Car Billions Won't Stop All Job Losses

11 November 2008

A $6.2 billion blueprint to develop a greener car industry in Australia will not stop the immediate loss of jobs sacrificed to cheaper labour overseas and the global economic downturn.

Announcing the Federal Government's highly anticipated plan to transform the car industry into a font of green technology and jobs, Federal Innovation Minister Kim Carr said almost 30% of Australian vehicle components manufacturers faced "stress" and might be forced to sack workers.

"There will be downturns in the industry, there is just no way around that," Mr Carr said.

He said the Government's plan was not "crisis management", but rather a plan to take advantage of fundamental shifts in the global economy and improve Australia's manufacturing industry over time.

"It's about not sitting on the sidelines watching a disaster unfold," Mr Carr said.

The centrepiece of the Government's policy is a $3.4billion grant scheme to help the industry go green.

Applicants will have to demonstrate the environmental benefits of their project, and a commitment to training workers, before money is given.

In addition, the $500 million Green Car Innovation Fund announced in the federal budget last May will be expanded to $1.3 billion. "When the economy recovers, the climate change issues will still be there," Mr Carr said. "This is an opportunity to invest and adapt to the new concerns."

Prime Minister Kevin Rudd said that making the industry greener was the "next step" in the Government's response to the financial crisis following a $10.4 billion economic stimulus package and the bank deposit guarantee last month.

Mr Rudd foresaw a "green recovery" to the economic turmoil, achieved through investment in energy-efficient and renewable technologies. He said the vehicle industry was the centrepiece of the broader manufacturing industry - extending even to the nation's defence industry.

"Some might say it is better not to have an auto industry," Mr Rudd told a room full of current and future vehicle workers. "That is not my view. That is not the view of my Government and it will never be the view of any government I lead."

But shadow industry minister Eric Abetz said the plan missed "the biggest crisis currently facing the car industry" - lagging demand caused by the Government's luxury car tax and buyers' inability to obtain credit because of the global crisis.

And Tim Wilson, a research fellow with the Institute of Public Affairs, said the plan was "a ridiculous gesture ... to prop up an industry that is not economically viable".

Shannon Smith, 23, an apprentice at the Docklands' Automotive Centre of Excellence, said the assistance was a welcome sign of commitment.

"It looks like he's actually trying to save the industry," Mr Smith said. "Apparently, it's a dying trade."

Ford and General Motors in the US are reported to be on the brink of collapse, and the Australian industry continues to struggle to keep jobs from fleeing to countries with lower wages. Holden has already cut 1100 jobs, Ford 600 and Mitsubishi 100.

The package gained the support of the Australian Manufacturing Workers' Union.

"This package will stimulate investment, which means it will stimulate jobs," said AMWU federal secretary Dave Oliver. "Inevitably, there are still redundancies. That is not going to turn around overnight."

The new policy settings follow a review of the industry earlier this year by former Victorian premier Steve Bracks.

The Federal Government accepted most of his recommendations, including a cut to tariffs on vehicle imports from 10% to 5% in 2010.

Mr Oliver said it was imperative that, if tariffs were to fall, the Government must win better concessions in trade agreements.

The tariff cut, which Mr Bracks opposed as premier and then recommended in his review, has attracted harsh criticism from unions and from Mr Bracks' successor, John Brumby.

Yesterday, Mr Brumby embraced the federal plan, calling it a "great response" to the Bracks review.

Expectation of the new federal policy has for months delayed the release of a manufacturing statement by the Brumby Government, but Mr Brumby would not say yesterday exactly when the new policy would be unveiled.

COMPONENTS OF THE PLAN

$3.4 billion over four years to support the development of a greener industry.

$1.3 billion over 10 year for the green car innovation fund

Tariffs on imported cars cut to 5% in 2010

$116 million to help workers and companies through the shrinking of the components manufacturing industry

$20 million to help components companies that survive become stronger

$6.3 million to help market components for export

$1000 LPG grant to fit out new cars doubles to $2000

AND THE RESPONSE

MARK REUSS, HOLDEN

This announcement provides certainty for the industry, its 64,000 employees and hundreds of direct and indirect suppliers. Through the Government's commitment to doing what is right, local manufacturers will embark on a decade of innovation.

MARIN BURELA, FORD

The Federal Government's new car plan represents a significant and comprehensive package, with a number of key elements that have the potential to drive a paradigm shift in Australian automotive manufacturing.

CESAR MELHEM, AUSTRALIAN WORKERS UNION

This plan puts the component industry front and centre by improving their access to national and global supply chains, and creating job opportunities.

DAVID MCCARTHY, MERCEDES-BENZ

The drop in the duty is certainly very encouraging ...

The unfortunate component is that there does not seem to be any way that they have addressed the drying up of credit at the retail level. And the luxury car tax continues to dampen sales.

MAX YASUDA, TOYOTA

The Government's policy settings will assist the industry to evolve to meet this competition and build a solid base for future development.


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