Forget the greenwash, the key statement in today’s car package is this one from the Prime Minister.
Only 15 or so countries in the world can design, engineer and build a car from scratch and we are determined to maintain that capacity.
There it sits in the press release, unadorned with any supporting evidence or justification of any kind. We’re just gonna have a car industry.
The other prize example of question-begging is to be found in the Executive Summary of the policy launched this morning:
While the Government has recognised the scale of the transformation required by extending support to 2020, our ultimate goal is that industry should be self-sufficient.
As St Augustine famously said about Hippo’s troubled chariot industry, Lord, make us self-sufficient, but not yet. What would most Australian businesses give to be told they had 12 years to become commercially viable, but that taxpayers and consumers would pick up the tab until then, thanks.
Kevin Rudd this morning was emphasising the green aspects of the automotive package. You got the impression we were going to drive our way to a low-carbon future in an Australian-made green machine. And true, the second biggest item in the package is an additional $130m in 2009-10 to kick off the bigger, longer, faster, greener Green Car contestable grants program, which wasn’t scheduled to start until 2010. Now it will go for 10 years, at $130m a year, rather than five years at $50m pa. The Government didn’t specify the conditions for receiving grants under the program, but judging by the Toyota hybrid car announcement earlier this year, pretty much anything with the words “low emissions” in it will get a few million.
By the end of the 10 years of the Green Car program, the industry will be nearing the end of the extended assistance program that is the big budget ticket in the package: an extra $100m a year from 2011-15 on top of the $200m it was scheduled to get, and a further $200m a year from 2016-20, when it wasn’t getting anything.
Anyone who thinks 2020 will be the end of the taxpayer largesse to these multinationals and their tame unions is mad. This nonsense will keep going for decades unless someone with some guts calls time on the handouts.
There are some small additional measures. LPG conversions get an immediate boost that will take a further $10.5m off this year’s surplus. There’ll be just over $6m a year to further encourage exports (quite why multinationals need help to export stuff is a complete mystery). The only faintly responsible part of the package is a $116.3m adjustment package intended to help the less viable parts of the components industry and its workers “adjust” — i.e. close. That’s another nearly $60m off this year’s surplus — if one is left.
In total, we’re talking $2.4b and change in extra funding between now and 2020.
The other element of the Government’s spin was its claim that this was somehow leveraged investment by taxpayers. “The governments expects this assistance to stimulate industry investment of at least $16b … It is about mutual obligation all round — a genuine partnership.”
Doubtless the number crunchers in Detroit, currently working out what sort of three-into-two merger will save the US auto industry, will be breathing a little easier knowing that they’ll continue to get assistance in Australia from 2016.
And the lack of actual announcements about new investments — strangely enough, given the turmoil besetting the world car industry — gives the game away. There’s no commitment to additional investment from the big car makers beyond what they’ve already announced. The Government has leveraged precisely nothing in its package. It’s not even clear Ford and General Motors will still be around in their current forms next year.
This is ALP tradition at its very worst. Because of the financial generosity and strength of the manufacturing unions, because of John Button’s legacy, and because, almost certainly, of an absurd left-wing conviction that only the manufacture of physical objects is somehow a real economic activity, Australian consumers and taxpayers are condemned to continue paying too much for imported cars and subsidising 60,000 jobs. Other industries should be furious that this rort, this scam, this extended exercise in economic and fiscal vandalism, is being continued and exacerbated by a supposedly free market government.
What’s the bet, though, that they’ll stay silent in the hope of attracting some assistance of their own? When it comes to rent-seeking, everyone is a strategic industry.
The Government’s package is an exercise in keeping a brain-dead body ticking over. It’s brain-dead because it has failed to meet the changing needs of Australian consumers over the past decade and relied on assistance as its primary commercial strategy. And even with assistance, parts of the body have routinely died. It’s time to cut off the life support and let the car industry operate like the majority of Australian businesses.
Well gee Bernard you don’t think jobs in the vehicle industry are worth much when they actually produce something but somehow the people making the coffee and pulling the beer are better.
Get over this nonsense or drive a horse and cart mate.
This is a list of the things the economic rationalists including Keane, Henry, Burgh, Moran, and last but not least the Rooster Man Fisher et al, say we are not allowed to make because we are no good at them. Cars, computer chips, clothing, white goods, communications equipment, industrial electronics, heavy industrial equipment such as transformers, turbines and generators, in fact anything that requires scientists and engineers and sophisticated production equipment. What will they let us do? Dig holes using imported machinery and technologies so we can sell the stuff overseas and buy it back as elaborately transformed goods, plant and equipment. We are also allowed to farm except of course that we have absolutely stuffed large parts of the environment doing it. Once again with other peoples machinery. We can also run banks which borrow $1 billion per week to cover our current account deficit and oh yes we have sh..t loads of accountants to tell us how big our current account deficit is. We are also allowed to have lots of right wing economists to tell us that we should employ lots of accountants, lawyers and economists in the so called “service industries” The ones that create the large private debt and negative and growing current account deficit. Can Keane tell us what we are allowed to do and why this is an immutable truth with no possibility of change. We once rode on the sheeps back. Was this because we were only slightly smarter that the sheep? What do we ride on now. Other peoples money. Problem is they are a lot smarter than the sheep and a lot smarter than us.
Another brainless statement of the obviously wrong Bernard. Here’s what western economies are understanding – that if you let your economy decay to the point where it’s just services, rents and finance, then you can basically fold up and blow away in an instant. hence the current scramble across the west to try and retain some manufacturing industries . Who still believes in the ‘weightless economy’ of post-industrial production and comparitive advantage (you build cars, and we’ll um sell each other pedicures)? neoclassical economists and Keating-era public servants. Sorry, you were wrong. we’re doing something else now.
Yes Bernard – a very poor decision. Not policy on the run this time , but still very bad policy. $600million dollars a year for 60000 jobs. With ABC Learning it is $22million for 20000 jobs for two months. This is nonsense!
Never one to advocate Govt owning businesses, the fact remains that if we taxpayers are to pay this much to prop up failing businesses, then we should at least own some part of these businesses. Not just subsidise poor management!
With ABC, the Govt could actually start owning the real estate preparatory to handing over management to community groups -the aim of Govt and many others. With car Companies, Govt could also own the real estate rather than pouring millions into pipe dreams as this Rudd announcement seems to indicate.
Let’s face it neither car-making nor childcare is ever going to make real profits or repay loans, so let’s build up assets.
Bernard, I see what you are saying, but would the the Libs have done anything different? To me there is too much haste in the decision making process without extended consultation with all industries. I guess time will tell whether this is a poor decision.