PRIME MINISTER
CHECK AGAINST DELIVERY EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER
FEDERAL CHAMBER OF AUTOMOTIVE INDUSTRIES
ANNIVERSARY DINNER
CANBERRA 22 MAY 1989
Ivan Deveson, President,
Ladies and Gentlemen.
At the outset I offer my congratulations to the Federal
Chamber of Automotive Industries as you celebrate your
anniversary. When this Chamber was established in 1939 with the
amalgamation of various independent State Chambers, the
motor vehicle industry was already a significant one for
Australians and for Australia. That importance is much
greater in 1989.
The performance of your industry is a telling indicator of
the health of the whole manufacturing sector.
Your industry is one of Australia's most significant
exporters of manufactured goods, a leading innovator in high
technology and a major employer.
manufacturing and assembly of motor vehicles provides jobs
for some 35,000 people; and the components industry provides
another 25,000 jobs. Then there are the tens of thousands
of jobs in supporting industries such as plastics, steel,
rubber and glass, as well as some 80,000 more in sales,
distribution and servicing.
Such figures alone indicate why ensuring the competitiveness
of the motor vehicle industry in Australia was in 1983 and
remains in 1989 a very high priority of my Government.
In inviting me to speak here tonight, Ivan Deveson reminded
me that I have not met with the Chamber since my first year
as Prime minister in 1983.
At that time, economic policy makers faced two massive
tasks: reversing the recession we inherited, with . its
double digit inflation and unemployment, as well as starting
out on the longer battle of restructuring the fundamentals
of the economy.
The manufacturing sector was in. special need. High
protection and regulation had for decades encouraged
manufacturers to be uncompetitive on the world market and,
accordingly, unresponsive to changing market conditions.
In many ways these general problems were encapsulated, as I
am sure you recall, in the Australian car industry.
For decades before 1983, Australian Governments had tried to
foster a domestic motor vehicle industry in the deep shelter
provided by massive barriers of protection.
In those days, manufacturers would set up a plant in
Australia with little regard for the scale of efficient
operations overseas.
The outcome was as predictable as it was expensive:
Australians found themselves supporting, through tariffs and
prices, a car industry that was fragmented and
uncompetitive. when we came to office we were determined to abandon the
short-sighted interventionist policy-making that had been
the forte of previous Governments.
We wanted to ensure that, through a cooperative effort
involving the Government, employers and unions, the car
industry had the incentive to meet, not ignore, the
challenges of the 1980s and 1990s.
What we sought was a clear commitment from manufacturers and
component suppliers to undertake the investment necessary to
modernise the industry, and a commitment from management and
unions to work constructively together to avoid costly
disputation and to lift productivity.
And in the Car Plan that was developed by my colleague
John Button, we received those commitments.
For our part, the Government overhauled the existing
assistance arrangements and agreed to provide stable levels
of support for a fixed period to allow the industry to find
its feet and to become more self-sufficient and more
competitive. This Car Plan, which in 1984 set the course for your
industry for the eight years through to 1992, was a vital
means to safeguarding a vital industry.
we are now more than half way through the Car Plan, and the
Automotive Industry Authority has just released its report
on the state of the industry at the half way mark.
As you know, it was a report that levels a number of
criticisms at your industry and identified areas for future
challenge. 61) 90)
My view of the Authority's report is that it presents a
constructive and timely assessment of the industry's
progress since 1984.
And I stress the adjective " timely" because the eight year
life span of the Car Plan is long enough to give the car
industry time to adapt to a less protected environment.
In this perspective, I believe there is no problem in the
industry which should be viewed as insurmountable.
So I urge you to take the Authority's criticisms on board.
A great deal of progress has been made, but a good deal
remains to be done to meet the time-table, particularly in
regard to price, productivity and quality.
It was certainly disappointing to read the Authority' s
judgement that the quality of Australian made cars has not
improved significantly over the life of the Plan.
Insufficient quality control can only damage the reputation,
and therefore the sales, of your products, at home and
overseas and that is an outcome that none of us wants to
see. You have a collective responsibility producers, the unions
and component suppliers to secure the industry's future.
Further plant and product rationalisation, and greater
export orientation, should result in increased efficiency
and cost reductions through the operation of economies of
scale and improved capacity utilisation.
I realise I have dwelt so far on the Authority's criticisms.
Let me make it clear the Government fully acknowledges the
considerable achievements that have also been made. Credit
should be given where it is due.
The industry has developed considerably since 1984 when it
was hampered by a policy environment which made it hard for
the industry to chart its future.
Exports have grown by 60 per cent over the first four years
of the Plan and despite recent set-backs the Authority
expects a resumption in growth of exports by 1990.
Investment expenditure in the industry since 1984 has also
been substantial, both by Plan producers and by specialist
component producers. I was pleased to note that the
Authority reports that investment, aimed at upgrading and
enhancing production equipment, is expected to increase
further over the remaining years of the Plan.
The Authority also reports considerable progress in
rationalising the industry through reduced number of
producers and models, and through joint-ventures. This is
expected to ensure production runs of 40,000 vehicles or
more for most models by 1990. The export facilitation
scheme is also helping to increase specialisation in the
component sector. G 99'.
These efforts, if built on rigorously, should contribute to
increased productivity, lower real prices and high quality
cars. This progress has been due, in part, to the improved
industrial relations in the industry, and I pay tribute to
all those responsible for that.
As good as industrial relations have been on the
manuf acturing side of the industry, the same cannot be said
for the components suppliers side.
Let me take this opportunity to comment that in the era of
just-in-time production, the Government can only take a dim
view of the supply unreliability that accompanies such
disputes. it is more galling in view of the components industry's
heavy reliance on local content rules. The Car Plan itself
is progressively bringing pressure to bear on components
suppliers to lift their game. But employers and unionists
are being short-sighted if they see local content rules as a
cushion for their inefficiency or unreliability.
So, where do we go from here?
For our part, the Government remains committed to providing
a stable and predictable environment in which the industry
can make confident decisions about restructuring and
investment. It should not be forgotten however that at the expiry of the
Plan in 1992, relatively high levels of tariff assistance
will still apply 35 per cent, compared with levels of
or 15 per cent for most other areas of manufacturing.
it is important to appreciate that the community at large is
aware of the costs of the high levels of protection afforded
the car industry. You can expect to face continuing public
pressure for competitively priced, quality vehicles. And
there is a growing feeling in the community that the
industry has had time to become internationally competitive.
Clearly towards the end of the Plan the Government will
again need to look at options for post-1992 assistance
arrangements. This is not meant as a threat but as a reminder to the
industry to make the most of the stability offered now by
the Plan, to get on with the task of rationalisation. It
will be easier to do so now than after 1992.
Ladies and gentlemen,
over the past 20 years a lot of effort, throughout your
industry and in Government, has been directed to the task of
creating a national system of design rules to maintain and
improve the level of safety and emissions of vehicles in
Australia.
Despite this effort, uniformity has proved an elusive goal,
and crucial safety and emission questions remain subject to
eight separate sets of State and Territory legislation.
Last year the Interstate Commission concluded that effective
national uniformity could best be achieved by Commonwealth
legislation. This Government as you know has an unparalleled record in
pursuing micro-economic reform, eliminating the bottlenecks
that hamper efficiency and productivity and fostering a more
competitive environment.
This month we are bringing down a number of statements which
take this process further among other elements, a new deal
for scientific and technological research, and a strategy
for reform of the waterfront and coastal shipping.
Federal Cabinet recently tackled the issue of national
automotive design standards, and we have decided to
legislate to introduce national safety and emission
standards applying to all imported and locally manufactured
vehicles. in making this decision, Cabinet was also conscious of the
mounting concern about imports of secondhand motor vehicles
from Japan which do not conform to existing Australian
safety and emission standards. National legislation will
ensure that imported second hand cars are modified to meet
Australian standards and do not jeopardise the safety of
Australian road users.
The advantages of the legislation will be considerable. it:
will: replace eight sets of legislation with one;
encourage production economies in the industry;
enhance export prospects for Australian producers by
facilitating international harmonisation of vehicle
safety requirements; and
ensure a ' level playing field' for Australian producers
and importers of new and second hand cars.
I pay tribute to Bob Brown, the Minister for Land Transport
and Shipping Support, who can take great credit for this
initiative. It is the Government's hope that this
legislation will be introduced and passed in this
parliamentary sittings. I trust the non-Government parties
will co-operate in this important task.
Ladies and gentlemen,
I've addressed a number of issues of specific concern to the
passenger motor vehicle industry tonight but I want to close
on an issue of relevance to all employers and, indeed, ail
Australians. G 1J!
The Australian economy, as we all know, is working at a very
strong level of demand, which is sucking in excessive
imports and requiring a policy of tight money.
Employment growth has been strong and job vacancies are at
high levels.
Capacity utilisation is high and in some industries domestic
demand cannot be met by local production.
These conditions are comparable to the periods of the
1973-74 and 1981-82 wages explosions.
The Government's major short term objective has been to
prevent these pressures leading to another destructive wages
explosion. The wage/ tax/ transfer package in the April Statement has
been successfully designed to avoid a wages blow-out while
providing substantial tax cuts and additional support for
the least well-off members of the Australian community.
Anyone who imagines that the wages outcome we now face in
1989-90 could have been achieved in the absence of the
Accord is, to put it frankly, talking through their hat.
where we have an effective and durable wages policy, a
fiscal policy that has delivered a $ 5.5 billion surplus this
year and will do so again next year, and an appropriately
tight monetary policy, the alternative is nothing but
confusion and instability.
I believe the car industry knows as well as anyone in this
nation that we cannot afford a return to the inefficiency
and uncompetitiveness that characterised earlier years.
So, the Government will continue to take hard economic
decisions. It cannot lose sight of the responsibilities the
Australian people have put upon it. Similarly, industries
such as yours must strive to do their part to help set
Australia on the path of prosperity.
Once again, let me offer my congratulations on your
birthday, and my best wishes for your future.
I J1!