Fairer trade a hot-button issue at auto summit

The importance of Australia having fairer trading conditions with regional markets was drummed home to prime minister Julia Gillard at an informal automotive summit in Melbourne last Friday.

But GoAuto has learned there were neither requests for, nor offers of, extra financial assistance for the industry, according to someone who was in the room.

However, there were calls for all state governments to purchase more locally made cars to boost volume for the remaining two car-makers.

The prime minister even made an undertaking to raise the possibility of all state governments and government authorities being asked to buy Australian-made cars at the next Council of Australian Governments.

After the meeting, Industry and Innovation minister Greg Combet indicated that he saw government purchasing decisions as a major element in the industry’s survival.

In a stand-up press conference after the summit, Mr Combet suggested that a further 8000 to 10,000 locally made vehicles a year could be sold if other governments lifted the proportion of Australian made vehicles in their fleets to the same levels as seen in the Commonwealth, Victorian and South Australian fleets.

“One thing that would be enormously helpful would be for other states and territory governments … to lift the number of Australian vehicles in their fleets,” Mr Combet said.

However, an industry source said that Queensland premier Campbell Newman had already dismissed this notion, saying that Queensland would continue to buy on price.

GoAuto was told the prime minister was “very switched on” about the issues at the summit and was keen to hear from everyone in the room.

“She was very open. It was a very positive meeting,” the source said.

Everyone in the room reinforced the need to encourage the purchase of more Australian vehicles.

Nobody laid any blame for the industry’s current position on the carbon tax. In fact, the carbon tax was not raised during the meeting, the source said.

But the issue of access to regional markets has caused major aggravation for the local car manufacturers and parts-makers ever since Australia signed Free Trade Agreements with Malaysia, Singapore and Thailand. It is currently negotiating a free trade agreement with China.

There was discussion around the need to raise exports as a means of increasing production, but this highlighted the poor access Australia has to nearby markets.

One of the car-makers – the source declined to name which one – suggested at one point that Australia should impose the principle of reciprocity on its trade partners.

This means that, if another country wants access to our vehicle market, then they must grant access to their market on the same terms.

At the moment, for example, Thai factories send more than 170,000 vehicles to Australia under the FTA, but Australian plants send scarcely more than a handful back.

This is because Thailand maintains heavy tariffs and also because it has backed these up with high sales taxes on vehicles with engine capacities greater than 3.0-litres.

However, the federal ministers were firm in their support of FTAs, according to our source.

Furthermore, said the source, “we had a really good discussion on the supply chain issue and the problems the supply chain is facing, and the implications of the Ford decision on the supply chain”.

“We talked about diversification and the need for consolidation within the industry.” The source said it was pointed out that the supply chain was already in difficulty on volumes before the Ford decision was made.

“That was obviously a huge issue for everyone.” Politicians in attendance were the prime minister, minister for Industry and Innovation Greg Combet, minister for Employment and Workplace Relations Bill Shorten, Victorian minister for Manufacturing David Hodgett and South Australian minister for Manufacturing Tom Kenyon.

Also in attendance were the federal member for Corio – which includes Geelong – Richard Marles, and the federal member for Calwell – which includes Broadmeadows – Maria Vamvakinou.

Car industry executives included GM Holden chairman Mike Devereux, Toyota Australia executive vice-president Dave Buttner and Ford Australia president Bob Graziano. The Federal Chamber of Automotive Industries was represented by executive director Tony Weber.

The parts industry was represented by Mark de Wit, chief executive of Futuris Automotive, and Richard Reilly, executive director of the Federation of Automotive Products Manufacturers.

Union leaders included Dave Smith, secretary of the vehicle division of the Australian Manufacturing Workers Union and Dave Oliver, secretary of the Australian Council of Trade Unions.