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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2012-11-13 Daily Xml
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MANUFACTURING SECTOR

Mr SIBBONS (Mitchell) (15:25): I rise today to speak about a topic that is very close to my heart, that is, the future of the vehicle manufacturing sector in Australia. The announcement last week that Holden is shedding 170 jobs, combined with components manufacturer Autodom going into receivership, was a depressing deja vu moment for me. In my mind, there is no doubt that without the co-investment by the state and federal Labor governments the Holden plant at Elizabeth would have closed. There is no doubt that had we not invested in this sector we would now be looking at the loss of thousands of jobs. Perhaps less well known is that had we not provided this investment we would now be experiencing flow-on effects in other sectors, such as science and defence.

The good news is that we have, for the moment, provided the support which is critical to Holden's survival. However, there is much more that needs to be done. Our vehicle industry is at serious risk of failing without further intervention, stimulus and support. Australia has one of the lowest per capita government co-investment models of any vehicle-producing country. Our vehicle market is one of the most competitive and open in the world. Of the one million cars sold in Australia last year, 86 per cent were imported, with 20 per cent of these attracting no tariff at all and the remaining imports attracting a 5 per cent tariff—again, one of the lowest in the world.

Japan, Korea and Germany all have a tariff. Countries like Germany and China offer consumers VAT rebates when a locally produced vehicle is purchased. The Thai government has introduced a tax rebate scheme worth 30 billion baht, approximately $A1 billion, to support first-time car buyers. These are just some examples. In a report released in February of this year, the Department of Foreign Affairs and Trade noted that Australian manufacturing exporters face a range of non-tariff barriers in Asia, as well as foreign tariff barriers and quantitative restrictions on Australian exports of manufactured goods.

While working to reduce these, the report notes that negotiating on these restrictions is complex and it will inevitably involved encouraging countries to change their domestic regulations. So, protection of domestic vehicle manufacturing is well and truly established among our competitors in this sector. You do not have to be an economist to see that in our rigorous and righteous pursuit of free trade we are gradually and inevitably steering a course that will see our vehicle industry die a slow death, because our auto sector is not, in any way, shape or form, trading on a level playing field.

There is a reason every country which makes cars from scratch has a range of government supports for its vehicle industry. The auto sector is one of the largest investors in research and development in the world. Vehicle manufacturing is increasingly high-tech and requires a high investment in training and skills. Where you have a vibrant auto industry other manufacturers tend to cluster, including defence and green technologies. The Burgen report estimated that Holden accounts for some 16,000 jobs in South Australia, contributes up to $1.5 billion in economic activity and up to $83 million in state taxation revenue.

So, we need, once and for all, to challenge the economic policy purists who shout protectionism as soon as the topic of industry assistance is raised. They are the economic dinosaurs. We need an equitable approach to the openness of our market and equalisation of our tariff and non-tariff protections. We need to use the revenue this would generate to provide co-investment and consumer incentives to purchase locally manufactured vehicles. As governments, we need to put our money where our mouth is and protect local jobs by turning around our government fleet purchases, which have fallen from 66 per cent locally made vehicles in 2004 to just 33 per cent in 2011. The warning signs for me are crystal clear; I have literally been there. The economic and social cost when plants the size of Holdens shut down are wide reaching and permanent. It is time that we got back in the game before we lose this vital sector forever.

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