VICTORIA SETS AGENDA FOR THE FUTURE OF AUTO INDUSTRY

Monday, 12 May 2008
The Federal Government must maintain existing automotive tariffs at 10 per cent until at least 2015 to ensure the future of Victoria’s $15 billion auto industry.

Premier John Brumby today outlined Victoria’s submission to the Federal Government’s Automotive Industry review which calls for:

  • Automotive tariffs to be maintained at their existing level of 10 per cent until 2015; and
  • Maintaining the Automotive Competitiveness and Investment Scheme (ACIS) at current levels with a focus on research and development.

Mr Brumby said Victoria’s automotive industry is Australia’s largest, currently employing more than 37,000 people and generating around $3 billion a year in exports.

“Maintaining the existing tariffs at 10 per cent is vital to securing local jobs and ensuring future investment in manufacturing in Australia. We have taken a common sense position based on changes in the economic climate and a desire to not put our local industry at a competitive disadvantage in global markets.

“The automotive industry plugs us into global supply chains and is a major market for and driver of productivity, skills, R&D and technology transfer across many other industries.

“But our domestic market is too small to support a competitive auto industry on its own and future growth depends on being able to access the global supply chains.”

Key findings in the Victorian submission include:

  • That the automotive industry is strategically important to Australia and has strong links to other industries such as tooling, chemicals and plastics;
  • The global and domestic environment for the industry in 2008 is much more challenging  than it was when last reviewed in 2002; and
  • The recent focus on bilateral free trade agreements presents significant risks for the Australian industry.

Mr Brumby said the Victorian Government’s position on tariffs was also informed by Lateral Economics and Monash University economic modelling. This modelling, to be completed later this month, questions the net benefits associated with the scheduled tariff reduction.

“The strong partnership between industry and Government in industry skills and training must be maintained to promote a highly skilled and adaptable workforce,’ he said.

“The Victorian Government is putting these key issues on the agenda to secure a strong and future for our largest and most strategic manufacturing industry.”

Industry and Trade Minister Theo Theophanous said it was vital that the research and development sector of the auto industry focused on developing new technologies to address environmental and design challenges.

“We also advocate that the $500 million Green Car Innovation Fund be used to drive innovation in response to demand for low environmental impact vehicles, further strengthening our international reputation for auto design and engineering excellence,” Mr Theophanous said.

He said the recent decision by US automotive giant General Motors to export locally made Commodores re-badged as Pontiacs into the US showed the local automotive industry had world-class capabilities.

“Our submission also highlights how Government and private sector fleet procurement helps the domestic passenger motor vehicle industry achieve the scale economies that enable it to competitively supply export markets.

“This submission is the latest demonstration of the Brumby Labor Government’s strong commitment to working with the industry to help it achieve and maintain global competitiveness.”

Copies of the Victorian submission to the Federal Government’s Automotive Industry can be downloaded at www.diird.vic.gov.au .