I thank the member for Calwell for her contribution in this debate on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. I might disappoint her by not attacking the unions, but if she wants me to and invites me to then I might have a shot at them. It is great that the member for Calwell has the Ford factory in her electorate. I hope that the member for Calwell actually drives a Ford and supports the industry that employs people in her electorate.

When the car industry is spoken about in this place there is usually an eastern-centric focus, so today I hope to give a Western  Australian perspective. Eastern state towns like Geelong are often referred to as the manufacturing heartland of Australia. This is true: large-scale manufacturing in the east currently employs some 56,000 people, producing annually around 300,000 vehicles. However, to treat the large manufacturing plants as the only part of the Australian car industry would be wrong. There are many complementary industries across the country that rely on the success of the Australian car industry. In fact my electorate of Swan has 105 motor vehicle body and trailer manufacturing companies, six automotive electrical component manufacturing companies and 43 other motor vehicle parts manufacturing companies. The industry extends further with other organisations such as service providers that are reliant on local vehicle manufacturing.

The largest motor vehicle retailing company in Western Australia, the John Hughes Group, is located in my electorate of Swan. Just the other day my office was assisting The Tyre Factory in Cannington with their telecommunications problems. This is another type of company that is related to the motor vehicle industry. The point I want to make is that the success of these small businesses in my electorate depends on the success of the large-scale manufacturing in the east. They should all be considered part of the automotive industry. Automotive legislation considered by this place will therefore ultimately affect small business and jobs in Swan.

It is important that I rise today to speak on the Automotive Transformation Scheme Bill 2009 and the ACIS Administration Amendment Bill 2009. The coalition has always been a great supporter of Australia’s car-manufacturing industry, its employees and the three main motor vehicle producers in Australia: GM Holden, Ford Australia and Toyota Australia. The car sales strips of Albany Highway, Victoria Park and Albany Highway, Cannington are also in my electorate. These strips are littered with dealers who are household names in Perth. My electorate is also the transport hub of WA, and many companies use the suburbs of Kewdale and Welshpool to run their transport and subsidiary companies.

An issue for the manufacturing sector has been controlling job losses, fundamentally caused by improved technology as well as by job restructuring and training in order to work with the new manufacturing tools. The automotive industry operates in an extremely competitive international arena. Pressure has been put on the Australian car manufacturers over the past 20 years to reform to new technology and innovation, to become more flexible with industrial relations practices and to enhance the industry’s position by exporting our cars to overseas markets.

The previous government took steps to address this problem. It provided the automotive industry with certainty in moving towards a low-tariff environment. Under the Howard government’s ACIS program approximately $2.8 billion of transition assistance was provided to the Australian automotive industry between 2001 and 2005. In 2006 some 126,000 vehicles were exported to destinations including the Middle East, the United States, China, South America, South Africa, New Zealand and South-East Asia. Growth in the industry was present in 2006, when domestic automotive manufacturers exported 38 per cent of local production—this compared with only seven per cent of local production exported in 1990. As tariff levels declined, the Howard government helped the industry to compete internationally and to continue to export to foreign markets. In recent times, however, during a world economic downturn, demand for the industry has decreased and growth has declined.

I would like to now talk about the health of the big three car manufacturers in Australia: Ford, Toyota and Holden. Profitability between the three car manufacturers in Australia has been extremely varied over the past 20 years. Let us take Ford Australia for example. Ford entered the Australian car market back in 1904 with the Model T Ford, and 20 years later Ford’s first factory in Geelong was opened to locally manufacture the vehicle. An Australian designed and developed car came in the form of the Falcon in 1960. Since then Ford has been strong competition for other Australian manufacturers, and the Ford versus Holden debate has divided the nation for decades. It is part of the Australian culture. It is part of the fabric of Australia. It is like barracking for teams in the AFL.

I can remember as a young lad travelling to Bathurst in the late seventies to go and watch Moffat and Bond cross the line at Bathurst. I remember the might of the vehicles—Holden versus Ford—travelling down Conrod Straight, up the mountain and across the skyline. Often the trips up there were related directly to the Holden versus Ford debate. I remember a mate of mine, who I have often spoken to about this, Adrian Lawson, from the ‘Magic Men’, used to speak about the Fords and Holdens being rust buckets. That has been brought up recently as well in a state versus state competition for funding between New South Wales and Western Australia, and the Treasurer of Western Australia aptly called the state of New South Wales a rust bucket.

I will return to the subject of the day. Unfortunately, with the downturn in the world economy, Ford’s full-year financial result for 2008-09 was a loss of $274 million with a sales revenue fall of 7.4 per cent. Ford operates two plants, at Broadmeadows and Geelong, in Victoria and has around 4,500 employees and 230 dealers. In 2007 it produced around 68,000 vehicles. Only a small portion of some 5,000 units were exported that year. On 22 August 2008, Ford announced that production would be cut by 25 per cent, with some 350 jobs lost as a result of the downturn in vehicle sales. However, on 24 July 2009, the Australian and Victorian governments announced funding of $42 million would be provided to Ford to produce a new four-cylinder engine version of its Falcon. The catch, unfortunately, is that the engine will be fully imported, and Ford announced at the same time that it would not proceed with its proposed new, locally built Ford Focus plant at Broadmeadows. Although the Rudd government have been somewhat supportive of this motor company, they have in turn cost the Australian economy further job opportunities. It is disappointing that the new plant will not be opening.

GM Holden is a wholly owned subsidiary of the General Motors Corporation. With uncertainty surrounding the future of General Motors as well as the current downturn in vehicle sales, the company was hit particularly hard in recent months. Holden’s vehicle export program began in 1954 when FJ Holdens were shipped to New Zealand. The company has grown dramatically, exporting 36,534 vehicles in 2007, with plans to expand its export program. However, the axing of the Pontiac brand by General Motors had an adverse effect on these plans, as the Commodore was to be exported to the US under this brand. Rather than shedding staff, Holden asked employees to reduce shifts, change working hours, take forced holidays and take an effective pay cut. Its plant at Elizabeth in South Australia is now one of the most flexible automotive operations in the industry—an essential strategy to serve the diverse markets.

Mr Champion —Hear, hear!

Mr IRONS —I acknowledge the member for Wakefield’s cheering. Changes have also been made to Holden’s corporate structure, with Alan Batey set to take over the role of chairman and managing director on 1 September this year, succeeding Mark Reuss. With regard to local sponsorship, Holden has been extremely focused on providing its support to netball in Australia. Its broad commitment to the sport includes partnerships with the national team, the Australian Diamonds, the ANZ Championships, Holden International Test Series, all five state netball associations and various grassroots programs.

Mr Champion —And the Central Districts Football Club.

Mr IRONS —Yes. Thanks for the prompt, Member for Wakefield. I appreciate the support. Unlike Ford and Holden, the Toyota motor company has not yet looked at shedding or changing jobs as a result of the downturn in vehicle sales. Although figures show Toyota’s total domestic sales are down 40 per cent, exports to the Middle East are thought to be holding up well.

Before I continue, I would like to briefly acknowledge that Australia’s big automotive manufacturing companies have been and are still investing in local communities. Ford is one of the major partners supporting United Way, Geelong’s major charitable organisation. This organisation raises funds for over 60 vital health and human care agencies within the region. Commendably, the organisation has also recently set up a program in the Geelong plant where employees are entitled to two hours paid leave each quarter to visit the Red Cross blood bank to place donations. I also believe it supports the Juvenile Diabetes Research Foundation. As most people would know, Ford has terrific brand awareness, and this is used when sponsoring Australian sport. Ford is involved in cricket, AFL and the racing and surfing industries, having a particular focus on grassroots involvement. Ford has now been involved with the 2007 AFL Grand Final winners, Geelong Football Club, for 80 years.

The Holden team also run many great initiatives that give back to the local communities. They support the Leukaemia Foundation, providing transportation for patients to and from treatment facilities. GM Holden were in a similar financial position to Ford this year. Their engine plant at Fisherman’s Bend in Melbourne will close at the end of this year, with around 500 people losing their jobs. In December 2008 GM Holden reported a loss of $70 million, with the demand for Holdens down by nine per cent.

Toyota’s community spirit scheme involves working closely with Phillip Island Nature Park, providing support for conservation, education and research activities. Along with this, Toyota also partner with Conservation Volunteers Australia, an organisation that completes more than 200 conservation projects across Australia each year. As a strong supporter of conservation groups in my electorate of Swan, this is good to know. Maybe I could champion some of my local environment projects to Toyota. As well as these environmental schemes, Toyota are sponsors of the AFL and the NRL Cup 2009. They look to support Australian sport at a professional level as well as locally through youth involvement in the broader community.

I do have some concerns about the bill. As members will recall, on 10 June 2008 the Prime Minister and the Minister for Innovation, Industry, Science and Research, Senator Carr, travelled to Japan to announce funding of $35 million so that Toyota could manufacture a hybrid Camry in Australia from 2010. At a press conference shortly after the announcement of the grant, the Toyota president said, ‘We are not sure in what way we would like to use that amount.’ Further to this, a spokesperson for Toyota told the Australian newspaper when speaking about the hybrid Camry:

Since the funding was announced it has emerged that, similar to Ford, the engine for the hybrid Camry will be fully imported into Australia. While this generation 1 car is introduced to the Australian market, Toyota is planning to start building a generation 2 vehicle in the US, Japan and Europe. What is extremely concerning is that Senator Carr and the Prime Minister felt the need to fly all the way to Japan to boast about the $35 million provided to Toyota but tried to keep Holden’s $200 million loan a secret. As I understand it, the government only made this information available after questions were asked by a couple of journalists.

You may ask why this concerns the legislation we are discussing today. The green car fund, combined with the proposed ATS, will see the Rudd government proposing to provide an additional $3 billion to the Australian car industry. Economic analysts have expressed concern, one commenting:

The green car fund officially commenced in April 2009; however, the government announced funding for Toyota and Holden prior to this start date. This reinforces the coalition’s view that there should be more transparency when it comes to how the government is spending taxpayers’ money.

Secondly, the ATS is another example of a scheme designed by the Rudd government that contains no benchmarks or requirements for public reporting. I remember making a similar point during a speech about the Schools Assistance Bill last year. There is no outline of reporting how public money is succeeding in supporting the bill’s objectives, nor does it have accountability measures for such a large sum of money. Surely the Australian people have a right to be shown that their money is not going to waste, but rather to improve economic outcomes of the automotive industry. The bill proposes to commit $3.4 billion in total over a 10-year period—an increase of approximately $2.1 billion on what is currently committed through ACIS. My concern is that this spending would represent a blank cheque for some manufacturers.

What we are asking for is simply details of how the cash is going to be handed out and to whom. There needs to be a direct link between the level of assistance and the level of economic activity. Whereas the ACIS arrangement of duty credits provides assistance to the automotive industry, the new ATS will provide assistance in the way of cash payments, and hence for the first time this will be itemised in the budget papers. It should be the responsibility of the minister to submit a report annually to the parliament on the progress towards achieving the bill’s objectives. This is an important and sensible amendment for the Australian people and does not impact the benefit to the automotive sector in any way.

The current ACIS act provides about $500 million in duty credits to the automotive sector each year, and it is scheduled to provide more than $4 billion in subsidies between 2006 and 2015. Announcing an extension of the ACIS in 2002, the then Ministry for Industry, Tourism and Resources, Ian Macfarlane, said:

The ACIS provides credits for motor vehicle producers relative to production and investment. Credits for other services such as service providers and automotive component producers were also set in relation to their investment in plant, equipment and research and development.

All participants under the current scheme are eligible for funding from the capped pool of $2 billion over five years. If claims are to exceed the cap, the credits are reduced to keep the total credits within the cap. The second pool of funding is not capped but is only available to motor vehicle producers. This is estimated to cost $850 million over five years. In addition to all of this, under the current ACIS no participant can receive credits exceeding five per cent of their automotive sales in the preceding year.

The automotive industry also benefits from a range of policy measures in addition to these current ACIS funding pools. For example, there are industry-specific initiatives such as the fringe benefits tax concession on the private use of company cars. This is seen as significantly important to local manufacturers given their reliance on fleet sales. Purchasing preferences are also in place with some governments and statutory bodies for vehicles manufactured or imported by local vehicle producers. These purchases effectively provide a subsidy to companies with a local presence. General policy such as the Export Market Development Grants Scheme is also beneficial to the industry, as it provides taxable grants to reimburse up to 50 per cent of designated export promotion expenses, with a focus on small and medium enterprises.

In respect of the current downturn the automotive industry is facing, the opposition supports the provision of further funding to the industry to ensure its long-term sustainability in the face of lower tariffs and one of the most open car markets in the world. However, the ATS Bill, which has been put forward aiming to make the car industry economically and environmentally sustainable, does not focus on the economic outcomes. Minister Emerson said in his second reading speech on this bill in the House:

The outline of the ATS, however, does not set out economic stability as its aim. The ATS requires all participants to demonstrate two things: (1) progress towards achieving better environmental outcomes and (2) a commitment to developing capabilities and skilling the workforce at present. These requirements are welcomed; however, I feel the act should also incorporate a requirement to improve economic outcomes and this amendment should be made to the bill.

It is also my opinion that the ATS Bill is a piece of so-called coathanger legislation—that is, it contains very little detail, with the bulk to be included in the regulations and guidelines. The ACIS act, as previously mentioned, was introduced by the Howard government and is some 124 pages long. In stark comparison, this piece of legislation put forward by the Rudd government is a mere 18 pages. Containing the bulk of its information in the regulations and guidelines robs the parliament of a true view of the legislation and does not allow for any real opportunity to properly scrutinise and amend the material. This is of concern to me.

The bill does specify three main objectives: to provide assistance to participants for each motor vehicle and engine they produce, to provide assistance for investment in eligible research and development and to provide assistance for investment in plant and equipment. These three areas are also covered in the current ACIS, although the ATS would see them produced at higher levels to support the current downturn in the industry. Having said that, I say there are many details not included in the bill that should be stated and would be particularly relevant to be included in the papers—for example, the rate of assistance available for motor vehicle and engine production, debt recovery provisions, registration and deregistration, the right to an AAT review and performance clauses around ‘environmental outcomes’ and ‘workforce skills’.

In conclusion, there is no doubt that we must provide assistance to the Australian car manufacturing industry, as this industry is vital to the economy not only in Australia but in my electorate of Swan through em-ployment, exports, innovation and skills. There must be support provided to the automotive industry as it deals with the ramifications of the downturn in business. I urge the government to consider the coalition’s amendments, which are important and sensible and do not affect the benefits for the automotive industry. I believe it is of great interest to the nation for us to continue to assist the car manufacturing and automotive industry in Australia to hopefully see it regain strength after this difficult international economic situation. I would ask the Minister for Agriculture, Fisheries and Forestry to point out to the member for Calwell that I did not bash the unions once during this speech.