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Value play: Senator Rex Patrick at the opening of the Melbourne AIC, where he emphasised the need for Australia to add value via advanced manufacturing rather than simply exporting raw materials.

Victorian AIC open, SA to follow, in bid to maintain viability of local parts sector

16 Dec 2019

THE first of two Auto Innovation Centres (AIC) was opened in Melbourne last week to support local automotive parts development and testing, backed by $10 million in government funding that one of the politicians responsible for securing the support, Senator Rex Patrick, described as a good example of “public interest extortion”.


In opening the Mulgrave facility, which will be followednext year by a twin centre in South Australia, Senator Patrick (SA, Centre Alliance Party) said the AIC was an important step towards maintaining Australia’s place in the automotive industry and its future as a manufacturing country.


Senator Patrick said the AIC, which was conceived by the Australian Automotive Aftermarket Association in 2014 before the closure of the Ford, Holden and Toyota factories, became part of the $100 million rescue package assembled after the Abbott government oversaw the closure of the industry in 2017.


The package was drawn up after a Senate inquiry on which Senator Patrick, and his predecessor Nick Xenophon, both served.


“The car industry closure was totally unnecessary. I was quite adamant something needed to be done for the industry,” he said.


Sitting on the Canberra crossbenches gave Senator Patrick the opportunity to do some hard bargaining for the industry.


“It wasn’t just the funding for this fantastic facility thatwe got. We managed to twist the government’s arm with some ‘public interest extortion’ to the tune of $100 million,” he said.


“Of that, $47 million was to stimulate high-value manufacturing in Victoria and South Australia, $24 million for a range of advanced manufacturing research projects, $13.5 million came in the form of tariff reductions, $5 million to assist student research and $10 million for two innovation laboratories.


“People talk about horse trading. We dismiss horse trading because when you horse trade sometimes you get a donkey.


"We prefer to talk about what we do as public interest extortion.”


The $10 million funding, which includes $600,000 from the Victorian government, includes $4.2 million for the establishment of the two AIC sites while the remainder will be made available in the form of grants to parts-makers who successfully apply to use the development and testing services.


Applications for the second round of these grants opened on the day the AIC was opened, December 12, and will close on February 4, 2020.


As GoAuto reported the announcement of the AIC at the Australian Automotive Aftermarket Expo in April, the centres are designed to accelerate the development and reduce the costs of local component design and manufacturing.


They will be equipped with advanced data capture equipment that can scan and recreate whole vehicles in a digital three-dimensional space, providing crucial information to expediate the parts-making process without compromising quality.


Advanced 3D printing hardware will also be on hand at the centres, as well as facilities for staff training on use of equipment and tools.


Senator Patrick said last week that Australia could not go on simply digging up and selling rocks to overseas buyers, but needed to get into value adding if the manufacturing sector of the workforce was ever to grow back past seven per cent.


“For instance, we have about 18 per cent of the world’s reserves of lithium and we currently produce about 47 per cent of world production,” he said.


“It’s predicted that in 2025, lithium world exports will be worth $12.5 billion. So we could have a portion of that. But if we go to the refining and processing stage, that’s going to be worth $41 billion.“


"If we go to electro-chemical processing, that’s going to be worth about $297 billion. Storage cell production then will be worth about $424 billion and final battery assembly will be worth $1.3 trillion.


“That’s what we should be shooting for and, in order to dothat,we need to be value adding here in Australia.”


Senator Patrick said those in Canberra who do not think Australia should try to grab some of that value adding for itself, instead of simply exporting rocks and letting others make the profits, should remember the famous line written by public intellectual Donald Horne.


“Australia is a lucky country run by mainly by second-rate people who share its luck," he said.

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