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Mar 22, 2012

Gillard's $215m 'strategic

It’s not a hand out, Julia Gillard said today about her, well, handout -- and those of the Baillieu and Weatherill governments -- to US multinational General Motors to keep making cars here until 2022.

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It’s not a hand out, Julia Gillard said today about her, well, handout — and those of the Baillieu and Weatherill governments — to US multinational General Motors to keep making cars here until 2022.

“A strategic investment” was the Prime Minister’s phrase for the $215 million package to support 55,500 jobs in the car industry and “around 200,000 additional jobs nationally” (those magic employment multipliers again).

Among those jobs will be several new ones. There’ll be an “Automotive Envoy” “to strengthen links with the global automotive market”. Let’s call him or her the ambassador for Detroit. There’ll also be an “Automotive Supplier Advocate to help identify new products and customers in automotive and non-automotive industries.” GM will also be establishing a “Suppliers’ Working Group to connect Australian suppliers to GM’s world-wide supply chains.” The golden opportunity to appoint a US-style “car Tsar” has, sadly, been missed.

There’s only so much terms like “co-investment” and  “developing new business opportunities” can hide before it becomes apparent that this is merely a $200 million plus bid by Australia in the international market established by multinational automotive manufacturers to determine where they can get the most handouts for establishing car plants.

There are few other industries like it, with the capacity to hypnotise politicians the world over, making them suspend their scepticism and start writing out cheques. The closest comparison is “major events”, in which sordid institutions like the IOC, FIFA and Formula 1 demand, and get, massive subsidies and legal protection from governments for the right to stage ludicrously costly events.

Although, seen from that point of view, the deal isn’t too bad: remember we blew $46 million just trying to bid for the soccer World Cup, and compare the $50m Victoria wastes every year on that noted supporter of gross human rights violators, Formula 1, for some momentary coverage and a minimal boost to tourism. The $200 million that might — time will tell — keep perhaps ten thousand workers in jobs for another decade suddenly doesn’t look so bad.

The only smart aspect of the package was a further $16m for training and support services for workers leaving the automotive industry. Its one flaw is that is should have been ten times that, to help exit a substantial chunk of the workforce.

That Gillard proudly stood next to the same vehicle as Ben Chifley did in 1948 speaks volumes: our industry policy hasn’t moved on in more than 60 years. At the ceremony not long before the “Holden 1” rolled off the production line, Chifley spoke about of exporting vehicles “beyond our borders to other people in the Pacific and South East Asia” and lauding it as an example of the Australian-American relationship.

Today there was no pro-American rhetoric, but the Prime Minister was still talking about accessing Asian markets.

Detroit would be only too happy to be here in 2076 with another PM talking of co-investments to enable Australian manufacturing to enjoy the benefits of “the Asian century”. And if they’re not, they’ll be in some other country lucky enough to have “won” the global auction that is car manufacturing.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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118 thoughts on “Gillard’s $215m ‘strategic

  1. Edward James

    @ Tim Nash We have a nice range of war vehicles being made here for use in someons elses way in the middle east. When we had more different brands of vehicles being manufactured here we were making components for the various assemblers. I am not convinced Australia needs to play on the world stage. We can build cars and trucks for use here, they should all run on gas because we have a glut of gas right now! Selling it to China for something silly like $2 a tonne because they will take it off our hands in bulk. Moving toward the so called world car is about leaving control with the big manufacturers who do not have Australias best interest at heart. Everything being manufactured on the world stage cost more to produce that the majority of the worlds population can afford. That disparity is numbered in the billions subsiding GM America to build Holden cars in Australia is not in our best long term interest. I pay tax and I support myself but I can’t afford to pay cash for a fifty thousand dollar car or a thirty thousand dollar car for that matter. And I would be surprised if many workers in the failing car industry can afford to pay cash either. Australia from the Federal government all the way down to people in uni getting degrees are running on borrowed money to such an extent even the interest payments are being borrowed. We are in trouble, we need to become self sufficent first! We have the skills the raw materials and the energy. Edward James

  2. Suzanne Blake

    Bring back honest Tanner and dismiss dishinest Gillard

    “Lindsay Tanner slams politics of spending

    FORMER finance minister Lindsay Tanner has attacked politicians, including his own former Labor colleagues, arguing that they are ignoring the national interest and handing out infrastructure funding “irrespective of merit” for political and not economic gain.

    In comments critical of the Rudd and Gillard governments, as well as the Howard government, Mr Tanner declared the political milking of government spending had become worse over the past decade.

    He told an Infrastructure Australia forum in Melbourne yesterday that government spending was inevitably compromised by having to dole out projects around the states on the basis of political expediency rather than providing infrastructure where it would generate the biggest economic returns.

    “If you are financing national infrastructure, it’s actually pretty hard to say: ‘Well, the most nationally needed projects just happen to be in Queensland and Western Australia,’ ” he said.
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    “You are increasingly within a construct that says you have to spread the gravy around irrespective of merit, otherwise you (will) suffer politically . . . That’s been there forever but is intensifying.”

    The federal government has often ignored the recommendations of it advisory body, Infrastructure Australia, sometimes giving the green light to projects the body had warned against.

    In 2010, an Australian National Audit Office report found Labor handed $2.2 billion in taxpayer funds to eight infrastructure projects that its own adviser had questioned as economically unviable or “not ready” to proceed.

    The report said six rail, road and port infrastructure projects announced in the 2009-10 budget, as well as two rail projects funded in the 2010-11 budget, had not made Infrastructure Australia’s shortlist of priority projects.

    Mr Tanner’s comments came a day after eight Labor ministers, including cabinet members Anthony Albanese and Jenny Macklin, were reported to have awarded more than $8.2 million in grants in their own electorates without properly reporting them.

    Auditor-General Ian McPhee on Wednesday released details of 33 cases over 2 1/2 years in which ministers violated Labor’s anti-pork barrelling rules.

    Mr Tanner, who retired from his seat of Melbourne before it was won by the Greens’ Adam Bandt at the 2010 election, said politicians had to develop the courage to allocate costs, not just benefits: “Unfortunately, the principle on which our contemporary politics operates is that free lunches are the only thing . . . what it ultimately consists of is an endless process of pretending you are solving problems . . . because you don’t want to upset anybody.

    “You want to make sure every child gets a prize.”

    Mr Tanner laid some of the blame for Australia’s infrastructure deficit at the feet of a public spoilt by long-term prosperity. “Prolonged prosperity ironically has reduced public willingness to accept hard decisions by government,” he said. “There is less willingness to pay the cost of infrastructure through charges or taxes. We tend to take the view that if it ain’t broke, don’t fix it.”

    He said politicians were increasingly loath to spend money without asking how it would benefit them at the ballot box. “The tendency of politicians to milk the political benefits of government spending has intensified substantially over the past decade or so. That had led more and more to sub-optimal approaches to investment in infrastructure so anything that might actually be in the long-term national interest but doesn’t produce substantial and serious short-term political benefits is always going to struggle,” he said.

    “Increasingly, the pressure is on for any substantial spend by government to deliver a big political dividend. By definition, that tilts the playing field towards consumer-based projects. Freight rail will be tricky, ports will be tricky.”

    During the height of the 2010 election campaign, Julia Gillard promised to fund the $2.1bn Epping-to-Parramatta railway line in Sydney, a project not then recommended by Infrastructure Australia and which did not rank highly on the state’s infrastructure priorities. Mr Tanner said an increasingly white-collar workforce trying to live in ever more sprawling cities was another hard-to-reconcile infrastructure issue.

    “Major cities are bumping up against the limits of supply for large monocentric cities,” he said. “As urban sprawl has spread, the nexus between residence and employment has diminished.

    “The transformation between blue collar to white collar has meant more jobs in the centre, but people need to live further and further out, which has exacerbated the transport problem, but that’s by no means the only infrastructure issue.”

    He said he favoured a pay-for-availability model, as used to deliver the Peninsula Link road south of Melbourne, rather than making the private sector bear all the risk.

    Mr Tanner said infrastructure bonds could be a good way to fund infrastructure in a way that was less sensitive to marginal seats, taking away the pressure from politicians to pork barrel.

    Developing public private partnerships was a hard sell.

    “PPPs have an image problem with the public,” he said. “Which is unfortunate because they are a useful tool.””

  3. Edward James

    @ Suzanne Blake Anna Bligh has resigned her seat today making certain Labor do not have party status. And all the benifits that status brings with it. Meaning they will have to pay their way for a change. It may be the LNP victor grantsd whats left of Labor party status, but I hope they dont. Labor have had a long easy ride on the backs of taxpayers. The whole idea of taxpayers kicking them right out of parliament into the street is to make room for new political blood, people who have their own backbones still intact. Who will enguage with their constituents and exercise their influence in the best interest of those constituents. Keep in mind LNP went out of their way to cut the heads off potential leaders of the Labor opporsition.
    @ Karen, of course I am writing metaphorically. I consider the ballot box to be like a “butchers block” where people who exercise their votes by numbering below the line. Can work to do more than simply vote a politician out of power they can work to dismantal a political party like Labor which is dysfunctional Local, State and Federal. We must do what Labor and is supporters have refused to do for themselves tear it apart get rid of the dead wood politicians. Thank god we dont have to listen to the pundits and comentariate tell us Labor has been sent a warning. Even the political inbread Labor Party politicians will understand Australian taxpayers and ratepayers have had a gut full of being lied to and disrespected by people whom we have given our votes to in trust. I hope the same thing happens in April. For too long the two parties not much prefered have been issing on our backs and telling us it is raining! Edward James

  4. Edward James

    @ Karen. I started directing my published comments to Labor party members and suporters around five years ago when I realised, for the most part the Labor Party Nationally is dysfunctional. Because its grass roots support and membership some of whom are elected reps at Local State and Federal levels of government are themselves the seat of the problem. They are the ones accomadating their parties political sins against the peoples. The job of dismantleing Labor falls to the prolatariate, the peoples who election after election have given their votes in trust that next term things will come good. I believe the long overdue changes are happening because it is clear the Labor Party will never do anything about the greedy cancer which is continueing to consume the party from within.
    Queensland voters will be best served by holding their resolve to exercise their vote for change again and again if needed until they fill their Parliament and local councils with politicians who have forgotten how to lie and disresperct their constituents. No government has a mandate to misgovern that happens when taxpayers go to the ballot boxes and then forget about misgovern for another three years. The government which was just booted out held a behind closed doors meeting and resolved to pay $120 K to and alledged victim of rape Annette M identifed that money as hush money in ther Courier Mail I expect everyone who has a problem with what we know as the Heiner Report and Shreddergate to pursue a Royal Commission. How we are governed or misgoverned is entirly up to us, and what we will put up with. Edward James

  5. Karen

    @Schnappi – The electorate can be quite schizophrenic – they’ll hate Labor for asset sales and pummel them electorally, but won’t really take the axe to the Libs doing it. A completely hypocritical response, I know. Can’t really explain why, other than to attribute this to a cynical media who’ll use it against Labor to manipulate punters to vote against Labor (when it suits). And yet, it will serve up a bouquet to the Libs for doing exactly the same thing because it supports the conservative agenda to transfer income from the public sector to the private sector.

    Julia’s problems are down to bad press too, fundamentally – the press hate her. Relentless bad press will get you booted out, even if you pull the moon down, it would seem. And yet, against all the odds, JG has achieved, in a legislative/policy sense, more than any of her predecessors over the same period. For the benefit to the community with little or no impost to it. The community has not lost a thing. Gee, the government has even steered the country out of recession. And yet no-one cares – they view the governments programs directed to them as ‘waste’ because the conservative media told them so. And wring their hands over the modest imposts on the big end of town because the media told them how bad it will be for big business who are making obscene amounts of money.

    And just wait, when Abbott gets in, repeals the MRRT and carbon tax and imposes service cuts, a hike in the GST, and deregulation of the labor market, the public who will surely hurt over it, will accept it because the media, again, won’t make an issue of it. So, the community won’t bother joining the dots over how much they are being ripped off.

    It won’t be that bad under Abbott to start with though because the Greens will buffer the community from the excesses of his ideology, but then the community will turn on the Greens and give them the boot because the press will really go after the Greens and accuse them of stymying the conservative ‘mandate’ and standing in the way of progress etc.

    Honestly, tin foil hat territory, here we come…

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