STEVE CANNANE: Our panel tonight: Miriam Lyons from the Centre for Policy Development, Marius Benson from ABC NewsRadio, and economist and contributing editor to The Australian newspaper Judith Sloan.
STEVE CANNANE: Well, the future of Australia’s car industry has become the latest battleground for Labor and the Coalition. The Opposition has promised to scrap half a billion dollars worth of subsidies and that’s causing some internal divisions, so today Julia Gillard visited the Ford factory in Broadmeadows, Victoria, to announce a new $34 million rescue package creating 300 jobs and she used that opportunity to have another dig at Tony Abbott.
JULIA GILLARD: That’s good news for people who are going to get that work. It’s good news for people who rely on car manufacturing for their livelihoods and it’s good news for Australian manufacturing overall. Premier Baillieu a Liberal Premier has joined with us in these endeavours and I thank him for that. In contrast, Tony Abbott is saying no to the jobs of these Australian workers, simply saying no to them having their jobs. Now, that is an irresponsible approach.
STEVE CANNANE: The Manufacturing Minister, Kim Carr, says a financial support package for Holden should also be finalised within two months for investment beyond 2016. He says the car industry is vital to Australia’s future.
KIM CARR: A million Australians are employed in manufacturing and the foundation stone of manufacturing is the automotive industry. We have the capacity in this country to be able to be part of the great global industry and to remain part of it but it requires investment, new investment. It needs constant attention. It’s not a ‘set and forget’ policy area. It’s an area in which we must work closely with everyone involved to maintain our international competitiveness.
STEVE CANNANE: Marius, a quick comment from you on the politics of this. Is Labor trying to wedge the Coalition? Because there does seem to be a bit of division over the car industry subsidies within the Coalition.
MARIUS BENSON: I think the Coalition are self-wedging on this. There is a genuine division in Coalition ranks between free marketeers who say ‘we really should scrap that half a billion dollars, as we’re now promising, from the car transformation scheme [Automotive Transformation Scheme]’ and those who want protection and Tony Abbott is seen as being in the protectionist camp. He’s seen as being much in line with Barnaby Joyce, who wants to see protection all around, and it’s a genuine division in Coalition ranks. It plays directly into the leadership issue, too, of where Tony Abbott is leading the party.
STEVE CANNANE: Well, let’s hear from a member of the Coalition. Simon Birmingham is a Liberal Senator for South Australia, a state that has had… for a long time relied on the auto industry for jobs, particularly in Adelaide’s northern suburbs. In an opinion piece in The [Australian] Financial Review today he argues the car industry subsidies need to be abolished through global trade agreements. Simon Birmingham, welcome to The Drum.
SIMON BIRMINGHAM: … [unclear] to be with you.
STEVE CANNANE: Before we talk more about your ideas, can you tell us, what is the Coalition’s policy on government assistance for the car industry? Does the Coalition support these kind of subsidies that the Government announced today?
SIMON BIRMINGHAM: Well, John Howard had a pretty clear policy in government and that was to further reduce tariffs, to further reduce entrenched protection, but to have some assistance and transitional support for the car industry as those tariffs were reduced and that was a package in place through til 2015. What we’ve seen, by contrast from this Government, is a lack of certainty for the industry. They’ve put in place funding, then over the course of this term of office they’ve withdrawn up to a billion dollars in different support measures for the car industry, now they’re talking about putting more back on the table, and so this uncertainty has absolutely got to cruel the industry. I’m sure the industry would rather at least have certainty for the future about where they’re going than the comings and goings of Labor saying ‘you can have a Green Car [Innovation] Fund, you can’t have a Green Car Fund, you can have ‘cash for clunkers’ [Cleaner Car Rebate Scheme], you can’t have ‘cash for clunkers’ and, oh, by the way, you’re going to have to pay $50-60 million in carbon tax costs over the next few years.’
STEVE CANNANE: But is there uncertainty in the Coalition policy because it’s thought that the Coalition policy is to scrap $500 million worth of subsidies but leaks have come out of the Coalition’s internal review suggesting that that’s going to be overturned that review that was being done by Sophie Mirabella and also Ian Macfarlane.
SIMON BIRMINGHAM: Well, the Coalition and Sophie will present, as the Shadow Industry spokesman, and Joe [Hockey] as the [Shadow] Treasurer and Shadow Cabinet including Ian, will present our final policies before we go to the next election. Let’s not forget, here, that nobody even knows what the deal with Holden is. Nobody knows what it entails so the Government, in a sense, is trying to create this false debate, create this wedge, without even knowing what type of money we’re talking about into the future, so I think let’s deal with facts here and we’ll see some facts on Holden in the coming months, I trust that’s what Kim Carr says and we’ll certainly release our policies in due course before the next election.
STEVE CANNANE: Sure, but it would be hard for your Leader, would it not Tony Abbott, who’s spent most of the last 12 months touring around blue collar workplaces talking about the job losses due to the carbon tax if he was to axe $500 million worth of subsidies to the car industries? Wouldn’t it be hard for him to argue with that, given what he’s been doing for the last 12 months talking about blue collar jobs?
SIMON BIRMINGHAM: Well, let’s understand the first point there we will axe the carbon tax and that will make the car industry better off. I mean, the first thing you should be trying to do for manufacturing, or in fact any industry sector in this country, is to have a domestic foundation that allows competitiveness, that makes things as competitive as possible, so if you don’t have a carbon tax, if you have the type of frameworks in your economy that allow industries to genuinely compete, well then you probably don’t need the type of subsidies and assistance that this Government is being dragged to provide because, of course, Australia’s car makers will be worse off under this Government with a carbon tax than they would be compared to their competitors overseas who don’t have that type of cost in place.
STEVE CANNANE: Alright, well, let’s talk more about the auto industry and what you wrote in the ‘Fin Review’ today. Tell us more about your ideas about how to get rid of these kind of subsidies.
SIMON BIRMINGHAM: Steve, I think, as the panel was discussing just before, this is a global problem and there’s this global game of one-upmanship that goes on, where car companies go from government to government and they say ”so and so’s giving me X-hundred million dollars or billion dollars to set up a plant here or to keep my plant here and my operations here’ and, frankly, these are governments that, around the world, just can’t afford it. Kim Carr likes to prattle off, and Marius mentioned it before, the list of examples, talking about the United States, talking about European countries. These countries are all deep in debt, running significant deficits, and, like Australia, are talking about trying to bring their deficits back down. None of us can afford to be transferring taxpayer dollars to these companies, so let’s look long term, wisely and smartly, about how to get out of that and, while global trade talks are never perfect and they can be slow and clunky, there has been global success over the years on reducing tariffs and quotas around the world. Let’s do the same for this type of non-tariff protectionism. Let’s find ways to get some global agreement on how to end subsidies for industries that should be able to stand on their own two feet, and let everyone compete on something closer to a fair playing field.
STEVE CANNANE: Miriam?
MIRIAM LYONS: Look, first up, Senator, let’s be clear on what the real link is between the carbon tax and subsidies for the auto industry. Unpriced pollution is a form of subsidy. It’s about transferring wealth from everybody who has to pay for the cost of the pollution from future generations directly to those polluters, so, you know, I was very impressed, actually, in the article that you wrote today, about your consistency on the line that, you know, global cooperation should come first. I’ve seen a lot of people argue that, you know, ‘we shouldn’t go it alone on climate change’ and then turn around and argue ‘well, we should go it alone on free trade because it’s the right thing to do’, so the consistency of calling for global cooperation to come first there is a good thing. Look, I think it’s a great idea, actually, to do an international negotiated, you know, ramp down of subsidies to the auto industry. Why stop there? You know, why not do an international negotiation to stop mining companies from holding countries to ransom, threatening to shift jobs offshore if they’re taxed fairly for the resources?
JUDITH SLOAN: Um, Steve… Steve?
STEVE CANNANE: Yeah, sorry, Judith, yeah? You’re wanting to get in now? I’ll just get Simon Birmingham to respond to what Miriam said there first.
SIMON BIRMINGHAM: Well, I think in terms of actually broadening debate, that is obviously a smart thing to do. Governments should be focused on the core things that governments should be doing and that doesn’t really relate to propping up different industries or providing favours to different industries, so if you can have a genuine global conversation, through the G20 [Group of Twenty Finance Ministers and Central Bank Governors] or appropriate fora, about how to end this spending by governments on industry, then that’s a really good thing and that’s certainly, the car industry seems a good place to start and at this very point in time, when governments around the world including Australia are dealing with debt and deficit issues, now’s surely the time to have that conversation.
STEVE CANNANE: Okay, Judith? You wanted to come in here?
JUDITH SLOAN: Yeah, I’d just like to pick up on something Miriam said which is actually not right because the thing is that, for a country to liberalise its trade, there are unilateral benefits. There is actually no need to create a global agreement. The absolute reverse is the truth with the carbon tax there are no benefits in going it along; there are only costs and that’s the point I think Simon’s making. You know, we’re way out there. We’re imposing a cost not just on the car industry and manufacturing, in fact a whole lot of Australian industry, and there are no benefits, so I mean I’m absolutely adamant that you cannot draw a parallel between trade liberalisation and imposing a carbon tax. You ask any economist they are not an appropriate parallel.
STEVE CANNANE: Okay. Quick response, Miriam?
MIRIAM LYONS: First, we’re not actually going it alone. I was making a parallel with the Coalition’s argument there but that’s actually not true we’re amongst dozens of countries who’ve already imposed some kind of price on pollution…
JUDITH SLOAN: Nothing like us. Nothing like us.
MIRIAM LYONS: Secondly, there are very well demonstrated benefits of regulating in the same direction that the rest of the world is going to regulate in because your domestic companies develop an advantage. It’s pretty clear that the rest of the world is going to have to act on climate change at some point if you assume that, you know, humanity doesn’t have a death wish, so…
STEVE CANNANE: Okay, back to the auto industry. Marius, you’ve got a question for Simon Birmingham?
MARIUS BENSON: Yeah, just to ask, is… for all of the uncertainties of the review that’s underway with Sophie Mirabella and Ian Macfarlane and that review going to Shadow Cabinet and so on… is it definite that the Coalition, the next Coalition Government, would cut auto industry subsidies? Because the Labor Government is going to say ‘beauty, Tony Abbott, put on your fluoro vest, go outside Broadmeadows and announce that!’
SIMON BIRMINGHAM: Well, Marius, what is definite is that we’ll provide some certainty to the auto industry. We won’t…
MARIUS BENSON: But is the certainty a reduction in subsidies?
SIMON BIRMINGHAM: … pull the rug out from underneath them. Well, Marius, I hate to say it. I’m not the Shadow Industry Minister. I’m not the Shadow Treasurer. I’ll let them talk about our policies as and when it’s appropriate to release them and, as I said before, let’s actually see what the deal with Holden is. Let’s not buy into this debate just at present that the Government is trying to create about whether we are ‘for or’ something about which nobody has seen any of the detail. Let’s see whether it’s a deal that actually does ultimately get us to a point where the Government isn’t constantly subsidising industry because that surely should be the goal that everybody wants. I’m not sure it’s a goal Kim Carr wants he’s said that you can’t buy a car industry; you can only ever rent it. Well, that doesn’t sound like a sustainable argument to me. I think we should have an objective to have industries in this country that can stand on their own two feet, operate in a global marketplace that is as fair as possible… so let’s work towards those end goals.
STEVE CANNANE: Okay, Senator Simon Birmingham, thanks very much for joining us on The Drum.
SIMON BIRMINGHAM: A pleasure, Steve. Thanks, mate.
STEVE CANNANE: Okay. See you later.