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FUTURE OF AUSTRALIAN MANUFACTURING IS ALL ABOUT CHOICES

20-11-2015
by 
in 

By Senator Kim Carr

 

Prime Minister Malcolm Turnbull has said that he is open to suggestions about how to support manufacturing in Australia as the end of car making draws closer.

He has also hinted that the $900 million the Government wanted to cut from the Automotive Transformation Scheme (ATS) could be made available to the wider manufacturing sector.

If Mr Turnbull is serious, there are existing proposals he could take up.

An inquiry into the auto industry by the Senate’s economics committee has recommended that the Government expand the ATS to help component makers diversify before vehicle production ceases.

If Australia is to remain a nation of high-wage, high-skill jobs, it is vital that we retain the industrial capabilities these firms possess.

The Senate inquiry’s interim report calls for ATS funding to be maintained through to the end of 2021, as provided for in the ATS Act.

It recommends that any underspends from phase 1 of the scheme, which ends next year, be reallocated to phase 2, which runs to 2021.

The report also recommends that the ATS be redefined as a broader, advanced manufacturing, design and engineering program.

The scheme would still be automotive-related, but the aim would be to preserve skills and capabilities, and to mitigate the loss of jobs by encouraging diversification in the supply chain.

The Prime Minister and his Industry and Innovation Minister, Christopher Pyne, should be under no illusions about how many people’s livelihoods are at risk.

Modelling by the University of Adelaide estimates that the shutdown of car making will rip a $29 billion hole in the economy – about 2 per cent of GDP – and result in the loss of 200,000 jobs.

Having goaded the car makers into leaving, the Government surely bears responsibility for dealing with the impact of their decision.

This is not just crisis management – it cannot be about nothing more than a short-term, political fix.

It must be about making the right strategic choices for the long-term economic future of Australia.

The ATS is an instrument that can be wielded effectively to that end, especially if it is amended as the Senate inquiry recommends.

At present the scheme’s strict eligibility criteria mean that only about $100 million of the available funds are likely to be spent.

The inquiry has proposed that eligibility should be broadened so that it encompasses all types of vehicles, not just passenger cars and light commercial vehicles.

The annual registration requirement should be removed, to allow ease of movement between registration categories.

So should the requirement that participants in the ATS should not be granted registration under National Interest provisions for more than two successive years.

Motor-vehicle producers should remain eligible through to their shutdown dates, to ensure an orderly transition.

Companies should also be allowed to claim for research and development relating to non-automotive industry sectors, to help facilitate transition out of motor vehicle production for those firms that choose to do so.

These changes would allow the ATS to be used much more flexibly in responding to the needs of an industry and an economy in transition.

I have always said that Australia does not have a choice about whether to have a manufacturing sector.

The choice is about what kind of manufacturing we should do, and the answer to that will depend on government policy.

Policymakers need to redefine what they understand the automotive industry to be.

Securing new investment into the future will rely on our ability to maintain the world-class automotive skills and capabilities Australia has developed over generations.

I am confident that there will be an automotive industry beyond 2017, and that it will involve manufacturing in some form.

Automotive manufacturing needn’t only be about making passenger vehicles.

The Prime Minister is fond of saying that this is an exciting time to be Australian, and so it is.

It is exciting – and challenging – because we are taking responsibility for our future.

The hard work of shaping that future had already begun before Mr Turnbull issued his recent request for suggestions.

I commend the Senate’s auto inquiry to him – he’ll find that it has suggestions aplenty.

 

Senator Kim Carr is Shadow Minister for Higher Education, Research, Innovation and Industry

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