One of the few policy positives of the Abbott government was the vigour with which it dealt with one of the longest-running blights on the Australian economy: our protection of the automotive industry. For too long cossetted by governments at the expense of taxpayers and consumers, the industry met its match in the newly elected Abbott government. Led by Treasurer Joe Hockey, the government declared that enough was enough and that the days of protectionism would be over once existing subsidy programs ended.
It was a gutsy decision, but the right one, and signalled that the government was up for the challenge of economic reform. But that government now seems to have faded into the history books.
In the aftermath of the confirmation that multinationals General Motors and Ford would cease their subsidised operations here, the government correctly reasoned that further support was unnecessary and that the remaining years of funding under current programs should be retained by the taxpayer. But today that decision was partly reversed, at a cost of $500 million.
Given the government was unable to secure passage of the relevant legislation through the Senate, it could be argued it is simply making a virtue of necessity. But the signal that it sends to every rent-seeker and opportunist in the country is a powerful one: this government is now weakened and unable to stand up even for its good decisions. Along with the retreat on the Medicare co-payment and the cave-in on ADF pay, this is another flip-flop that might serve the government’s short-term political interests, but will do nothing but damage to its policy reputation and its budget bottom line.
Why on earth are we protecting an industry that will shut the year after next?