An 11th-hour warning was issued to the Australian government last night on the eve of the release of the Federal Productivity Commission’s position paper on tariff reform, writes Mike Duffy.

Holden chief Peter Hanenberger said failure to provide a competitive policy setting could send a signal to Detroit and Tokyo that Australia was not committed to the automotive industry.

He said all four Australian car manufacturers and importers had, for the first time, made a joint submission to the commission urging the government to maintain automotive tariffs at 10% beyond 2005.

As well, the Federal Chamber of Automotive Industry – of which he is president – called for a renewal of the Automotive Competitiveness and Investment Scheme beyond 2005.

“This will be vital if the industry is to attract the necessary international investment to secure its future,” Hanenberger said in a keynote address to the FCAI AGM in Canberra.

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“It also supports the government’s stated objective of a viable, internationally competitive and globally integrated automotive manufacturing industry in Australia.”

Australia’s tariff protection for the auto industry currently stands at 15% but reduces to 10% on January 1, 2005.

The Productivity Commission review will be central to the government’s final decision on the level of protection post-2005.

Free-traders within government want a zero tariff by 2010. However, Holden, Ford, Mitsubishi and Toyota are opposed to such a move and warn of the long-term risk to the industry.

The future of Mitsubishi Motors has been assured well beyond 2010 following an announcement of $A1 billion investment for two new cars, a Magna/Diamante replacement in 2005 and a new large car in 2006.

Holden’s exports last week were given a significant boost with an announcement that General Motors had contracted to buy 18,000 Monaro Coupes (badged Pontiac GTO) a year worth $A1 billion starting towards the end of next year.

Hanenberger said industrial relations was a critical domestic issue that had to be addressed as five major disputes had impacted or threatened many of the 54,000 people employed by the car industry.

“From Holden’s perspective, two of those disputes cost 16 days’ production and an estimated $A320 million in lost sales,” he said.

“There were flow-on effects to most of the 190 suppliers with whom we do business. We will not stand by and let our people be affected by the illegal industrial actions of others,” he said.

The 26,000 people employed by Ford, Toyota, Mitsubishi and Holden were entitled to expect that their jobs will not be continually interrupted by other companies’ disputes.

Hanenberger asked all parties to secure support for “simple common-sense steps for industrial relations”.

“We are also seeking increased protection for innocent third parties at risk of significant damage as a result of such action. Most importantly, we need commitment from all parties to a long-term strategy which brings this sabotage to an end.”