Ministers and Assistant Ministers
for the Department of Industry, Innovation and Science

7 September 2015

Subject: The future of industry in the Illawarra, Syria

AUSTRALIAN MINISTER FOR INDUSTRY AND SCIENCE IAN MACFARLANE: We’ve had a very positive and constructive meeting, where politics was left at the door and people have talked in a bipartisan way about the opportunities for this region. The reality is that this region has a number of natural advantages and whilst it does face a very concerning and difficult time in terms of the restructuring of the steel industry, we remain totally confident in the future of the steel industry. I’ve had discussions with BlueScope this morning which has reinforced that. Providing they can reintroduce the $200 million worth of efficiencies that they need to put in place, BlueScope are confident that they can be competitive in the long term.

As to the opportunities for the region, we’ve all agreed as a group, that we need to explore the opportunities both in terms of upgrading the skills of workers who are displaced, but also building on the very significant skills base in this region. There is a very large infrastructure programme currently being undertaken by mainly the NSW Government but with some support from the Commonwealth, to upgrade infrastructure in this region and their needs to be further work done in that area, as well as a serious consideration on how Port Kembla can be developed, perhaps as the Mayor of the region discussed, perhaps even going so far as developing a master plan for the development of the Port and the industrial areas.

Anthony Roberts who is representing the NSW Government in the Industry portfolio is going to say a few words and then we’ll take questions.

NSW MINISTER FOR INDUSTRY ANTHONY ROBERTS: Well look, thank you Ian. It’s great to be here in the Illawarra. Can I say, today’s meeting reflected the resilience of this great region and indeed, with 18,000 new jobs created last year, this region is going from strength to strength. Notwithstanding that, there are some challenges, and that’s where today, having a roundtable of people from both sides of politics, industry, from unions as well, community groups and employer groups, we’ve come to a sound decision and that is that we will be working together to ensure that we can continue to grow the Illawarra. We continue to look at the current jobs and what happens with those, but also developing and building new industries and new jobs for future generations. So all in all, can I thank those people who attended today. Can I thank the leaders of the Illawarra, the political leaders, who have come together today in one common cause and that is to progress the jobs and industry and wealth of the Illawarra region. Now I’ll pass over to Gareth Ward, the Parliamentary Secretary for the Illawarra.

NSW PARLIAMENTARY SECTRETARY FOR THE ILLAWARRA GARETH WARD: Thank you Minister. Can I thank both Ian and Anthony for being here today. Look, there’s no doubt that for us this is a very difficult time. We are facing a transition. That doesn’t mean that we can’t look at two things. How do we firstly, do everything we can to support Paul O’Malley and BlueScope and everything they are doing, but how to we look to the next twenty years as well too, facing this region? This region has a very bright future. We are a resilient region. I look forward to working with all levels of government and I think that the discussion we had today broke down some of the boundaries. We’re not talking local versus state versus federal or industry versus public. What we’re actually talking about is the future of this region and what we can all do to play our part. And today there was a true spirit of bipartisanship. People committed to the tough questions, but also the solutions to take the region forward into what will be a very bright future.

BLUESCOPE CEO PAUL O’MALLEY: I’d like to thank Minister Macfarlane and everyone else who has attended today. Clearly it’s a challenging time for the Illawarra but what was fantastic was everyone in the room was talking about the future and the solutions and from my perspective, those that need to contribute to delivering the $200 million of savings were represented in the room and I believe the conversations are very constructive and there is a sense that there’s more optimism today than perhaps the fatalism that we saw a couple of weeks ago. So I’d like to thank everyone for coming today. Clearly there’s a lot of work to do from our perspective over the next couple of months and we will work with everyone we need to, to deliver the best possible outcome for the region.

JOURNALIST: So just on that, are you saying that there’s some flexibility perhaps in the 500 jobs figure?

PAUL O’MALLEY: We’ve got to deliver $200 million of cost savings and it’s almost impossible to do that if there aren’t about 500 jobs that go. The alternative is 5,000, so it’s all about saving 4,500 jobs. So the $200 million we’ve got to deliver on, we’ve been pretty clear about what that requires. As I mentioned, all of the stakeholders are positively contributing to delivering on that target.

JOURNALIST: From what you’ve heard today do you expect that $200 million of savings can be met?

PAUL O’MALLEY: We’ve got a line of sight on today’s savings. We’re not all of the way there yet. Clearly we’ve got to work through the detail with everyone that needs to contribute. Those processes are in place. The next four to eight weeks are absolutely critical.

JOURNALIST: So on top of the job reductions, where else are the savings coming from, other workplace efficiencies?

PAUL O’MALLEY: Yes, so we’re looking at job reductions across everyone who works within BlueScope and the whole team is involved in that. We do need productivity improvements and we’re going to work through a process with our employees to deliver that. There are some improvements in the way we’ll be able to source raw materials and there are also some technological improvements we’re looking at in terms of investment. At the same time, our coated and painted business is going to continue to receive significant investment for us because we’re going to grow the top line there and that’s also part of the solution.

JOURNALIST: You’ve also said in the past that it is vital that the Government does come to the table with this assistance. Are you still confident that they will do that from what you’ve heard today?

PAUL O’MALLEY: Well what we’ve talked about already is we’re already about $30 million a year better off because of the repeal of the carbon tax, the bipartisan support for the Renewable Energy Target (RET) adjustment, and the red tape that the Federal Government’s removed, has all already got us off to a good start. We’re having very constructive conversations with the NSW Government. They’re appropriately doing some very detailed due diligence because we’ve asked for some very specific issues there. That process is in train. We’ve had some very good support from both sides of politics on those discussions and our employees’ engagement is absolutely well in place. Everyone who needs to contribute is engaged and the next four to eight weeks will be a busy time but I believe we’re making progress.

JOURNALIST: So you’re still committed to Plan A, keeping the steelworks open?

PAUL O’MALLEY: As I’ve said my personal preference is absolutely for Plan A. We’ve got to deliver the $200 million of savings. If we don’t, it is Plan B. But at the moment, everyone else is trying to help us deliver Plan A, and that’s certainly my preference.

JOURNALIST: Should BlueScope get an explicit handout though from the Government? I mean, you’ve seen some governments in the past step in to save industries that are in trouble. Should there be an actual package?

PAUL O’MALLEY: The only way we can be successful is to be cost competitive. That lesson was learnt in the 1920s, the 30s, the 40s and the 50s. The only way we can get there is if we’re cost competitive. That is predominantly within our control, but there are some costs that we incur that do need to be removed from the steelworks if we’re to hit that target. I don’t think government handouts is the answer, I think the solution is about costs going down and that’s the only way we can basically compete with what is an infinite amount of steel that’s being produced around the world at the moment.

JOURNALIST: You’re talking about those costs, are you taking about things the Government can do? So other tax relief?

PAUL O’MALLEY: Basically costs that if we weren’t here we wouldn’t be paying, so specific examples - payroll tax is a big cost and we’re working through an appropriate process there – but it’s all about costs and if we can get the costs out, we can be competitive with the steel that’s being produced and sold around the world.

JOURNALIST: And what about trade arrangements, tariffs and that kind of thing? Do you feel like that would be of some assistance?

PAUL O’MALLEY: There’s bipartisan support for anti-dumping regimes. There’s been good discussion today about how they can be optimised. But the rules that we’ve got in place today are very good rules, they perhaps just need a little bit more sting, but I think that’s well understood. I think any other solution doesn’t work. That’s the bottom line. We certainly need to be more competitive in producing and selling steel in Australia. We believe we can do that but we’ve got to get the costs out.

IAN MACFARLANE: Any other questions?

JOURNALIST: Sharon Bird has said that the situation is urgent here. What urgent measures can we see in the next few weeks, next few months?

IAN MACFARLANE: Well Sharon’s contribution today was constructive and I’ve undertaken to go away and consider the issues that she raised. That requires me to have a discussion with other Cabinet Ministers and the Prime Minister, but she raised some good points and we’re prepared to look at all the issues that were raised in here. As I said at the end of the meeting, no issue is off the table but we do need to do things that aren’t sugar hits and quick fixes. We need long term solutions for this region. We need to build on the capital that is already here in terms of skills, we need to make sure that we bring industries here that are going to provide jobs for the Illawarra in twenty years’ time.

JOURNALIST: What extra federal resources can we expect?

IAN MACFARLANE: Well as I said before I came down here, I won’t be making any announcements today. I want to put in place a package in cooperation with the NSW Government. The NSW Government has an excellent jobs programme for NSW which targets this region. We want to build on that. We want to build on the skills programmes that are already operating and the Commonwealth has half a billion dollars in skills programmes that are very pertinent to this region.  The same in terms of developing innovation, again a half a billion programme that runs nationally. There are things that we can do for this region to actually assist in the acceleration of the uptake of those schemes, but it needs to be done carefully, otherwise it just gets scattered to the wind.

JOURNALIST: Some of the unions want to see some import tariffs put in place here to protect the local industry. Is there any movement that we can expect there?

IAN MACFARLANE: The future of this industry does not rely on tariffs. We’ve seen a reduction in the value of the Australian dollar which has had a far bigger competitive addition to the price of Australian steel than anything else. It’s raised the price of imports; it’s increased the value of the steel that we export. Tariffs are not the long term solution. We are looking for long term solutions. The industry understands that and BlueScope’s restated that again today.

JOURNALIST: What about our negotiations with China in terms of the Free Trade Agreement? Is that tying our hands in any way in terms of being able to protect local jobs?

IAN MACFARLANE: There is no connection between what is happening to the steel industry globally and here in the Illawarra, and the China Free Trade Agreement. What the China Free Trade Agreement does do, is give people in the Illawarra the opportunity to get jobs that are going to be there in twenty and thirty and forty years’ time in industries that are establishing themselves in this region and are already established in this region.

JOURNALIST: So what kind of task are we talking about? When are we going to see a plan for this region?

IAN MACFARLANE: Well you’re going to see stuff rolled out over the next month and then gradually after that. There is a very big proposal that’s being discussed between Senator Concetta Fierravanti-Wells and myself and the NSW Government which we’d prefer not to talk about just yet, but it would make a massive difference to this region and so the solution isn’t just one thing and it isn’t just one package. The Illawarra is very much in the focus of the NSW and Federal Governments and we will work to build on the natural strengths. This is a fantastic region, I mean look outside, beautiful landscape, beautiful seascape, in terms of the skills base that’s here, there’s an opportunity for this region to grow and we want to be doing everything we can to accelerate that.

JOURNALIST: So are there any details that you can reveal today as to the conversations going forward?

IAN MACFARLANE: Well I’d prefer not to because as I say, there needs to be a package. Anthony Roberts and I have had a discussion this morning, we’ve agreed on a couple of things, we have to get the sign off from his Premier and my Prime Minister, but the region can be confident that we are going to make sure that we assist both the immediate issues in terms of both the potential job losses at BlueScope, but also put in place programmes that’ll last.

JOURNALIST: You’re talking about infrastructure building though are you?

IAN MACFARLANE: I’m talking about a range of things and I’m not going to be specific (today).

JOURNALIST: Do you understand how frustrating that could be for the workers whose jobs are on the line at the moment though?

IAN MACFARLANE: I think what the workers get out of today’s meeting is that we’ve had the complete diversity and range of people representing this region.

We’ve had the trade unions, we’ve had Labor MPs, Liberal MPs, Senators, Mayors, we’ve had industries from right across this part of the world, and everyone is in agreement and there is no political point scoring. That would say to me if I was a worker, that the people that they elect to get this thing fixed, are working on fixing it and be confident about that.

JOURNALIST: What did you learn today that you didn’t know before?

IAN MACFARLANE: Well I learnt a few things. I guess every time I come down here I’m amazed not only by the region and what it has to offer, but also by the University and the potential it has to provide industries with new jobs. Look, I think it is a region which I think doesn’t sell itself well enough and I made a couple of suggestions inside about that. But the reality is we all need to work together.

JOURNALIST: Just on another issue if I could, Minister. The Prime Minister has refused to rule out a Cabinet reshuffle. Given the state of the polls, do you think that’s necessary?

IAN MACFARLANE: Well look, I leave that sort of speculation to the media. They have much wilder ideas than I could ever come up with.

JOURNALIST: And just on the humanitarian intake, do you think Australia should lift its overall intake to, particularly in light of what’s happening in Syria?

IAN MACFARLANE: What we need to do is take our share of refugees from all around the world. Now there is an immediate problem in terms of refugees coming out of Syria. Minister for Immigration Peter Dutton has been dispatched to Switzerland to deal with that issue. Australia takes more refugees per head of population than any other country in the world. They not only add to our national wealth in terms of a human resource to this country, but it shows that we are the most humanitarian country in the world.

PARLIAMENTARY SECRETARY TO THE MINISTER FOR SOCIAL SERVICES CONCETTA FIERRAVANTI-WELLS: Can I just add on that. This is my area of responsibility. I look after multicultural affairs and settlement services. Australia’s intake is now at 13,750 and will be going up to 18,000 by 2018. As the Minister said, we are amongst the highest countries that take the highest number of humanitarian entrants for settlement in Australia. Our settlement services are very good. It’s important though, when we do take people under our humanitarian programmes that we settle them and we settle them appropriately and that’s really the important thing here. That’s why we have a very well established humanitarian programme. It is amongst one of the best in the world and anyone that we do take will be looked after appropriately under those circumstances.

JOURNALIST: With respect, 2018 isn’t much use for Syrian refugees right now, is it?

SENATOR FIERRAVANTI-WELLS: Well the issue is that the Prime Minister has indicated that we will be looking at intake of people from that area as we have last year, within that 13,750, so there’ll be more announcements in relation to that.

[Ends]