledged the workers every step of the way in this process. I think they’ve been very responsible but there are more steps to be taken. We need a car industry that has work practices. I’m not saying wages I’m saying work practices, that are similar to the countries we compete with. If we don't have that we simply won't be competitive, so taking three weeks off over Christmas on top of four weeks annual leave is not the way to be competitive. We have a company that wants to make cars in Australia. Toyota is very, very committed to Australia. Remember that Toyota's first cars made outside Japan were made here in Australia. So they have a long history, they are committed to it. Let’s see what we can do to make sure that a difficult task turns into an outcome that’s long term and sustainable.

JOURNALIST: Minister in terms of the future, the Prime Minister has foreshadowed a support package, for the workers and the states of South Australia and Victoria. The two Premiers are coming to speak to the PM today and Jay Weatherill, the South Australian Premier says make no mistake, the bill the Commonwealth is going to have to pay to compensate Victoria and South Australia will be massive. How much is the Federal Government prepared to do and we are you going to start?

IAN MACFARLANE: We’re prepared to do what it takes and we accept that there will be thousands perhaps tens of thousands of workers who will have to be retrained and transition into new careers perhaps careers they never dreamed of. I never dreamt I’d be a politician, I thought I was always going to be a farmer. Every day people change their career paths because of circumstances around them changing. Now the reality is what we can give them is firstly create the initial support so if there are shortfalls in their social security position than obviously the Commonwealth will step in there. If there are issues in relation to them needing to upskill and change their training capability, I'm the guy to talk to because we've got apprenticeships and skills training in our portfolio. That's the deliberate reason Tony Abbott put it there, to ensure that we can provide the skills to people to work in the new industries in Australia, and then of course we've got the new industries that we need to work on establishing in South Australia. South Australia doesn't just make cars. It is a resource state; it is a state that has some very sophisticated manufacturing and some very sophisticated electronics. It is moving further and further into the Defence supply area. There are opportunities that can be made in South Australia which will transition these workers into jobs where they don't have to do every five years be put through the torture the of the uncertainty of a car industry that they work for closing down.

JOURNALIST: And how quickly can you do something about that because presumably Holden won't be taking many more apprentices between now and 2017 you wouldn’t think. There’s going to be a shortfall immediately. Nick Champion the local Federal Member points out this coincides with the completion of the air warfare destroyer. Some are suggesting the Government should straightaway commit to building the next generation of submarines in Adelaide in South Australia, rather than buying them off-the-shelf. What do you think?

IAN MACFARLANE: Well there are all sorts of options to create jobs in South Australia. There are options in terms of the Army’s land based fleet in terms of trucks and vehicles and armoured personnel carriers. There are a whole range of things in the defence portfolio. There is the opportunity to participate in some of the avionics and some of the fibre composites as well, so look we will be working through this. There will be things announced over the next three or four days, but in the end the one thing I can be sure of, and that the workers of Holden can be sure of, is that we will be doing everything we can over the next three years to ensure that this transition to a new career is as painless as possible.

JOURNALIST: Ian Macfarlane, thank you very much for joining us.


Media contacts: Mr Macfarlane's office 02 6277 7070