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Carr criticises cabinet in-fighting on car industry

Back off: Labor industry spokesman Kim Carr says the federal government is split down ideological lines on the car industry.

Lib “free-trade fantasies” threaten car-makers, says Labor spokesman Carr

5 Nov 2013

FEDERAL opposition industry spokesman Kim Carr has called on the government to stop the in-house ideological battle that has resulted in a string of leaks that are not fact-based and which are damaging the car industry.

Senator Carr – an industry minister in the former Labor government – said the battle was between cabinet ministers who recognised the economic value of the car industry in general and, on the other side, free-trade fantasists who wanted to try out their ideas on the car industry.

He said the government was treating the carmakers with contempt.

"Some Ministers are telling journalists the car makers are "rent seekers" and that they keep going to Canberra with their begging bowls," Senator Carr told GoAuto.

“Some ministers are telling journalists the car-makers are ‘rent seekers’ and that they keep going to Canberra with their begging bowls. It’s just a bizarre way to behave.” Senator Carr said other industries got far more assistance and yet escaped the same sort of adverse leaking by cabinet.

“Of course, if they were mining companies, we would treat them differently, wouldn’t we?” he said in reference to the diesel fuel excise rebate enjoyed by the mining industry. The miners save more than $1 billion a year under this tax exemption.

“We provide more financial support for livestock than we do for motor cars. They never talk about that.

“The reality is we spend less money on the automotive industry than we do on many other industries.” Reports that GM Holden had approached the government seeking assistance of $200 million were “complete crap”, Senator Carr told Melbourne radio station 3AW at the weekend.

“What you constantly see is an endless stream of propaganda aimed at trying to hurt this industry,” he said.

Senator Carr said opponents of the car industry assistance wanted to use the industry in an economic experiment.

“There are people who want to treat the workers of this country as a bit of a plaything, people who want to try out some of their free market fantasies,” he said.

“There’s clearly a very deep divide in this government about manufacturing. For some people, support for industry is bad but support for the automotive industry they say is evil.

“Now we are constantly seeing speculation which is not based on fact.” Senator Carr applauded the study commissioned by the Federal Chamber of Automotive Industries (FCAI) showing that it would cost far more to close the car industry than to keep it open.

The study showed the cost of closing the industry in 2018 would amount to $21.5 billion over 13 years.

The highest rate of assistance under the current arrangements is $500 million a year, and that is recouped through income taxes and increased economic activity generally because around 250,000 people employed directly and indirectly by the industry have jobs and disposable income.

“It will actually cost us more as a country to get rid of this industry than it would to preserve it, in terms of lost taxes and increased social security,” he said.

“It would probably take us about 10 years, particularly in Victoria and the 28,000 direct employees in Victoria, about 10 years for the economy to recover if this industry falls over.” Senator Carr told 3AW that Ford’s decision to cease manufacturing in 2016 was a real concern to the former Labor government because Ford had stopped investing.

“But we’re not getting that position from Toyota, we’re not getting that position from General Motors, we’re not getting that from the 160 firms that are tied up with the automotive industry.” Senator Carr said the automotive industry played a central role in the development and introduction of new skills and technologies across the industrial and manufacturing base.

“There are benefits to other industries, in telecommunications, in mining, in glass, in electronics. It is the largest research and development contributor to Australian manufacturing.” The former minister said a lot of the problem with the industry at the moment could be put down to the strong Australian dollar, but that there was probably also some snobbery involved in the ranks of the Liberal Party.

“We have got a dollar which has gone up dramatically and increased (Australian production) costs by about 30 per cent (when converted into US dollars).

“So we are now finding it much cheaper to buy imported cars than we are to buy Australian cars.” Senator Carr said there was also some resistance to local cars among the critics in the Liberal Party.

“Now I know there is some snobbery around, the Liberal Party snobbery in particular, that says Australian cars are no good,” he said. “That’s just not true.

“The car-makers are in the top 10 selling marques in the country. They are producing high quality (cars), in high quality plants, but our cost structures are higher because of the change in the dollar.” Senator Carr said it was important to retain at least two car-makers because it would not be possible to sustain the parts manufacturing base if the suppliers were dependent on only one assembler.

“The reality is that the Australian automotive industry is an ecosystem. And, if General Motors were to “pull the pin”… it would flow right through the industry.

“Every car on Australia’s roads at the moment is supported by a government somewhere. I think it is tragedy the Australian government has so little regard for our future in terms of manufacturing, and for the people of this country in terms of its capacity to have a balanced economy.”

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