TREASURER:
Good morning.
PRESENTER:
Well what are we headed for here? We have got the GMH problem, we have got Toyota added to it and you are talking about new debt levels. What sort of situation is Australia facing?
TREASURER:
I want to say that Australia has a terrific future, but we have got to deal with the challenges that we have been left. The fact is, the last mob took their eyes off the ball. They left a legacy of problems and we are methodically going through each individual issue trying to make sure that Australia can take the opportunities that come its way over the future years.
PRESENTER:
But it doesn’t look like a terrific future when you look at this. What stakes have we got on the table here? If Holden and Toyota pull out what are the implications for this country?
TREASURER:
We always go through these things. We always get through the challenges. Firstly, we want an Australian motor vehicle manufacturing industry – we really do. Over the years there has been massive consolidation in motor vehicle manufacturing. I remember when Nissan used to manufacture cars in Australia. For a long period about 80% of the cars bought in Australia were manufactured in Australia. But it has changed over time. The previous government saw the end of Mitsubishi and Ford – effectively manufacturing in Australia. Now, Holden are refusing to confirm that they are going to be around for the years ahead, which is incredibly frustrating, I think, for workers and for the Australian community which has provided billions of dollars to Holden over the years. Toyota; so much of it is in the hands of their own employees. The fact is, on Friday the employees are being asked by Toyota to negotiate a deal that simply keeps the business going 24 hours a day if possible, without any reduction in salary for workers, but the AMWU is recommending against it.
PRESENTER:
Let’s look at the potential here though. There is talk that it could cost 50,000 jobs if Holden goes. There is talk that $2.5 billion is spent in Victoria alone on components. There is talk that Australia, if Holden goes, could be forced into recession. Is that wrong?
TREASURER:
It is wrong, of course it is wrong. For a start, the total number of manufacturing employees at Holden in South Australia is, as I understand it, about 1760 and then 200 in Melbourne. A total of 2000 in Australia, in manufacturing at Holden.
PRESENTER:
What about the component jobs?
TREASURER:
The component jobs, yes, they are flow on employment.
PRESENTER:
How many?
TREASURER:
I have not got the exact figure, but it is certainly a significantly larger figure. However, 50% of the Holden Commodore is parts imported. The suggestion that the total employment in the motor vehicle industry in Australia is directly linked to the manufacturing of cars in Australia is just wrong. The numbers involved in employment are greatly exaggerated when it comes to the motor vehicle industry because you have just seen Mitsubishi and Ford – and Ford has not gone yet – but they have announced their ceasing manufacturing in Australia, the world has not come to an end.
PRESENTER:
Well, Denis Napthine is on your side. The Victorian Premier’s is on your side. The industry is worth $676 million to Victoria and the employers 25,000 people. You have to assume those jobs are on the line long-term.
TREASURER:
No, I do not accept that.
PRESENTER:
Where do they go? Where are they going to work?
TREASURER:
I do not accept that every salesperson at Holden is directly linked to the manufacturing of Holden cars in Australia. Because most of the cars that Holden sells are not manufactured in Australia. Everyone is rolling in every dealership, every spare parts facilitator. They are rolling in logistics suppliers and so on. The bottom line is we can make cars – we can do well – but the cost of making cars in Australia is $2500-$3000 more than it is in other countries. Now, how do we reduce our costs? One of the ways to reduce our costs is to ensure we improve our productivity, improve plant and equipment and that has been part of the deal over a number of years. It cost $3750 per vehicle more to build cars in Australia, relative to other countries. $2000 of that is within Holden’s own plants and mainly relates to the cost of labour. Another $1500 is the premium paid to buy local products and then about $250 is the logistics cost of imported components. As I said, 50% of the Commodore is imported components.
PRESENTER:
We were talking about the Toyota situation as well. Does all this mean, when you talk about productivity, does the workforce have to accept less?
TREASURER:
No, I do not think they have to accept less, but they have to accept the flexibility that is so important.
PRESENTER:
Well, what sort of flexibility? Are we talking about penalty rates? What are you talking about?
TREASURER:
No, it is about making sure that the massive investment in plant and equipment does not lie idle for periods of time. Toyota will need to explain it to you directly – and I would urge you to get Toyota on the line. In my discussions with Toyota they are incredibly frustrated that they are trying to send the message to head office in Tokyo that they want to continue manufacturing in Australia. They want to invest in new vehicles in Australia. They want to show that they are in partnership with their employees. I am sure the employees of Toyota want to ensure that they have job security into the future. But the union, the AMWU, is fighting against the company to prevent the flexibility needed to ensure the Toyota keeps manufacturing at a competitive level in Australia and exporting into the Middle East. These things come down to the relationships within the companies and the capacity of the company to be able to compete on the world stage.
PRESENTER:
So why does it cost so much more to make a car in Australia? Whether it is a Toyota or Holden. Who is getting the money?
TREASURER:
Overwhelmingly, a large part of it is labour costs and labour inflexibility.
PRESENTER:
Well how do you fix that, without reducing labour costs?
TREASURER:
Obviously, you can have different work shifts, you can get rid of union picnic days and various other things.
PRESENTER:
Penalty rates are coming back, if you are going to work 24 hours a day.
TREASURER:
If you were asking me to go down the path of rewriting the industrial agreements, that is up to the companies. That is not up to the Government.
PRESENTER:
Is that part of the answer? What’s the answer?
TREASURER:
You will need to ask the companies.
PRESENTER:
Come on, is it part of the answer from your point of view that the industrial agreements need to be rewritten?
TREASURER:
You will need to ask the companies. I do not employ people in this industry. All I know is that taxpayers are putting $48,000 per year towards each manufacturing employee in the motor vehicle industry. Now that is a huge taxpayer contribution to the employment of other people and the bottom line is we need to make sure that we are getting benefit for taxpayers money.
PRESENTER:
Okay, you say the figures that are being quoted are wrong. What are the figures? What are the implications here if it all goes wrong?
TREASURER:
I do not want it to go wrong, I do not accept the premise of the question, I do not accept that.
PRESENTER:
No. But what are the stakes then? What the stakes we are playing for, not playing for, what are the stakes on the table here?
TREASURER:
This is about Australia’s ability to compete with the rest of the world. We need to make sure we are at our best. That is what we have got to do. Whether it is manufacturing of motor vehicles or manufacturing of high-tech products or services exports to the world or agriculture or mining – we need to be at our competitive best. Even more so, when the subsidy being provided to an industry like the motor vehicle industry – over $1.1 billion a year in assistance from the government to the motor vehicle industry – when that money is being spent we need to make sure that we are competitive. These are global companies – Toyota and General Motors. They are looking at the costs of production in Australia versus the rest of the world they are saying, and had said over the years, they want to be more competitive but everyone needs to work together to make that happen, including the unions.
PRESENTER:
Well you have been very tough, the government has been very tough on Holden through this. The statements from you in Parliament yesterday were pretty much unprecedented towards a company..
TREASURER:
I do not accept that because if you or I were running a company…
PRESENTER:
Will, come clean, be honest, that is what you are telling them.
TREASURER:
Yes, that is right, well what is wrong with that?
PRESENTER:
I am not saying there is anything wrong with it, but I have not seen them directed from the Treasurer at a company like this before. Is there a bit of brinkmanship here? Is it something the chest to try and get Holden to toe the line a bit more.
TREASURER:
No. Look, the Australian government and the Australian taxpayer has put a huge amount of money into General Motors Holden over the years. It is put on the table, $1.4 billion over future years for General Motors Holden and Toyota. I think we have got a right on behalf of taxpayers to ask them what their long-term intentions are. If we are putting $1.4 billion on the table for two companies to operate in Australia, Toyota certainly says it wants to be here for long-term, Holden has not said the same thing. I think the Australian taxpayers deserve answers from Holden, given that literally hundreds of millions if not billions of dollars that are going be part of the partnership into the future.
PRESENTER:
Is Holden conning us? Has the decision been made?
TREASURER:
You look at the reports out of the United States a decision has been made, but Mr Devereux says no final decision has been made. But that is not an answer. Mr Devereux needs to be fair dinkum with the workers and with stakeholders and suppliers. It is just not good enough to say that we have not made a decision about our future. That is a decision not to have a future. I mean, either you are here or you are not. This game has got to come to an end to provide certainty for all the stakeholders including taxpayers.
PRESENTER:
Now? before Christmas?
TREASURER:
If they have made a decision and the decision comes out of the board in Detroit, then they should be upfront with the Australian people.
PRESENTER:
Thank you for your time.
TREASURER:
Thanks.