Comment from Kim Carr - Auto industry woes

[Brazen]

Hi, interesting comments from Kim Carr. I have made this its own thread as I think we need to participate in this national discussion regarding the auto industry.


http://www.goauto.com.au/mellor/mell...257B48001CBE9B

Global threats to Australian auto industry do not mean we stand down, says Kim Carr
9 April 2013
By KIM CARR (COMMENT)
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.

My take is if the Coalition forms government this year they need to hear from those who want continuing support for the auto industry.

Here is a page where you can give comment to Tony Abbott. I have contacted him asking for continuing and growing support for the auto industry. I then copied my message and sent it to Sophie Mirrabella. If many of us send a message it would at least give a counterpoint to the chorus of people who shout from the rooftops lamenting government assistance.

http://www.tonyabbott.com.au/ContactTony.aspx

http://www.sophiemirabella.com.au/Co...actSophie.aspx

[Road_Warrior]

'Support' needs to be more comprehensive and intelligent than simply 'throwing money at the problem' hoping it will go away. The ridiculous trade and FTA imbalance needs to be addressed, the Button Car Plan needs to be reviewed finally to ascertain whether it worked and whether the industry has gone too far over the edge, and finally, governments and parties of all persuasions need to put OUR national interest first in terms of our industry and not that of other countries. We have every right to make our own stuff and the people that make our stuff should be proud of the fact they can do this in such a hostile trade environment for local produce.

[Joe5619]

I guess the only good thing about Holden’s discussion about redundancies is it will come right around election time & I think this could become an election issue.

I also get a very very small feeling the tide is very slowing starting to turning from 'negative' feelings around government support for the car industry to 'positive' ones?

[FPV GTHO]

I think they should never have slashed the tariffs as much, but how can they reverse that now? The public will scream if 90% of the market jumps in price. Maybe they can remove the LCT from local sales or other high end taxes.

[mik]

Originally Posted by FPV GTHO

I think they should never have slashed the tariffs as much, but how can they reverse that now? The public will scream if 90% of the market jumps in price. Maybe they can remove the LCT from local sales or other high end taxes.

Very true , australia is going up against country's with an artificially low currency's'.
Basically we are getting the shaft, there has to be a happy medium in trading , we are a long way offf that.

[aussie muscle]

Originally Posted by FPV GTHO

I think they should never have slashed the tariffs as much, but how can they reverse that now? The public will scream if 90% of the market jumps in price. Maybe they can remove the LCT from local sales or other high end taxes.

No we can't. We've signed agreements that prevent it. also the World Trade Organization will get involved to remove barriers in Trade.

Removing the LCT for locals would be a good idea. is a $60,000 car really a luxury car?

[turbodewd]

If Europe's tariffs are 10%, then ours should be as well.

[tezxr8man]

Originally Posted by turbodewd

If Europe's tariffs are 10%, then ours should be as well.

Also if Thailand Has 28% tariff, we should too when it comes to their product, its not rocket science is it, at least have an even footing.

If 90% of the market goes up in price then so be it that means our product is that much more competitive and more attractive

[Road_Warrior]

Originally Posted by tezxr8man

Also if Thailand Has 28% tariff, we should too when it comes to their product, its not rocket science is it, at least have an even footing.

If 90% of the market goes up in price then so be it that means our product is that much more competitive and more attractive

It's 50% for vehicles with an engine capacity over 3 litres.

[DanielXR8]

Originally Posted by Road_Warrior

It's 50% for vehicles with an engine capacity over 3 litres.

50% tax on Thai built vehicles under 3 liters seems a fair swap. I imagine if our government had the guts to do it, this umm "tax issue" would be sorted quick smart and Territory's could be sold at more realistic prices in their market.

FTA's are fine, but you occasionally need to ensure the rules are being enforced fairly and to the original intention. Overseas counties know our pollies are a soft target, so hence how these taxes suddenly spring up. They know we won't do anything about it.

[Road_Warrior]

Originally Posted by DanielXR8

50% tax on Thai built vehicles under 3 liters seems a fair swap. I imagine if our government had the guts to do it, this umm "tax issue" would be sorted quick smart and Territory's could be sold at more realistic prices in their market.

FTA's are fine, but you occasionally need to ensure the rules are being enforced fairly and to the original intention. Overseas counties know our pollies are a soft target, so hence how these taxes suddenly spring up. They know we won't do anything about it.

Actually I was wrong. It is 80% for vehicles with an engine size over 3 litres, 50% for everything under.

[Road_Warrior]

Originally Posted by tezxr8man

Also if Thailand Has 28% tariff, we should too when it comes to their product, its not rocket science is it, at least have an even footing.

If 90% of the market goes up in price then so be it that means our product is that much more competitive and more attractive

It's 50% for vehicles with an engine capacity over 3 litres.

[Buntz]

Originally Posted by turbodewd

If Europe's tariffs are 10%, then ours should be as well.

Ours should be more.

[MAD]

How much personal income tax, and company tax, did that investment of $2B get them?
Probably more than $2B over the same period of investment.

Most gov investment is then followed by further investment from "head office"

[Road_Warrior]

Originally Posted by MAD

How much personal income tax, and company tax, did that investment of $2B get them?
Probably more than $2B over the same period of investment.

Most gov investment is then followed by further investment from "head office"

Well, in the same 12 year period Holden received $2.1 billion in handouts, Holden spent $34 billion in parts and materials procurement, R&D, capital investment, wages and taxes, and operating expenses.

[MAD]

Originally Posted by Road_Warrior

Well, in the same 12 year period Holden received $2.1 billion in handouts, Holden spent $34 billion in parts and materials procurement, R&D, capital investment, wages and taxes, and operating expenses.

Exactly. The actual tax returns to the government, while not the $34B mentioned, are huge.
Well worth the investment. Let's see you get that return from an ING account...

And the other side of the coin... Imagine all those workers out of a job (7 per auto worker iirc), now all of a sudden the gov has not only lost an income stream, and now also needs to support those now unemployed. Where does that money come from? us. Do they get any return on it? no.

[Bossxr8]

Kim Carr brings up all the issues and then claims throwing money at the manufacturers is going to help. But in reality it does bugger all towards helping the manufacturers get around these issues, and make them competitive.

When is the government going to stand up and do something, our tariffs should match those of other countries, and maybe Australian made vehicles should be cheaper to register etc. Other countries have incentives to buy locally made cars, so should we.

[Jason[98.EL]]

Originally Posted by Bossxr8

Kim Carr brings up all the issues and then claims throwing money at the manufacturers is going to help. But in reality it does bugger all towards helping the manufacturers get around these issues, and make them competitive.

When is the government going to stand up and do something, our tariffs should match those of other countries, and maybe Australian made vehicles should be cheaper to register etc. Other countries have incentives to buy locally made cars, so should we.

so true something along the lines of say 25% rego discount for new purchases

And then sliding down to 10% in 5% drops each year and only for the original owner.

If you buy it second hand ( even in the first discount stages ) you get 10% off rego for the life of the car the follow up auto places like parts etc. need to be supported as well hence the ongoing discount.

Jason

[mik]

Originally Posted by Bossxr8

Kim Carr brings up all the issues and then claims throwing money at the manufacturers is going to help. But in reality it does bugger all towards helping the manufacturers get around these issues, and make them competitive.

When is the government going to stand up and do something, our tariffs should match those of other countries, and maybe Australian made vehicles should be cheaper to register etc. Other countries have incentives to buy locally made cars, so should we.

i have to say it has always looked to me that our string pullers for decades have been trying to give the industrial advantage to other country`s, after seeing the tube clip on the lima declaration 1975.
it still looks to me BossXR8 nothing has changed.

[Bucknaked]

He was our minister of our department until recently.

[jpd80]

would I be out of line suggesting that Australia would be one of Thailand's main markets?
Just thinking how many products come from there, products that seem to sell pretty well here...

[FPV GTHO]

Most of the light commercial market are Thai built, as is Fords small car lineup.

[XR Martin]

Originally Posted by FPV GTHO

Most of the light commercial market are Thai built, as is Fords small car lineup.

Most of Honda is too.

[Road_Warrior]

Originally Posted by jpd80

would I be out of line suggesting that Australia would be one of Thailand's main markets?
Just thinking how many products come from there, products that seem to sell pretty well here...

No you'd be pretty close. In fact I think one of the car media outlets (may have been GoAuto or Drive) did a piece on it and said something like the majority of new car sales - country of origin was Thailand.

[Nikked]

Originally Posted by Road_Warrior

No you'd be pretty close. In fact I think one of the car media outlets (may have been GoAuto or Drive) did a piece on it and said something like the majority of new car sales - country of origin was Thailand.

...the same country that takes advantage of our low/nil tariffs, yet slams our exports with prohibitive taxes.


Free trade maybe, Fare trade its not.

[Joe5619]

Originally Posted by Road_Warrior

No you'd be pretty close. In fact I think one of the car media outlets (may have been GoAuto or Drive) did a piece on it and said something like the majority of new car sales - country of origin was Thailand.

The data is in the Tech area

http://www.fordforums.com.au/vbporta...articleid=1283


Thialand is 16% of new cars sold in 2012..

[ryeman]

An FTA with Thailand mean trade free of tariffs but I think they're getting the best of it.

[Joe5619]

Originally Posted by ryeman

An FTA with Thailand mean trade free of tariffs but I think they're getting the best of it.

When does this FTA end? I.E. When is the next time Australia can agree to fairer terms??

[XR Martin]

Last year, Imports from Thailand were $8.6billion, exports to Thailand were only $5.7b.
Goods vehicles (utes) and cars were $2.7b of that amount.

[BroadyFord]

According to the link below, Abbott would RETAIN funding for the auto sector past 2015 - a bit of a relief.

Don't know if it will be enough to save Ford but time will tell.

http://www.manmonthly.com.au/news/co...medium=twitter