Good Start, But The Engine Can't Afford To Idle
The Age
Saturday August 16, 2008
The Bracks review is an important first step. But Australia's car industry must meet its obligations with decisiveness and rapid innovation.
THE starting point for the review of Australia's car industry led by former Victorian premier Steve Bracks was the sensible question from the man who commissioned it, federal Minister for Innovation and Industry, Kim Carr: Do we want a car industry at all? As it turns out, to little surprise, Senator Carr's question was rhetorical. The report, commissioned in February, submitted to the Government at the end of last month and made public yesterday, emphatically endorses the continuing viability of car manufacturing in this country. In the words of Mr Bracks, there is "a sustainable case both economically and environmentally (for) a competitive industry that can compete worldwide, that goes for export whilst . . . having a competitive domestic market as well". This is underscored by the fact that this industry contributes almost $8 billion a year and $4.7 billion in exports to Australia's economy - one of the top 10 exporting industries. Although the Government has yet officially to respond to the review, Senator Carr is wasting no time in praising it: "I want to sing this report from the rooftops," he said yesterday. Before he gets his ladder out, however, he might wish to ponder two supplementary questions only partially dealt with in the 200-page report. One, how will our car industry match the technical, environmental and competitive strengths of its global competitors? And, two, how long will this take to achieve? These questions, which should be put directly to the industry itself, are necessary, given its unfortunate history of slow reaction to innovation and market forces. The key word - one emphasised throughout the report - is "sustainability". To this end, Mr Bracks makes some strong recommendations, and proposes allocating $2.5 billion of government assistance, to encourage and strengthen the industry with the aim of achieving economic and environmental stability by 2020. Perhaps the most controversial recommendation is the support of the planned reduction to the tariff on passenger cars from 10% to 5% by the beginning of 2010. This is a good idea, based on common sense. In sticking to the Government's line, but tightening the deadline instead of reducing tariffs by 1% a year to 2015, the proposal confirms the inevitable truth - that any increased protection would have been detrimental rather than beneficial to an industry that would have been too over-protected for its own long-term good. Entering a more competitive international environment will place the industry in a more responsive position to global economic and market realities.Another good idea is the proposal to bring forward to 2009 the Government's green car innovation fund and, if successful, to double its allocation to $1 billion. But the acceleration of time and money is, as Einstein might have said, relative to the speed of incentive and innovation: although the report is specific on some of the fund's structural elements, it needs a sharper focus on how the money is allocated and over what period. It is crucial that such investment yields results in a timely manner. It is not that the car industry does not know what is required. Already, Australia is behind in the development of its own environmentally sensitive car, and global competitors, such as the Toyota Prius and the Honda Civic, have led the field in industry-defining vehicles. Australian manufacturers have that chance, too, and the Bracks report suggests valuable methods of encouragement.The proposed changes of infrastructure - replacing the present automotive competitiveness and investment scheme with a global automotive transition scheme - are long overdue and critical if the car industry is to be repositioned in international terms. Also welcome is the proposed innovation council, to provide advice and perspective; but it must be hoped this will include managers experienced in the global market. In essence, the Bracks report is sensible, welcome and, although perhaps short on some necessary specifics, represents an important first step in the reconstitution of this country's car industry. As such, it is a beginning whose developments must be taken up by the industry itself. Funding incentives are fine, but the quid pro quo is delivering on deadline. The industry needs to respond to its economic and environmental obligations decisively and responsibly. As it prepares to come off the feeder-road and on to the global super-highway, there are new rules to learn, new signs to follow. What cannot happen is a U-turn.
© 2008 The Age