
For the last few years, on average, around 145,000 people have been retrenched every quarter, or around 1.25% of the workforce. Normally, not a lot of fuss is made about those lost jobs, despite the dislocation caused to workers. Around half are back in the workforce again in the same quarter, the ABS data show.
An awful lot of fuss is being made about the closure today of Holden’s Elizabeth plant, the last car-manufacturing facility in Australia. That will be highly dislocative for 950-odd staff who will lose their jobs, as it has been for the 800-odd who’ve lost their jobs since the closure was announced in 2013. Stories have been written about the “iconic” Holden brand, about how car manufacturing supported families, many of them migrant families, about couples who met at the manufacturing plants, about how important manufacturing is.
All of this is true, of course. But it’s no more true than of any other sector. Australia continues to draw large numbers of immigrants, who find work in other sectors of the economy — mainly in the services sector, often in health and social care, which for years now has been our biggest employer. Families and communities are sustained by all sorts of industries. Couples meet in workplaces across the country every day. Everything written about the closure of Holden could be written about any other industry.
But car manufacturing always placed a spell on us, especially on policymakers. For decades, we forced consumers to pay punitive tariffs if they wanted to buy an imported car. We spent tens of billions of taxpayer dollars as, effectively, bribes to American and Japanese multinationals to continue to build vehicles here, even as car manufacturing became a highly automated and lower-skilled task that could be much more cheaply performed in developing countries.
In 2008, the Productivity Commission calculated we were spending over $23,000 a year subsidising each car worker’s job, although that figure fell in ensuing years as subsidy programs wound up. We even justified protectionism by arguing that other countries were also punishing consumers and handing taxpayer money to multinationals, so we should as well.
Nor did the usual politics apply to this industry. Both Labor and the Coalition, until 2013, backed continued protection for the automotive sector (even now, despite the closure of the remaining local production facility, you can’t import a second-hand vehicle without punitive tariffs, because there’s bipartisan protection for the automotive retailing sector). And unions — from both left (the AMWU) and the right (the AWU) — and employer groups were happy to put aside their traditional antipathies and be as one in supporting this policy.
Other manufacturing industries didn’t fare so well, because the unions and businesses involved were less powerful. And the workers were more invisible. We dumped most tariff protection and any budget support for the one manufacturing industry with a strong female presence, textiles and clothing, back in the 1990s. The steady closure of textiles and clothing manufacturers rarely attracted attention either from the media or policymakers, even as the number of Australians working in textiles, clothing and footwear manufacturing fell from over 100,000 in the 1990s to, at last count, around 34,000. The stories of those workers who lost their jobs rarely made the news.
There’s one way in which we should regret the end of car manufacturing in Australia, however. As it turns out, automotive protectionism was a relatively efficient means of subsidising jobs. In the post-neoliberalism era, we’ve now embraced defence protectionism, in which taxpayers will spend up to 30% more to build large naval vessels here than buy cheaper, better versions from countries with greater economies of scale and comparative advantage. Defence protectionism come with a much higher price tag per job than making cars — in the hundreds of thousands of dollars per job. And the billions of dollars that we will spend on less than 3000 mainly South Australian jobs to build new warships will translate into millions per job in total, before the inevitable cost blowouts of projects like the new submarine fleet.
From a taxpayer and economic efficiency point of view, it would have been better to stick with propping up multinational car manufacturers.

20 thoughts on “Australians’ love for local car manufacturing is misplaced”
old greybearded one
October 20, 2017 at 1:18 pmTwo things Bernard. If you can’t make stuff, you can’t fix stuff, so how do you repair you ships? Also can you tell me a serious industrialised country with out protection for its auto industry or some other aspect of manufacturing? They all started that way in any case. We make nothing so we are at the whim of whoever.
CML
October 20, 2017 at 1:31 pmAbsolutely correct, OGO!
Bernard has been going on about this for years…and he is still wrong!!
[email protected]
October 21, 2017 at 8:35 pmManufacturing and maintenance can be worlds apart. Major overhauls might be closer to the manufacturing stream, but it’s a long bow in my opinion to say that if we don’t build it we can’t fix it. Given the abundance of iron ore, coking coal and potentially cheap nuclear power, I can’t understand why we aren’t the world’s steel manufacturer. Throw some government money at that.
The Curmudgeon
October 20, 2017 at 1:40 pmAnd, the assumption that everyone has the attributes and temperament to work in the services sector grates with me. They don’t. Some people are good at making things.
Wayne Cusick
October 20, 2017 at 1:43 pmExactly. We can’t all be in tourism, selling coffee or in the health sector. Or digging shit up.
Barry Reynolds
October 21, 2017 at 12:38 amOr a churnalist. I worked in the “service” sector for about 8 months and to be blunt….it sucks!!!
[email protected]
October 23, 2017 at 10:34 amso we should therefore all pay huge subsidies to give this people jobs?
Robert Smith
October 20, 2017 at 1:50 pmDo you think that if the car manufacturing industry were still going we would import the naval ships & subs?
brian crooks
October 20, 2017 at 2:13 pmIt makes a lot more economic sense to prop up local car manufacturing and saving many thousands of direct and indirect jobs than giving billions to a shonky Indian company or billions in tax cuts to the greedy 1% , australia is the 3rd lowest taxing nation in OECD now, why race even further to the economic bottom by following the orange clown in the U.S to political and economic oblivion.
Hunt Ian
October 20, 2017 at 2:44 pmBernard, what makes you think that the reasoning of the productivity commission on the cost of protection for jobs is accurate? Does the productivity commission make the ideological assumption that our economy functions “as if” it fits the neo-classical model of a perfectly competitive economy? Think about it: does the ultra high price of housing in Sydney reflect the “scarcity” of houses? There are whole lot of factors going into the mess that is Australia’s economy. The naivety of the Howard government and the following Labor Rudd and Gillard governments, which all assumed it would be OK to just let LNG producers export LNG because we live in a “free world economy” is breathtakingly stupid. Thank goodness the Labor opposition proposed a domestic reserve for Australian gas. Equally breathtaking is the stupidity of privatising gas pipelines, electricity and water. None of it has worked and not just because Governments intensified lack of competition to up the price of asset sales. It is because of the monopoly nature of the assets. Do we have water providers offering alternative reticulation schemes, so that competition will keep prices down? Is water better supplied because providers up their game to protect themselves from competition?
The argument for a car industry is that it fills out the industrial structure of a country but Australia has never shown the gumption to do anything but allow car multinationals to set up shop here so that they could ship their scrapped uncompetitive plant to Australia behind tariff walls to continue making cars so that their profits-the multinationals rather than their local Australian branches-could be increased. Nor is our population too small. Sweden has a smaller population (less than half) of Australia but this hasn’t stopped their car production, largely for export. Neo-liberalism and a colonial mentality rather than tariffs per se have blocked viable car manufacture in Australia.
No doubt Australia will continue its colonial role of a source of raw materials for multinationals and a captive market for high priced exports from overseas trade cartels (in books, a British and US cartel, and so it goes on) backed up with nonsense about our “comparative advantage” for this role.
Alan
October 20, 2017 at 3:13 pmBugger off, Bernard. A job is a job.
zut alors
October 20, 2017 at 4:36 pmAm trying to imagine the current Treasurer declining to fund a railway line with $1B taxpayer dollars with a dismissive “You’re either here or you’re not!” to the snake oil peddlers, Adani.
That’s the challenge a blustering Joe Hockey made to Holden in 2013 when threatening to cull the car manufacturing subsidy. Adani would bug off pronto if Morrison took the same stance today. And good riddance.
As a taxpayer I don’t mind subsidising jobs & would much prefer them to be in the automotive industry than the dirty defence industry (yes, I realise Holden briefly built weaponry during WWII). Time will tell if the profligate submarine subsidy is sufficient to save one job in particular ie: Christopher Pyne’s.
Will
October 20, 2017 at 4:37 pmIt takes a true neoliberal mindset to see nothing but net economic benefit – and so really nothing to lament – in the closure of Australia’s last car manufacturing plant. Is there no cultural symbolism for the traditional working class here? A political turning point for them, and all of us, not just reached? Such manufacturing plants (plus ones in steel, household goods, and all the rest that have gone offshore) once offered secure, life-long, full-time employment, which formed the bedrock of good lives in real communities, which were protected by unions and represented by their very own major political party. Replaced by what? Part-time and gig economy work. Social and political fracturing. And economic dependency upon China. Yep, nothing to see here but the saving, Bernard.
Dog's Breakfast
October 20, 2017 at 7:06 pmI haven’t read the productivity commission analysis, but they have some form in neoliberal spruiking, and there is reason to doubt that the figures provided don’t have some elasticity in them.
John Menadue’s blog this week quoted a figure of around $8000 per worker, per year, subsidy for car making. I suspect that is closer to the mark. Cheap at twice the price.
Given that many of those older workers will now go on unemployment or other benefits at MUCH higher cost to the government, it actually makes rational economic sense to support the industry, and that is without going into the reasoned arguments given by other esteemed commenters.
The textile, clothing and footwear tariff changes was actually huge news Bernard, for close enough to 5 years at least. What was different about that was that it was an industry dominated by individuals working at home on piece rates who were paid mere fractions of the basic wage, it was a corrupted industry much more about home workers being exploited rather than major factories. It was also low tech, and always a problem in terms of competition. We were propping up an unscrupulous industry, not a going concern with reasons for us to continue to support it.
All the rest of the comments apply. Most particularly the reference to some people just being good at making things, and finding a meaningful life in that. You know, Blokes!
The services and many of the professional industries are soulless concerns which have real implications on the mental welfare of the populace, again mainly men. The move away from a ‘making things’ economy has much larger implications than just tariffs. The rise in mental health problems and the dearth of ‘making things’ jobs is no coincidence in my opinion.
I say that as a spreadsheet pusher, who needs to do repairs around the house and making things to feel that I’m not an overwhelming fraud. And I’m damned good at my job!
This is not peripheral, or a mixed and stupid argument. It is very much a feature of healthy maleness. Not all but a very large percentage of males want it, need it, and should receive some support from government to help make things.
Try it Bernard, you’ll be surprised how spiritually and emotionally uplifting it is to actually produce something. The world is filled with sad and dysfunctional lawyers, accountants and yes, analysts. This is a very big part of the reason why. At a visceral level, most men understand that if they aren’t actually making something, they are fakes.
And they are right!
Wayne Cusick
October 21, 2017 at 10:45 am“John Menadue’s blog this week quoted a figure of around $8000 per worker, per year, subsidy for car making. I suspect that is closer to the mark. Cheap at twice the price.”
Is the figure per worker calculated including taxes, or is it just the subsidy amount divided by the number of workers?
If it is the latter, I would imagine the tax for auto workers would go a long way to compensating for that.
bryon
October 20, 2017 at 9:43 pmBut… the thing about the car manufacturing is that it was part of the defence industry.
No car industry no mass production industrial base.
No ability to mass produce military vehicles or adapt Toyota utes to light machine guns carriers.
Obviously in most scenarios we are either overrun and our power generation capacity is destroyed quickly, so vehicle production capacity is irrelevant. Or we are on the winning side and our allies can deliver as much hardware as we need. But somewhere in between there are conflicts where our supply lines are constricted, but an enemy can’t overwhelm us and the capacity to build a bunch of transport and fighting vehicles would be handy.