Facebook Google Menu Linkedin lock Pinterest Search Twitter



Feb 11, 2014

Toyota exit without an industry policy is economic vandalism

Toyota's decision to leave Australia in 2017 sounds the death knell for Australian manufacturing. Who is to blame?


Toyota’s decision to quit making cars in Australia from 2017 was an inevitable follow-on from Holden’s announcement last December. In global terms the industry was already sub-scale, making roughly 220,000 cars annually, and there were plenty of warnings last year that if Holden quit, Toyota would too.

It won’t be the last announcement of job cuts: the car industry employs some 44,000 people directly and many suppliers to Holden and Toyota will go to the wall. Richard Riley, president of the Federation of Automotive Product Manufacturers, last night warned this was “ground zero” for Australian manufacturing.

If it was the federal government’s intention to end the “age of entitlement” and cut support for the car industry, it would have been nice to know that before the last election.

Instead, we simply had uncertainty about whether the Coalition would match the extra $500 million in assistance spread over five years that would have secured the future of Holden and Toyota into early next decade, with commitments to make the next generation of Commodores and Camrys here. Labor warned of the possible consequences but by then nobody was listening.

The Coalition promised to conduct a Productivity Commission inquiry into further assistance for the car industry. Fair enough. But after insisting, quite reasonably, that the government would work to its own timetable, not that of the car companies, Treasurer Joe Hockey didn’t wait for the findings. Even as Industry Minister Ian Macfarlane tried faithfully to stick to the process, his cabinet colleagues were leaking to the media that Holden “didn’t want to be saved”. Hockey bowled into Parliament, yelling at Holden to stay or go. He got his answer the very next day: GM certainly didn’t need to be here.

Since then we’ve had the Treasurer’s handling of Holden retrospectively dressed up as a principled decision to end corporate welfare. Fine in principle — who could argue? — but it remains to be seen whether this philosophy is going to be applied across the board or is going to be a politically-motivated, make-it-up-as-you-go-along sloganeering as my colleague Bernard Keane has argued along with The Sydney Morning Herald‘s Peter Martin.

In the real world, economic theory has to be tempered with pragmatism — as former PM John Howard recognised by rejecting calls for an end to car subsidies in 2002. When he was opposition leader Tony Abbott’s relentless campaign against the carbon tax seemed to take him to every factory in the country. It is hard to square the enduring image of Abbott in high-viz, hard hat and safety glasses with the PM that is now sitting by and allowing irreplaceable Australian manufacturing capability to wither on the vine.

It is kindergarten-trite for the PM to preach that companies close and companies open. Derr-Fred. Where are the new jobs for manufacturing workers going to come from — if not precisely, at least roughly? What’s the government’s plan? Especially as the investment phase of the resources boom — with its massive skill shortages in engineering and construction — shifts into an operating phase over the next few years, with far fewer jobs required.

“… we’ve had a mix of ad-hoccery, rationalist rhetoric and retrospective justification that is wholly unconvincing.”

If abolishing the carbon tax is the full extent of the Coalition’s industry policy we are in deep trouble. Commentators speculate that money which would otherwise have been given to the car industry could support new manufacturing capability. But how is that consistent with ending the age of entitlement? The Australian Financial Review‘s Chanticleer talks about the importance of science but, hang on, we no longer have a science minister and isn’t the CSIRO about to shed up to 1400 jobs, losing what is described as the “next generation of innovation”? The AFR‘s Alan Mitchell says subsidies have been holding back start-ups, a position David Charles, chairman of the Advanced Manufacturing Co-operative Research Centre, this morning told ABC RN Breakfast was “manifest rubbish”.

Last night, Communications Minister Malcolm Turnbull told the Q&A audience, to rousing applause, that car manufacturing was uncompetitive in Australia and we had to move up the value chain and focus on smarter, more technologically advanced industries:

“The jobs that Australians want — the advanced, successful proficient industries that you need to have, will be created when there is the freedom to get on with the job and you do not have so much of taxpayers’ resources being diverted to prop up industries. We should be focussed on creating new jobs, focussed on the future, and that’s what we’re committed to. That’s why we say Australia is once again open for business and that doesn’t just mean open for businesses that are seeking subsidies, it means open for new businesses, open for innovation.”

Hear, hear. But hang on, if there’s one thing the industries of the future are going to need surely it’s ubiquitous fast broadband? Isn’t Turnbull inching towards a National Broadband Network premised on a hodgepodge of century-old copper, 20-year-old coaxial cable and a mix of fibre to the node, basement and premises which is left to the market? Hardly an NBN at all — or certainly not one that can eventually be sold to private investors.

Beyond IT, what might be the industries of the future? Cleaner energy perhaps? It would be a brave country that pinned its economic future to the coal industry in 2014, in the face of accelerating climate change. But hang on, isn’t the government axing the Clean Energy Finance Corporation that is financing clean-tech development at a profit to the taxpayer, and aren’t the climate sceptics within and outside cabinet pushing for a reduction in the 20% by 2020 renewable energy target that underpins investment in clean energy and lowers wholesale electricity prices?

What about food and agribusiness? With the world’s population rising to 9 billion, mostly in our region, and rising food insecurity, it’s a sure-fire winner that plays to our strength in farming. Food and beverage processing is also Australia’s largest manufacturing sector and, with the dollar falling back to more normal levels, there is huge potential for value-adding. But, hang on, with the SPC Ardmona decision aren’t we pulling $25 million in support to guarantee the modernisation of the last cannery in the country, even as we prop up a Cadbury tourist trap in Hobart to the tune of $16 million?

It would be all right if the government gave the impression it knew what it was doing — flagged it in advance and backed it up with empirical research. A bit of policy rigour. Instead, we’ve had a mix of ad-hoccery, rationalist rhetoric and retrospective justification that is wholly unconvincing.

Shutting down a whole industry employing tens of thousands of Australians based on the fundamentalist belief — nothing more than a prayer, really — that something better will come along in the very near future is economic vandalism.



We recommend

From around the web

Powered by Taboola


Leave a comment

39 thoughts on “Toyota exit without an industry policy is economic vandalism

  1. MJPC

    Thank you Paddy, you have said what has been missing in this whole sorry story. Abbott and his brigands are kidding themselves if they think this is going to introduce a brave new world of innovation and opportunity, it is just criminal and strategic negligence; they are traitors to the Australian proletariat.
    As for the carbon tax, the SMH had an interesting article yesterday by Michael West on protecting Australia’s gas supply from flogging it off to China without consideration of the domestic supply implications. Already power costs are rising. Interesting, the QLD power company Stanwell is mothballing the biggest gas powered station in the state to boot up an old coal fired station.
    Their reason: carbon tax (which, come July they won’t havew to pay), real reason (now) selling off gas to providors so they can flog it off to China. I am waiting till July when the CT goes and the cost of power does not fall the requisite 10%, the spin the LNP will have to generate will run 100 wind turbines.

  2. drmick

    Vandalism perfectly describes this Paddy.They don’t have a plan and they are stacking their daks that their business mates, doing the review, come up with something that doesn’t look like what it will be; A greedy grab, privatising cherry picked government assets, giving murdoch the abc and “wrecking” the NBN, putting us further into debt and leaving a steaming pile for Labour to clean up at the next election

  3. Rod

    Listening to Abbott this morning on the radio he clearly has no plan for manufacturing in Australia, had no clear idea as to what he was going to do and noted that his job when he was in opposition was to talk the country down.

    This government has no ideas, no leadership, no vision – only politics and old ideology that demonises and uses fear.

    Why aren’t we educating, building for the future and getting rid of the rorts and waste associated with middle class welfare, negative gearing, tax breaks for the wealthy, dodgy financial planners, car leasing etc etc. The only plan the LNP has it seems is to reduce the wages for those who can least afford it (child care and aged care workers for example) and further increase the wealth of those who don’t.

  4. Russ Hunter

    I couldn’t agree more. Abbott is a weird and confused political creature who has gotten himself and our country in a real mess.

  5. MJPC

    Don’t you all know that (as the Leader says) when one job goes, another is created; that the job created is some sub-standard wage in McDonalds is beside the point.
    To all those who voted LNP in the last election, you reap what you sow.

  6. Ghost PeterReith

    Can we also end the FBT rort now, too?

  7. Electric Lardyland

    Go on, I dare you lot to go!

    Come on, you bastards don’t have the guts to go!


    Err…………….well, it’s all the fault of the unions.

    Err………..and the carbon tax.

    And the ALP.

    And the ABC.

    And those illegal immigrants….err……Stop The Boats!

  8. Electric Lardyland

    Well, if the Coalition are still wanting to engage in sloganeering, here’s one that I think nicely sums up their industry policy. Let Them Eat Chocolate.

  9. CML

    MJPC – Well said!
    And Paddy is correct. The rAbbott and his motley crew are economic vandals.
    I have two nephews who work in the car manufacturing industry, and their futures are bleak, to say the least. But the LNP doesn’t care about the workers. Never did, never will.
    Pity the bogans didn’t listen before voting in the current government. What a mess, and we haven’t even had six months of these drongos yet!
    It can only get worse!!

  10. Timehhh

    This government is placing ideology ahead of the national interest. As Paddy points out, the obvious candidates for investment in ‘future’ industries (which are really ‘now’ industries), ICT and clean energy, are being systematically undermined by the Abbott government eager to appease its boosters in the fossil fuel industry and old media.

    The government seems determined to halt these emerging industries because they are disruptive to the old vested interests. They’re so busy trying to protect their mates in the fossil fuel and mining industries they haven’t figured out that the world is moving on.

  11. Timehhh

    I should clarify that my comment above (#9) applies regardless of what you think of maintaining a subsidised car assembly industry. I’m more concerned that there doesn’t seem to be any plan for what comes next, beyond mouthing platitudes about jobs being good and wanting a strong economy. We all want a strong economy, but what does the government think that looks like, and how is it planning to achieve it?

  12. Giuseppe De Simone

    Government assistance does not come for free. It comes from increased taxes now or increased debt which means increased taxes in the future to pay for the debt and the interest.

    What this article completely ignores is that we are a first world taxing country with a first world social safety net and first world regulatory controls in a region of low taxes and regulation.

    The global corporations will move their manufacturing and service/support where they can get the lowest cost and the cost of doing business in Australia is far higher than our competitors. Also, Australia’s talented young entrepreneurs and skilled professionals see the world as a global village and they move where they can have the best life-style and retain the most of their income even if they subsequently come back to Australia to educate their children. The perspective of the most ambitious and dynamic individuals today is very different to when I started working. There was not the communications and information super highway in place to allow me to be in touch with my extended family and friends constantly if I travelled. Even without the best NBN possible, even on today’s existing infrastructure, there now is and it will only get better.

    Tariffs and subsidies merely try to equalise the cost by punishing through taxation and red/green tape the industries that are globally competitive and not in need of government assistance.

    Sure, every “rich” country has its subsidies and trade barriers but amongst the larger economies Australia is one of the most trade dependent economies in the world.

    Whitlam started the dismantling of trade barriers and currency manipulation in an attempt to transition Australia from the McEwan-era. There was a bit of a pause during much of the Fraser years before the Hawke-Keating-Howard governments continued this process as did to a lesser extent the Rudd-Gillard team.

  13. Andybob

    Ad hoc retrospective justification was my impression also.

    I have heard teachers tell scientists that they envy their lack of a science minister.

  14. Stevo the Working Twistie

    You really want to know who to blame? Blame the bloke up the street from me, whose tradie ute has a Southern Cross and a “Love it or leave it” sticker on the back. The ute is a Great Wall. Nuff said.

  15. Jimmyhaz


    Government assistance in Australia is actually, for all intents and purposes, free. It doesn’t require increased taxes now, or in the future. Public debt is as meaningless to us as it is to all countries with their own currencies.

  16. DiddyWrote

    Abbott, if we are to believe his speech at Davos, believes that the Invisible Hand of the Free Market will provide for all, no need for any policy. Government should just get out of the way of the market and all will be well.
    Well the Invisible Hand has just given Australia the finger and buggered off taking the last of the car industry with it.
    Abbott is now engaging in magical thinking believing that all these automotive workers will transition smoothly into better jobs. Where?
    This bozo is on A$ 507,000 per annum and he hasn’t got a clue.

  17. JohnB

    Guiseppe, before you start throwing around statements such as “Australia is a first world taxing country”, it pays to be sure of your facts.

    The basics are very easy to find, for example http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates.

    Read and weep.

    You are dead wrong.

    Australia is not highly taxed wrt comparable others. You only assert that we are and this may well be due to an overdose of either News Ltd or Coalition ravings. They are identical, quite possibly indicating a single origin inside an octogenarian skull in New York.

    After Howard PM, one of our problems is that Australia is not taxing adequately to provide the money needed to pay for the middle-class welfare and upper-class rorts, but that is another matter.

  18. drmick

    I want to know where these magical jobs that appear after others close are coming from? They have no initiatives in the public arena for discussion. They have closed off IT and Clean energy, so where will these “magic ” jobs come from? When howard and fraser created unemployment back in the 80`s as a means of dealing with inflation (FFS), they introduced the RED scheme. Many of the yobs out of work because the car industry will close were part of that scheme. The NBN could have been the new Snowy Scheme and the skills required there could be carried over into IT and Clean energy manufacture and innovation. Remember the Clever Country initiative? Well we are still smart, its just that we have a dumb carnt running it.

  19. mikehilliard

    My sentiments exactly – vandals.

  20. AR

    As LeccyLardy noted, when asked by Uhl Mad Eyes (thankfully now only on radio)about industrial policy, TT fell back of “bop the stoats” and “electricity Bill”.
    What are LP voters grovelling in shame at what they’ve wrought?
    StevTwisty as always, mordant & brief.
    Diddy – I lurve it when neorightards invoke Adam Smith’s “Invisible Hand” (over at Daily Kos, Tom Tomorrow constantly skewers it)with no sign of having actually read “An Enquiry…” which gives the context – “men of similar trade rarely meet, even on social occasion, without it resulting in a conspiracy against the public weal”.
    Pretty much the tory game plan.

  21. Electric Lardyland

    Yes, JohnB, I did notice a remarkable similarity between the election policies that Tony formulated and the tweets of Citizen Rupe: both in general sentiment and the amount of rigorously worked through policy detail.

  22. Bill Hilliger

    Yes …the coalition is finally the government and prime minister wing-nut always good for a for a slogan …Australia is now open for business. Holden shuts down; Toyota shuts down; SPC down the gurgler potentially tens of thousands out of work. Wait! that’s not all; yet another slogan from our smacking lips wing-nut …says he’ll help those thousands of potentially unemployed move from “good jobs to better jobs”. Oh yes I forgot additionally to help business and technology the NBN still needs to be nobbled as does the ABC just in case they put in an un-Australian news report on our about to be f#&ked economic prospects. Our Victorian premier Mr Napthaline flake promises jobs in infrastructure investment (which would not include the NBN) that’s off the menu. Yes Coles, Woolies, McDonalds, KFC that’s where the jobs will come from.

  23. zut alors

    Turnbull receive ‘rousing applause’ on Q&A for his positive spin on the demise of car manufacturing. But I note there were no specifics mentioned about what jobs or industries might be materialising in this golden future of which he speaks. Would that be because he & his colleagues have not the slightest clue?

    In today’s Question Time there was mention of infrastructure projects – the NBN is an infrastructure project in case they hadn’t noticed. And the costlier it is and the longer it takes means more jobs for Australian workers. How ‘creative’ and ‘innovative’ it would be to finish the Rudd NBN rather than the cheap, third rate version. Although I wouldn’t put it past Turnbull to offer further positive spin on recycling hundred year old copper formerly deemed impractical. Malcolm’s adept with words, isn’t he, it’s the legal training of making a case even for a dud client – this time it’s Abbott.

    These boastful cries of ‘open for business’ sound hollow &, one fears, will be increasingly desperate for the remainder of the Abbott government’s term.

  24. Dogs breakfast

    I’m no fan of subsidies to the car industry generally, but Paddy Manning nails it here.

    The NBN, and the govt’s attitude to renewable technology, is the clearest statement that they are here to preserve the status quo and give nothing to the future.

    Mining, mining for gawd’s sake, still getting subsidies and tax breaks coming out of their wazoo. How can that be justified?????????????

    Ignoramuses, intellectual small-people!

  25. graybul

    Excellent summation Paddy!
    Sans a 21st Century NBN and denial of Climate Change opportunities deprives Australia of essential building blocks for future prosperity. NO PLAN!! No Manufacturing Industry. No means of building a 21st Century Hi-Tech Industry. Our brightest entrepreneurs forced off-shore. Whilst rural/remote 2nd class citizens are again abandoned to endure further decades of gravel roads, snail mail (reduced service) and unattainable medical services. So question is . . what the hell will this Govt. invest in? Aside from another war!

  26. Ian

    Giuseppe, can you (or anybody else) explain to me why the government can’t, within reason of course, just create the money to apply to a subsidy or any other investment for that matter. Unlike Greece we issue our own currency don’t we?

    Of course this doesn’t apply if we have a systemic foreign trade deficit and the outgoings are not matched by direct capital investments over time.

  27. Jimmyhaz

    On the contrary Ian, the systematic trade deficit means that the only possible possible route for economic expansion is a persistent government deficit to, at the very least, match the outflow of capital investments.

    The only limit to the amount of money that we can print (create) as a nation is inflation (which the government could depress somewhat through the scrapping of mandatory securities), and political will.

    The ‘budget emergency’, as I hear the LNP go on about, is a complete fabrication.

  28. Jabba Jawzz

    Interesting to read comments on this. Sad to see all are political blame diatribe though. How many are aware Australia,only has 80 tonne of Gold in current ownership, ok, not really in ownership as 99.9% of it is held at the Bullion bank in England. Rehypothacated multiple times no doubt. What has this to do with Toyota’s departure you ask? It’s about wealth. Vietnam, is the new mecca for investment. Toyota doesn’t have future building Cars here, regardless of what Minister of parliament from either side of the festered pit think. Like Holden, Ford before them, Toyota would have done their homework and know where the money is. Strangely enough,Vietnam also holds more Gold then Australia, Grt.Britain and a few other Nations. You have the gold, you have the draw card. The Asean and Brics are about to have their day in the sun. Us world $ will not be for long. Since the last stock market crash.. aka GFC, All the gold has been going to the Asean markets.. look about you, you think Australia is special in this? More Americans loosing jobs daily than what the death of our Industry will shed.. Look about you.. Ireland, Spain, Greece, USA,France, England .. it’s everywhere. Time to pull the political blinkers off and realise BOTH damn sides got us here. Neither side have the WANT to shift us out of the mess. If they Did, they wouldn’t be selling us off and out after each swap to head trough. We really need to stop selling everything as our only way of moving forwards.

  29. Ian


    This trade imbalance thing is a facet of economics I have been trying to grapple with for some time so please try and enlighten me if you can.

    Persistent trade deficits can be funded or partly funded by either direct foreign investment or other capital inflows eg loans to the private sector, the stock market etc. Is that correct? Now if a gap remains, how is that funded? Presumably, I guess by the government but how exactly does that mechanism work? That is perhaps where I am confused but I am beginning to see the light – I hope.

  30. Carbonbasedlife

    “Instead, we simply had uncertainty about whether the Coalition would match the extra $500 million in assistance spread over five years that would have secured the future of Holden and Toyota into early next decade” .. this is unproven, even nonsense. Why write this. It would not, could not, have saved the industry. Maybe postponed the inevitable for a few months. If that.

  31. Jason Middleweek

    What makes me angrier than the LNPs ineptness and cynicism is that the leader of the opposition is not going for Abbott’s jugular ‘Abbott’ style. There is so much ammunition here to create talking points with mass appeal. Perhaps Shorten is just too decent, or is it that they don’t want Abbott’s ratings to plummet so much that he gets rolled by Turnbull before the next election.

  32. Jimmyhaz

    A trade deficit is merely an imbalance between the value of exports and imports in the country, whereby the latter has a total value greater than the former. The Australian trade deficit results in an outflow of Australian dollars (therefore demand) overseas, which the government must at least match to keep the economy running smoothly.

    It is funded the same way that everything is, through the creation of public ‘debt’, which is a somewhat misleading name for money creation, as government spending creates money (and taxation destroys it).

  33. DiddyWrote

    Hi Jabba Jawzz,
    It was interesting to read your comment too, unfortunately very little made any sense.

    Can you confirm that you are suggesting that if we had more gold (sorry Gold) bullion that it would attract more investment for manufacturing?

    Do you propose that Australia nationalises all the gold mines and then stores all the gold (sorry Gold) in a big building. Then investment in Australian Industry would flow in from the rest of the world.


  34. drmick

    This is called the “Treacle Down” effect. Haven’t you been listening?

  35. Electric Lardyland

    Ahh, it makes sense now. The sweet deal for Cadbury, means that we’re going for a chocolate led recovery, as part of the treacle down effect.

  36. Warwick Carter

    Stephen Gatley pointed out that the tariffs on imported vehicles more than cover the costs of subsidising local manufacturing.

    Given that tariffs range from 3.5% to 5% normally and 30% for the luxury vehicles and that there were around 1.1 million new cars purchased last year of which around 800,000 were imported and assuming that the average cost of the vehicle is 25K and the average tariff 5%, the amount the government receives is around 1 billion in tariffs.

    So where did this money go? Where will it go now? Certainly not to support jobs under governments of either stripe.

  37. David Hand

    I’ve read this article and the usual motley set of comments whose main commonality is a visceral, irrational hatred for the prime minister and a naïve trust in big government.

    Of course Abbott has an industry policy. We are no longer shovelling hundreds of millions of taxpayers’ dollars into unprofitable, inflexible failing industries.

    The reason the car industry is going is because 9 out of 10 cars sold in Australia are imported. So there is a statistically high chance that most of you in this thread do not support the Australian car industry with your own money.

    The reasons for this may vary. I doubt that 9 out of 10 car purchasers are “unaustralian” or whatever honorific might be applied. I reckon its the lack of flexibility in the industry – the fact that those factories in Adelaide, Geelong and Melbourne don’t make the cars we want to drive.

  38. Jimmyhaz

    All countries shovel millions of dollars into industries that would otherwise be unprofitable and failing, the area of contention is whether better returns on government funds can be achieved by redirecting them into other areas. When it comes down to the car industry I suspect your analysis is correct, but using this to paint broad generalisations onto the entire manufacturing industry is unhelpful, and far too black and white – something that the colourblind coalition would love I imagine.

    Also if this is Abbott’s industry policy, then I would hate to see what him not having one looks like, because this one looks and feels incredibly haphazard and short-sighted.

  39. Liamj

    We at the international primitivists union applaud the deathrattle of manufacturing in Australia and have sent Mr Abbott a commemorative rabbitskin loincloth and the complete two rock toolset in celebration.

Leave a comment


Telling you what the others don't. FREE for 21 days.

  • This field is for validation purposes and should be left unchanged.