Despite the complaints of Eric Abetz, it’s a relief that Toyota had decided to build its hybrid in Australia anyway, regardless of the $35m gift Kevin Rudd gave it yesterday. It means there is some commercial basis for the decision.
Or as commercial as you’re going to get in the Australian car industry.
Some sectors exert a mesmeric hold over politicians. Free-to-air television. Airlines. Pharmacies. A hold that prevents all but the most powerful political minds from exercising the same rigorous judgement about them as is applied to most other sectors of the economy.
Judging not merely by yesterday’s announcement, but the Government’s manufacturing pronouncements generally, the car industry has got the Rudd Government every bit as much under its spell as it had the previous Government, and more.
For a time it looked like Rudd was different. His obsession with policy, his willingness to break from the ALP mould, his strong focus on skills, education and infrastructure, all suggested his Government might have the capacity to resist traditional rent-seeker calls from sectors used to bending governments to their will. Rudd seemed to be focussing on enhancing the economy’s capacity to respond and adapt to changing economic circumstances, rather than trying to steer it.
Not to be. Regardless of the outcome of the Bracks Review – always suspected to be a policy figleaf anyway – this Government is determined to prop up an industry that has been unable to stand by itself for a generation. The Australian Manufacturing Workers Union, and the multinational corporations that run our car industry, mustn’t be able to believe their luck.
It’s not clear what the Prime Minister’s $35m will be spent on by Toyota. Rudd yesterday was dressing it up as research funding for the “public good” technology. Politicians always say something like that. It’s “strategic”, they say. Or it’s a “national champion”, or a major employer. They should just be honest and say it’s a protectionist subsidy.
But it doesn’t really matter, because $35m is loose change given the amount of assistance the motor industry gets. Tariffs. The Automotive Competitiveness and Investment Scheme. The AutoCRC. Company car fringe benefits tax concessions. In 2006-07, this industry got over $1.1b in assistance, either through government grants or tariffs (we pay, either way). It’ll get the same this year and next year. And that doesn’t include grants from State Governments.
The industry employs fewer than 50,000 people. This means each of their jobs is, according to the Productivity Commission, subsidised by the Commonwealth to the tune of $23,500 pa. And that’s before the Green Car Innovation Fund of $500m.
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At a time of low unemployment – in fact, when other industries are facing serious skill shortages – there’s no possible reason for skewing the economy in this way. Other countries make cars better and cheaper than us.
You can’t help but think the AMWU and the car companies like to play to politicians’ desire to not merely Do Something but Be Seen To Do Something. The idea that there isn’t a role for government in directing industry policy, that government isn’t the answer, that politicians should sit back and let consumers and businesses work out what goods we make here and what we import, is anathema to most politicians on both sides. Endless media demands for politicians to act to solve the most trivial problems don’t help, admittedly. It’s not like Australia has much of a genuinely liberal policy tradition.
The treatment of the car industry sends a clear signal to every other economic sector: the Rudd Government is open for business. Open to “facilitation”, “transitional packages”, “temporary assistance measures” and every other form of business welfare that looked, briefly, like it was under threat from the likes of Lindsay Tanner. If it’s good enough for the car industry, it’s good enough for every other “strategic” industry.