SENATOR KIM CARR
Minister for Innovation Industry, Science and Research
MARTIN FERGUSON AM MP
Minister for Resources and Energy
Minister for Tourism
TRANSCRIPT
PRESS CONFERENCE
CANBERRA
E & OE
SUBJECTS: Buy Australian at Home and Abroad
CARR: I am here with my colleague Martin Ferguson to make some further announcements on our Buy Australian campaign. This is in the context of Australia facing this historic challenge, the likes of which we have not seen in two generations.
We have a resources sector with an investment pipeline of some $430 billion. And we also have a manufacturing sector which is struggling to deal with an exchange rate that has gone up by some 45 per cent in the space of two years. So the question is what do we do about it?
What we do is we build the capabilities and the partnerships that give local firms a red hot go to compete for new work, wherever and whenever that takes place. Whether it’s in major infrastructure projects, whether in big resources projects, or whether it’s in government contracts, it’s about allowing Australian firms the opportunity to make sure they get a fair go.
We train our athletes to compete at an international level, in fact at the very highest level. The least we can do is to train our companies to be able to compete on the same scale. And that’s why we have developed the $53 million Buy Australian At Home and Abroad program.
And today I announce that the Government will make two new appointments in regard to the front line of this national challenge. First, Peter Beattie will serve local industry as a supplier envoy for the resources sector. And Dennis O’Neill will take up a post as the Steel Supplier Advocate to champion local industry as it works through the various challenges we are facing.
Both men need little in the way of an introduction to the friends of Australian manufacturing and friends of Australian industry. They have a long record of delivering outcomes for Australian firms, and that record speaks for itself.
The Government is also convening a resources sector supplier advisory forum which will bring together the decision makers within the resources sector. Whether it be mining companies, resources companies, manufacturers or unions, we want to ensure that we get the players together to talk through these important issues.
These new measures will build on the announcements we have made and the strengthening we have already undertaken through Enterprise Connect, through the industry capability network and through the use of the supplier advocates that are already in place in auto, rail, steel, water and the built environment. What we are doing is putting experts in the field to ensure that the main players come together and make the right decisions about Australian industry participation.
And if you look at what we’re doing for instance in coal in China - we have Australian industry specialists on the ground at the cost of $150,000. Through that work, 13 contracts have been secured for $42 million. That’s contracts for Australia.
In the past three years, the supplier access program has helped local firms get over $1.8 billion in contracts that otherwise would have gone offshore. We’ve had trade missions led by Steve Bracks and John Conomos, which have already yielded some $60 million worth of extra work for the automotive sector. We’re bringing the right people together who can rebuild firms and ensure that our businesses have the capacity to participate in what is the biggest growth we’ve seen in two generations.
FERGUSON: I just want to reinforce the issues raised by Kim here today. We have an investment pipeline of $430 billion in the resources and energy sector in Australia, principally in Western Australia and Queensland. Very significant investments just about to be made for example in the Northern Territory with the Ichthys project, and I think we are moving closer and closer to the Olympic Dam investment by BHP in South Australia. Our job is to actually work with industry to build bridges and capacity. This is not about mandating Australian content. This is about working with people like Peter Beattie to build the partnerships between those investors — both Australian and international investors — to create further jobs in manufacturing and in doing so to improve our manufacturing capacity. Not just for domestic activities but also, potentially for export opportunities. And the mining services industry is a prime example of that. One of the reasons why we are so competitive internationally is because we are so efficient.
The mining services sector today is worth about $9 billion in exports. So we have got to try and achieve the same opportunities in the manufacturing industry. And earlier this year I must say I, with the Western Australian Government in the lead up to our May Budget, had detailed discussions with all these major investors principally focussed on Western Australia. Actually talking to them about the problems in terms of why our manufacturing companies have failed in terms of winning some of these contracts.
And there has been a greater commitment to actually work at a local level. They’ve actually given people within their companies specific responsibility to work with manufacturing industries. To talk to them about why they failed in the tendering process in the past and how they can bring them up to scratch. And that’s also about building strategic links with some of the international companies because you can set up joint ventures and share R&D, innovation, productivity outcomes, etc.
There is a genuine willingness by these major investors to actually try and lift Australian content in manufacturing. But can I also reinforce, as the Minister who has to work with these companies on a regular basis, content is not just about manufacturing. We get a whole variety of other opportunities out of investments. Logistics is a prime example. Engineering, legal services, financial services, catering firms, etc. So we are actually making significant progress in getting real jobs in Australia out of those activities. Where we have failed to some extent in more recent years is in the manufacturing sector. And the job of people like Peter Beattie is to actually build the capacity and the linkages because industry will work with these manufacturing companies but there’s no hand out mentality. You’ve got to be competitive. You have got to come up to scratch. And I think we have got the capacity to do it. We’ve done it in the past and the mining services sector is a prime example of how we can do it. That’s why our mining industry is efficient. That’s why our mining services are sought after internationally. We’ve now got to do it in the manufacturing sector and I’ve got no doubt that with the leadership of people like Peter, we’ll make the contracts and we’ll get those partnerships and outcomes in the future.
BEATTIE: In February last year as Trade Commissioner I took a delegation of engineering companies and mining supply service companies from Mackay and other parts of Queensland to Houston. And there we met companies like Bechtel [inaudible] WorleyParsons and got them to meet the procurement officers so that they actually put their case and skills of what they could do with the LPG plant in Gladstone. Opening that door was actually a significant opportunity for them. That’s what I intend to do here. When both Ministers asked me whether I would take up this position I agreed to do it because I have been passionate for a long time about Australian industry. As a former Premier of Queensland that’s dealt with the coal industry over a long period of time, my Government in fact set the 13 per cent generation standard for gas that led to the development of the coal seam methane industry itself. So I am passionate about this both from a policy point of view and the point of view that I want to deliver it.
This morning I have spoken to Belinda Robinson from the Australian Petroleum Production and Export [Exploration] Association, Mitch Hooke, Chief Executive of the Mining [Minerals] Council, Heather Ridout and a number of other players. They are supportive of what’s being done here. Later on this year, probably in November or earlier depending on when it can be organised, I’ll be embarking on a significant visit to Western Australia to make sure that I meet with the major players, get them around, get them to understand. I’ve left a message this morning with the Premier of Western Australia to make sure he understands. Because I’m a Queenslander I do want to focus on Western Australia, I’m instructed by the Ministers to do that. I’ve got to forget that I’m a Queenslander – I’m now an Australian. And I will focus specifically on Western Australia to do that. Next year in the early part of the year I’ll be leading a trade delegation determined by the Ministers and I’ll do everything I can to facilitate the development of this industry.
QUESTION: Minister Ferguson what do you, or Senator Carr, what do you say to the claims from the steel industry that they are actually locked out of contracts because for example they say that there are, they put specifications and they can’t meet them. Is that actually true?
CARR: I have heard this claim. I’ve had it put to me by a number of people. I have asked for detail. I have asked my Department are they aware of any evidence that this is occurring and the advice that I am getting from my Department is that they have not been made aware of any evidence to support the claims that have been made. We are more than happy – we would be very keen – to investigate such claims where evidence can be presented. It is obviously not the sort of behaviour that one would encourage, but I don’t believe at this point there is evidence being presented in the public arena.
QUESTION: What about Mr Ferguson, you say you’ve been talking to, you talk to them? Have they raised it with you or are they just making this up?
FERGUSON: People in the steel industry have raised it at different times and they have not been able to present any concrete evidence. And I can assure you in my discussions with the big resource and energy companies that there is no tender process trying to lock out Australian companies. What we’ve gone out of our way, is actually to take some of these companies through why they have failed. You’ve got to be competitive. You know capital is footloose. We have to chase investment in Australia. We’ve got $430 billion. You can’t basically say you’re going to mandate Australian content if it’s five times the price. Because that effectively means we wouldn’t get the original investment. Our job is to actually bring these companies up to scratch and that’s about innovation and productivity, it’s about workplace change, re-inventing what we did in the eighties and nineties. And then we’ll get them in the ring through the leadership of people like Peter and we’ll win the contracts. We are having success.
QUESTION: Aren’t they…
FERGUSON: RGB5, BHP’s latest iron ore expansion – 90 per cent Australian content. Go to the question of the Gorgon project. $43 billion project, we’re probably about 15 months in, we’ve got $14 billion committed in Australian content. We can do better but we’ve also got to improve our performance at a manufacturing level. We’ve got to reinvent the productivity debate that we’ve lost a decade.
QUESTION: So is it the case that part of the problem here is with the manufacturers themselves, that they need Peter Beattie to get them through the door?
CARR: It’s a more complicated story than that. First of all, we have to ensure that people are aware of the opportunities. Second, we have to be aware, or we have to ensure, the proponents of projects are aware of our capabilities. We have to bring the two things together – opportunity and capability.
What we are in the business of doing is changing the culture about ensuring that people understand what each other can do and what each other requires. It’s no good putting in a tender that doesn’t meet specifications. It’s no good putting in a tender that’s way, way over of the odds. It’s no good putting in a tender when you can’t meet the delivery requirements.
Now, many of the projects that we are talking about have very, very high specifications. That’s because occupational health and safety is such an important issue in the resources sector. We’ve got to ensure that our manufacturers, our suppliers, appreciate what the specifications actually mean, and what they have to do to win the contract. We can’t assume however, that simply because they didn’t put in a tender that they’ve been disadvantaged, other than by their own actions in not actually applying through (inaudible)…
QUESTION: With respect on that, surely it shows that our manufacturers aren’t any good if they can’t make their way into someone without having Peter Beattie hold their hand?
CARR: That’s not the case at all, that is just not it, I reject that absolutely. We have got some of the best engineering firms, for instance, in the world.
QUESTION: Well, why can’t they compete…
CARR: Let me give you an example. Take the Joint Strike Fighter. When that process started there were cases where companies in Australia, who were used to doing work locally, weren’t able to fill in the tender forms properly and were knocked out as a result of their failure to actually tender properly.
But working with the companies through the Department of Innovation, through the various programs we have available, we’ve lifted their skills to the point now where they are world class. They are winning contracts on international defence projects and are second to none. They can compete on price, they can compete on quality. They can compete on ensuring that they actually meet the specifications.
Now the issue here is how do we actually build the capabilities of our industry? And I made the case before in regard to the way we treat our athletes. We just don’t send our athletes out against the world without training and support, why should we send our companies?
QUESTION: So what clout does Peter Beattie actually have if, for instance, he came across an example where Australian manufacturers weren’t being treated fairly in some, on a particular project, what can he do about it?
FERGUSON: I think it’s going to be about shame. These companies are getting the one off opportunity to actually develop our resources. And we’re not asking them to basically select an Australian potential supplier unless they are competitive. But if Peter discovers that we have got a well performing company that’s duded in the tender process then I think the Australian community will want an explanation. Peter will bring it to our attention. But having said that can I say, there is no doubt from my discussions, and Colin Barnett had similar discussions, these companies want to work with Australian companies. It’s about capacity and the linkages. That’s Peter’s job. We’ve got more contact now than ever. But sometimes we have to teach them how to do their job.
CARR: Can I just add to what Martin said. We have clearly a question here about changing the culture. That’s at the forefront of the approach we are taking, by talking to people, getting people to see that there is a better way of doing business. We also have provisions in terms of the various legislative responsibilities I have that, if people want a tariff concession, they have to have a genuine effort to have an Australian industry participation plan. Built into our programs is this obligation. So there is some financial incentive for those who are actually seeking leverage from the Government, or support from the Government in various ways.
So the main thing, and I think the point that Martin makes is absolutely right, the public have got a right to know, but there is also provisions within various legislative responsibilities to actually ensure that the Australian industry participation plans have real teeth.
I remind you, Telstra put a bid in for the NBN. Telstra chose to ignore the provisions of the Australian industry participation plans and they were not able to continue with their bid. Now, about 50 per cent of the NBN’s work is actually going to local contractors, Australian companies, 50 per cent of the total volume of the work that is being undertaken.
QUESTION: Are you Ministers convinced though that every tender for work from the big companies, the proponents of these very big projects, that they are putting these projects to tender with Australian standard specifications?
FERGUSON: There have been complaints about specifications, no one has produced evidence that the specifications have been drafted in a form to exclude Australian companies. There are tender processes underway on a daily basis with respect to these projects. Our job is to actually get them through and make sure they are competitive. If anyone has got any contrary evidence about tender documents being produced in a way deliberately to exclude Australian companies then they should put the concrete evidence in front of Kim and I.
QUESTION: You’re saying everything is put to tender because this is one of the allegations put by these, the Institute, the unions, and there are some projects that they have named.
FERGUSON: I wouldn’t be surprised to discover that there are thresholds in terms of what goes out to tender, so let’s be frank. I’m not going to say that everything is put to tender. It’s no different from the Government. There are thresholds in terms of what actually goes to tender. The reality is there are a lot of very good tender opportunities in Australia and the project, the Gorgon project recently gave, I think it was 10,000 tonnes of steel to Cimvec, if I remember correctly, in Western Australia, a huge announcement only a matter of a couple of Fridays ago. And I must say, to be fair, as a result of the discussions involving Colin Barnett and myself with the CEO of Chevron, they have gone out of their way now to engage with local industry. And I must say to try and bring them through. You actually have to bring in some companies and explain why you actually failed, to try and teach them about, in essence, how to be competitive and how to come up to scratch. And I think that’s what Kim said – it’s actually a change in culture. No longer just relying on the tender process. You fail, the contracts gone here. What we are basically saying, to try and nurse them through and teach them, get them up to scratch, so we get the jobs here.
CARR: We have the resources forum, which we are initiating, which will be an opportunity to examine these claims in detail, and will actually give people the opportunity to tell us precisely what it is they say is in the process. We are very concerned to ensure that Australian businesses get a fair go, but they have to compete, they have to be internationally competitive and we have no doubt that Australian firms can be, we know they’re capable and I have absolutely no doubt that they will win the work if they actually apply themselves.
QUESTION: Senator Carr, on the internationally competitive, I mean, the Steel Institute and others argue that it’s hard for people when they are fighting a rival who has a manipulated currency. Now you’ve said – you know, no doubt accept that Australia can do anything by itself but do you agree that we should make a more pointed effort to join the US and others to pressure the Chinese specifically?
CARR: Well, I will repeat to you what I have said on many occasions. There are many countries that have manipulated their currencies. It’s not just the Chinese, it’s many, many countries.
The Treasurer through the G20 arrangements, has taken necessary steps to put our view about how we strongly disagree with that approach. It’s a much more complicated story, a much more complicated story than that. You can’t particularise one individual country in that regard because the practise is very wide-spread.
What I can say to you is that we don’t play that game. We do not have the capacity to play that game and the claims that we can play that game are mistaken. We’re in the business of building our capabilities, of strengthening our competitive position, about making sure we use our science and research agencies more effectively, about ensuring that our skills development programs make us more competitive. We are actually in the business of strengthening Australian industry. It’s no good trying to find an excuse in this climate when we are facing such intense international competition.
QUESTION: Will every Australian manufacturer be able to ask for and receive help from Peter Beattie and what sort of team will he have? What sort of resource is being thrown at this.
BEATTIE: I’ll obviously be working with the Department and I’ve had a discussion with the team this morning. What I need to do and what I will do is to get out and talk with the industry which I’ve already started doing this morning by phone and from there we will target specific markets. Let me give you an illustration and I come back to your question before. When I spent time as trade commissioner in Latin America – and you have got to remember the world is not just Asia – Asia is really important but, you’ve now got Brazil which is the sixth biggest economy in the world and in another fifteen years will be ahead of France and Great Britain. You’ve got huge industrial expansion in Columbia, Peru, all those economies, Mexico, are really changing. I took a delegation of companies to see a major player who I won’t name in Columbia. This international company who you all know did not take Australian skills in the mining sector seriously. And, in fact, told me that before I took them there. Afterwards a number of those companies subsequently got work. It is about opening the door, it is about showing people what skills we’ve got. It’s about getting to the procurement, the people that actually make the decision like we did in Houston so that when they are considering putting out opportunities then Australian companies are there. Now, in terms of what we will do, obviously I will work with the two Ministers. The first thing I need to do, and I’ve again spoken to people this morning, is to get recommendations to go on this forum, this CEO forum, names that will go to both Ministers. They will have to approve it. We’re hoping to get that done by October.
QUESTION: But will every manufacturer that wants your help get it?
BEATTIE: I’ll get to see everyone I can in partnership with the Department.
CARR: And there are, just to remind you, there are a range of advocates operating in a number of different sectors. So Peter is not the only advocate and we will have additional advocates to support him in Queensland and Western Australia. But we have advocates in steel, in water, in ICT, in rail. It is our approach to actually try to build these industry capabilities across a range of industries. We have our innovation councils, we have Enterprise Connect, we have ICN – industry capability networks. So there’s a whole mesh of activity interlocking which is aimed at being able to provide assistance to every business in the country that wants it.
We back people who are prepared to back themselves. We have to encourage people to actually invest in themselves. We got the R&D Tax Bill through the Parliament – well, through Senate yesterday and I understand that’s due to be completed in an hour or so, alright, in the Senate. $1.8 billion of support for people who want to back themselves, to invest in their own future.
QUESTION: Can I ask the Ministers about BlueScope. There’s been quite a lot of criticism about the company paying the executives substantial bonuses when it is not just having to sack people but it is also getting a lot of Government money. Do you think this is acceptable?
CARR: Well it’s the nature of the way in which the bonuses were paid, I understand the bonuses were paid to about 11 executives, some of which weren’t actually in Australia. It was to do with their overseas operations not just what occurred in Australia there have been no bonuses paid. The assurance I have been given by the company is that there were no bonuses paid whatsoever on the question of financial managing. The question of company remuneration of course is a longstanding debate. It’s a matter for the shareholders to actually look at how those things develop.
We are not in the business of playing games, not like Senator Xenophon, who really had nothing else to say other than trying to get into a stunt like this, when there are, we are looking at a thousand people directly losing their jobs, four hundred contractors losing their jobs, if that’s our concern, how do we ensure we have the support mechanisms available to assist in what is a very painful transformation for those people.
My job is to work with these companies to produce a result for the Australian people. I’m not going to get distracted on whether or not some foreign directors were receiving benefits for what actually occurred overseas. I am in the business of trying to ensure that that company is returned to financial health as quickly as possible.
QUESTION: Senator Carr can I ask other recommendations coming from the industry and the unions after specific tax treatment as an incentive to use Australian product, are those sorts of measures protectionist and would they be hideously expensive?
CARR: Well one, that’s not the language I am familiar with, we don’t, we are not in the business…
QUESTION: Would they be very expensive?
CARR: Well that’s a question for the Treasurer to work through, but we are not interested in a definition that even looks at these questions about protectionism as such, this is about building Australian industry so it can actually fulfil what I think is its abilities, its capabilities.
We’re not trying to go back to something in the past, some old illusion that people have about what Australia was in the 1950’s. Australia has employed the better part of a million people in manufacturing since 1960. We have increased our production levels by about maybe six or seven times in that time. A massive level of productivity.
Australian manufacturing is extraordinarily resilient. We’ve gone through a whole series of major structural changes globally in that period. Australian manufacturing is renowned for its creativity. I am absolutely confident that Australian manufacturing will weather this storm, we will come through it much stronger, and we’ll be there shoulder to shoulder with firms as we build a new type of manufacturing in this country and it’s part of our approach to building a new Australia. This is our chance to actually reshape this country to meet the challenges of the 21st century. And that’s what we are doing today. This is one small measure of helping companies, of helping workers, helping communities, face up to the challenges and building a new Australia as a result.
QUESTION: You’re painting the picture of, I think Minister Ferguson used the word nursing, what does it say about Australian industry that they need taxpayer resources to teach them how to fill out forms or am I oversimplifying?
FERGUSON: Life’s about continuous improvement. The tourism sector, we’ve got to continually invest, innovate and create new product. The world is not standing still. There are improvements in productivity, investment in R&D and innovation overseas. We have got to work with industry in Australia to make sure they stay competitive and they also innovate and go forward. Because frankly if we stand still we’ll just be left behind. And that’s what this is about, the partnerships, the capacity building, making sure that we are in the game as a nation. It’s not just in manufacturing, it is across the board. Can I say minerals and energy have to be just as competitive. Because capital is footloose. We’ve got $430 billion committed at the moment, we are very fortunate. But there are a lot of other countries opening up too and that’s why it’s about capacity in terms of mining and energy is so important. It’s getting investment here in Australia now but it’s also winning export contracts to the tune of $9 billion.
Thank you.
END