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Car industry job losses: It will affect us all

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HC Online | 09 Jul 2013, 12:03 AM Agree 0
The recent crisis culling the automotive industry could cost Australians thousands of jobs, FAPM warns.
  • Chris Golis | 09 Jul 2013, 07:50 PM Agree 0
    Why should ordinary Australian taxpayers have to pay for the production of cars they are shunning as consumers?

    Should Australia have a car industry at all?

    Supporters of an industry – any industry – always come up with the same arguments: it is a major employer; it generates technological spill-over effects; and it is ‘strategic’ for Australia's defence (though the term is seldom defined).

    The closer you are to an industry, the more such arguments seem to make sense. After all, nobody likes to see a big employer disappear from one’s city or state. And of course there will always be a few successful or innovative parts of the sector. But do they justify keeping the whole industry alive at enormous costs?

    A dispassionate look from the outside may aid a more balanced view. The same arguments being made for keeping Australia’s car manufacturers alive have been made for Germany’s coal industry for decades.

    Since the late 1950s, German black coal could no longer compete with imported coal – much of which came from Australia and cost between a third and half the price compared to domestic deep-mined coal. For employment, technological and strategic reasons, German governments continued to subsidise mining for decades at a total cost of about $430 billion with no success in making the industry competitive with countries like Australia; subsidies are scheduled to be phased out by 2018.

    From an Australian perspective, it is obvious that Germany’s coal subsidies were a complete waste of money. All these years, Germany could have imported cheaper energy from Australia while saving enormous amounts of money – money it could have spent regenerating former coal towns.

    It’s the other way around for Australia: Instead of pumping in billions of dollars into the car industry, Australia could have imported vehicles from countries that are simply better placed to produce them on a large scale. Countries like Germany, for example.

    Australia's car industry is a bucket of wasted subsidies and transfer payments to foreign owners. Australia needs a car industry as much as Germany needs its own black coal mines.
  • kevin | 10 Jul 2013, 01:52 PM Agree 0
    What is missing in all of these is a sensible long term vision and plan for the future of Australian industries. With this a sensible transition plan could be developed. For example it is irresponsible to have a vision for a clean energy policy if there is no transition plan to give effect to this. To switch from one to the other without a transition plan would leave us all literally in the dark.

    Some leadership would not go astray.
  • Joe | 10 Jul 2013, 05:29 PM Agree 0

    Your argument while presented logically, has some basic flaws.

    If we compare apples with apples rather than mining vs automotive - the German government spends 5x the amount, per vehicle produced, that the Australian government does on subsidising it's car industry.

    The automotive industry isn't asking for excessive handouts to keep a dying industry alive. It's only asking for the playing field to be level set with every other country in the world that produces cars.
  • Chris Golis | 11 Jul 2013, 11:40 AM Agree 0
    My understanding is that the German government has done is extend its cash for clunkers scheme. German consumers will receive €2,500 for trading in vehicles more than nine years old if they buy a car that is less than one year old. The scheme has been extended until the end of 2009 and is expected to apply to 2 million new cars. While this scheme will still cause distortion, the consumer has a choice about which car he or she will buy and of course there are environmental benefits. This is a far better way of subsidising an industry than direct payments to a manufacturer or a tariff. The Australian Goverment did something similar when it allowed a extra $5000 depreciation for companies for new cars but of course did it for any new car instead of domestically produced vehicles.
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