EMBARGOED UNTIL 8 P. M.
PRIME MINISTER
SPEECH NOTES FOR THE PRIME MINISTER
FEDERAL CHAMBER OF AUTOMOTIVE INDUSTRIES
CANBERRA 5 APRIL 1984
I am pleased to attend this dinner tonight with
delegates from the automotive industry in Australia
Representing motor car and component producers,
importers and distributors
The motor car industry holds an important position in
the Australian economy and industry structure
In 1981/ 82, motor vehicle and component production
along with vehicle distribution and sales employed
more than 150,000 people
and contributed over $ 3,600 million to GDP
The motor vehicle also holds a special place in
Australian society
As our fundamental means of transport in a big
country where large distances need to be covered
It is not surprising, therefore, that my Government
would wishes to ensure that we have a healthy automotive
industry providing up-to-date vehicles at competitive
prices The motor vehicle industry, in Australia and overseas,
has been required to meet three great structural
challenges over the last ten years. These are:
A rapid and enormous rise in the price of petrol
and as a result a swing in demand to smaller, more
fuel-efficient cars
The strong penetration of overseas markets by
Japanese vehicle producers
The huge escalation in costs in bringing a single
new vehicle model into production
The industry throughout the world has responded by
massive adjustment in its activities
Through internationalisation of vehicle production:
common basic designs for cars are produced in a
number of countries, concentrating vehicle and
component production where cost advantages are
greatest By huge re-investment programs: for example, the
United States motor vehicle industry is estimated
to spend more than $ US8O billion in 1985 to meet
the Japanese challenge
Through rationalisation of production by company
mergers and co-operation in design and production.
As well, the industry is moving into new technologies,
and this trend is expected to grow strongly in future
years This includes new materials, such as plastics and
ceramics in vehicles
And use of robots and other advanced machinery in
production.
In these ways the industry is restructuring not only to
meeting present challenges but to address the issues of
the future This will contribute to guaranteeing the industry's
viability in the longer term
And assist in achieving higher standards of living
for the whole community.
As I have said on a number of occasions, the Government
is committed to facilitating structural change in the
economy To reinforce prospects for sustained medium to
longer term economic growth
And to provide enhanced employment opportunities
and improved living standards
I would emphasise that in approaching structural change
in industry the Government does not intend imposing
policies arbitrarily
We seek an ongoing dialogue with the community as a
whole and industry members in particular to assist
in encouraging a more favourable climate for change
and in developing suitable mechanisms for
adjustment
The steel industry plan is an example of the
Government's co-operative approach
Entailing contributions from Government, business
and unions.
The Government is convinced of the need for increasing
change in the Australian motor vehicle industry to
ensure it becomes more internationally competitive
Without change
Australian consumers will continue to be
disadvantaged by high prices for motor
vehicles Australians will suffer lower incomes because*
resources are not used wisely in producing
several, low volume models and
other parts of the economy will be
disadvanataged by inefficiencies in the
industry
The Australian motor vehicle industry must confront the
need for change
indeed, some rationalisaton has already occurred in
the component industry
But as commentators have pointed out, existing policy on
the industry has not been as successful as it might have
been Protection provided to the industry has increased
and yet employment has fallen and the
competitiveness of the industry appears to have
stagnated.
Indeed the increase in protection levels over the last
decade has removed some of the impetus for gradual
adjustment. The Government aims to promote reductions in the costs
of producing vehicles in Australia. In part this will
mean reductions in protection levels towards the
manufacturing industry average consistent with the
maintenance of motor vehicle production at around its
present level
The Government will be seeking gradual but
consistent changes which take into consideration
the costs of adjustment
We also aim to establish a stable policy
environment within which companies can invest with
confidence for the future
4.
Accordingly, the Government is presently reviewing the
assistance arrangements for the industry after 1984 when
the present arrangements expire
Our deliberations will be aided by the report of
the Car Industry Council as well as the IAC Report
on assistance for light commercial vehicle
production
In making our decisions we will be taking into account
the views of all parties
We will be guided by our desire to foster a n
outward-looking, efficient and competitive economic
environment
We expect the Australian Motor Vehicl~ e Industry to
continue to make a very significant contribution to our
economy and general well-being
For its part, the Government is working to remove
obstacles to progress
In this way we look forward to a continued major
contribution from the Motor Vehicle ' Industry to
Australia-Is continued economic prosperity.