Minister visits Toyota in Japan for crucial talks

FEDERAL industry minister Ian Macfarlane has traveled to Toyota’s Japanese heartland to personally outline to the car-maker’s chiefs the terms of reference for the Productivity Commission inquiry into the Australian motor industry beyond 2016.

Toyota Australia president Max Yasuda and executive vice president Dave Buttner have also flown to Japan for the crucial meeting this morning at Toyota’s Tsutsumi Camry plant in Toyota City, near Nagoya.

The Productivity Commission inquiry is set to form the basis for the federal government’s on-going support for the local car industry – namely Toyota Australia and GM Holden and related parts suppliers – which is hanging in the balance.

Both Holden and Toyota say they need to make a decision by next year on whether they will invest in new models, for Holden from 2016 and for Toyota from 2018.

The terms of reference for the inquiry outlined by treasurer Joe Hockey and Mr Macfarlane today are: • The Australian automotive manufacturing industry's current structure, productivity, investment, profitability, international competitiveness, exports, workforce structure and practices, skills levels and long-term sustainability • The changing international automotive environment, including further potential for Australian made cars to be exported overseas, and the type and level of support provided to overseas manufacturers • The changing nature of domestic demand and consumer preferences, including demand for new products and technologies and • Australia’s attractiveness as an investment location for all phases of automotive manufacturing activity.

Mr Macfarlane has asked the commission to deliver an interim report by December 20, thus helping GM Holden and Toyota meet deadlines for decisions on the future of their Australian manufacturing operations later this decade.

The final report is due on March 31 next year.

Mr Mr Macfarlane has refused to be rushed into a final decision on government assistance for the industry, which is currently losing money at an unsustainable rate.

Before climbing on a plane to Japan last night, Mr Macfarlane told ABC Radio that the final review by the Productivity Commission would not be released until next year, possibly April or May.

He said the government would not commit to funding decisions until it had all the facts on the table, and that would not be possible until the report was in.

Mr Macfarlane said Holden might want an earlier decision, but he had made it clear that was not possible.

"They may not accept that readily, but that's the reality,” he said. “I'm not going to put in place long-term car plans without there being a full assessment of the situation.

"We can't just throw out a heap of money and hope we can fix it because that will inevitably lead to the failure of the car industry."Mr Macfarlane said the Productivity Commission guidelines would include an examination of government assistance to the car industry in other countries and the potential for greater export of Australian-made cars.

He said every other country in the world subsidised domestic car manufacturers, most much more than Australia.

"We want to get all those facts on the table so we can have a comparative position in terms of the expectations that the car industry has of Australian taxpayers supporting them into the future," he told the ABC.

Mr Macfarlane said: "We need to know exactly what everyone else is doing."While in Japan, Mr Macfarlane is expected to also join talks on the proposed free trade agreement with Japan – a development that will have major implications for the Australian motor industry.

Mr Macfarlane’s Toyota visit comes just a week after Victorian premier Dennis Napthine made a similar pilgrimage to Nagoya to emphasis the importance of the Toyota manufacturing plant at Altona to Victoria.

Toyota Australia says it needs to trim $3800 from the cost of every car it makes at the Altona plant if it is to secure head office go-ahead for the necessary funding for a new-generation Camry from 2018, along with export markets to make it viable.

At least 2500 jobs at Altona are at stake, along with thousands more in the parts supply industry.

About 100 jobs are being axed via voluntary redundancy this week as Toyota Australia prepares to slow its production rate due to a fall in export demand for its Camry.