Additional Comments by Senator Nick Xenophon
Time to jump start the automotive sector
1.1
I welcome the committee's report, and in particular the sensible
recommendations made in relation to expanding the Automotive Transformation
Scheme's (ATS) eligibility criteria (governed by the Automotive Transformation
Scheme Regulations 2010) to encourage investment in research and development in
order to support diversification initiatives.
1.2
Now more than ever the Federal and State governments need to implement
effective measures to ensure the long term future of Australia's automotive
industry. Without such measures over 100 years' worth of mature industry
capability in Australia is at risk.[1]
1.3
South Australia and Victoria are facing a tsunami of job losses with the
departure of automotive manufacturing in Australian by the end of 2017. There
are 33,000 direct jobs in the tier 1 component sector in Australia that are at
direct risk following the closure of Ford, Holden and Toyota (on top of the 12,500
direct jobs in automotive manufacturing). In South Australia alone job losses
are estimated to be in the vicinity of 24,000, which would be a massive blow
for the SA economy and community.[2]
1.4
The Bracks Report in 2008 estimated a multiplier effect of six jobs for
every job in the automotive manufacturing or component job—this equates to
between 150,000 to 200,000 job losses in the auto sector and beyond. On the
18th of June this year I asked Senator Ronaldson, representing the Minister for
Industry and Science in the Senate, whether the Federal Government's forecasts
in respect of job losses in the automotive industry were in line with the
multiplier effect outlined by the Bracks Report. The Government was unable to
satisfactorily answer this question—a concerning indication of the Government's
lack of understanding of the true extent of the jobs crisis facing this sector.
1.5
Without decisive action by the Federal Government thousands of
businesses, and the families that these businesses support, face ruin. That is
why the Government must commit to at least not only maintaining the current
level of ATS funding through to 2020–2021 but also to expanding the eligibility
criteria for the scheme to enable these businesses to diversify and grow. In
fact, there is a compelling argument to increase funding given the enormous
transition and challenges facing this vital sector.
1.6
One such business affected by the short sightedness of the ATS in its
current form is Supashock, a proudly South Australian owned and operated enterprise
with expertise in the manufacture of dampers as well as vehicle dynamic
analysis. Supashock hit the headlines recently when it was revealed that a
shock absorber they designed and manufactured was the secret to Ford's recent
success in V8 Supercar races. It is also indicative of the depth of talent and
high level expertise in South Australia's automotive sector. Mr Oscar
Fiorinotto and his team from Supashock deserve support from the ATS to reach
their full potential, not only in our domestic market but with export markets
as well.
1.7
I recently wrote to the Minster for Industry and Science, the Hon Ian
Macfarlane MP, on behalf of Supashock, urging the Minister to reconsider the
eligibility criteria for the ATS in light of Supashock's demonstrated success
(attached). In the Minister's response he advised the Government will maintain
the ATS in its original legislated form (response attached). This
short-sightedness is unacceptable and I will continue to agitate for reform of
the ATS in order to broaden its accessibility.
1.8
The Federation of Automotive Product Manufacturers in its submission set
out its vision for the automotive sector in Australia:
The FAPM believes a strong and vibrant future for the
Australian automotive industry still exists, albeit in a new form. The
contribution that the industry makes in its own right, in addition to the spill
over benefits to the economy more broadly, and unique contribution to a range
of areas including advanced manufacturing, skills and training, and lean
principles and processes, highlights the breadth of these attributes.
One of only 13 countries globally with the capability to take
a passenger vehicle from concept to the showroom floor, the FAPM believes the
skillsets and capability of the Australian automotive industry are too
important, too strategic and too valuable to let go following the departure of
the local OEMs.[3]
1.9
In addition the advocacy for the after-market segment of the auto-sector
could create many jobs, as advocated by Senator Ricky Muir, if only the ATS
funding criteria was liberalised to take into account the change of
circumstances of this sector.
1.10
There is also great potential to develop synergy between the automotive
sector and another industry facing the prospect of extinction in Australia: shipbuilding.
While we are still waiting on the outcome of the competitive evaluation process
to determine who will be awarded the $50 billion contract for the submarine
build, the Government has stated its intention to build the new fleet of
frigates in Adelaide, commencing in 2020. There is a real opportunity here for
the excess capacity created by the downturn in the automotive sector to be
utilised in our defence sector broadly, and for the future submarines and
frigates projects particularly. In addition there needs to be an overhaul of
government procurement rules so that the broader economic impacts of a
procurement decision are taken into account.
Senator
Nick Xenophon
Independent
Senator for South Australia
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