30 January 2012 in Jamie’s View
By Jamie Briggs, The Sunday Mail
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I want Australia to have a car industry in the future. But it has to be an industry that is viable. That is - able to stand on its own two feet without needing a new assistance package every couple of years. I say this because the country cannot afford it and because subsidies in the end will not save it.
Those advocating for more subsidies say that we must spend more money in order to save jobs. But how can we justify spending billions of dollars on saving jobs in this industry and not another? The car industry is under pressure, but so too is the retail industry. The Government hasn't proposed to subsidise shops in Rundle Mall to save jobs.
Two weeks ago, the finance sector announced that thousands of jobs would be slashed. But the Government isn't "co-investing" with the banks to save jobs in that industry. A further point to make is that subsidies don't actually "save" anything; they push a problem down the road.
In 2002, the Productivity Commission said in its review of automotive assistance: "without a sound business case, no amount of assistance will attract investment". The experience of Mitsubishi proved this to be true and it proved to be true again this week with Toyota announcing that it would slash 350 jobs. Government subsidies did not save Mitsubishi in 2008 and they did not save jobs at Toyota in 2012.
We are told that we need to continue subsidising the industry because this is what Europe and the US are doing with theirs. Well wouldn't be encouraging us to adopt policies from Europe or the US. The US nearly defaulted on its loans recently and Europe is in the midst of a massive debt crisis that has the very real potential of dragging the world into another global financial crisis.
Until a week ago I had not heard this reason, but apparently, as Labor MP Mark Butler articulated in his opinion piece for the Sunday Mail, we should continue subsidising the industry because it is what we did it in the 1930s. He said that because we paid to keep General Motors-Holden's in South Australia in the 1930s, we should do it today, in 2012. I don't think we should be parachuting economic policies from the 1930s into the 21st century.
Despite what Labor might want you to believe, the Coalition is not proposing to immediately remove government assistance from the car industry altogether. We will still support the industry with $1 billion of investment, and, importantly, we will not introduce a carbon tax
that will increase the cost of building every single car.
But in the long term the industry must be able to stand on its own two feet.
Unless the industry has a flexible workforce, is internationally competitive, has an export market and is profitable, no amount of assistance will keep the industry afloat.
Thousands of businesses struggle in our economy each year, yet only a chosen few get a government subsidy to keep them going. The time has come for that discrimination to end.