Labor leader Bill Shorten has pledged to provide Arrium’s Whyalla Steelworks plant with $100 million of taxpayer support in a bid to keep the plant operational. From The Canberra Times:
The $100 million would be packaged as a $50 million grant and $50 million loan, to be bolstered by a further $50 million from the state Labor government…
Mr Shorten said the money would finance specific projects with an agreed business case, and could not be used to pay down debt or meet regular operating costs.
“Labor will not leave the workers of Arrium and their community on their own to face the unfolding challenges in the global steel market,” he said in a statement…
Labor’s finance package would be withdrawn if the future buyer does not maintain steel production in South Australia. Mr Shorten will make the announcement in South Australia on Thursday.
While I don’t generally like to see taxpayer money going to private companies, Labor’s policy makes sense.
The Industrial Transformation Institute at Flinders University recently estimated that the closure of Arrium’s Whyalla Steelworks plant would deal a savage blow to the South Australian economy, potentially leading to more than 5,000 job losses and costing the state’s economy up to $770 million. So there’s a lot at stake.
There are strategic considerations too, given steel’s role in defence. Australia would be loathe to become reliant on imported steel.
As well, Whyalla has been mismanaged as existing management has sought to cover its tracks in poor iron ore mine investments by transfer pricing Whyalla to oblivion. It is viable as Bluescope shows.
In any event, the $100 million price tag is chump change when compared against the Coalition’s $85 billion contract to “create jobs” in Adelaide by building 12 submarines.
