Back in the Carr game: reflecting on Australia's automotive industry

Former minister wants Australia’s automotive industry to have a future.

First published in the August 2015 issue of Wheels magazine, Australia’s most experienced and most trusted car magazine since 1953.

KIM Carr still believes in the car industry, but can do little about it from the discomfort of the Opposition benches. Now the former industry minister helps to shape policy so Australia can maintain crucial capability.

“Whatever happens, there will be an Australian automotive industry,” he says. “What we are debating now is the scale and its nature.”

The senator says investors need to know they are welcome and that policy promises will be kept. But this will be difficult given massive funding cuts by successive Liberal and Labor governments, not to mention footage in late 2013 of treasurer Joe Hockey in parliament daring General Motors to leave Australia, a performance that made a big impact in international automotive circles.

Yet he insists there are multiple proposals to invest in the local car industry. He cites evidence to a parliamentary committee last year that “at least three bodies” wanted to explore options, and says he is aware of at least nine possible automotive projects.

Carr says the resurgent British car industry – last year more than 1.5 million vehicles were built there, the most since 2007 – is proof that a “phoenix strategy” can revive a moribund sector. “The British faced a similar situation after the devastation of Thatcher [and] came to realise they actually needed an automotive industry.”

He says Australia has global credentials in gaseous fuels, light-weighting and battery development, and has attracted investment from China and India, “but I wouldn’t exclude the possibility of [knock-down] kit production and contract manufacturing”.

“It will depend on the business case,” he says. “They might not necessarily need large production runs to do that, with the Australian dollar at sub-80 cents. We know that [with] anything below 86 cents it was possible to make money on export markets.”

Carr argues that Australian wage structures are not that high by international standards. And that the Germans, Canadians, Americans, Japanese and Koreans all manage despite also having relatively high wages. “But stability is important,” he says. “You have to be able to think some years in advance, and you’ve got to be able to resist the fads.

“Look at the sale of full electric vehicles. Underwhelming. But we were told by every peacock in every pet shop in every bloody town in this country it was going to be the answer to a maiden’s prayer. Well that didn’t happen.

“But I am interested in the new technologies that will come on. I’m interested to see where hydrogen goes ... We have very substantial reserves of hydrogen in this country.

“I believe it’s reasonable to put to foreign manufacturers that if you want access to hydrogen, we want to see a quid pro quo in terms of the development of manufacturing capability. I’m interested in the development of the technology in Australia.”

Carr stays in touch with the global carmakers and argues that Australia can leverage its network of Aussie-born auto industry executives in international roles.

Too much hype

IT’S tempting to say successive governments have refused to offer incentives for electric vehicle buyers, partly because scarce funding was tied up in local car production.

But Kim Carr insists Better Place, the high-profile Israeli EV network and battery swap business that collapsed in 2013 after establishing a branch in Australia, showed EVs were “overhyped”.

So is Carr bearish on the future of EVs? “They are going to have to get the production costs down quite dramatically ... But until they develop the necessary infrastructure, I don’t see them moving quickly.”