More auto job cuts coming, but funding justified: Carr

GIVEN the state of the Australian dollar, further lay-offs in the auto industry are, unfortunately, inevitable.

The industry needs to reshape and buffer itself against the highest dollar since 1983, and very high government subsidies in competing markets.

This does not mean that support for the industry is wasted.

Last week, Holden chose to disclose the funding it has received from government over the past 12 years. And it got the economics club’s pulse racing. Nothing gets them going more than auto investment.

I’ve yet to see the same arguments applied to wheat, or sheep, or resources – sectors which benefit far more from public funding than auto.

Let’s start with the claim that this is money poured on sand – a sop to some nostalgic rev-head dream.

The fact that a country with some of the highest terms of trade in the world can still make export-class cars is phenomenal. We are more than just a mine, and our skills run deep. It is all the more remarkable when we put Australia’s investments in context.

The best available estimate of the cost for Australians is about $US18 per person per annum, less than the cost of a footy ticket. For Germans, it’s $US90 and for Americans, it’s $US96 – based purely on the level of federal government support.

A more accurate figure would take into account the billion-dollar deals done at state level, which ramped up substantially in the aftermath of the global financial crisis.

Our auto tariff is 5 per cent – compared to 10 per cent in the EU, 25 per cent in China, and up to 100 per cent in India. And let’s not be naive about where this game is really played – in the arena of monetary policy.

The Japanese government, for one, makes no bones about it. Prime minister Shinzo Abe declared Japan is pursuing a course of “bold monetary easing”. Cabinet documents confirm that these “aggressive” settings are intended to “facilitate the expansion of Japanese businesses in overseas markets”. Put simply, Japan is driving the price of the yen and exports down.

And the Obama administration is aggressively encouraging auto manufacturers to come back to American shores – they call it “onshoring” – using a range of tariffs, incentives and subsidies far more generous than Australia maintains.

That ought to remind us of the sheer resilience and leanness of local auto firms.

The Labor government is proud of its investment in auto.

That attitude used to be bipartisan. But the Coalition has already pledged to cut support to the industry by $500 million and has given no commitment beyond 2015. Leaks from Shadow Cabinet confirm the strong pressure for further cuts.

This is a capital-intensive industry. It relies on long-term investments underpinned by a clear and consistent message from the Opposition. If Abbott in opposition has been a threat to Australian cars, in government he could be fatal.

So I come to the final argument – the claim that auto has had its day.

Anyone who has walked into a car plant would know that the auto industry incubates vital skills and develops new infrastructure and technologies. It supplies the workers, the contracts and the innovations on which other manufacturing sectors rely.

Above all, it sustains the jobs that pay the mortgage and put the food on the table.

I defy any economist to tell me these are somehow unworthy concerns.

Today the Labor government is continuing to support vital technology development and product diversification within the sector. Work is being done to better integrate the local industry into global markets and attract new investment.

More can, and I trust will, be done to encourage state governments to buy locally.

This support for the industry continues through to 2018. That, at least, is the future Labor intends.

Australian industry leaders have said that 2013 could be the year Australia decides whether it wants a car industry or not. If Mr Abbott is successful we know what the answer will be.

Editor’s note: Senator Kim Carr was the federal industry and innovation minister from December 2007 to December 2011, and minister for manufacturing from December 2011 to March 2012.

Shadow minister for industry and innovation, Sophie Mirabella, has also been invited to contribute.