For the last few years, on average, around 145,000 people have been retrenched every quarter, or around 1.25% of the workforce. Normally, not a lot of fuss is made about those lost jobs, despite the dislocation caused to workers. Around half are back in the workforce again in the same quarter, the ABS data show.
An awful lot of fuss is being made about the closure today of Holden’s Elizabeth plant, the last car-manufacturing facility in Australia. That will be highly dislocative for 950-odd staff who will lose their jobs, as it has been for the 800-odd who’ve lost their jobs since the closure was announced in 2013. Stories have been written about the “iconic” Holden brand, about how car manufacturing supported families, many of them migrant families, about couples who met at the manufacturing plants, about how important manufacturing is.
All of this is true, of course. But it’s no more true than of any other sector. Australia continues to draw large numbers of immigrants, who find work in other sectors of the economy — mainly in the services sector, often in health and social care, which for years now has been our biggest employer. Families and communities are sustained by all sorts of industries. Couples meet in workplaces across the country every day. Everything written about the closure of Holden could be written about any other industry.
But car manufacturing always placed a spell on us, especially on policymakers. For decades, we forced consumers to pay punitive tariffs if they wanted to buy an imported car. We spent tens of billions of taxpayer dollars as, effectively, bribes to American and Japanese multinationals to continue to build vehicles here, even as car manufacturing became a highly automated and lower-skilled task that could be much more cheaply performed in developing countries.
In 2008, the Productivity Commission calculated we were spending over $23,000 a year subsidising each car worker’s job, although that figure fell in ensuing years as subsidy programs wound up. We even justified protectionism by arguing that other countries were also punishing consumers and handing taxpayer money to multinationals, so we should as well.
Nor did the usual politics apply to this industry. Both Labor and the Coalition, until 2013, backed continued protection for the automotive sector (even now, despite the closure of the remaining local production facility, you can’t import a second-hand vehicle without punitive tariffs, because there’s bipartisan protection for the automotive retailing sector). And unions — from both left (the AMWU) and the right (the AWU) — and employer groups were happy to put aside their traditional antipathies and be as one in supporting this policy.
Other manufacturing industries didn’t fare so well, because the unions and businesses involved were less powerful. And the workers were more invisible. We dumped most tariff protection and any budget support for the one manufacturing industry with a strong female presence, textiles and clothing, back in the 1990s. The steady closure of textiles and clothing manufacturers rarely attracted attention either from the media or policymakers, even as the number of Australians working in textiles, clothing and footwear manufacturing fell from over 100,000 in the 1990s to, at last count, around 34,000. The stories of those workers who lost their jobs rarely made the news.
There’s one way in which we should regret the end of car manufacturing in Australia, however. As it turns out, automotive protectionism was a relatively efficient means of subsidising jobs. In the post-neoliberalism era, we’ve now embraced defence protectionism, in which taxpayers will spend up to 30% more to build large naval vessels here than buy cheaper, better versions from countries with greater economies of scale and comparative advantage. Defence protectionism come with a much higher price tag per job than making cars — in the hundreds of thousands of dollars per job. And the billions of dollars that we will spend on less than 3000 mainly South Australian jobs to build new warships will translate into millions per job in total, before the inevitable cost blowouts of projects like the new submarine fleet.
From a taxpayer and economic efficiency point of view, it would have been better to stick with propping up multinational car manufacturers.
Two things Bernard. If you can’t make stuff, you can’t fix stuff, so how do you repair you ships? Also can you tell me a serious industrialised country with out protection for its auto industry or some other aspect of manufacturing? They all started that way in any case. We make nothing so we are at the whim of whoever.
Absolutely correct, OGO!
Bernard has been going on about this for years…and he is still wrong!!
Manufacturing and maintenance can be worlds apart. Major overhauls might be closer to the manufacturing stream, but it’s a long bow in my opinion to say that if we don’t build it we can’t fix it. Given the abundance of iron ore, coking coal and potentially cheap nuclear power, I can’t understand why we aren’t the world’s steel manufacturer. Throw some government money at that.
And, the assumption that everyone has the attributes and temperament to work in the services sector grates with me. They don’t. Some people are good at making things.
Exactly. We can’t all be in tourism, selling coffee or in the health sector. Or digging shit up.
Or a churnalist. I worked in the “service” sector for about 8 months and to be blunt….it sucks!!!
so we should therefore all pay huge subsidies to give this people jobs?
Do you think that if the car manufacturing industry were still going we would import the naval ships & subs?
It makes a lot more economic sense to prop up local car manufacturing and saving many thousands of direct and indirect jobs than giving billions to a shonky Indian company or billions in tax cuts to the greedy 1% , australia is the 3rd lowest taxing nation in OECD now, why race even further to the economic bottom by following the orange clown in the U.S to political and economic oblivion.
Bernard, what makes you think that the reasoning of the productivity commission on the cost of protection for jobs is accurate? Does the productivity commission make the ideological assumption that our economy functions “as if” it fits the neo-classical model of a perfectly competitive economy? Think about it: does the ultra high price of housing in Sydney reflect the “scarcity” of houses? There are whole lot of factors going into the mess that is Australia’s economy. The naivety of the Howard government and the following Labor Rudd and Gillard governments, which all assumed it would be OK to just let LNG producers export LNG because we live in a “free world economy” is breathtakingly stupid. Thank goodness the Labor opposition proposed a domestic reserve for Australian gas. Equally breathtaking is the stupidity of privatising gas pipelines, electricity and water. None of it has worked and not just because Governments intensified lack of competition to up the price of asset sales. It is because of the monopoly nature of the assets. Do we have water providers offering alternative reticulation schemes, so that competition will keep prices down? Is water better supplied because providers up their game to protect themselves from competition?
The argument for a car industry is that it fills out the industrial structure of a country but Australia has never shown the gumption to do anything but allow car multinationals to set up shop here so that they could ship their scrapped uncompetitive plant to Australia behind tariff walls to continue making cars so that their profits-the multinationals rather than their local Australian branches-could be increased. Nor is our population too small. Sweden has a smaller population (less than half) of Australia but this hasn’t stopped their car production, largely for export. Neo-liberalism and a colonial mentality rather than tariffs per se have blocked viable car manufacture in Australia.
No doubt Australia will continue its colonial role of a source of raw materials for multinationals and a captive market for high priced exports from overseas trade cartels (in books, a British and US cartel, and so it goes on) backed up with nonsense about our “comparative advantage” for this role.