PRIME MINISTER PRESS STATEMENT NO. 3669
14 November
ASSISTANCE TO THE AUSTRALIAN MOTOR INDUSTRY
A new plan to assist and strengthen the Australian
motor industry was announced today by the Prime Minister,
Mr. Whitlam. He said that it was the Government's intention
that the new policy would operate for ten years and would
therefore provide a stable framework within which industry
would confidently plan.
Mr. Whitlam said assistancee would be based on a
company average local content plan of 85%. This would be
supported by a tariff of 35% on complete cars when imports
were less than or equal to 20% of total passenger motor vehicle
registrations and 45% when in excess of 20%. In view of the
existing abnormal rate of imports the higher duties would
apply immediately. A differential of 10% would apply between
imports of cars and unassembled vehicles.
Duties of 25% would generally apply to components
not in c. k. d. packs and minimum rates of duty would apply to
certain specified components re;" erred to in the Commission's
Report. The Prime Minister explained that the duty of
on built up vehicles would remain for a minimum period of 6
months and then would be subject to reduction to previous
levels if and when the 12 month moving average of c. b. u.
imports to total passenger motoy* vehicle registrations fell
to 20% or below. Any subsequent changes in duty woul'd
similarly be on this minimum 6 months basis.
Mr. Whitlam said that commercial motor vehicles
reported on by the Commission in its passenger motor vehicle
report would be accorded the tariff treatment outlined above
passenger motor vehicles.
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He said that the existing 85% and 95% local
content plans would be phased out over four years and then
replaced by the new plan.. Under this plan local manufacturers
would at the end of the four year period have to achieve 85% local
content on a company average basis on all of their vehicles
manufactured or assembled in Australia to be eligible for by-law
concessions. The actual by-law concessions have yet to be
finally determined by the Government. Provision would be made
for phasing new manufacturers into the plan subject to approval
by the Government. Relevant matters in the consideration of
any such applications would inc1Vdeprational use of resources,
location and complementation.
Mr Whitlam said that to accord with the new vehicle
plan the existing component manufacturing programs involving
over 85% local content requirement would be phased down to
over a maximum period of 4 years and no new programs would
be instituted. " These proposals will develop a stronger long-term
base for the local industry and help safeguard the jobs of
Australian workers," Mr Whitlam said.
" At the same time they will allow the industry to
adjust more easily to basic structural changes essential for
its future growth and viability."
Mr Whitlam said the Government accepted the judgment
of the Industries Assistance Commission, expressed in its recent
report, that the Australian motor industry should be restructured.
It accepted the IAC's judgment that assistance policies of the
last decade had contributed significantly to the present
unsatisfactory state of the industry.
Mr Whitlam said: " The Government has moved to correct
a number of problems associated with past protection policies
by reducing the high 95% local content requirements, moving
away from a multiplicity of plans to a single plan and
changing the plans from a model to a company basis.
" The industry must be able to exploit the advantages
of economies of scale. Special action will be taken to
encourage common sourcing of components to allow this, with
consequent cost savings. In addition, special attention will
be paid to complementation schemes with overseas sources and
markets. " The Government believes these changes will lead to
greater specialization in the production of components, reduce
model proliferation and fragmentation and produce a more
viable industry in the long run. They should also considerably
simplify the present assistance arrangements for the industry."
The Prime Minister said talks were under way with
Japanese motor producers about the possibility of their further
manufacturing motor vehicles in Australia. Japanese technical
experts would come to Australia soon to carry out feasibility
s tugies. ". While the new tariff arrangement will lead in the
Sshort-term to somewhat higjher prices for imported motor vehicles
it is expected that in the medium-term the new arrangement will
result in a better based local industry with consequent
advantages to local consumers and the economy generally,"
Mr Whitlam said.
" The Government wants necessary changes to proceed in
a manageable way. The present proposals will enable this."
Mr Whitlam said the industry in South Australia and in
other major motor vehicle producing centres would be safeguarded.
Firms and employees in the industry adver~ ly affected by this
decision will be eligible for consideration for-adjustment assistance
under the Structural Adjustment Assistance Scheme subject to
the criteria orovided for in that Scheme. In addition assistance
under the Non-Metropolitan Subsidy Scheme would be available.
The Australian Government gives a high priority to
its programs designed to create a new growth centre in Albury/
Wodonga. ~ ie Government is concerned to ensure that groWth
centres are _ ased on sound economic industries. The Government
is confident that the future operations of Borg-Warner at
Albury/ Wodonga will provide such a basis.
However, the Government recognises that the existing
operations of Borg-Warner could be affected by the introduction
of the new motor vehicle policy. * Therefore the Government is
prelatred to assist Borg-Warner in Albury/ Wodonga for an interim
peri. -2 if necessary in addition to assistance which may be
availaole through the non-metropolitan subsidy scheme, so that
it can cirry out any necessary adjustments to its operations
to ensure continued long-term viability.
The Departments of Urban and Regional Development,
Manufacturing Industry arn. Prime Minister and Cabinet are
ready to co-operate with the company and with Repco Bearing
Company Pty Ltd in Launceston to pr. ovide any necessary
assistance and to help the companies take full advantage of the
economies available under the new policy including the wider
markets in the region.
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' Ilhe question Lo be investijted of pos: 3. ilbL
Aiu; t ra Li ain C; ov rnmtnz I. itr Le i. pi Lion in aiy new jo Lnl. ert( ltc prceltu
which might eventuate from the new policy.
Further detailsn of the policy will be announced dfter
tvaluation of the possibility of greater participation by tiie
Japanese motor industi-y.
CANBERRA 14 November