Australia is a country that relies heavily on the automotive
industry to overcome the tyranny of distance and achieve its potential through
connecting people and places.
With a growing population and aspirations of increasing
economic growth and prosperity, there is no doubt that Australia's automotive
industry will remain critically important.
Australia has a long history of excellence in automotive
manufacturing, industrial engineering and design. While automotive
manufacturing is declining due to announced closures in motor vehicle
production in 2016 and 2017, the future of automotive engineering and
manufacturing is not in the hands of the car makers alone.
Australia will have an automotive industry after 2017;
government policy will determine its size and its shape. What is crucial now is
that governments act to preserve the industrial capabilities of the automotive supply
chain. A redefinition of the industry is also required to recognise and support
the role of all sectors, including but not limited to: motor vehicle
production; component making; aftermarket manufacturing; engineering and design;
servicing and smash repairs; retail motor trades; sales support; and training.
This inquiry was established to develop a policy framework
and identify areas where the government could act to assist all sectors of the
industry address the challenges and harness any opportunities arising during
this period of change.
The interim report focused on two areas the committee
considered needed immediate action—a comprehensive and coordinated policy
framework and reforms to the main automotive manufacturing assistance program,
the Automotive Transformation Scheme.
Reflecting the changing industry dynamics, the committee
recommended that governments take a wider approach to defining what constitutes
the automotive industry and facilitate policy development aimed at fostering
the growth of industry as a whole.
The committee recommends that the Australian Government work with
stakeholders—across industry, unions and state and territory governments—to
develop an internationally competitive automotive industry policy framework for
the entire industry, recognising the strategic role the industry can continue
to play in a diversified economy.
Reforming the Automotive
Given the imminent cessation of passenger vehicle production
in Australia, the committee considered it important to propose amendments to
the Automotive Transformation Scheme in the interim report. Implementing these
amendments as soon as possible will give affected business the best opportunity
to manage the transition and develop viable and sustainable business models.
The committee recommends that the Australian Government maintain
the current level of Automotive Transformation Scheme (ATS) funding through to
2020‑21 as provided for in the ATS Act, and allow current underspends in
the ATS to be brought forward from stage 1 (ending 2015‑16) to stage 2
The committee recommends redefining the ATS into a broader,
automotive‑related advanced manufacturing, engineering and design program
that is intended to maintain skills and industrial capabilities and mitigate
the loss of jobs by supporting supply chain diversification, new manufacturing
investment and jobs growth.
The committee recommends that the object of the Automotive
Transformation Scheme Act be updated to better reflect the current situation
within industry and the need for targeted support for diversification and
transformation activities, particularly in the automotive manufacturing supply
chain. The new object should specify that the ATS is designed for the
promotion and growth of advanced automotive industries in Australia, including:
components and materials, new technologies, engineering and design for both
domestic and offshore customers when that work is performed in Australia.
The committee recommends that the ATS rules and eligibility
criteria should be amended to encourage further investment in research and
development (R&D) so that manufacturers can continue to secure complex
design and engineering work and to provide greater support for diversification
initiatives, including (but not limited to):
amend the ATS rules to allow for the claiming of R&D relating
to products and services for non-automotive industry sectors to facilitate the
transition of manufacturers out of motor vehicle production;
amend the ATS rules to allow for the claiming of R&D and
engineering services across the registration categories for both domestic and
offshore automotive customers when that work is performed in Australia;
amend the definition of automotive services so that the concept
of eligible automotive services is broader than passenger motor vehicles and
light commercial vehicles (and covers all modes of mobility);
remove the once a year registration requirement to allow for ease
of movement between ATS registration categories as the transition within the
industry progresses; and,
amend the ATS rules to allow motor vehicle producers to remain
eligible for the scheme, even in the event of declining production volumes.
The final report explores what is required for the industry
as a whole to reach its potential. Once again the issue of developing a framework
for industry development and coordinating government involvement is explored.
In addition, there are number of specific areas that the
committee considers important in their own right. The downstream automotive
sectors face challenges arising from changing business models, technological
developments and the need to attract and retain skilled workers. Automotive
manufacturing needs assistance to retain as much activity in Australia as
possible, and there are opportunities to expand automotive manufacturing in
other areas, such as the automotive aftermarket and the truck industries, if
the policy settings are conducive. In addition, the motorsport and motoring
enthusiast sectors are significant contributors to the automotive industry and
should be encouraged to expand their activities.
Policy framework revisited
The committee reiterates its support for the development of
a unified industry voice through the establishment of an Automotive Industry
Taskforce and a coordinated government approach to the industry.
Government must recognise that the automotive industry will endure.
Given this recognition, the committee recommends that the government devote the
necessary resources across a range of government departments to ensure the
process of transformation continues. This includes a redefinition of the
automotive industry to recognise and support the role of all sectors, including,
but not limited to, motor vehicle production, component making, aftermarket
manufacturing, engineering and design, servicing and smash repairs, retail
motor trades, sales support and training.
The committee recommends that the Australia Government support the
establishment of an Automotive Industry Taskforce—with representatives from
industry, unions and governments—to facilitate a collaborative and coordinated
approach to developing and implementing a national automotive policy framework
which encompasses all sectors of the industry.
The Automotive Industry Taskforce would also build on the work of
the AutoCRC and the Automotive Australia 2020 Roadmap Project. It would develop
strategies to understand and meet the challenges and opportunities associated
with alternative fuels and emerging technologies as they affect the automotive
industry, including electrification, light-weighting, gaseous fuels and fuel
cell technologies, car sharing, telematics and autonomous vehicles.
The Automotive Industry Taskforce should also examine the findings
of this committee inquiry and report back to government with further
recommendations for action and strategies to address the issues raised over the
course of this inquiry.
The committee recommends that the government urgently develop and
implement a comprehensive and coordinated strategy to:
avoid a social and economic catastrophe arising in those areas
most affected by the closure of vehicle manufacturing; and,
address the unprecedented structural adjustment occurring across
the retail service, repair, recycling and associated sectors.
Sales, service and repair sectors
With the reduction in automotive manufacturing, the
downstream sectors will account for around 95 per cent of all
activity within the Australian automotive industry after 2017.
The sales, service and repair sectors are all facing unique
challenges as they adjust to rapid technological change, the emergence of firms
in some sectors that have significant market power, and ensuring that workers
have the training and skills they need. The committee has proposed a set of
recommendations to cover the issues raised by stakeholders.
Given the consolidations and closures in the automotive
and related industries, the committee recommends that a close examination of the
operation of the Franchising Code of Conduct be undertaken as part of the next
scheduled review of the code, with particular regard to the automotive sectors,
including new cars, motorcycles, farm and industrial machinery and fuel
retailing franchising arrangements.
The committee recommends that the current restrictions
and requirements on the parallel importation of both new and used vehicles be
The committee recommends that the government continues to
work with industry to ensure suitable access to manufacturer information by
independent automotive service and repair businesses. The committee notes the
progress that has been made through the Voluntary Code of Practice for Access
to Service and Repair Information for Motor Vehicles (the Code) and recommends
that the Commonwealth Consumer Affairs Advisory Council undertake a review of the
Code no later than three years after commencement.
The committee recommends that an independent inquiry into the
smash repair industry be undertaken to examine the relationships between
insurers, parts suppliers and smash repair businesses, and inform an
appropriate policy response.
The committee recommends that the government recognise the vital
role of training in this sector and support a comprehensive, industry-wide
approach to assist the automotive sector to redesign and implement training
courses that reflect the needs of employers and give workers the skills they
Due to the unprecedented structural adjustment across all sectors
of the automotive industry, changes to training and skills development VET
packages in the automotive fields should be put on hold for a period of 12
months. During this time, Auto Skills Australia and a coordinated alliance of
national industry sectors should undertake the necessary work to recast all
qualification requirements, including for new skills occupations. Owing to
their national reach and previous experience, the committee suggests that the Motor
Trades Association of Australia is the most suitably qualified organisation to
led and coordinate this work.
The committee recommends that the government, through the Council
of Australian Governments (COAG), work with state and territory governments to
identify and address barriers for mature workers seeking to enter the
automotive industry as apprentices.
The committee recommends that the mentoring program for automotive
apprentices developed under the Australian Apprenticeships Mentoring Program
and the Australian Apprenticeships Advisers Program be reinstated.
Automotive manufacturing is an integral part of advanced
manufacturing activities more broadly as the technologies and skills associated
with automotive manufacturing and readily diffused into other manufacturing
applications. The committee believes that the government should set policies
that encourage diversification, growth and innovation in Australian automotive
manufacturing. In addition to proposed reforms to the ATS, the committee
recommends some changes to the Automotive Diversification Programme and
considers the government should give consideration to providing targeted
incentives to modernise Australia's truck fleet.
Subject to any changes to the Automotive Transformation Scheme
after 2017 and providing no existing registered companies are adversely
affected by changes to the scheme, the committee recommends that a proportion
of the funding available under that Automotive Transformation Scheme (for
example, from underspends in the scheme) be allocated to manufacturing
diversification programs such as the Automotive Diversification Programme.
The committee recommends that the activities eligible for
assistance under the Automotive Diversification Programme be expanded to
include support for research and development, engineering and product
development, commercialisation, feasibility studies, site relocation and/or
consolidation activities and marketing activities. In particular, the committee
recommends that grants for the appointment of export managers plus on-costs on
50:50 matched basis be included as an eligible activity under the Automotive
The committee recommends that the government undertake a
feasibility study of the proposal put forward by the Truck Industry Council to
modernise Australia's truck fleet. Pending a favourable evaluation, government
should seek to implement this proposal as a matter of priority to assist the
automotive manufacturing industry to adjust to cessation of passenger motor
vehicle production in 2017 and as part of the broader reform agenda to reduce
Motor sport and motoring enthusiasts
Motor sport and motoring enthusiasts activities are a
significant and growing part of the Australian automotive industry and provides
an opportunity for further growth and development. However, there are barriers
to the expansion of these sectors to which potential solutions should be
The committee recommends that the government undertake an
independent review of the Specialist and Enthusiast Vehicle Scheme (SEVS) to
- the scheme is meeting its stated objectives;
- the eligibility criteria for importation are
compliance and monitoring processes do not undermine the integrity of the
The committee recommends that the government, through COAG, pursue
reform options to harmonise vehicle modification regulations and adopt a
consistent national approach to compliance and enforcement with vehicle
regulations. A critical part of this work will be the harmonisation of emerging
federal, state and territory legislation and regulations designed to deal with
the arrival of autonomous vehicles and driving systems.
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