In his first year of Government Tony Abbott will need to decide whether to choose the frying pan or the fire when it comes to automotive industry policy.
There is no doubt that there are significant costs to keeping the industry alive while this period of a strong Australian dollar persists.
However Professionals Australia believes that we must help our automotive industry survive these challenges for the future of our economy, our way of life and our national interest.
It’s clear that the Abbott Government is struggling with this decision – as it should.
The industry is clearly at a threshold unlike any it has faced in its entire history. Industry players have told us that there is a very real likelihood that the whole show could close down in a matter of a few short years.
It has stated clearly that it will be deciding on the future of Australia’s automotive industry and whether the benefits of maintaining our nation’s ability to engineer, design and build vehicles are worth the costs.
It's undoubtedly a tough choice and if you believe the papers Mr Abbott’s own cabinet is split between those that want to keep building cars and those that would prefer to see the industry die, than provide more assistance.
Professionals Australia has long advocated keeping our car industry. Of course, you would expect us to do this, given the many hundreds of our members who are currently working in the automotive industry.
But we have many more reasons to support Australia’s automotive industry than just the honourable need to reflect the needs of our members.
We acknowledge that not every one of our members wants Australia to keep investing in the automotive industry. That’s why we liken keeping our auto industry alive as standing in the frying pan, but its worth realising that deciding to close down the industry would put our nation’s futures firmly in the fire.
These are the main reasons we believe we need to keep the industry alive now and, once the dollar returns to more historically normal levels, thriving.
A closure of Australia’s automotive industry will have the following effects:
1. Australia will forego $127 billion of GDP, for more than 36,000 businesses. This will result in Adelaide’s economy going backwards by almost one per cent and Melbourne’s going backwards by 1.4 per cent compared to forecasts.
2. Australia will forego $3.5 billion of exports every year.
3. More than 50,000 direct jobs and many, many more indirect jobs will be lost.
4. These Australian employees will forgo $17 billion of wages.
5. It will cost the Commonwealth and State Governments millions of dollars of welfare payments and re-skilling assistance if the automotive sector closes.
6. It will also cost the Commonwealth and State Governments millions of dollars of revenue if the automotive industry closes, through reduced company tax receipts, payroll tax and land tax receipts.
7. Australia will have no independent ability to design or produce military or transport vehicles should we again be engaged in a major conflict, and little chance of re-building this capacity. If you don’t believe me just have a look at how many former automotive engineers are now working to build military assets like the Bushmaster.
8. The industry is an important source of on the job engineering training to Australia’s graduate and younger engineers that would be lost forever.
9. About $480 million of research and development is invested in the automotive sector and many of these innovations flow on to other sectors, including mining.
10. Automotive engineers have one of the best jobs in the world. Right now, in every Australian school thousands of kids wonder what it might be like to design cars.
11. Australia will be a less diverse economy, relying even more on our mining, education, financial services and agriculture sectors.
12. The reality is that most industries receive some sort of government support.
13. Given our automotive industry has taken many decades to develop, it is unlikely Australia would regain its ability to design, engineer and build cars ever again.
What our Federal Government, State Governments and the three main automotive producers can and should do is an even more tricky matter.
That’s why we are asking you to have a think about what should be done and how.
Time and time again we have found that some of the best ways through a crisis come from asking our members to find a way forward.
What policies should be changed, implemented or scrapped to make sure every Australian kid has the chance to get one of the very best jobs our nation has right now – an automotive engineer.