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Federal

Mar 22, 2012

Gillard's $215m 'strategic
investment'

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.

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.

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118 comments

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

  1. Ralph Becker

    Strategic it may be, but for whom and why is clear… *sigh*

    Of course it’s strategic to invest $200,000,000 to cement our status on the world markets as ‘also rans’ and save jobs of card carrying members while quite happily letting other jobs go down the drain. Oops.

    Especially since there are no alternative industries that we could strategically invest $200M in – areas in which we have the natural resources and competence to be amongst the world leaders.

    Alas, that would require our card carrying members to do as the majority of us do – adapt and learn.

    *sigh*

  2. Edward James

    We are long over due to have our own fair dinkum Australian motor vehicle manufacturing industry. We have the resources and the skills. Why are we beholden to Germany Europe and USA. Platform cars have been around for decades! We are being taken for mugs and our elected reps are part of the on going problem! We are spending millions of dollars paying our politicians to act in our best interest and yet we are going broke. While inviting imports of stuff which will damage our own natural resources. Edward James

  3. Damien

    If it costs $20 mil per year to make cars in Australia – so what? It may be a rort but what’s the alternative? What will we ever be able to manufacture in this country if the market has its way without intervention? We’re already consumers of almost everything that uses fuel and lifts or carries any item. I think we need to be able to do more than service cars or fix them after prangs.

  4. Holden Back

    So, I assume you can write the story to go under the headline for the alternative outcome:

    GILLARD GOVERNMENT REFUSES TO SUPPORT AUSSIE MOTOR INDUSTRY.

    Yeah, right.

  5. Edward James

    @ Damien, It seems we have been led into believing we need to import everything on offer from the rest of the world. Well no we dont Damien! We once had two east coast steel mills Wollongong and Newcastle where we made world class steel. Australia has resourses inn raw materials and energy, more than enough to serve us as a nation independantly of the rest of the world. We also have natural produce growing all over the place, most of which is not yet contaminated with oversears blights and desiese. All we need to do is learn how to defend ourselves! Our dead wood elected reps are not going to help us do that! Dont you know! Edward James

  6. Tim nash

    @Damien maybe we don’t need to manufacture things here, why do we need too if we are only going to make a loss like this?

    Everybody seems to just accept that Australia ‘should’ be making stuff like that’s the rightful state of things.

    Listen to this podcast on rear vision from radio national that was on just recently:

    http://www.abc.net.au/radionational/programs/rearvision/making-it3b-manufacturing-in-the-west/3865626

    Australia has never made stuff very well, it’s just not our thing.

    This bailout is atrocious, it’s just delaying the inevitable.

  7. Edward James

    @ Holden Back
    Posted Thursday, 22 March 2012 at 3:28 pm | Permalink
    I believe I have already postulated an alternate for the Australian peoples. It dose not include importing cars, trucks and stuff from overseas. Bcauser I have no doubt Australians can and will given the opportunity build cars and trucks better than anything available from lessor producers worldwide! I am not sucked in by the myth Holden is an Australian ICON. I see a chopped and chaneled Dodge . That was back then in the early fifties. This is now2012. We have resourses, skills , and energy. All we need to stand alone is leadership! Edward James 0243419140

  8. John64

    The next “under threat” industry is already lining up to ask for its hand-out now.

    Those poor multi-nationals. Whatever will they do? Meanwhile I note General Motors’ International Operations made $1.9 Billion profit last year. I wonder, is that with or without hand-outs?

  9. ggm

    I have been told the reason we pumped money into the automotive industry post WW-II was to ensure there was a manufacturing capability onshore, capable of making WAR PLANES.

    Ie, the strategic justifier wasn’t the cars, or the jobs: its the risk assessment of needing to either bomb somebody, or defend against being bombed.

    Since that threat has gone away, a car making lobby has emerged which has found other reasons to keep the lips stuck on the teat of mammon.

    Personally, I’m happy for some of my tax dollars to go towards jobs in Geelong. But lets not kid ourselves there is some other overarching reason we want cars made here: lots of other economies are perfectly happy assembling cars coming in at the docks, or even just driving them off ships..

    -G

  10. eric

    A pretty smart move I would suggest.

    The government over the next 12 years will get way more than the $250.000,000 back in taxes and not having thousands more ex car workers on the dole.

    The trick for all three car makers is to try and ramp up export orders.

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