Federal industry review finally revealed

THE continuation of scheduled import tariff reductions, the inclusion of road transport in the proposed carbon tax scheme and a new $2.5 billion federal government assistance scheme are the key recommendations of Steve Bracks' crucial Review of Australia’s Automotive Industry released today in Melbourne.

In addition to the "retargeted" Global Automotive Transition Scheme (GATS), to replace the Automotive Competitiveness and Investment Scheme from 2010 to 2020, the report also recommends the $500 million green car innovation fund be brought forward to 2009 and, if successful, doubled to $1 billion and extended beyond five years.

Other key findings include a $60-$80 million industry restructure fund to improve supply chain economies of scale, expanding free-trade agreements especially with South Africa, ASEAN and Gulf nations.

Industry and unions were expected to criticise the backing of further tariff cuts in the 190-page review, commissioned by federal minister for innovation, industry, science and research, senator Kim Carr, on February 14, finalised on July 22 and handed to government on July 31.

Opposition industry spokesman Eric Abetz criticised the timing of the review’s presentation today, two weeks later during the Beijing Olympic Games, by Mr Carr and the former Victorian Labor premier Mr Bracks.

“Everything is determined by the news cycle,” he said. “And with the Bracks review, clearly there are elements in it that they must be concerned about, because there's no reason for not having released it immediately, and now to release it in the middle of the Olympics, they're trying to bury this report from the public's sight as much as possible.” Mr Bracks said his recommendation to continue with the scheduled reduction of the passenger motor vehicle tariff from 10 percent to five per cent by 2010, as had been widely anticipated, would make Australian car tariffs the third-lowest among the world’s major automotive producing economies.

Other key Bracks review recommendations included: • assisting the automotive supply chain to be more competitive • bringing forward, and doubling to $1 billion if successful, the Government's Green Car Innovation Fund • including road transport in a carbon pollution reduction scheme • encouraging automotive exports through expanded free trade agreements, particularly with the Gulf States, ASEAN and South Africa • expanding access to overseas automotive supply chains through a ‘Team Australia’ approach using eminent automotive ambassadors • harmonising, and in some cases reducing, state and territory passenger motor vehicle taxes, while encouraging governments to support an environmentally sustainable Australian industry and • establishing a new Automotive Industry Innovation Council to provide advice and oversight in relation to the new transitional arrangements.

Left: Kim Carr (top) and Steve Bracks. Mr Bracks said his review was supported by an expert panel and canvassed the views of a wide range of industry stakeholders, attracting more than 130 submissions.

It included productivity commission modelling of the economy-wide impacts of various industry assistance options, and consultation with the leaders of other current reviews, including into the National Innovation System and the textile, clothing and footwear industry.

Mr Bracks said the automotive industry is a major contributor to Australia's economy, which employed more than 64,000 workers and last year produced about 335,000 cars worth $7.7 billion, including exports of $4.7 billion - putting the industry among Australia’s top 10 export earners.

“There is no doubt that the industry is under considerable pressure because of the high Australian dollar, the cost of fuel, cleaner emission requirements and intense worldwide competition. Despite these challenges, the industry is transforming itself and my recommendations aim to assist that transformation out to 2020,” Mr Bracks said.

“But these challenges can be turned into opportunities. For example, responding to climate change is opening up possibilities for more fuel-efficient and lower-carbon dioxide emission technologies.

“The Australian industry also has the potential to be a bigger supplier to global automotive supply chains. The industry is responding to the challenges and opportunities, and is transforming itself in the process of doing so. Already, we have seen Ford and Toyota announce plans to build the Focus and Camry hybrid respectively here in Australia,” he said.

Senator Carr said the review, the recommendations of which aim to continue the trend of the Button Plan of the 1980s, when automotive tariffs were 57.5 percent, was asked to examine all the factors affecting the competitiveness of the Australian automotive industry and recommend strategies to overcome the barriers to success.

He said his government’s formal response would be released “shortly”.

“The Rudd Labor government firmly believes that there is every reason to be optimistic about the future of the nation's automotive industry if the right policy decisions are made now. This is what this review is all about,” he said.

“Mr Bracks has supplied a comprehensive and thoughtful report that provides the basis for making informed policy choices. The government's response will tackle the tough issues outlined in the report and will be released shortly.

“The automotive industry is strategically critical to Australia in terms of exports, employment and innovation. Our economy benefits from the investment, jobs, skills, research and development, innovation and the exports the industry generates.

“Cars integrate almost every advanced technology we use today. Mr Bracks finds that the industry needs to continue embracing global competition, but also acknowledges the challenges it faces, not least climate change.

“A range of new technologies is being developed to meet demand for low-emission, fuel-efficient vehicles, and no-one can say which technologies will succeed.

“This can be seen as a threat to the Australian industry – or as an opportunity to carve out a new niche in the international production system and secure critical export sales.

“Seizing the opportunity will require a new policy approach and that's what the Rudd Labor government will provide.

“I want to thank Mr Bracks, the review's expert panel members and all those who contributed to the review for providing such a comprehensive and thorough report in this very complex area,” said senator Carr.

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