JULIE DOYLE: Hello and welcome to Capital Hill. I’m Julie Doyle. Ford’s decision to cut hundreds of jobs in Victoria has put debate about Government handouts to the car industry at the front and centre again. Today we’ll discuss car subsidies and are they worth the cost? Joining me, in Melbourne, we have Labor MP Kelvin Thomson and, in Adelaide, we have Liberal Senator Simon Birmingham. Good afternoon to you both.
KELVIN THOMSON: Good afternoon, Julie, Simon.
SIMON BIRMINGHAM: G’day, Julie, Kelvin.
JULIE DOYLE: Now, let’s start on this issue of Government handouts to the car industry. Kelvin, these job cuts are happening in your state, in Broadmeadows and Geelong. The Federal Government recently gave Ford around $34 million back in January. Was it worth it, given what we’re seeing now?
KELVIN THOMSON: I believe so, Julie, and I think it’s a bit rich that the automobile industry gets constantly singled out in relation to industry assistance when, in fact, industry assistance overall last year was of the order of $9 billion across the industries by way of tax concession and direct subsidies. You’ve got a $2 billion diesel fuel rebate going to the mining industry. Over the course of the last 15 years, a quarter of the direct assistance went to agriculture by way of drought relief. You’ve got jobs packages in the coal industry, all sorts of industry assistance going on, and yet the automobile industry gets singled out. Secondly, the level of assistance in Australia is modest compared with that in other countries. Ours is about $18 per person but in other countries Germany, the US, the UK, France, Sweden the assistance is much more so I think that our assistance needs to be put into perspective and, thirdly, the reason why the automobile industry is suffering and Ford is suffering is because of the high Australian dollar which is brought about by the mining boom and it’s all very well for commentators to say that people should go out of the automotive industry and into the mining boom but the question is: do those mining companies want those mining companies want to employ Australians? I had a grandmother in my office a couple of days ago in tears because her grandson, with… dux of his school, a Bachelor of Science, finishing a Masters in Electrical Engineering, had applied for 47 jobs and hadn’t got one so I don’t think that it’s correct to say that people will just be able to move out of the manufacturing area, move out of the automotive sector, and into the resources area.
JULIE DOYLE: Well, Simon, I want to bring you into the discussion as well because we’ve seen a significant package for Holden in South Australia, in your home state. What do you think of these kind of investments, this kind of money that we see going into the car industry?
SIMON BIRMINGHAM: Well, Julie, I worry about this package for Holden because I’m concerned that there are no guarantees about the jobs on the end of it and we’ve now seen a situation where millions of dollars have been given to Ford and job losses have occurred and they’ve occurred because, to be frank, Ford is not making a product that Australians want to buy. You can come up with all manner of other reasons and there are certainly cost pressures and there’s an impact of the dollar and there’s an impact of the carbon tax but, of course, they’re just not selling cars and it doesn’t matter how many millions of dollars you give them, ultimately you’re giving them millions of dollars potentially to keep making a car that people don’t want to buy which is why they end up laying off staff anyway. We need to find a way…
JULIE DOYLE: So should we be continuing to prop them up, then? Should we be continuing to give this money to them, Simon?
SIMON BIRMINGHAM: Well, indeed, Julie, we need to find a way to get out of this. Now, that doesn’t mean you pull the rug out from underneath them quickly but it does mean you actually are open as a government and say ‘this is not a never ending process, you can’t keep coming back every few years and asking for more money from the taxpayer’ because the taxpayer pays or the consumer pays through higher car prices somebody in the economy, somebody in Australia, ultimately always pays for these handouts that go into the pockets of multinational car companies so you need to find a way to say ‘we’re going to transition you, as an industry, to have to stand on your own two feet.’ That’s what we should aspire for for all industries. Kelvin wants to compare, of course, drought assistance for farmers with this type of car industry support. Well, I don’t think the two are directly comparable and I think Kelvin needs to be a bit careful about how he compares, really, apples and pears in cases like this.
JULIE DOYLE: Kelvin, should there come a time when the car industry should be weaned off these subsidies? Do you see a time when the local car industry here will be able to compete and be efficient?
KELVIN THOMSON: Well, I think it would be very foolish if we were to withdraw the assistance now as the Coalition is proposing to do…
SIMON BIRMINGHAM: That’s not what I said at all, Kelvin.
KELVIN THOMSON: Simon says we shouldn’t pull the rug out from under out from under them. The Coalition policy is to withdraw financial support from the automotive sector. That would lead to local job losses. It would be bad for Victoria. It would be bad for research and development, bad for our engineering capacity and, ultimately, bad for our national independence.
SIMON BIRMINGHAM: You’re… Let’s be very clear here. What Sophie Mirabella and Tony Abbott have said is Coalition policy is: if we’re giving the car industry money, we want some certainty and some guarantees in return. The Gillard Government keeps giving them money and job losses keep occurring. That is hardly a sensible outcome or a good outcome for Australia.
JULIE DOYLE: Well, Simon, the Coalition is talking about cutting around $500 million from assistance, taking it back to levels it was at under the Howard Government, so do you think, though, that that will have an impact, that that will mean that there could be more job losses?
SIMON BIRMINGHAM: Well, we need to work through the industry on the details of these things but what is essential here, firstly, is that, if you’re giving industry money, you get something guaranteed in return you don’t just have this situation where job losses keep occurring but, secondly, that you do transition to industry standing on its own two feet. It’s not reasonable to say the rest of the world is doing it, therefore we should. That is not a sensible outcome on something like this. We should, if anything, be working with other western countries frankly, countries who equally can’t afford to keep propping up these car industries to say ‘let’s all get out of the business of doing this, let’s actually let this car industry stand more on its own two feet rather than governments right around the world doing so’ and let’s put that front and centre on the agenda at trade talks around the world.
JULIE DOYLE: So you’re happy with the reduction, then, that the Coalition is talking about?
SIMON BIRMINGHAM: I think we need certainty for this industry and certainty comes from saying ‘there’s only limited money, it will only apply in certain circumstances and we want to transition you to stand on your own two feet.’
JULIE DOYLE: Kelvin, there’s been a lot of talk that these industries, the car industry, has been hit hard by the high Australian dollar but they’re not the only industry that’s struggling with that impact. Why should the car industry be singled out here for special treatment?
KELVIN THOMSON: Well, my point, originally, Julie, is that it’s not being singled out for special treatment. You’ll see industry assistance packages in relation to coal, in relation to steel, in relation to agriculture and all sorts of other areas…
SIMON BIRMINGHAM: That’s because you put a carbon tax on those industries, Kelvin.
JULIE DOYLE: Well, the Coalition has still committed around $1 billion and committed to 2015. Simon Birmingham, what happens after 2015, then?
SIMON BIRMINGHAM: Well, hopefully by 2015 we’ve got in place the type of arrangement with the car industry that does transition them out of having to rely on government support. That is why we’ve said, all along, ‘let’s be open and clear with the car industry.’ One of the great failings of this Government is they’ve set up programs like the Green Car Innovation Fund and then they’ve pulled the rug on those programs. How on earth is the car industry meant to plan for the future with a government that keeps changing its own mind on these sorts of things? So we actually, in the Howard years, said very clearly there was an end date to this, there was a program we were going to work through. That’s the type of approach we want to take into the future as well.
JULIE DOYLE: Well, let’s move on to something completely different and The Australian Financial Review has a story on its front page today about a meeting of union leaders discussing a possible return of Kevin Rudd and saying that there was an acknowledgment that time is running out for Julia Gillard. Now, Dave Oliver from the ACTU [Australian Council of Trade Unions] has said that that report is plain wrong…
JULIE DOYLE: Simon Birmingham, no surprise that the Opposition have jumped on this report today but Dave Oliver has been quite clear saying that Julia Gillard got a standing ovation at the ACTU Congress and nothing has changed since then so are you just blowing this of proportion?
SIMON BIRMINGHAM: Well, isn’t that very polite of the ACTU to give the Prime Minister a standing ovation but we’re not blowing this out of proportion the Financial Review are the ones who ran this story and they’re not part of the so called ‘hate media’. They’re part of the Fairfax press so they’re the ones who’ve actually broken this story that the faceless men of the union movement who control, of course, so many of the MPs in the Labor caucus are the ones who don’t think they can win the next election under Julia Gillard, who are effectively putting up a $4 million bribe, in campaign funding for the Labor Party, to say ‘ditch the Prime Minister, give us a change, and then we might fund your campaign against the Coalition.’ This is the dirty way things work in Labor politics. It’s the dirty way things work between the Labor Party and the union movement and it just shows that this sad and sorry saga looks like continuing to limp along all the way until whenever the next election is and that really is just unfortunate for Australia that we have a Government that is controlled by people who are so focused on the Prime Ministership rather than on getting on governing for the good of the country.
JULIE DOYLE: Does a union campaign, though, scare you at all, Simon Birmingham, given how successful they were in their campaign against WorkChoices?
SIMON BIRMINGHAM: The union movement will run a fear campaign against the Liberal and National Parties at every single election. They always do. They always will. We will have to counter it as we always seek to.
JULIE DOYLE: And that’s where we’ll have to leave it for today, I’m afraid. Simon Birmingham in Adelaide and Kelvin Thomson in Melbourne, thank you both very much for joining me.
KELVIN THOMSON: Good to talk with you.
SIMON BIRMINGHAM: A pleasure, Julie.