May 5, 2010

2010 Federal Chamber of Automotive Industries Annual Dinner

2010 Federal Chamber of Automotive Industries Annual Dinner


The Hon Anthony Albanese MP

The Minister for Infrastructure, Transport,

Regional Development and Local Government

Leader of the House

Member for Grayndler

05 May 2010

Leadership in Vehicle Safey and Environment Standards

Thank you for the opportunity to address your Annual Dinner.

I would like to make some remarks tonight to you about leadership.

Decisive leadership that is expected of Government in the tough times, to deal with the challenges of the present while preparing us for the future.

And the leadership of industry to accept responsibility to embrace and lead change, particularly in vehicle safety and environmental performance so as to position itself to be relevant to the nation’s future needs.

The importance of the automotive industry to Australia is well recognised by the Rudd Government.

For the contribution that you make to the wider manufacturing and other sectors of the economy.

For your role in Australian research and development, the development of a skilled workforce, and manufacturing exports.

For the more than 50,000 people employed in the manufacturing sector of the industry, for the contribution of some $4 billion annually to the salaries of Australians.

It was not all that long ago that a small group of economists and commentators questioned whether we needed a local automotive industry at all.

These armchair critics were wrong.

Your industry today is open, competitive and diverse.

It is valued by the Rudd Government.

So when the Global Financial Crisis hit the world hard we directed a portion of our stimulus package towards boosting automotive sales.

We were aware that the automotive industry is such an important source of employment and business confidence, both directly and indirectly.

The targeted tax breaks for business were, by any measure, a success. Not only did they stimulate sales, they also helped business at a time when investment in fleets was threatened.

In 2009 new vehicle sales in Australia were down 7.4 per cent over 2008.

In the same period in the United States they were down between 27 and 33 per cent.

It is very pleasing to see that sales of new vehicles continue to grow after the economic stimulus tax incentives have concluded.

Vehicle sales for the first three months of 2010 are up by 18.2% compared with the same period last year.

I believe this data also demonstrates the growing strength of the Australian economy and confidence of the Australian consumer.

Buying a new car is, for the family, or the individual, a sign of confidence in the future. It signals confidence in employment and in the economic outlook.

Our leadership during the Global Financial Crisis has played its role in securing this optimism.

Another area where Governments are showing leadership is in the development of a seamless national economy.

During 2009 the Council of Australian Governments signed off on the development of single national regulators for heavy vehicles, rail safety and commercial maritime vessels.

We recognise that within Australia, these are in fact national markets.

We should therefore enjoy the benefits of single national regulation, cutting out red tape and out-dated state based differences in transport regulation.

Since becoming the Minister responsible for the Motor Vehicle Standards Act, I have focussed attention in my department to policies aimed at delivering greater vehicle safety and better environmental performance.

Improving road safety is an important objective for the Rudd Government.

Over the past thirty or more years, we have seen great improvements in this area.

Last year’s national road toll was less than half what it was in 1970 even though the number of vehicles on our roads and the kilometres travelled has steadily risen.

Better roads, tougher laws, improved driver education and safer vehicles have all played their part.

When we look at vehicle safety, I am also aware that it comes at a cost which is generally passed on to the consumer.

Therefore improvements to the national safety standards – the Australian Design Rules, the ADRs – need to offer a tangible benefit in safety.

It is in everybody’s best interests for standards to be clear, unequivocal and national.

Given that over 80 per cent of vehicles are imported into Australia, it is also vitally important that the ADRs be harmonised as much as possible with the United Nations Economic Commission for Europe vehicle regulations, acknowledged as the peak international standards and agreed by the Council of Australian Governments.

In June last year, I announced the mandatory fitting of Electronic Stability Control to all new models of cars, passenger vans and off-road vehicles sold in Australia. We worked closely with the industry to bring in this regulation.

ESC is life saving technology and research has found that vehicles equipped with ESC are around 25 percent less likely to be involved in a fatal accident than those without it.

You will be aware that this new ADR comes into effect for new model light passenger vehicles from November 2011 and all other new light passenger vehicles from November 2013.

In October last year, the Victorian Government announced that it would mandate the fitting of ESC to all new light passenger vehicles from January 2011 through its own local regulations.

In a national market where there was already a very strong take up of ESC the benefits in doing so are minimal, while the costs are significant.

I will continue to argue that it is vitally important that in areas such as vehicle standards, we must support a national approach.

An important element in ensuring we maintain a robust national approach is for the Australian Government and vehicle industry together to demonstrate clear and decisive leadership, in setting the vehicle safety agenda.

My Department is currently working on reinvigorating the Technical Liaison Group, the peak ADR advisory forum which includes the FCAI, the states and territories and other industry groups, so that it has a more strategic focus and achieves greater levels of ‘buy in’ from all participants.

The Government has also directed the Department to increase its involvement in the formulation of international vehicle standards.

Australia is currently mounting a proposal for development of an international pole side impact standard aimed at increasing vehicle occupant protection.

Up to 10 per cent of Australian road fatalities involve pole side impacts.

The proposal will be formally considered by the international standards working group in Geneva in June.

I strongly urge the FCAI and it members to support Australia’s proposal and to recommend this position to the International Organisation of Vehicle Manufacturers.

I also look forward to the FCAI finalising the voluntary code of practice on head protecting side airbags as soon as possible.

Most new vehicles sold in Australia already have this safety feature, but I encourage you to go further and ensure it is made available to lower specification vehicles as well and to reflect such a commitment clearly in the code.

This will complement Australia’s Geneva proposal and demonstrate industry’s commitment to lead on safety.

Turning to environmental issues, the Government is committed to improved health outcomes by achieving better vehicle pollution emission standards.

We want to see Euro 5/6 standards introduced in Australia as soon as practicable.

Since we issued the Draft Regulation Impact Statement at the beginning of this year, we have received around twenty-five submissions.

Many of the responses favour the introduction of Euro 5/6 as proposed in the draft RIS, but I do recognise that some in the industry have some reservations about the timing of the implementation.

The Government is willing to discuss adjustments to the timeframe with the FCAI which could help to minimise compliance costs while maintaining air quality benefits.

But the Government expects industry to show leadership and embrace the purpose and intent of the change and not substitute prevarication for action.

In my view, it is important to have these issues resolved quickly so that the industry has maximum time to plan for compliance.

I am confident the FCAI will work with the government and show leadership to achieve healthier air quality for our major cities.

We will also be looking for your strong engagement on the issue of CO2 emissions from vehicles.

As you are aware, in July 2009 COAG endorsed a new National Strategy on Energy Efficiency – with fuel efficiency in transport being a key element.

COAG has identified the reduction of CO2 emissions from the transport sector as a difficult task, but one we must deal with.

And given the light vehicle sector is the biggest single source of transport CO2 emissions – almost 80 per cent in fact – your industry has a pivotal role in helping Australia meet this challenge.

The draft RIS on the costs and benefits of introducing CO2 emissions standards for light vehicles is expected to be released later this month and I urge your members to consider it carefully and provide constructive comment on its recommendations.

A co-operative approach to tackling this challenging issue will, in my view, give Australia the best chance of achieving a successful outcome – delivering real reductions in CO2 emissions from the transport sector.

A more environmentally sustainable industry will be more economically sustainable in the future.

And real progress is being made.

The Government’s $6.2 billion New Car Plan for a Greener Future is playing its part in assisting putting the industry on an economically and environmentally sustainable footing.

We are seeing the production of more fuel-efficient vehicles.

For example, through $35 million in support from the Green Car Innovation Fund, Toyota is now producing the hybrid Camry which has been met with enthusiasm by Australian car buyers, selling 1,290 cars in the first six weeks of going on sale.

With $149 million of assistance from the Green Car Innovation Fund, Holden will commence production of a small car at its plant in Elizabeth in February 2011.

Last year we approved the first full volume fully electric car to the Australian market- the Mitsubishi MIEV. I test drove it and was impressed with its on-road performance.

Back in 2008, we saw the Australian industry generate nearly $6 billion in exports. It was the pinnacle for local manufacturers with 163,718 vehicles being exported – more than three times the number of a decade earlier.

You demonstrated that the industry was internationally competitive.

Mike, in his former role as President and Managing Director of GM in the Middle East saw Australian export products rolling off the ships in our largest export market.

That was before the Global Financial Crisis and, through no fault of local manufacturers, the export story turned bleak in 2009.

I would like to see us return to those days in the near future. From my experience with the industry I believe it is achievable sooner rather than later.

I am profoundly aware of the challenges you as manufacturers and economic wealth creators face, both domestically and globally.

The challenges for us, the policymakers and regulators, are to provide you with a well structured, equitable business environment while meeting community expectations for a cleaner, safer and friendlier world.

Governments and industry need to continue to show the leadership necessary to achieve this.

I look forward to the continuation of our strong and constructive relationship.

Thank you again for this opportunity.