Federal Chamber of Automotive Industries Annual Dinner

Federal Chamber of Automotive Industries Annual Dinner,9 April 2008, Melbourne

I’m delighted to have the opportunity to join you for tonight’s annual dinner, the first since the Rudd Government’s election late last year.

I would like to acknowledge the Kulin Nations, the traditional custodians of this land.

Ours is a government with a strong commitment to the car industry.

We understand its importance to Australian families as car buyers and car owners, as well as the wider importance of the car industry to Australia’s manufacturing base.

I feel a particularly close link to the car industry, with Toyota’s Altona plant located near my own electorate.

I’m also conscious of a bit of history as I speak to you tonight.

Many of you will be aware of how John Button guided the transformation of this industry when he was industry minister during Labor’s last time in office.

John’s death this week is a terrible loss to Australia, to the labour movement, and to all friends of manufacturing in this country.

The automotive industry owes its success over the past two decades in good part to the Button Car Plan, which brought down the high tariff walls and put the industry on the road to global competitiveness.

Of course, John always enjoyed a strong relationship with the FCAI, especially with Bill Dix as president, and with FCAI officials such as Ian Grigg.

I’m sure the same will be true under Minister Carr.

As you may know, John told many tales of dealing with the industry and the unions in the eighties and early nineties.

One of my favourites concerns the chief executive of Toyota in Australia during the 1980s, a man named Mr Tamura.

After Labor came to office in 1983, Toyota’s Japanese management was very concerned about the continuity of automotive industry policy.

Mr Tamura was despatched to visit John in his ministerial office in Canberra.

As John tells the story, Mr Tamura was a particularly polite and charming man, but his visit was remarkably short.

He sat down and simply said: "Minister, I know you are a very busy man. I will not keep you. I have only three words to say to you:Don’t change plan."

And with that, he got up, thanked the minister for seeing him, and left.

Fortunately for the industry, John didn’t take his advice.

He proceeded throughout the 1980s to implement the most far-reaching policy changes that the automotive sector had ever experienced.

But at the end of the decade, as he prepared to return home to Japan, Mr Tamura came to the Minister’s office to say goodbye.

He was a little more relaxed as they discussed at some length the success of the reforms.

As he left, he bowed politely, smiled to John and said: "I have three final words:Don’t change plan."

It’s not my role tonight to discuss our future plans for the industry.

I know that Steve Bracks has already spoken in some detail early today about his work on the industry review.

But you can be certain that the Government believes in the future of a globally competitive, innovative Australian automotive industry.

After all, this is an industry that employs 66,000 Australians and generated $5 billion worth of exports last year. It is a major investor in R&D and its activities drive demand across the economy.

The prospects for the automotive industry are of course greatly influenced by broader economic conditions.

As you are aware, we are in a more challenging economic environment right now than we have seen for many years.

Some five weeks from now we will be releasing a Budget that reflects our commitment to responsible economic management and to tackling the challenge of rising inflationary pressures.

In the longer term, our economic priority is to reinvigorate Australia’s weak productivity growth and to lift workforce participation.

The productivity and participation agendas are central to my portfolios of education, employment and workplace relations.

To lift productivity today, we need fair and balanced workplace laws.

To lift productivity tomorrow, we need a world-class education system.

The productivity agenda is so important because the only way to get the three things we want most – high growth, low unemployment and low inflation – is by boosting productivity.

If you grow quickly without increasing productivity, you soon come up against capacity constraints that generate inflationary pressures.

That’s exactly what has happened in Australia, with productivity growth below even the average historic levels throughout this decade.

A chief culprit in sliding productivity is our under-investment in the skills of the workforce.

Industry surveys continue to tell us that skill shortages are the major constraint on lifting business investment.

Yet as the Dusseldorp Skills Forum last year highlighted, each year around 45,000 to 50,000 early school leavers are not going into full-time work or learning, or a combination of the two.

Our school retention rate has fallen to 74 per cent, while many of our competitors have retention rates above 90 per cent.

The Productivity Commission has recently told us that better policies for early childhood, education, skills and workforce development could boost participation by 0.7 per cent, productivity by 1.2 per cent, and GDP by an extra 2.2 per cent between now and 2030.

The message couldn’t be clearer – we need to invest in skills, and we need to do it now.

That’s why the government has launched an education revolution – ranging from access to pre-school for all 4 year olds, to trades training centres and computers in schools, 450,000 new traineeships and halving HECS fees for students who do maths and science.

That’s also why we are establishing Skills Australia to identify skills needs across industries, and provide advice on how to fill them.

Automotive review

As I said, all my responsibilities are part of the same story – a story about participation and productivity.

This industry is part of that story, too.

Think of how much the industry has changed from what it was 25 years ago.

And then think ahead to how the industry will need to change to be competitive and healthy 25 years from now.

Today the industry is export-focused and innovation-driven. It is increasingly integrated into global supply chains. It has earned a place at the international table on the strength of its engineering and design.

Tough decisions have been taken and big investments have been made to improve efficiency and productivity.

The challenges facing the industry twenty years ago have been answered.

Now there are new challenges.

The high Australian dollar and the emergence of low-cost competitors are making it tough for all manufacturing exporters.

Rising petrol prices and environmental concerns are driving what KPMG calls a tectonic shift in consumer demand towards fuel efficiency.

New challenges require new answers. That’s why my colleague Kim Carr has asked Steve Bracks to conduct a review of the industry.

It is a pleasure to see Steve and other members of the review panel here this evening.

They released a discussion paper last week looking at local and global industry conditions, the current policy framework, innovation, skills and workplace relations, the environment, and vehicle safety.

The paper makes no recommendations. It is designed to stimulate debate.

The review has wide terms of reference, and it will be providing advice on every aspect of the industry – including how we deliver the government’s $500 million Green Car Investment Fund.

It is essential that people who really know the industry – people like yourselves – have a say in its deliberations. Submissions close on the 14th of May.

Conclusion

The government is investing in skills, infrastructure and innovation. It is fighting inflation and exercising fiscal restraint.

And it is working on how it can foster a positive environment for the future of the Australian car industry.

The Australian automotive industry has reinvented itself before, and I know it can do it again.

Global conditions will change, consumer demand patterns will change, and industry structures and practices will change.

But I am sure that there are many pages yet to come in the great story of the Australian automotive industry.

And I’m delighted that I have delivered these remarks without once making a lead-footed joke about how the Prime Minister appointed a minister named Carr to be responsible for your industry.

Thank you.