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Senator Kim Carr
Minister for Manufacturing
Minister for Defence Materiel

 

Pacific 2012

Transcript of doorstop interview

 

 1 February 2012
Sydney Convention and Exhibition Centre

Darling Harbour

Senator Carr: There are some great opportunities here, growing opportunities here, and some of the things I mentioned this morning – a ten billion dollar budget in terms of procurement alone is not an insignificant level of investment for the government. There are some great stresses on a number of companies at the moment. In terms of the effect of the dollar they are very significant and we are working with the companies to be able to make sure they’re better prepared to be able to cope with that. But we make no assumptions that we can secure every single position. Our approach is to work with the companies, and we are very concerned about any job losses. But our approach is to maintain the capabilities so that we can take advantage of any opportunities as they arise.

The circumstances we face at the moment are historically unique; in terms of the rise of the  dollar, in the terms of trade [inaudible] …these are remarkable circumstances. Its not only that since 2008 there’s been a 67% increase in the value of the dollar. In the last 12 months we’ve seen the dollar vary from 95 cents to $1.10. So this is not just a high dollar, it’s a very volatile dollar. So there are a number of factors affecting business conditions. We’ve also got the situation in terms of the uncertainty around the European debt crisis and great stresses within the international community. So you can’t say it’s down to one particular issue.

Journalist: Is it more a matter of speeding up the first and second pass approval system?

Senator Carr: Well I think you have to be fair. I mean this is a balanced approach that the Government takes to ensure that we get the system is right; these are very complex systems that require careful examination. We’re not reckless about where money is spent. It’s better to take the time to get it right and you’ll actually save money and produce better outcomes for Australian companies.

Journalist: But not every project is so complex, and yet first and second pass approvals have now been applied to minor projects…

Senator Carr: [inaudible] We’ve had an increase in the number of approvals. What we’re looking at is what we can do to ensure that we have greater confidence that we are able to maintain that high rate. So we’ve embarked on a capability development improvement program to ensure that business processes are streamlined and to ensure that we are still providing the Government with very high quality business cases for their consideration.

Journalist: What can you do to local skills and local jobs in an industry like submarine manufacturing to get value for money…

Senator Carr: The Government position is that we are looking at all the options. The White Paper made it clear in terms of policy announcements at the time. I don’t think that it would be any secret to any of you that my interest is developing Australian capabilities. Our interests there of course extend to [inaudible]. .. that includes local capability but have developed systems that we can understand, modify and fix when there are problems. We have to have the capacity to replicate those capabilities quickly in times of emergency. So it’s the overall effect.

The whole chain needs to be examined when you’re looking at the purchase of major acquisitions, particularly in terms of ship building. And we will have a look at all of that, we will do it thoroughly. The fact remains – on the advice given to me – that we have not, I have not, seen any evidence that there is an off-the-shelf solution that can be applied without adaption. [inaudible] It’s a theoretical model which is something economists love to do. They like to sit there and contemplate in the abstract, they don’t have to think about what practical implications – of what it actually means to deliver these products in a way that it is useful for the country.

Journalist: With the demise of the car industry…

Senator Carr: What demise of the car industry? I’d like to challenge that.

Journalist: Ok well the point is there are thousands of skilled people in Adelaide working on submarines.

Senator Carr: We are short of welders.

Journalist: Where are they going to go if the submarine is not built here?

Senator Carr: These are things that take time to develop. Some people will say to me well without the car industry we’ll just get by. That’s not the case. You may not notice it immediately but in due time you will notice it. It’s a national experience; if you lose capabilities it’s extremely difficult to replace them. Once the door shuts it’s incredibly difficult to re-open it. Now we know that effect of a loss of capability in one sector has effects in other sectors. One of the reasons I’m so committed in terms of the automotive industry is the stellar effects it has. The strategic implications it has in terms of not just our assemblers, but also in terms of the people, the designers, the tool makers. It’s the whole range of skills that are necessary.

If you go around to any of the workshops and talk to people about where they have worked,  in aerospace you constantly come across people who have worked in the automotive industry; you come across companies that started in the automotive industry, advanced engineering companies that of course adapted their skills and diversified their skills. I know we have world-class skills in this country. My concern is that we don’t have enough of them. What I know is that the way to get more of them is to give people the capabilities here to ensure that the work is done here; so that we can develop skills which are then applied across the board. Now whatever you say, we don’t have enough people, and the way to get more people is not take more work away.

Journalist: Do you reckon you could win that argument with the [inaudible] in cabinet?

Senator Carr: Well look all I can say to you is this. These are decisions that the whole of Government understands. You’ve heard what the Prime Minister has said today. You understand what we’re saying in terms of the importance of manufacturing. These are not questions that are confined to one portfolio. These are whole of Government questions and I think this is becoming much clearer in this society as a whole. There is increasing debate about why it is so important to maintain manufacturing in Australia. You can’t just import everything, you actually have to have the skills developed here and we need as a people to be able to ensure that there’s a balance.

Journalist: I heard this morning from a senior analyst that your appointment as both the Minister for Defence acquisition effectively and your role in promoting Australian manufacturing is an obvious conflict of interest.

Senator Carr: What – not in the national interest? …Listen, I take an interest in more than the automotive industry. I’ve taken an interest, if you look at what I’ve done in the Parliament in 19 years – I’m not just confined to one industry.  The fact remains that what we do in one industry affects others – this is an ecosystem. If I spoke about engineering would you be more comfortable? 

Journalist: Jobs are obviously very close to your heart.

Senator Carr: Why shouldn’t they be?

Journalist: How do you say to one company they’re not going to get the contract because your product is not the product ….?

Senator Carr: Because we’ve always said .. look at everything I have said.  We’re not in the business of giving people a leg-up when they don’t deserve it. This is not a crutch.  This is about ensuring that companies are internationally competitive. 

I made the point before that we have international companies in this country that are world-best in engineering. We don’t have enough of them. My job is to encourage more companies to be world’s best.  I used the analogy of Olympic athletes. We are good at many things but we send people into international competition after they have appropriate training and appropriate support. I say the same principle applies in terms of our engineering capabilities.  We have to be able to develop that. There is no conflict there whatsoever. 

I said in my speech today this is not about giving people contracts at any price or on any terms.  There’s no excuses for second-best – whether it’s in our universities, whether it’s in our science agencies, or our engineering firms.There’s no excuse for second-best.

Journalist: What policies do you have to ensure…

Senator Carr: Well, there’s a range of them. We have a comprehensive list which I’ve put down in our innovation statement – Powering Ideas. If you have a look at that we have a ten year strategy for the development of industrial capabilities.

We have a whole of Government approach with the work we do in terms of our universities, with our science agencies and of course with our manufacturing firms. 

We have instruments like Enterprise Connect. We have innovation systems and centres. We have the ability to work with individual firms to transform the way they do business. I’ve used the analogy before –  there was a time, where there were firms that were tendering for work that couldn’t fill in the tender forms. Those same companies are now winning international contracts for some of the most technically advanced equipment that our military forces have available. So we have the capability, we have the instruments available to be able to transform the way we do business. That’s how we are going to cope with the high dollar.

Journalist: When we look at boosting assistance programs for industry, and we say that conditions are difficult, is there a case for looking at what we’ve already got in the Defence sector?

Senator Carr: Well I’m in the process of learning the trade here .I’ve learnt the skills in many respects, but I’ve still got to get my head around every individual project. It’s a very complex organisation the DMO. But the fact remains the Government provides very substantial assistance. In terms of our purchasing power alone there are very, very substantial policy instruments that are available to us. Given our budgetary constraints it’s not likely that we are going to find additional capacity in terms of higher spending. We’ve got to work within the budgetary commitments that are made given the Government’s commitment to the surplus.