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Securing Australia's manufacturing future

18 December 2013

Joint media release with the Prime Minister, the Hon Tony Abbott MP

Australia has a strong manufacturing history and will have a strong manufacturing future.

Today, the Government is announcing a wide-ranging industry initiative comprising targeted support for regions impacted by the wind-down of Holden’s manufacturing operations by 2017; reviews of the South Australian and Victorian economies; and development of a National Industry Investment and Competitiveness Agenda which will focus on our strengths, create jobs and exploit our competitive advantages.

Transitioning from heavy industrial manufacturing to higher value added production calls for a national,strategic response rather than a piecemeal one based on hand-outs and subsidies.

The Federal Government understands that South Australia and Victoria have acute pressures due to the departure of Holden and Ford.

Still, they are not alone and Australia’s manufacturing industry faces challenges across the board.

Industry policy in Australia must become proactive to ensure that our manufacturing industry is competitive and incentivised to create jobs and investment.

We will deliver support for the workers and communities impacted by the recent automotive closure announcements but will do so based on state specific economic recommendations so that scarce Budget resources can be deployed to grow the economies in both states.

To support the reviews, the Federal Government’s response will include the development of a $100 million growth fund to support economically responsible initiatives in regions facing pressure in their manufacturing sectors.

The fund will support business and research and development opportunities and will complement the direct support available to Holden workers as part of existing Commonwealth and Holden support schemes. We will also work to ensure that automotive workers have their skills and competencies recognised and certified.

The fund will be administered by the Department of Industry and commence in 2014/15. The fund will provide:

  • Support for existing component manufacturers in Victoria and South Australia to adjust their business output or business model to non-automotive and overseas customers, or who commence or expand export activity;
  • Grants to existing and/or new businesses that establish or expand manufacturing operations in South Australia or Victoria, with preference for those businesses that employ former automotive workers; and
  • Grants to aid the commercialisation of research and development in the automotive component manufacturing sector, leading to new products or processes.

The final design of the fund will be informed by the outcomes of the reviews, consultation with the South Australian and Victorian Governments, and advice from the review panels.

The Australian Government will contribute $60 million to the fund and the Victorian Government will contribute $12 million. The remainder will be drawn from the South Australian Government and our expectation is that Holden will make a contribution.

GM Holden has indicated it has set aside at least $100 million for costs relating to the wind-down of its Australian manufacturing obligations. Holden workers will also be eligible for employment support with a Job Services Australia provider as part of the Automotive Industry Structural Adjustment Programme.

Two reviews of the South Australian and Victorian economies will commence immediately and report to the Government in February 2014. The outcome of the reviews will support the work of the COAG Industry and Skills Council.

The reviews will develop support plans that are local, practical and take into account challenges facing South Australia and Victoria.

Both reviews will be chaired by Industry Minister Ian Macfarlane. They will include MPs and industry leaders in the South Australian and Victorian business communities.

The reviews will look at ways to boost the competiveness of the South Australian and Victorian economies by:

  • Encouraging investment and innovation in high growth sectors in the affected regions;
  • Further investing in infrastructure to boost productive capacity;
  • Where appropriate and cost effective, relocating Commonwealth public service functions to the affected regions.
  • Considering the most pressing concerns of the shipbuilding industry;
  • Supporting the diversification of automotive supply chain companies; and
  • Supporting the training and redeployment of workers displaced by closures.

Australian Government infrastructure investments in both states could also be brought forward should the State Governments agree and where projects are ‘shovel ready’.

More than $1.5 billion has been set aside for South Australian infrastructure projects over the next six years and $6.5 billion for Victorian projects. We will continue discussions with the Victorian and South Australian Governments to determine suitable projects that could be fast-tracked.

The Government wants to see Toyota continue manufacturing in Australia and exporting. Australia must develop a plan for the future if we are to sustain and grow our manufacturing industry for the future. Our challenges are greater than the departure of key automotive players and affect all states and territories.

Therefore I will Chair a Taskforce comprising the Treasurer, Industry Minister and Minister for Trade and Investment to develop a National Industry Investment and Competiveness Agenda which will make recommendations to the Government by the end of June 2014. I will also consult closely with my Business Advisory Council, Chaired by Mr Maurice Newman AC, in the development of the Agenda.

We are determined to be a government that makes decisions in a considered way, with the best advice and in the national interest. We will move quickly to support the more urgent needs of South Australia and Victoria, but must deliver a longer term national plan for change and growth.

Work is already underway to reduce red tape and taxes which stifle business and investment. We have completed a Free Trade Agreement with South Korea and are advancing further FTAs for the benefit of Australian businesses and the economy.

Therefore, the Taskforce will focus on potential measures to promote national competitiveness and productivity including:

  • Economy wide measures to boost the competitiveness of Australian manufacturing and lower the costs of doing business, such as options to reduce the costs of energy and regulation on Australian businesses;
  • Options to encourage innovation, including employee share schemes, support for research and development and commercialising good ideas;
  • Options to accelerate the development of productivity enhancing infrastructure;
  • Options to encourage the growth of small to medium businesses; and
  • Economy-wide incentive mechanisms to boost investment in Australia.

Still, the Government understands that the best thing we can do for business in Australia is to reduce costs and lower taxes.

No country has ever taxed its way to prosperity. Similarly, no country has ever subsidised its way to prosperity.

We will do what we can to ensure the workers and businesses of this country have a strong, profitable, viable and competitive future.

We will do what we can to ensure that Holden and Ford workers move from one good job to a better job when they leave those companies in 2016 and 2017. That means ensuring they get the best possible economy in which to move.

Government’s essential task is to get the fundamentals right: that means low, simple and fair taxes; stable and predictable policy settings; prudent, frugal and effective administration; efficient services and strong infrastructure.

Legislation to repeal the carbon and mining taxes has passed the House of Representatives. If the Senate passes the legislation as its first order of business next year, 2014 can be better for Australian businesses across the board.

Media contacts: Mr Macfarlane's office 02 6277 7070