Transcript – Joint Doorstop Interview with Sophie Mirabella MP – 12 July 2011

TRANSCRIPT OF SOPHIE MIRABELLA MHR,

SHADOW MINISTER FOR INNOVATION, INDUSTRY AND SCIENCE

AND

SENATOR MITCH FIFIELD

SHADOW MINISTER FOR DISABILITIES, CARERS AND THE VOLUNTARY SECTOR

AUSTRALIAN ROLLFORMING PTY LTD, DANDENONG SOUTH

MIRABELLA:

Well thank you for coming and thank you for opening your doors. I was wanting to come and see you on site here at Australian Rollforming since I saw you get your award, and being inducted into the Manufacturers’ Hall of Fame earlier this year – that’s a couple of months ago actually in May, and to also come and visit an innovative and award winning Australian company because I do believe there is a future for manufacturing, I do believe that Government has a role in removing a lot of the regulation and cost that makes it more difficult to compete with imports, and that’s why its always good to be able to tell a good story and say here’s an Australian business that is being innovative, always cutting costs, cutting their energy use and being far more efficient. Obviously issues like the carbon tax add yet another cost impost on business and I’m very concerned for businesses, not just here in Dandenong, but right across Victoria and right across Australia because we are seeing at a time when our businesses are becoming more efficient, using less energy they are being undercut by price from foreign companies that aren’t doing the same thing, that aren’t doing the right thing. And my concern is that a carbon tax is going to affect so many local businesses that are already operating on a very narrow profit margin and just push them over the edge, or push them offshore. And that’s the problem with the carbon tax. It doesn’t do anything about competitiveness. What it does is, its like imposing a tariff on Australian industry and giving a legup to foreign companies. And that’s why I’m here, not only to see the good work that you’re doing but to say we are supporting you. We will fight the carbon tax. We will fight it from one end of the country to the other. To stand up for local innovation, local businesses and local jobs, and we will fight it at the next election as well, because it will have such a devastating impact on the viability of so much of Australian manufacturing.

COMPANY SPOKESPERSON:

That is exactly right. We cannot afford to increase our prices to reclaim the tax, so all it can do for us is erode our margin and our margin’s already very slim now. Already our raw materials – take our steel for instance, we’re already about $200 tonne more expensive that what I can buy the steel for in Asia. Why that is I don’t know – talk to Bluescope. The carbon tax is going to increase the price of steel, and it’s a creeping, insidious increase because (inaudible) increase the cost of the iron ore, the coal, the electricity, so everybody thinks (introduces Jill Walsh). Jill looks after our (inaudible) group – we’re part of a group, a consortium of companies, we have to work as a consortium to offer a one big package to the bigger customers like Lombardia and Jill coordinates that group activity. You have to do that to be more competitive otherwise you’d all be fighting one another . So we parcel up and work and work as a consortium and tender out to Lombardia. If we didn’t do that Lombardia would (inaudible) certainly the fabricating would be lost to (inaudible) Romanian (inaudible), German group so if you’ve got all that together tender for some of those bigger jobs. With the carbon tax my real fear is it’s cumulative at every stage of the process.

A tax on a tax on a tax.

(inaudible) the same again on the electricity and when you need a tonne and a half of coal to make a tonne of steel (inaudible) $3 so it becomes $40. You need two units of electricity for a unit steel so its double again, so by the time it pops out the end with just a few little numbers (inaudible) its going to increase the cost of steel by, they say its only a few dollars, but its not, its going to be $100 and something.

Well one thing you can be certain, the figures that the Government uses in all its carbon tax predictions are not accurate. In the last three years of the Rudd Gillard Government none of their budgetary figures or their mid year economic figures have been accurate. So I don’t see why there’s a difference here. But I might just ask Mitch as Patron Senator for the South East to say something.

My concern, not just as a Senator for Victoria, but as the Senator for the south east of Melbourne, is that the carbon tax really is going to be like a punch to the solar plexus for manufacturing in this area. One of the most unappreciated things about this area is that it produces about 44% of the manufactured goods of the State. There are about 70,000 people employed by manufacturing in this area. I was at HM GEM this morning with Tony Abbott. They’ve got an electricity bill worth $300,000 plus. So a carbon tax automatically adds $30,000 onto their costs. That’s just the straight cost without multiplying. Visiting manufacturer after manufacturer you learn that there are small margins on a lot of the products which are made here. There are going to be jobs lost if this carbon tax goes through.

ARM SPOKESPERSON:

Seventy five percent of us I’d say roughly in this area are in trouble. In a recently published (inaudible) said 75% of manufacturers were happy and 25% weren’t. Well I’m sorry the figure is the other way around. We actually did a study because we cant expand our contract manufacturing so we are looking to buy businesses in order to buy work. We are looking interstate and we know how many businesses are desperate to sell, and I heard this from another rep this morning. And it’s just the story every day. We’re losing customers – to try to give us $5000 – $7000 month in business, how can we compete. On that level there’ no fringe factor here because when you’re in a (inaudible) as we are with the internationals which is our customer, not mum and dads getting compensation, but internationals (inaudible) China and India there is no comeback. There’s no remission on our costs. But to remain in that (inaudible) which we’ve done for 11 years now we have to compete on an international stage, at an international level. Our performance is outstanding at that level because these larger companies they churn people in from overseas. They have no loyalty to a local supply chain and yet in this area we have managed to create the (inaudible) which is a cluster if you like, or a consortium of four companies which has kind of in a way defeated lots of the odds to survive , but we know our Government’s turned against us.

FIFIELD:

And not just the Government, your local Members here – Mark Dreyfus and Alan Griffin – they are being silent. Mark Dreyfus is the Parliamentary Secretary for Climate Change, so part of his core job is actually imposing a carbon tax on his own local businesses. There’s a big conflict of interest there. They are both nice guys but you want someone who’s going to fight for local businesses to represent you.

I can understand philosophically why you would want to put a carbon tax on. You want to reduce pollution and all that. That’s a good thing, but this is just not going to do it.

This is not going to do it, its just not going to do it.

If you impose the same tax on imports so that would level the playing field. You know every container load of rubbish that comes in from China (inaudible). You know accumulated tax from our system – you know its going to be about $100 tonne on manufactured products. You know every container that comes in, $100 tax – it levels things out.

MIRABELLA:

Did you guys want to ask any specific questions?

JOURNALIST:

I’m from the Leader by the way Henry – you’re say its going to cost an extra $100 tonne.

This is just ball park – pie in the sky stuff. If its cumulative within the industry (inaudible) whether it applies to clothing, textiles or food (inaudible).

JOURNALIST:

Yes, where does that put moving forward – to use a lovely corporate term – where does that put your business, to be under that extra pressure, extra burden. You are competing, you’ve got a strong dollar, you’re trade exposed.

Right now manufacturing product is coming in from China and its landing here at a finished cost of about $1600 tonne. I’m buying steel from Bluescope for $1200 tonne and my rollforming costs $400 tonne. So I haven’t made a buck yet. (inaudible) and I’m already behind. So by the time I add another $200 tonne bare margin, there’s 10% margin on it, I’ve lost. So it you then go and put another $100 tonne on top of (inaudible) tax, I’ve lost. I’ll just put the big for sale sign outside now and quit while I’m ahead.

JOURNALIST:

Is that the inevitable for a lot of these businesses?

The inevitable is we do what just about every other manufacturer has done and I’ll pick out of the seven machines I’ve got, five will go to an Asian country. I’ll keep two here to do the high value add product , like the fancy stuff . I’ll do that here. Seventy percent of my work will come out of my factory in Asia. Is that where we want to go? I don’t want to go there.

ARM SPOKESPERSON:

But at least we keep the profit in the country. We cant walk away. The skills necessary to run a rollforming operation, the amount of time it takes to train, did you mention that we are the only heavy duty roll form left in Australia? Did you mention what the carbon tax has done with the power stations in the La Trobe Valley? All the work that has been put on hold.

COMPANY SPOKESPERSON:

Yes. We should have had a machine tooled up and running now. We do this refurbishment program – its the hot gas cleaning plant of the operation. They have put that on hold pending this carbon tax. We’ve got a contract going out for the next three years to replace all those plates – its like $3million worth for the next three years – a lovely bit of income and its now put on hold pending the outcome of this carbon tax. And (inaudible)

But this is why we are determined to fight it because the full implication, the ramifications through the whole economy are going to be absolutely disastrous. And this is why every single person living in an electorate with a Labor Member needs to pressure their local Member to have an early election, because the Prime Minister would not have won the last election is she had said six days before the election, “We will introduce a carbon tax”. If she wants to introduce this the ethical thing to do, the moral thing to do, the morally right thing to do would be to go back to the people and say this is what I want to do. To fundamentally alter our economy, do you agree or do you not agree. So there is something that people can do.

We are going to oppose the Government’s package lock, stock and barrel. If they do get it through the Parliament and we win the next election, it would be a very game Labor Party that would seek to stand in the way of legislation to repeal the carbon tax.

[ENDS]