PM: Thank you. I'm joined today by the Deputy Prime Minister and Treasurer, Wayne Swan and by the Minister for Innovation, Industry, Science and Research, Minister Carr. As a Government we have been explaining to the Australian people for some time now that the fundamentals of the Australian economy are strong. We have low unemployment, we have strong public finances, we have a huge pipeline of investment coming on stream and we have strong banks. We've also been explaining to the Australian people that our economy does have patchwork pressures.
Though the economic fundamentals are strong, there are pressures on some industries and some regions. Those pressures arise in part from our very strong Australian dollar. It's a benefit for some but for some industries including manufacturing, that does put pressure on. And there are other competitive pressures and changes in the global economy that have impacts for some industries, regions and firms.
It's against that backdrop that today we have seen BlueScope announce that it will reduce jobs by 1000; 800 of those in the Illawarra and 200 in Hastings. Now this is an issue that affects us nationally, it affects those two regions and of course it affects the individual workers who are now understandably very worried about what their future will hold.
Nationally it affects us because we want to be a nation that produces steel, we want to be a nation that has a strong manufacturing sector and that offers the opportunity of high wage, high value adding manufacturing jobs.
For the regions involved, it is obviously a big blow to their local economies. For example, if we look at the Illawarra, more than 600 local firms contract with BlueScope, the firm BlueScope purchases more than $1.2 billion per annum in goods from the local economy and BlueScope provides goods worth more than $600 million per annum to the local economy.
So understanding this, the Government has made a set of decisions that we'll announce with my colleagues today and explain. We've decided to make this announcement because there's no higher priority for us as a Labor Government than supporting jobs. We've got a proud track record of supporting jobs, of managing the economy so that we create jobs and we intend to keep supporting jobs.
We also intend to keep managing the economy in the right way as we face these patchwork pressures, so that we spread opportunity for all and so that we do not see regions or individuals left behind. So the Government has determined to make available out of the Steel Transformation Plan money, a facility of $100 million. The Government has also determined to make available a package that totals $30 million as an investment and innovation fund. The $30 million is composed of $20 million flowing from the Federal Government, $5 million flowing from the New South Wales Government and $5 million flowing from BlueScope itself.
We've also determined to make available $10 million worth of services and support to the individual workers involved. We want to make sure that people do get the services and support they need to help them get the next opportunity, the next job, the next change in their life. This is a difficult day for many working people and their families, we understand that. We'll always be determined to support Australians and their jobs and consequently we are making these announcements today.
I'll turn now to the Treasurer first for some comments and then to Minister Carr.
TREASURER: Thanks very much Prime Minister. Minister Carr will deal with the detail of the programs and I'm happy to answer questions about that as well. Firstly, I want to say what an awful day it is for those workers that are involved in these decisions down in the Illawarra and elsewhere in Victoria. It's a terrible day and we feel their pain, but the fact is that our economy is changing and what we have to do is understand the broader economic context in which these events are happening.
We do need to recognise that the global economy is changing and of course the Australian economy changes with it. Now, these changes are going to bring great opportunities for our country and for our economy, great opportunities for the country in the longer term. But what we are also seeing is the challenges and some of the downside today. What we are seeing is some of the painful adjustments that take place in parts of our economy as part of that wider change.
What we are seeing is that the weight in the global economy is moving into Asia. Now this is not just the massive development in China but it's right across our region, and we all know this is pushing up demand for our resources, and along with our other strong economic fundamentals, what this does mean is a higher Australian dollar. Now on the one hand that means cheaper goods for Australian consumers but the higher dollar puts a lot of pressure on our trade-exposed industries, and BlueScope is an example of that and they have made that very clear in their announcement today.
And what it means to companies like BlueScope is they do have to look for a sustainable business model, and of course, as I said, we are seeing the harsh consequences of that today. And this is part and parcel of having a patchwork economy. The Government has been talking about the patchwork economy for a long time. We began talking about it first in the Budget last year and we made it the centrepiece of our discussion about the future of the economy in the Budget this year. And it's instructive whilst you have this announcement today from BlueScope, you also see another announcement today from OneSteel with an expansion of their operation in South Australia. And we saw over the weekend further announcements in Queensland in terms of investments. Now none of that is great comfort to the workers involved in this announcement today. But what it means for Government, what it means for our country is we do have to face up to the challenges of the patchwork economy and we have to design our policies very carefully because of that patchwork economy. And that's why we identified the challenges of that patchwork economy in the Budget this year.
You might recall the centrepiece of the Budget was a $3 billion investment in skills and training, and you might also recall that last year we commenced the process of putting in place a resource rent tax. And what we want to do with that money is to give tax cut to businesses elsewhere in the economy that are not in the fast lane, recognising the reality of the patchwork economy. So what we have to do as we go forward is we have to continue to adjust our policies and our policy settings to ensure we do the best that we can for all of those in our economy including those that are not in the fast lane.
I would just like to draw a contrast between our position on this critical question and that of Mr Abbott. Mr Abbott wants to abolish the MRRT. He doesn't want the revenue that will flow by way of lower company taxes to businesses in our economy. He thinks the mining companies are paying too much tax. What we've put in place through this arrangement with the MRRT - tax cuts for small business, tax cuts for corporates generally - is absolutely essential to ensuring that those businesses that aren't in the fast lane get a fair go.
So as we go forward, I think Australians should be assured of the fact that we have jobs at the very core of our economic policy settings. We acted to keep this country out of recession during the global financial crisis and the global recession. We are determined to ensure that Australians stay in work. There's been something like 750,000 jobs created since the Government was first elected. And what we're about with our policy settings is ensuring that jobs and opportunities from the mining boom are spread around our country.
And the last thing I want to say is the Government is absolutely committed to ensuring there is a future for manufacturing industry in this country. We do expect that the manufacturing industry will continue to grow and will be stronger as we go forward but what we're determined to do is to ensure we get the right policy settings in place that cater for the whole of our economy, not just those in the fast lane. And that's why we're announcing the policy responses today that Minister Carr will detail.
Thank you.
MINISTER CARR:Well thank you Wayne. The Government has done three things in response to the decision by BlueScope to restructure its operations. Firstly, we have ensured that there is a full range of services and support, and that that's available for every worker and every family that is directly affected by the decision both in the Illawarra and the Western Port.
We've also put in place, with the support of the New South Wales Government and the company BlueScope, an Illawarra Innovation Investment Fund to create new jobs and to strengthen the economic base of the Illawarra region which of course has had much higher levels of unemployment than other parts of the country. We continue to work with the company to ensure that the capacity within the steel industry is maintained and that it can be brought back on line when economic conditions improve.
We are looking to strengthen the industry as a whole. The Government is in the business of helping workers, of helping regions and of ensuring that we manage the change that is necessary as we go through this period of adjustment. This in our view is the best option to follow. We have, of course, faced up to many difficulties in the past. The Treasurer and the Prime Minister have indicated during the economic crisis, we were able to manage the change and produce a much stronger economy as a result. And I am very confident, and I share with my colleagues the confidence about the future of manufacturing in this country.
So we will provide immediate and practical support to affected workers and communities by delivering a comprehensive package of support measures to help workers find new employment and to ensure that local communities have a strong economy and a brighter future.
What we are doing is providing a package including a $30 million Illawarra Regional Innovation Investment Fund to make that transition easier. In addition, the Government has asked Dr. Don Russell the Secretary of the Department of Innovation Industry Science and Research to lead a whole of Government response to the BlueScope announcement and to work with local Government and with the New South Wales Government to ensure that we have smooth transition arrangements.
We are also providing a local employment coordinator to provide practical advice at a local level to ensure workers are able to get the help that they need. The local employment coordinator's job will be to ensure that there are onsite provisions by job services Australia staff and local employment coordinators and of course Centrelink to ensure that they have dedicated services available for each and every worker affected by the decision.
We have also instituted a dedicated hotline to fast track referrals to Job Services Australia (inaudible) fast tracking relocation assistance for BlueScope workers and will provide payments of up to $6,000 for relocation assistance with an additional $3,000 in the case of families with dependent children.
What we are also doing is providing additional support through the Australian Steel Industry Scheme to ensure that BlueScope, upon request, is able to have necessary financial support if it is required. Such a facility will also be available to OneSteel.
PM: Yes Phil.
JOURNALIST: There's been a growing (inaudible) two speed pressures for some sort of incentive for the mining industry to spend more on local manufactured products, and then talking about mandating the 5-10 per cent of Australian steel products used in mining infrastructure. Are you considering measures that could facilitate or at least encourage the resources sector to help out the other sectors of the economy?
PM: I'll go to Minister Carr for some detailed comments but I do want to make the point, we have been talking about patchwork pressures in our economy for months and months and months. So whilst I understand that there's been media reporting on some calls over the last few weeks, this is something we've understood for a long period of time which is why we did calibrate the May budget in the way that we did, we understood that there would be differential pressures in our economy, these patchwork pressures and we wanted to be strongly engaged with regions and industries.
It's also why we've created the department that Minister Crean oversees so we can get more of an understanding of the differences in communities around the nation and how their economies are going and responding. Minister Carr has been on these questions of working with Australian industry and procurement for a quite extended period of time now and I turn to him for some detailed comments.
MINISTER CARR:The Government has provided in excess of $50 million to support a Buy Australian At Home and Abroad Campaign. We provide support through the industry advocates through the industry capability networks, through Enterprise Connect and a range of other measures so that we can try to get our local firms to work with international firms particularly in the resources sector. We will have more to say about this later in the week, but it is our intention to match our capabilities with opportunities and we've got to ensure that people understand the benefits of buying Australian at home and abroad and that's very much at the core of the approach. The direct result of that has been many billions of dollars of work for Australian industry than otherwise would be the case. These are arrangements that were not in place under the former Government. These are new arrangements, and they are producing results for Australian firms.
JOURNALIST: Just on this patchwork economy, when you look at some of the numbers you've got for the (inaudible) $1 billion profit, BHP $30 plus billion, these are huge profits, you've got BlueScope minus $1 billion. Isn't the proper policy response to give these people a financial incentive not to go with Chinese suppliers but supporting their east coast brethren?
PM: Let me just make a few comments and then I'll turn to my Ministerial friends and I can tell they're itching to get into this. Because we've understood for a long period of time that our economic future was going to be one of an economy in transition, a strong resources sector, that's a good thing, that's a great thing, it means literally hundreds and hundreds of billions of dollars of investment coming down the pipeline, it means jobs, it means jobs in construction and jobs in mining themselves. And it means the services that mining needs also have a bright future. We've understood that for a long period of time. We've also understood that that was going to create these differential pressures including the impact of the strong Aussie dollar on other sections of the economy, manufacturing, tourism, international education.
Because we've understood that for a long period of time we've been calibrating our economic settings to respond to it. This is the foundation stone of the Minerals Resource Rent Tax, understanding that we've got a turbo charged section of the economy likely to be very, very highly profitable and we wanted to ensure that we got a fair share of those profits and we're able to use those proceeds to help balance economic activity in other parts of the Australian economy. That's why we're reducing the company tax rate, that's why we're offering small businesses special tax breaks, that's why we're investing in infrastructure and why of course we're backing in growth in our pool of national savings, precisely to deal with these questions. And then on the advocacy of Australian industry, as Minister Carr has indicated, we'll have something more to say about these questions during the course of this week but we have already been working to bring that advocacy for Australian industry into these projects so that locals can best maximise these opportunities.
Now everything we do has to be compliant with our role as a great trading nation that needs to comply with the rules based trading order, the World Trade Organisation rules and so we will always work within that because our future is as a great trading nation. And I turn now to the Treasurer first.
TREASURER: I've spoken to many of these large investors who indicate to me that they are keen on sourcing product locally where they can but when you go out and talk to industry sometimes you find that they put a contrary proposition. Minister Carr and I had a meeting only on Friday morning with a significant number of local manufacturers who suggested that this wasn't always occurring in the way in which it should. Nobody is looking here for a solution which is not market based. We want to see Australian suppliers who do a good job and produce good product, get a fair go in terms of accessing this investment. Some of those that we spoke to said they didn't think that was the case on Friday morning. So Minister Carr and I are going to follow up on that. We have a range of other initiatives in place that Minister Carr spoke about before but I think Australians would expect that where possible many of these large investments should be sourcing product domestically where that product tis competitive.
So there's a pretty strong conversation going on about this in our community and there should be. And we're going to engage with it further with industry and with the investors. What we want to ensure is that everybody gets a fair go on a competitive basis.
JOURNALIST: (Inaudible) Gina Rinehart has got a contract for the supply of Chinese-made rail tracks which is actually using steel that might have been sourced from Australia in the first instance.
TREASURER: No, I don't agree with that one way or the other because I'm not aware of the commercial detail. I also know that it is unrealistic to expect that these major projects won't be sourcing a significant amount of product from overseas because they are very big investments and of course product will be sourced from overseas, that's just common sense. I was referring to something else. I was referring to the fact that I've run into a number of people in manufacturing who have suggested to me that there may in fact be some impediments that where they're competitive they may not necessarily be getting a look in, if you like. So as a Government I think we've got to go through those issues responsibly with the industry. I'm not suggesting any solution that is not market based but I think we've got a responsibility as a country to ensure that our manufacturers get a fair go in these commercial contracts.
JOURNALIST: (Inaudible)
TREASURER: No, it's not necessarily steel specifications. I don't think OneSteel thinks that it is a competitor in some of these contracts either and it is indeed not necessarily saying that. So what we're looking for is market-based outcomes but I think what people will responsibly want to know is local product being sourced where it's competitive or not? And if people raise with me or Minister Carr, these questions, we're happy to have a look at it.
We have already been working in this area. Minister Carr spoke before about the program that we put forward in the Budget to assist industry in this task of sourcing contracts from these very big investments. And if you go around the country you'll find that state governments have been involved in discussions with companies as well as industry groups and we're going to have a good discussion about that with the industry and with the investors because this is a very important investment phase for Australia. It's important that investors make a profit and it's important that Australians understand that the opportunities that are flowing from these investments are to all our advantage.
JOURNALIST: Prime Minister, one of the Ministers spoke, I think Senator Carr spoke before about this is an issue of (inaudible) and change and if you listen to Mr Howes for example he says ok, so one sector's great fortune is a problem for another. Do you think it's the case as he says that manufacturing in Australia is in a crisis and that the change will be semi permanent or move onto a different footing, or are we going to perhaps come back the other way in the future, (inaudible)?
PM: I'll respond first and then we'll go to Michelle after that.
We live in a world of important transitions that will shape out nation's future. One of those transitions is the movement of global economic weight from west to east. We are in the region of the world that will see strong growth, I mean the Asia-Pacific century.
We are also in transition in our own economy, as we see the spectacular growth of resources and pressures on some other industry sectors, so there is a transition there. And of course, we're in transition too, to a cleaner energy future.
On the transition within our economy as the resources sector grows, when it's hungry for people, for skills, for infrastructure, when we're enjoying record terms of trade and the Australian dollar is so strong. That does put pressure on other industry segments. But we shouldn't conclude from that that we won't be a country in the future that manufactures things. We will be a country that manufactures goods. We've got to keep working to make sure we maintain competitiveness, we've always got to be looking to take ourselves up the innovation and value chain. That's good for our national economy, it's particularly good for the people who work in manufacturing who have the ability to get those high wage, high skill jobs.
And so when you look across the broad sweep of manufacturing in Australia you can see some remarkable success stories, even as we see this economic transformation with the strength of resources and the high Australian dollar. So I'm very determined that we will be a nation that has a diverse economic base and that's one of the reasons why we have worked and will keep working to ensure that our economic management is about spreading opportunity, spreading jobs, spreading skills, making sure no one's left behind, that we don't just say ‘well it's satisfactory to us that some industries and some regions fall by the wayside', that's not satisfactory to me as Prime Minister. That's why we will be strongly engaged with regions and with industries during this time of transition.
JOURNALIST: Sorry Prime Minister, in today's case, the things you've announced are a response to something that's happened to help them get over the result. But what is your Government doing, or can't you tell us until later in the week, to attack things beyond (inaudible) about - what is your response?
PM: I'll turn to Minister Carr for further responses, but as a Government we have been strongly engaged with manufacturing. It's what the new car plan is about, with more than $5 billion, that's recognising that being involved in manufacturing automobiles brings a set of skill sets into your economy that if you lose them they are very hard to replace.
So, very strongly engaged with the manufacturing of cars and the transition of our car manufacturing into a cleaner, greener future, because that's what people are going to want to buy, those cleaner greener cars, and we see that in the market place at the moment.
We've been strongly engaged too on manufacturing innovation and Minister Carr has led the way with his agenda about powering ideas, enterprise connect, cooperative research centres, which means that we can take innovations, things that matter to productivity and competitiveness and spread them so that we've got that competitive edge.
Our skill settings have been more and more finely calibrated, so we are working direct with industry and training to meet their needs. You saw some of that in the budget before last and then you saw more of it in the last budget.
And then of course, we have a workplace relations setting which enables enterprise bargaining for productivity, meeting differential needs for workplaces around the country.
But I'll turn to Minister Carr for some further comments.
MINISTER CARR: Let me just talk about my bit because the Prime Minister has indicated there's a whole lot of activity going on here from training to right through to workplace relations. From the very point at which this Government was elected, we were in the business of managing change. That's why we set up the Department of Innovation, Industry, Science and Research. That's why we've increased the support for those areas by 43 per cent. This Government is spending $9.4billion per annum on science, research and on innovation because we are in the business of managing change. This is an economy that simply will not survive if we do nothing, if we just let things bubble along, if we just allow things to continue as they are. We are in the business of working with companies, with universities, with the CSIRO and all our science agencies because they are very much at the cutting edge of this great transformation that is occurring in our economy, as we move from what we used to be to what we are going to be, and be able to face up to the huge challenges of the twenty first century. That's how we maintain prosperity, that's how we maintain living standards, that's how we make sure everyone in this country gets a fair go. And that's what this Government has been doing, whether it's in climate change or in any other area, we are in the business of managing change.
JOURNALIST: Ms Gillard, in view of the stark contrast we're seeing in the patchwork economy, both at a sector level and at a company level, isn't there an argument that you gave away far too much to the mining companies when you renegotiated the mining tax?
PM: No, there's not. We've designed a tax that we can implement and we're getting about implementing it.
JOURNALIST: Thank you very much. What impact has the carbon tax produced on these job losses today? What, if any, impact from the carbon tax?
PM: Absolutely none and I'd refer you to BlueScope's press release in that regard, which makes that crystal clear.
I understand that there will be people who will seek to distort this for their own political purposes. We are talking about 1000 job losses, what we should be doing it making sure people have the accurate information, this is not related to the Government's carbon pricing policy.
JOURNALIST: Prime Minister, is one answer to the patchwork economy finding new ways to let, or encourage workers to move to where the jobs are? I know that you've said you want to support manufacturing, but right now demand for jobs is in resources, you've got a relocation bonus in the package today, do you really want a workforce culture change in a sense, so that the future for steel worker in Wollongong might be becoming a FIFO worker in Queensland or WA?
PM: One of the things we've been thinking about, and obviously developing some programs to trial and see outcomes, is about relocation. Now, people have a strong sense of place and deep community roots, so I think we can all just from a common sense perspective understand that a family with two people in the workforce with kids in schools, with a network of friends, with nearby family, with all of those things that go to make up a life, find it hard to just pull up stumps and move across the country.
So, I think we can all understand what puts some pressure on the ability to move around. But we have wanted to trial some approaches to see if people who are unemployed and are in regions with high unemployment, can prosper in another part of the country. We put in place a program there and we upped the ante to assist with getting the workforce necessary to rebuild Queensland after the Queensland floods.
Look, I indicated as I sat round the COAG table with premiers and chief ministers on Friday, where we talked about the underlying strength of the Australian economy, but we also talked about these patchwork pressures. I indicated there I'm obviously open to discussions and ideas about labour mobility, recognising though the real constraints that there are for people.
JOURNALIST: Prime Minister, the original steel transformation plan was based on the steel industry being trade exposed, now if you're not exporting will they have to be (inaudible)?
PM: Well, they're still trade exposed, obviously. Trade exposed is trade exposed in both the exporting sense and competing with imports sense. Yes.
JOURNALIST: (Inaudible) suggested that there should be a new version of the accord to help enlist the unions into things like raising productivity at the same time that manufacturers union says that there should be closer consultation on industry plans and things like this. Is there a need or a justification for some sort of new mechanism like an accord to deal with the unions and help enlist them to raise productivity and things like that?
PM: I think the days of an accord in the way that we used to understand it are gone, because it relied on being able to deliver wage outcomes through a highly centralised wage fixing system, and we no longer live in a country with a highly centralised wage fixing system. We are proudly deliverers of, creators of the enterprise bargaining system that the Fair Work Act has at its heart, but if you mean accord in the broad sense of is there always a role for us to be strongly working with employers and their organisations and unions - of course there is and each of us, everyday in our own way, stays in good touch with both employer organisation and union organisations to foster that culture of cooperation, competitiveness and productivity.
JOURNALIST: Prime Minister, your Government used some procedural chicanery today to prevent the Parliament from voting on whether it believes Craig Thomson should make a full explanation to the House of Representatives. Can you explain to us please why you believe that he doesn't need to make that explanation, why the people don't deserve that?
PM: Questions of parliamentary statements are a matter for the parliamentarians involved. But what I would say more broadly on this matter is, for a long period of time here, there's been a Fair Work Australia investigation in train, I think the right thing to do is to await the outcomes of that investigation.
JOURNALIST: Prime Minister, if you've got complete confidence in Mr Thomson, would you then be happy for the Coalition's call for a police investigation to go ahead, if you're completely confident?
PM: I happen to be a believer in democracy and the separation of powers and I'll never believe in a day where a politician can tell a police officer what to do about a criminal investigation. That's absolutely wrong under the Australian system, Westminster system as we understand it.
JOURNALIST: Prime Minister, the developments in Libya, (inaudible)?
PM: Even, I'm just conscious even as we've stood here, events are moving very, very quickly. But it obviously appears that the rebels are in Tripoli, that the rebels are about to secure Libya overall, obviously the task is not yet done, but from what we've seen on our TV screens that appears to be what will happen. We will, as a nation, continue to support the people of Libya, on what we want to see as a journey to peace and democracy. We continue to call on Colonel Gaddafi to get out of the way and of course we believe he should face the international charges that are against him.
JOURNALIST: You mentioned measures to help industries and business that aren't in the fast lane. I was just wondering in your discussions with business figures how frequently do they express concerns about the Government's workplace laws?
TREASURER: Well it is raised from time to time but it's not raised as frequently as many other issues are raised. I think there's a whole basket of issues that business raise and the Government is intent on discussing all of these issues with business. One of the discussions we'll have, for example, at the Tax Forum will be on the most appropriate form of corporate taxation given the fact we've got a patchwork economy or a two-speed economy or whatever you want to call it. These are all matters that do need to be discussed if we want to maximise all of the opportunities that are flowing from this mining boom. Thanks.
PM: Thank you.