Subjects: Motor vehicle industry; ASIO bill; Bashir comments

E&OE...........

PRIME MINISTER:

Well, ladies and gentlemen, Mr MacFarlane and I have called this news conference this morning to announce the Government's plans to provide a decade or more of total certainty and assurance to the Australian motor manufacturing and motor vehicle industry and I'm delighted that we're joined at this news conference by the Chief Executives of the motor manufacturers and also the head of the component manufacturing organisation because this package is important not only to the car industry, it's very important to the component industry and very significantly it's important because it delivers job security for the thousands of Australian men and women who are employed in the motor manufactory industry.

We're announcing today proposals in relation to the post 2005 systems arrangements. These arrangements will provide certainty for the industry at least to 2015 and beyond. After falling from 15% to 10% on the 1st of January 2005, tariffs on passenger motor vehicles and related components will remain at 10% until the 31st of December 2009. And the 1st of January 2010, the tariff will fall to 5% and to support this the Government will extend the highly successful Automotive Competitiveness and Investment Scheme, known as ACIS, by a further $4.2 billion from 2006 to 2015 over the period from 2006 to 2010, benefits totalling $2.8 billion will be available under ACIS. From 2011 to 2015, ACIS benefits will total $1.4 billion but will be fazed out. A new feature of the ACIS scheme after 2005 will be a $150 million research and development fund to assist vehicle manufacturers in developing new advanced technologies. Legislation will be introduced into Parliament in the new year to give effect to the measures that I have just outlined. Importantly, there will be a further inquiry by the productivity commission in 2008 to determine whether changes are warranted to the legislated tariff reductions in 2010, taking account of conditions in the international trade environment.

It's fair to say that the Australian motor vehicle industry has transformed itself in recent years. It is a very strongly performing sector of the Australian economy. It has major export achievements to its credit. In fact, the great strength of the industry now is its export capacity, its world competitiveness and the measures I'm announcing today will reinforce the momentum that the industry has gathered over recent years to make it more competitive. We believe that the combination of targeted assistance, further tariff reform, the assurance of a further Productivity Commission inquiry in 2008 is a mix which will deliver certainty, build further confidence in the industry, guarantee job security, encourage investment from the parent companies and overall add to the lustre and strength of the Australian car industry.

It is a transformed industry, one that is performing well. I want to thank the management of the motor vehicle companies. Can I also thank the workforce, the Australian Manufacturing Industry in motor cars is very important to the future of the thousands of Australians, especially in Adelaide and Melbourne - but not only there because of the reach of the component industry in other parts of Australia, particularly in regional Australia. And the message that goes to the men and women of the car industry in Adelaide and Melbourne is this is a good news announcement for them. It'll give them the decade of certainty and beyond which so many of them very properly have wanted. Thank you.

JOURNALIST:

Prime Minister, what does this do to our Bogor timetable commitment of phasing out all tariffs by 2010?

PRIME MINISTER:

Well, when you bear in mind that we're going down to 5% by 2010, and when you bear in mind that for practical purposes there's not a lot of difference between 0 and 5%, and when you bear in mind that we're at least the equal, if not ahead, in that area of other countries in the APEC area, it is wholly consistent and in total harmony with what we're committed to under Bogor.

JOURNALIST:

[inaudible] 2008 review to reverse or unwind or halt the planned tariff cuts?

PRIME MINISTER:

Well, it will be a legislated tariff cut, but it's important that we have the opportunity of looking at how things are going two years before the step down from 10 to five and that's why we're having a productivity inquiry. We should never be frightened to gather evidence about the conditions. The productivity commission if its track record to date is any guide, can be relied upon to look at the industry rigorously but sensibly. And can I say that the recent productivity commission report was a very good one. It was strong on economic principle, but it was also sensible and pragmatic about conditions in the industry. And I think you've got the best of every world with this - you've got further tariff reform, you've got targeted help in areas in where it will help and you've got the assurance that if there is a significant change in the international trading environment, then the productivity commission's inquiry in 2008 can pick that up.

JOURNALIST:

But the tariff cut will go ahead Prime Minister, come what may?

PRIME MINISTER:

The tariff cut will be legislated and unless the law is changed, it will go ahead.

JOURNALIST:

Are you satisfied this will end the political football game that this issue has become with companies constantly putting their hand out for, and threatening to withdraw unless Government support is forthcoming?

PRIME MINISTER:

Well, I don't choose to use that language about the behaviour of the companies. They are operating in a world global economic environment and I wouldn't adopt that language. I think what this does to you is to deliver certainty, consistency, predictability and assurance over a period of a decade. And I think that is enormously important. I mean, the motor manufacturers obviously can speak for themselves in relation to their investment intentions and plans. But as far as the Government is concerned, this is a really balanced package. I want to thank Ian MacFarlane in particular for the work that he's done as the Industry Minister. It's a very balanced package and it creates a good investment climate, but it continues the process of reform and it further equips the Australian industry to compete effectively in a world environment.

JOURNALIST:

Does this mean Prime Minister that you have assurances from the four manufacturers that they will remain in Australia?

PRIME MINISTER:

Well they can speak for themselves, it's far better than anything I might say.

JOURNALIST:

You would have sought that though wouldn';t you?

PRIME MINISTER:

I beg your pardon?

JOURNALIST:

You would have sought that, I presume?

PRIME MINISTER:

I always engage in relevant discussions with people who are affected by Government decisions.

JOURNALIST:

Mr Howard, do you envisage a long-term exit strategy for Government in terms of funding for the…

PRIME MINISTER:

Well, it's phasing down, but at a sensible rate. I mean, it will phase down to the year 2015. Look it's… and when you think back to where protection was for the motor car industry when, I can still remember the days that you sort of were trying to guarantee what, 85% of the local market and to think how we have moved and that the tariff levels that obtained in 1996 when we became the Government. I believe very strongly that the decision that we took in 1997 which was something of a balanced compromise between people who thought we should go further in relation to tariff production and others who thought we mightn't go forward at all, I think we struck the right balance then and I think that helped to lay the ground work of the strength that the industry now has. I mean the tariff debate in a sense is over because once you get down to five or ten per cent you can have an exchange rate variation and it can equal or cancel out that impact. But equally you don';t want to be superzealous. You have to be sensible. And I think this is a very sensible package. There';s further reform but it';s targeted assistance. It';s going to be legislated and you';re going to let the Productivity Commission have a look at things against the background of a changed international environment in 2010. Now I can';t put it any better.

JOURNALIST:

Prime Minister could we ask the manufacturers whether they';re happy with your [inaudible]. Mitsubishi Australia – would they like to say whether they';re happy with it?

PRIME MINISTER:

That';s a matter for them.

JOURNALIST:

Are Mitsubishi Australia… are they happy with this package and does it ensure the future of Mitsubishi in Australia?

PHILLIPS:

Oh I think it certainly does. We';re delighted with the way the whole Productivity Commission process was handled and the dialogue we';ve had. The outcome I think is fantastic for us. Our product plans at this stage take us through… we';re in a 10 year cycle so we';re looking at now through 2012 and this is going through 2015. Well it';s probably going to be another year or so before we can say what';s going to happen in 2015, but certainly our plans at the moment clearly take us through that period and now that we have this certainty beyond, I think that we can now go to our parent and start planning very, very confidently about years beyond that.

JOURNALIST:

Are you confident that future Governments will honour these arrangements? There';s always the very strong chance that Mr Howard will be around in 2015.

TOM PHILLIPS:

Well I';d say it';s going to be legislated. I think we would obviously be very confident about it.

JOURNALIST:

Mr Phillips, how important is the R&D component of this new scheme and what does it mean for…

TOM PHILLIPS:

Well I think R&D is now becoming a very significant, from the automotive point of view R&D, the automotive industry is now making I think a significant contribution to R&D within Australia, not just affecting building motor cars. And so this is going to help us. It will help us bring R&D investment to Australia which may, in our case certainly, may have in the past been done in Japan for example.

JOURNALIST:

[inaudible]

GEOFF POLITES:

Well what I will say is we have absolutely no plans of going away. We';ve got plans in place way beyond the current timeframe. We';ve announced in the last two years a billion dollars of spending. I don';t know how much more commitment we can give. As for are we happy with the package, we';re more than happy with the package and more than happy with the process. We found the process, from the Productivity Commission through the negotiations that we had, to be everything that you could want in terms of a cooperative approach and we';re happy with the outcome.

JOURNALIST:

Is the future of the industry going to be increasingly on the export market rather than the domestic market? Is that where you';re looking now?

GEOFF POLITES:

Well we';ve got a business plan that doesn';t have exports in it at this point in time, but we believe that we';ve got a business plan that makes us a very significant player.

JOURNALIST:

[inaudible] thousands of jobs could be lost as a result of this package? Can you give an assurance to your workforce that that won';t be the case?

POLITES:

We can never give any assurances about anything that might happen in the future but the reality is that the tariff declines of the last few years haven';t cost any jobs and we would expect that that would be the case going forward.

JOURNALIST:

Mr Macfarlane, do you have any job projections behind this package?

MACFARLANE:

Well the job projections obviously depend on the industry growing and I think this package gives an extraordinary chance to grow if we look at the opportunities that Holden for instance are looking at with the third shift. The jobs in the industry have remained constant over the last 10 years. The product has increased enormously in quality. And I think that the Australian industry is really on the brink of bursting into the international market and of course, as Geoff Polites said, also in terms of its credibility in the domestic market it';s starting to win back, on the basis of just sheer quality and value for money, buyers who may have in the last few years bought foreign cars or imported cars. I';d just like to also say that the car industry really has given this inquiry its best shot and I have to congratulate the people standing behind me for their commitment to their industry, but also a realistic expectation of what they wanted to get out of this. They engaged the PC Commission and I think as a result of that we';ve got a PC report which was both fundamental in its economic approach, but also practical in the way we move forward. So I think we';ve now got a car plan that gives, as the Prime Minister said, particularly the foreign parents great confidence in investing here in Australia. By investing here, by increasing our exports, by increasing our production and our sales penetration, it can only mean more jobs for people in the car industry.

JOURNALIST:

So what expectations does the Government have of the industry as to its handling of labour relations?

MACFARLANE:

Well we obviously had a long and detailed discussion with the car manufacturers and component manufacturers about that. There are a significant number of EBOs due to be negotiated in the early part of next year. We have accepted their assurances that they will approach those on a best endeavours basis. The will make the negotiations tough but they have their own decisions to make in terms of the economics of their own businesses. And, of course, to protect themselves from illegal strikes they have put in place a contingency fund, which means that no single manufacturer or no single components buyer can be singled out by the unions and have their business destroyed. The biggest threat to jobs in the car industry in the next 10 years is still unlawful union behaviour.

JOURNALIST:

Just on the subject of the ASIO bill, I';d like to ask does the Government';s refusal to back down and accept the amendments that Labor is putting forward mean that Australians are going into the holiday season with impending terrorist threat, more at risk because the Government has refused to allow even some, although they might be watered down, powers to [inaudible].

PRIME MINISTER:

Well, we're not prepared to pretend to the Australian public that a bill in a form that we would see as unworkable is an adequate response to the current situation and the Labor Party has an opportunity to decide whether it supports the additional legislative power that is needed in this new environment or whether, for quite insubstantial reasons, continues to withhold support. And I find it quite amazing that they can remain mute and silent in the face of the New South Wales government giving police, without any judicial authority or warrant or approval or oversight, the power to strip-search kids between the age of 10 and 14. That's all right in New South Wales because it was passed by a Labor government. But what we are endeavouring to do, recognising that intelligence and information is critical to acquire the full knowledge to prevent a terrorist attack, surely preventing an attack has to be the holy grail, if I can put it that way, preventing something occurring has to be the driving force for our intelligence agencies and our responses, surely that is the thing that we must do above all else. And this bill is designed in a properly supervised way to give ASIO the power on warrant issued by a judicial officer with the approval of the Attorney-General, under judicial supervision, with a renewal of the mandate to hold every 48 hours with a maximum of holding somebody without charge for 7 days in order to obtain information that might enable the authorities to prevent a terrorist attack. Now, we are living in different times and it requires a slightly different response, a different response under properly supervised and enforceable conditions. And what I say to the Labor Party is, the nation needs a stronger ASIO bill, you remain silent in the face of what the New South Wales Labor Government has done and if this bill does not go through and we are not able to clothe our intelligence agencies with this additional authority over the summer months it will be on the head of the Australian Labor Party and on nobody else's head. But we are not going to pretend, we are not going to pretend to the public something which is not and that is pretend to the Australian public that we have a piece of legislation that's entirely workable. There comes a moment with these things where people have got to stand and be judged on the stands they take. We've been agreeable to a couple of Labor amendments in relation to the use of State Judges and a sunset clause. We've agreed to those two amendments but we're not going to agree to amendments that render the process we're establishing unworkable.

JOURNALIST:

[Inaudible] Abu Bashir';s threat to strike if [inaudible]

PRIME MINISTER:

Oh, Louise, I'm not going to get into an exchange in response to a reported comment by that person who, of course, is under investigation in his own country in relation to a number of matters. I would simply make the general point that this country self-evidently bears no ill will or malice toward any Muslim country or to Islam. Islam is one of the great world religions. Decent members, which are 99.9% of the Islamic faith, are as appalled at terrorism as we are. We are have not and will not behave with any belligerence towards any countries in our neighbourhood or, indeed, towards any Islamic countries. Thank you.

[ends]