Industry players at odds over carbon pricing

As a public rally fired up by radio jocks and newspaper columnists took to the streets of Canberra for the No Carbon Tax rally in March, the local auto industry was more temperate in its approach to something it sees as inevitable.

Bolstered by industry minister Kim Carr's strong suggestion of compensatory tax breaks and 'co-investment' activity, local auto makers have offered in-principle support for the tax, if not unanimously on its nature and magnitude.

Of those taking a public position while cabinet deliberations progress, Toyota took the hardest line, calling for care in the imposition of the tax lest it leave the local car industry "in a corner with nowhere to go".

Toyota Australia President Mr Max Yasuda (pictured) called on the government to finalise the policy ASAP to rid industry of widespread fear and uncertainty surrounding the impost. Mr Yasuda, a member of the government's business round table group on climate change, has also asked that cabinet take into account work already done and progress already made by the industry.

The company has invested heavily for some time in greening up, he says -- not just in local product like the Hybrid Camry, but in its manufacturing and procurement processes as well. "For many years Toyota Australia has reduced greenhouse gas emissions across its operations. Since 2006/07 we have reduced manufacturing emissions by 28 per cent and emissions per vehicle by 22 per cent."

Biting too far into local auto makers' profits would put at risk the investment required for research, development and manufacture of local product, making it harder to compete with makers in countries where no such tax exists, he said. "If it is not planned and managed effectively, the yet-to-be-defined carbon tax has the potential to heavily impact local automotive manufacturing, which employs 47,000 people."

Ever in search of a balance between the conflicting interests of industry, unions and green political forces, Senator Carr has promised "an active industry policy" ensuring "the necessary investments are in place". This is complex, with the ACTU looking to the government to impose carbon tariffs on imports from countries with no such carbon pricing policy. Trade minister Craig Emerson vigorously opposes any such idea.

Holden's current line is more go-with-the-flow. "I deal with the deck of cards that I've got," chairman and managing director Mike Devereux told media at the company's recent launch of its locally made Cruze. "We have to be pretty adaptable in this business." That means sticking resolutely on the production path it already has planned out, in the face of changes in legislation, or currency fluctuations and export demand. "We live our lives being flexible."

He played down the impact of a carbon tax and any subsequent petrol price hikes -- estimated at about six cents a litre -- on the industry as a whole. While Holden would like to see fuel prices kept low to minimise the impact on sales, Australia would be better off concentrating on energy diversification, looking towards other fuels such as LPG and ethanol, he said.

The Federal Chamber of Automotive Industries (FCAI) is waiting for something concrete before going public with an official position. But with the recently released National Average Carbon Emissions (NACE) figure for 2010 showing a year-on-year drop of 2.7 per cent, the Chamber was keen to highlight the positive results the industry has been achieving without regulatory intervention.

The Victoria Automobile Chamber of Commerce (VACC) is less circumspect, arguing the effect will 'permanently scar' small and medium businesses in the auto industry -- catching them in a pincer movement between big business passing costs down and consumers curtailing spending.

"VACC is not opposed to Australia being a world leader on carbon reduction," executive director David Purchase said in a statement. But the government's 'go-it-alone' approach will have little effect on global emissions. VACC argues that the local auto industry has never been greener, with manufacturers introducing a raft of green technologies and alternative fuels to improve capacity and efficiency, pointing to the NACE figure to prove its effect.

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