Let’s not Be-Holden to corporate interests

Vikas Nayak argues we need to accept reality and end the subsidies to Holden:

You know, I was just enjoying a nice relaxing Saturday afternoon when I catch on an hourly news update for the 6 o’clock news that our dear leader KRudd announced a $2 billion industry assistance package for Holden over 10 years. Now, the engineer in me immediately works out “hang on, that’s like $400k per worker” (in reality its actually $315656.57 per worker, apparently I underestimated Holden’s 6336 strong workforce). If you work that out, it chalks up to $31,565.66 of industry assistance per worker per year. If we take the AMWU’s word that workers are on average payed $55,000 a year, the tax payer is basically paying 57.39% of each Holden Employee’s salary.

Australia, I think its time we had an adult conversation, about fiscal prudency. Not only does Holden consistently manufacture cars that only fit a niche market (even inside Australia), our rampant protectionist policies to keep Holden around; just push up the price of cars for everyone. Instead of creating better cars, instead of competition to get us safer, cleaner and cheaper cars, Holden just keeps getting more expensive, its fuel economy barely passable and basically targeting the price inflating government car market. The loser is both the tax payer, and the Australian car consumer. Holden is the Charlie Sheen of Australian Car Sales, because whether you like it or not, “they already got your money dude”.

Now I know what people are going to say. “It’s better to keep these guys in a job than let them collect welfare”, or “but we need a manufacturing sector for national security reasons”, or my personal favorite “You’re counting the wrong numbers; there’s dependent jobs on Holden!” Well, you’re wrong…and here’s why:

Let’s start with the welfare claim, At $31,565.66 a year per worker, we’re paying almost double (well 2.25 times more to be accurate) than if we let the worker collect the dole with support for children. So let’s cut the BS right here, it’s NOT cheaper or better to keep them in jobs producing crap no one really wants to buy. The economic case here would clearly indicate that it’s better to let these guys get the retraining they desperately need to produce stuff people actually want.

Now the component parts claim (jobs dependent on Holden). I don’t know any “Holden only” parts manufacturers and if they DO exist, I have to seriously question how such an industry exists. Holden’s market share is only 12% presently and I’d imagine component sales would go on well into the future until those cars age out. Poor business decisions being subsidised by government just tells me we’re incentivising these component manufacturers to make bad choices and leave 88% of the market high and dry. Considering Holden will be making the VF commodore till 2016, announcing an end to the subsidies gives these companies 3 years + however long until the VF commodore reaches EOL to find separate income streams. Hardly an issue and I’m not going to shed crocodile tears on this matter.

To address the final argument, let’s talk National Security. I love this topic because it’s a pet favourite of mine. Firstly, Holden doesn’t actually have the capability to produce modern tanks or parts for modern places, they basically lack a titanium foundry. Don’t fret defence hawks; we do actually have one being made in Australia by our friendly defence contracting agencies. If we want manufacturing capability for National security reasons, I’d say pumping more money into projects like the titanium forge, increasing funding from our historically low Defence budget, and building up Edinburg Parks is probably the best way to go if we’re looking at a national security angle. Who knows maybe Holden can even bid for some of the work?

So Australia, let’s be the adults in the room and tell Holden why we’re not going to fund their penchant for producing cars no one wants, a sales team that doesn’t want our business (because they know they can sell it to various local, state and federal government agency pools) and generally poor management style. Its time Holden grew up as an organisation and we accepted economic reality. Let’s end the wasteful subsidies, because we all deserve better.

Comments

[Mathew]

1.

My question: Why has Holden already received so much more funding than either Ford or Toyota - twice as much in fact?
Ford has had to close its doors due to the high price of manufacturing in Australia. It is offensive to the employees of Ford Australia - manufacturing cars in Australia since 1925 to deem Ford unworthy of the equivalent support - keeping in mind that Ford alone sources its goods from various small-time operators. These small business supplying parts to Ford will now lose their best customers.

The Government's absolute bias towards Holden is unjustifiable. If the government was truly fair dinkum about helping the industry, all companies would receive equal support. Ford's needs were great yet seemingly ignored - thus removing any thread of credibility in the government's claim to wanting to help the industry.

[Georgina]

2.

Totally agree. Anyway where is the money coming from? No costings from Labor. It is about time that Labor released ALL their costings.

Would suggest to the Coalition,it provides the policies and savings on the Wednesday before the election,on 4TH September, (NAME POLICY AND SAVINGS FOR THAT POLICY) Nothing said at the moment about Labor savings to finance policies.

AND let us have LABOR COSTINGS in black and white, (NAME OF POLICY AND SAVINGS FOR THAT POLICY) GONSKI, NDIS, NBN (which Labor said they would be released AFTER THE ELECTION), asylum seekers, (INCLUDING THOSE BEING SETTLED IN AUSTRALIA), handouts (ALL THESE BRIBES FOR VOTES) ETC.)

Come clean - Labor to give COSTINGS OF POLICIES AND WHERE THE SAVINGS COME FROM on Tuesday 3rd September.

[Allan]

3.

Mathew, this has nothing to do with fair. It is just about Rudd covering his sorry arse after the fringe benefit fiasco.

Rudd is dangerous and has learned nothing in the three years that he was in exile from the leadership. What I can't understand is why there are still voters out there that are prepared to put up with another three/four years of his dysfunctional blundering from one disaster to the next all based on smoke-and-mirrors and lies.

[Anton]

4.

The subsidy is on top of import tarrifs and luxury car tax, among other protections.

After announcing their withdrawal, Ford stated that Australia is the most expensive place to manufacture cars, more expensive than USA, Canada or Europe. How long do we have to pay to keep Holden on life support?
Clearly Australia is uncompetitive in this industry and our resources, especially skills, would be better used where we are globally competitive - mining and farming

If component manufacturers cannot export their product they are on a limited life as well.

[Anton]

5.

Australia's competitive problem is not high wages - North America and Europe have similar average wages.

The problem is wages are too high iin low skilled jobs. Wage rates should be compared to a similar job in other countries, not other wages in Australia.

Retail checkout and box filler jobs cannot support a first world family lifestyle in a global marketplace. Higher wages must be supported by higher skills, not workplace laws. Otherwise the jobs just move to other countries, and the skilled jobs happen to follow as well.

[John Dunlop]

6.

The government's bias towards Toyota and Holden is because the have export plans. Toyota's new factory builds hybrids from the ground up. Holden has export markets for it's preformance models in europe and the US. Ford US won't entertain the idea of building export models here so Ford Australia gets no loving.
Successive governments justified the subsidies they paid on the basis that there was a significant payoff in terms of export dollars for every job they subsidised. The gross subsidy minus the export dollars generated is the Net sibsidy, or some such Malarky.

[John Dunlop]

7.

What? nothing to do with our high dollar value and the US's low one? the US exports Jeep's at Great Wall prices so there's some heavy duty subsidies going on there.

[Anton]

8.

Blame the high $A?
Good to see you have studied your talking points so well, always blame something else.

Does it stack up? A high $A -
>makes the steel cheaper, as it is fixed in $US
>Makes the plastic cheaper, as it is priced in $US
>Makes the rubber cheaper, as it is priced in $US
>Makes the machinery cheaper, as it is priced in $US or Euro
>Makes the debt cheaper, especially old debt

Only labour is more expensive, and if you look at the facts, Australia's low skilled labour is expensive at any exchange rate, and prohibitive when you take the low productivity into account.