Ministerial Statement

GM HOLDEN

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Treasurer, Minister for State Development, Minister for the Public Sector, Minister for the Arts) (14:06): I seek leave to make a ministerial statement.

Leave granted.

The Hon. J.W. WEATHERILL: In March last year, the government negotiated with both General Motors Holden and the federal government an industry assistance package to facilitate the production of two all-new Holden vehicles from 2016. This package totalled $275 million, comprising $215 million from the federal government, $10 million from the Victorian government, and $50 million from the state government. The contribution from the state government was to be paid in two tranches of $25 million, the first in 2016-17, and the second in 2017-18.

In negotiating the agreement, the state government stipulated minimum employment levels, minimum production levels, and minimum local supplier content levels as terms of the agreement. We also required that GM Holden and GM participate in a working group to position the local automotive industry within the GM global supply chain and to assist the industry to diversify.

These conditions, amongst a range of others, were set out in letters between me and the managing director of General Motors Holden, Mike Devereux. The government's terms were agreed to by Mr Tim Lee, President, GM International Operations, by letter dated 20 March 2012. Mr Lee's letter confirmed that, as a result of the government support, GM had decided to proceed with its plan to build two all-new cars at Elizabeth in the second half of this decade with investment from GM of more than $1 billion and that this would result in Holden operating at Elizabeth until at least 2022.

The effect of this letter was set out in a document I tabled in parliament on 28 March 2012. The parties have since been negotiating on the details of the funding agreement, which is yet to be finalised, but the fundamental terms of our agreement are clear and in writing and are expressed in the exchange of letters. Yesterday Mr Devereux announced a reduction in Holden's Elizabeth workforce of 400 employees. This reduction is estimated to reduce the workforce to 1,750 full-time equivalents, putting Holden's in breach of one of the conditions that both parties had agreed to in the exchange of letters.

I am deeply frustrated and angered by the way the announcement of 400 jobs being shed has come about. Our first priority is to support the displaced workers. To that end, I met with senior Holden's shop stewards yesterday, I am meeting with government and industry representatives later today, and this has been a topic of my early conversations with Mike Devereux yesterday and today.

I have also met this morning with the mayors of the cities of Playford and Salisbury, to discuss an assistance program to support the economic and community resilience of the northern suburbs. I will have more to say on this in the coming days. I met with Mr Devereux yesterday, where he conceded that the effect of his announcement was inconsistent with our agreement, and that that the matter will require further discussion. I am meeting with Mr Devereux to commence those discussions later this week.

Mr Speaker, this government remains committed to an advanced manufacturing sector in South Australia, as we outlined in our economic statement. We see the development and production of a new-model Holden manufacturing operation in Elizabeth as an important contributor to this sector, along with the component and other suppliers to Holden's. We will approach our discussions with Holden with a view to continuing this important contributor to our community.

As Professor Barry Burgan reported, their operations support approximately 16,000 jobs in the South Australian economy and contribute up to $1.5 billion of gross state product. However, we will not be providing financial assistance to Holden without stringent and enforceable consequences for failing to meet employment, production and local content targets, as well as other conditions which contribute to a broader economic benefit to our state.

Given we have not paid any funds yet to Holden, I make it clear that we will not do so unless new acceptable terms are reached with Holden, and so this government is willing to provide this support for jobs, support for business, and support for the economy.

The SPEAKER: I call the member for Heysen to order, and warn her for the first time for forced laughter and continual interjection.