Coalition plays possum on killing car industry

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Is the Coalition going to kill car manufacturing or not? From the AFR:

The Coalition’s budget razor gang is ­targeting car industry assistance to help fund its election promises, a move that could generate savings of up to $2 billion.

With General Motors Holden’s decision to cut another 500 jobs sparking renewed debate on industry assistance, The Australian Financial Review learned the Coalition’s expenditure review committee has discussed detailed submissions from the opposition’s industry spokeswoman, Sophie Mirabella , on cutting funds set aside for the car industry.

…“We think there is a better way. There needs to be a funding program that looks to the long-term viability of the industry,’’ she said.

Meaning what exactly, Sophie?

Meanwhile, Industry Minister Greg Combet said such cuts would mean Australia would stop making cars. 

Then there is the states. South Australian Labor Premier, Jay Weatherill, who is threatening to claw back subsidies and:

…has accused Holden of breaching the obligations of the agreement, which included maintaining minimum employment levels at its Elizabeth plant in SA. Of the 500 latest job losses, 400 will be from his state and 100 from Victoria.

Mr Devereux hit back, saying he had breached nothing because no contract had been signed. “I’m mystified to know that I’m in breach of something that I don’t have,” he said.

Meanwhile, Liberal Victorian Premier Denis Napthine:

….said his government had yet to pay Holden any of the $10 million…We would be seeking absolute assurances from Holden about employment and investment in this state.”

A terrible mess as usual with politics colliding with vested interests and sense being lost in the dust cloud. Questions abound for both sides:

Does Labor give money to these guys for employment or to become more efficient producers?

Is the Coalition going to kill them or not?

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. opposition’s industry spokeswoman, Sophie Mirabella

    Oh, I didn’t realise that. That is truly terrifying.

    The Coalition’s budget razor gang is ­targeting car industry assistance to help fund its election promises

    So, we’re going to kill the car industry so we can repeal the carbon tax? Excellent news. I might have to dust off those plans to move to New Zealand…

    • GunnamattaMEMBER

      ……Áve María, grátia pléna, Dóminus técum. Benedícta tu in muliéribus, et benedíctus frúctus véntris túi, Iésus. Sáncta María, Máter Déi, óra pro nóbis peccatóribus, nunc et in hóra mórtis nóstrae. Ámen…….

      If the M-Soph is the person who will advancing the interests of Australian industry in a new Torynuff Government it is time for the Hail Mary (in Latin) and Divine Intercession on its behalf.

  2. Whatever the outcome, it’s pretty clear that we can’t support all the carmakers we have. So, despite all the Union wailing and hand wringing over this “strategic” industry, probably best to cut it losse from Treasury.

    Save the money to invest in better border control materiel?

      • And in fact I’m kind of agreeing with that but adding that in a money constrained world, opt to save it. After all, whatever outlook there is, it doesn’t really include a vibrant self supporting car industry no matter what Sophie or the LNP say.

        Are you still of the opinion that car making is vital to our defence capabilities?

    • Save the money to invest in better border control materiel?

      Excellent policy choice for Australia’s long term future! No car industry, but we’ve stopped a few desperate souls on leaky boats.

        • In one sentence: Make ’em build sensible cars people actually want to buy. i.e. No more Falcodores!

          • No. Just don’t use government funding to support the design and manufacture of big-ass six-cylinder rear-wheel-drive sedans, that no-one has wanted to buy for a decade.

            People want smaller cars and SUVs.

          • As I said the other day: government taxes it if it is moving, subsidises it if it stops moving, and nationalises it when it is dead.

            How about just “not taxing and regulating” quite so much in the first place, and seeing what bobs to the top in a free market?

            The whole freakin’ economy is in trouble, specifically relating to the whole freakin’ tradables sector; and propping up bits of it the tradables sector, or even propping up the whole of it that still remains, is NOT a “solution”. The “solution” is drastic changes in fiscal policy.

          • “Slash and burn austerity” in the new Leftie double-speak: a return to the already-high-by-historical-standards spending levels PRIOR to the disgraceful, profligate, impecunious splurging of short-term bubble revenues that preceded the inevitable “adjustment”.

            Meanwhile, while impecunious finance ministers basked in bubble revenue, the “tradables” sector – on which the entire economy stands or falls in the long run – SHRANK. The bubble was a cancer sucking life out of the economy’s essential organ.

            But we can’t give that sector any “breaks” at all now, because that would be “slash and burn”?

            Sorry, pal, the bad news is that the economy is NOT going to recover without giving the tradables sector some breaks somewhere along the line. That means, shock, horror – less regulations – less taxes – less punitive workplace laws – lower cost land thrown open to alternative uses – less barriers to resource utilisation.

            In a word, what we accepted as the norm back before we “became a rich nation”, and before we furthermore threw all responsibility to the winds like a prodigal offspring who now has a big gambling debt to pay off. People in this situation cannot cry that it is unfair to deprive them of their human right to continued membership of their Mayfair clubs and the box circle at the Met.

      • The article is discussing how , in a constrained Budget environment, Taxpayer money is best spent.

        What is emerging between the LNP Opposition and the Govt is their clear differences on where are the Budget priorities. I think the Opposition will look to save in areas like car maker support in order to fund areas like improved Border Protection.

        Hope that clarifies.

  3. Simple, kill off non-profitable car industry and remove the ridiculous taxes on imported cars!
    .
    I want my cheap Audi! 😀

    • It does not matter WHAT Aussie exports or “import substitutes” in its tradables sector as a whole. Concentrating on industries for which people have a sentimental attachment is just a pointless diversion.

      With the right fiscal policies (including local government reform) who knows what Australia might be good at making?

      “‘Oddball heaven’ works for America”
      http://www.washingtontimes.com/news/2013/mar/25/oddball-heaven-works-for-america/

      http://online.wsj.com/article/SB10001424127887323549204578315714070017932.html

      While everyone in the USA is obsessing about their “Big Three”, they can’t even see the fact that they have been taking the rest of the world to the cleaners in innovation and manufacturing where it COUNTS: in the “waves of the future”.

      “…..The world now wakes up to iPhone communication, Amazon online buying, social networking on Facebook, Google Internet searches and writing and computing with Microsoft software. Why weren’t these innovations first developed in Japan, China or Germany — all wealthy industrial countries with large, well-educated and hard-working populations? Because in such nations, young oddballs like Jeff Bezos, Bill Gates or Steve Jobs more likely would have needed the proper parentage, age, family connections or government-insider sanction to be given a fair shake….”

      I also suggest that young entrepreneurs can get much cheaper commercial property in most US cities, than in other countries, and furthermore, that the formation of new clusters often takes place on “spare” and low-cost land that simply does not exist in other countries urban economies thanks to “planning”. The McKinsey Institute suggested in “Driving Productivity and Growth in the UK Economy” (1998) that Silicon Valley could never have happened in the UK.

        • In “the USA’s growth corridors” they actually maximise use of the commodities locally, due to having “the full package” of attractors of the industries that use them.

          I presume you have actually read the “Growth Corridors” article I link to above, probably for the 10th time on this site. If not, please do so. Read also, “The Flow of Money and its Impact on Local Economies” by William Fruth.

          http://www.policom.com/PDFs/FLOW%20OF%20MONEY%202013.pdf

          That will comprise a near-complete short remedial education for all politicians and pundits on what is wrong with the Aussie economy. Australia has almost all the POTENTIAL attributes that attract companies like Airbus to Southern USA. Australia is English speaking, with stable politics and strong institutions, close to Asia. It has desirable housing norms. It has (or should have) cheap resources. It most certainly SHOULD have the world’s cheapest urban land, and it should also have a quick and easy regulatory environment for anyone wanting to invest in a “tradables sector” activity.

          It should be exporting Hondas like the Southern USA is and could even be exporting jet airliners like the Southern USA is soon to be; if it adopted similar policies.

      • I also suggest that young entrepreneurs can get much cheaper commercial property in most US cities, than in other countries, and furthermore, that the formation of new clusters often takes place on “spare” and low-cost land that simply does not exist in other countries urban economies thanks to “planning”.

        Phil, what drugs are you on mate? Most of the innovations you speak of came out of San Francisco and the Bay Area, where land prices have been off the scale and always will be, largely because of geographical reasons (hemmed in by ocean, bay, mountains and fault lines).

        Honestly, your rabid ideology prevents you seeing common sense, or making compromise of any sort. Everything bad in the world is put down to the twin evils of government spending, and land supply restriction. Its a total crock. The truth is far more nuanced.

        • Lorax, I happen to know what I am talking about. Silicon Valley got underway when land was cheap and regulations were few.

          http://www.fcpp.org/images/publications/Cyprus%20letter.pdf

          California grew, 1950-1960, and 1960-1970, faster than Texas grew 2000-2010; and its land prices were perfectly affordable – one of the reasons for its rapid growth. It prices started to ramp up in some locations during the 1970’s, and steadily worsened as more and more locales become “exclusionary”.

          There is absolutely no way Silicon Valley could have started today where it is now. It is bleeding considerable activity to alternative locations, and the undercapitalised entrepreneurs with bright ideas in the future will be finding their low cost business premises in which to start out, somewhere else in the USA. This is going on right now and will be acknowledged in the mainstream in another decade or two.

  4. reusachtigeMEMBER

    The money spent on the car industry would be much better spent on increased grants for first home buyers to get into the market.

    • There should be no grants full stop!

      Cheaper land and therefore house prices is what we need. Not some grant which Joe Blogg developer/builder just slaps onto the asking price!

      • Fabian AlderseyMEMBER

        I’m sure reusachtige’s comment was in jest!

        Regarding the topic at hand, it’d be interesting, if we let the car industry go, and then the next industry, and so on, where we’ll end up. Are we internationally competitive in enough areas?

        • Abosolutely not. The gov’t will not let the car industry go until it has been reduced to all but a rump. Until then, they’ll keep throwing money at it. Same for real estate. That’s why we pay our taxes – to support ‘systemically important’ industries like real estate agents and car makers that have given up trying to create sustainable business models and rely on continued government intervention to survive.

          • Meanwhile, like the UK, we won’t have a clue what waves of the future our economy missed out on thanks to our preferred, utopian policies surrounding land use, resource use, workplaces and so on.

    • Don’t laugh, that’s probably a very real discussion had at the highest levels of government. Ideally, they’d love to unconditionally support both. I think they’d find it hard to make a choice. I can imagine that the politicians would choose the third option – increased deficits, delayed surpluses and cuts in other areas to make sure both are suitably supported.

  5. You know that you can’t trust Abbott on anything not in writing. He told us so. Oh, wait a minute, he didn’t put that in writing either!

    It’s time for Abbott to release written policies on all major matters of substance, making clear what is core and what is never-never, I mean aspirational.

    The release of the broadband policy is a start, but there are lots more to go.

    • Let’s see if he does. I think he’d actually be better served by releasing as little as he possibly can and trading on the utter hatred of Gillard and the ALP, no to mention their perceived incompetence. The more policy detail he releases, the more it will actually be compared to the ALP, sometimes unfavourably.

      I think it’s safe to assume that some of his policy releases will result in some loss of support because some people will realise they just don’t like what he’s got to offer. The NBN is an example of that. I can’t imagine that his carbon policy will do much for him either. Much like Beazley’s GST Rollback, I suspect people will roll their eyes and wonder why we’re even attempting to abolish the carbon tax, so little has it impacted on daily life. If Abbott releases too much stuff, he might actually find that losing becomes a realistic option.

      • Fabian AlderseyMEMBER

        +1.

        Their way of selling their broadband “vision” comes across oddly – “what we’re going to give you is good enough for you”.

        It may well be, but man, what a way to sell it!

  6. I wondered, when V8 supercars opened up the track to Mercedes & Nissan whether they had seen which way their wind was blowing. They didn’t want to lose their lucrative franchise by only having one hand clapping.

    The parity formula ensures homogeneity while giving the appearance of Red & Blue, & a couple of independents to barrack for…..

  7. tsport100MEMBER

    Last time Abbott LOST, Sophie Mirabella was ready to abandon the multi-billion dollar Green Car Fund at the drop of a hat, although the incumbents did the same in the end also!