Speech to the Federal Chamber of Automotive Industries Annual General Meeting

Thank you for the opportunity to address you tonight at the Federal Chamber of Automotive Industries annual AGM.

Yours is an enormously important industry to Australia.

It employs many thousands of Australians and the products and services that you deliver are central to the lives of just about everybody.

Your industry faces enormous change.

I would like tonight to firstly touch on some of those forces of change.

Secondly what the Turnbull Government is doing to engage with your industry and assist in the response to some of those forces of change

Lastly, I want to touch on what is not going to change!

Forces of change

What is changing?

Obviously there is extraordinary change in the technology used to propel vehicles – the drivetrain.

This change is driven by a number of factors. One is sheer competitive dynamism or animal spirits in the words of Keynes. Companies are looking for an advantage from more reliable, smoother, quieter engines, engines that can go for longer without needing servicing or repairs.

There is also pressure for change from Governments, to reduce the environmental impact of vehicles.

Of course there is the rise of automation. On some predictions within a few years everything is going to change - not one Australian will be behind a steering wheel making their own decisions. Everything will be software and it will all happen automatically. We will spend our lives being chauffeured around not having to think about driving the vehicle we are in.

I am somewhat skeptical of some of the most breathless projections but clearly there is a phenomenal amount of change.

I have certainly enjoyed the change to try a number of models with advanced driver assistance technology.  I have had the recent experience of testing level two automation features in Mercedes and Volvo models.

This is part of a bigger picture of change in the transport sector. Not only are cars changing but so too are trains and buses. There is a real blurring of the boundary between privately owned individual vehicles and public transport. We have always seen this as a very rigid divide but that divide is breaking down.

Many experts predict a world in which automated vehicle might collect three or four people who have dialed up a service on their mobile phone, with the software determining the best route, and taking those people to a train station arriving just minutes before the trains goes.

A third factor is the cessation of domestic manufacturing.

We shouldn’t overlook what a substantial change that is. But at same time, it is important to acknowledge just how substantial as employer the automotive sector remains in Australia. Of course, we have retained substantial know how and expertise in engineering and design skills in Australia, as part of the local operations of global automotive manufacturers.

That’s a development we welcome and celebrate.

A fourth trend is the change in customer behavior.

We are seeing a lower percentage of young people getting driver’s licenses than was the case for earlier generations; and we are seeing increased use of public transport.

Those pressures on the automotive sector are real and part of an overall environment of change.

Turnbull Government response

There are a number of things the Turnbull Government is doing to put our regulatory framework in the best possible position to respond to those changes.

We have worked through a lengthy process to reform the Motor Vehicle Standards Act which regulates the first supply of the motor vehicle to the Australian market. The present Act has been in place for 30 years; we are about to pass through the Parliament the Road Vehicle Standards Bill which will replace the present Act.

I want to acknowledge and thank the FCAI and other industry stakeholders represented here for your very detailed engagement on these issues over several years. These changes are will make the regulatory framework more flexible and adaptive to technological changes while also minimizing the regulatory burden on industry participants. We want to reduce red tape and have more streamlined certification processes.

When it comes to technology trends, we are seeking to support the trend to automated vehicles through funding the $55 million iMove Cooperative Research Centre, which will explore digital and evolving vehicle technologies.

The National Transport Commission under the oversight of Commonwealth, State and Territories Transport Ministers, is looking at the necessary changes to the regulatory framework to support the uptake of automated vehicle.

The Government also has a lot of work underway to introduce new communication technologies which will be critical to automated vehicles including the rollout of 5G spectrum and additional funding for the next generation of satellite positioning technology which moves from 5 -10 metres in accuracy to 5-10 cm in accuracy. These kinds of communications infrastructure will be increasingly fundamental to how tomorrow’s motor vehicle operates.

Of course we also have an extensive program of work under the Ministerial Forum on Vehicle Emissions - comprising myself and Minister for Energy and Environment Josh Frydenberg - looking at three interrelated issues noxious emissions, fuel quality standards and fuel efficiency standards. We expect to reach a decision on a package of reforms this year.

What won’t change

In the final part of my remarks, let me touch on what I think is not going to change.

What will not change is that the motor vehicle will remain a critical part of our transport system. People around the world - and certainly Australians - will continue to value the freedom and choice of travelling where and when they want, not according to a timetable or a route determined for them.

A core element of the product that you offer will continue to be attractive notwithstanding changes in the technological form in which it’s delivered. One implication of that is that we will continue to need investment in our road network. The Turnbull Government is delivering on this investment to a very substantial degree. The Government has committed to a $75 billion infrastructure program over the next 10 years.

Let me mention just some of the things we have announced in the 2018-19 Budget: $971 million for the Coffs Harbour Bypass on the Pacific Highway; $940 million for an Urban Congestion Package in Perth; $461 million for the replacement of the Bridgewater Bridge; in Tasmania; and an additional $3.3 billion for continuing upgrades of the Bruce Highway in Queensland, taking our total investment to $10 billion.

Government is working in partnership with your industry to make sure that the road infrastructure is there so that the fine vehicles that you produce have somewhere to be driven. We will continue to do that - and I know the people in this room and the businesses represented will continue to deliver your fine products for a long time.

Conclusion

Let me conclude then by noting that in coming weeks we expect to see passage of the most important set of regulatory changes to the way in which we regulate the supply of motor vehicles to the Australian market in nearly 30 years.

These changes are an important step in preparing Australia for the extraordinary transition underway in the automotive sector.   

As we move towards automation, the nature of our transport infrastructure investment will need to be world class in order to adapt to the needs of the future.

We have a clear plan to do that – now and in the future.