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Tag Archives: Holden

What really killed vehicle manufacturing in Australia

Image from theage.com.au

Image from theage.com.au

The death knell for Australia’s vehicle manufacturing industry was not because of high labour costs, writes Andreas Bimba in this guest article, but the free-trade agreements that acted to the detriment of the local industry. And who signed them? You won’t be too surprised to learn who.

Toyota, Holden and Ford did not decide to cease local automotive manufacturing because of high labour costs (this is nothing new), nor from a lack of direct financial support (this has been fairly constant but small), although both of these factors added to the pressure. Primarily, it was because of inadequate trade protection of the Australian new car market, the historically high Australian dollar, and finally, extreme hostility shown by the current Federal Government and the Productivity Commission in regard to dealing effectively with the urgent concerns of the industry.

It is quite obvious really, but as we have come to expect, the truth of the matter has largely been ignored by our superficial national media. The main headwind of the many facing Toyota Australia’s local manufacturing operations, and also those of Holden and Ford, is the one-sided Free Trade Agreements (FTAs) signed by our Federal Governments and the almost complete lack of tariff protection.

These FTAs conform to the neo-liberal philosophy of global free trade that is currently in favour with the Coalition Government, the Federal Government’s advisory bodies such as the incompetent Productivity Commission, and also the Australian Labor party.

The Australia Thailand Free Trade Agreement (TAFTA) came into force on the 1st January 2005 and was implemented by Prime Minister John Howard.

This agreement has allowed Thailand’s subsidised vehicles into Australia without restriction but has not prevented Thailand imposing secondary restrictions that have totally prevented Australian vehicles from being sold into the Thai market. Australia’s three top selling vehicles in 2013; the Toyota Corolla (43,498 units), the Mazda 3 (42,082 units) and the Toyota HiLux (39,931 units) all came from Thailand. By comparison, for 2013 the Australian made Holden Commodore sold 27,766 units locally and the Toyota Camry sold 24,860 units locally. I have not included Australian exports in these figures.

Over the preceding eight years not one Australian government has addressed the inequities of this vehicle trade imbalance and have stood back and ignored the inevitable consequences. Perhaps the Australian automotive manufacturers have also not tried diligently enough to address this trade imbalance as most of the vehicles being imported were made by subsidiaries of the parent companies.

This chart from GoAuto clearly shows what has been happening from 2005 to 2013. For the Australian new vehicle market it shows total Australian made vehicle sales (exports excluded) and total Thailand made vehicle sales.

GoAuto The Australia Korea Free Trade Agreement (FTA) came into force on the 5th December 2013 and was implemented by the Abbott Government. Korea has an almost totally protected car market and provides substantial subsidies to its manufacturers. It is also a much larger and more advanced automotive manufacturer than Thailand.

On the 11th December 2013 General Motors Holden announced the planned closure of its Australian manufacturing operations from the end of 2017.

On the 10th February 2014 Toyota Australia also announced the planned closure of its Australian manufacturing operations from the end of 2017.

It looks fairly clear to me that Holden and Toyota Australia concluded that the Australia Korea FTA was the last nail in the coffin and that there was no longer any point in baring their trading losses in the hope that the national industrial policy environment would improve.

The fact that Holden and Toyota Australia made no headway in Canberra with either the Government or the Productivity Commission with addressing their major concerns about viability under such extremely trade exposed conditions showed that the situation in their eyes was hopeless.

A bumpy road I believe that if a Labor Government was in power that the views of knowledgeable and reasonable negotiators such as Senator Kim Carr would have prevailed and that realistic strategies to address or counteract all of the concerns of the Australian automotive manufacturers would have been implemented. This would have occurred at the time of Holden’s threatened closure and I believe would have saved the local manufacturing operations of Holden and subsequently also those of Toyota Australia.

Even though during the Rudd and Gillard Governments (as well as the Howard Government) the issues of the vehicle trade imbalance with Thailand, the lack of trade protection in general, the unreasonable barriers placed against exports, the occasional unwillingness to export and the historically high Australian dollar were not adequately addressed, I believe that Labor would have done whatever was needed to retain the Australian automotive manufacturing industry as soon as it became aware of how critical the current situation had become.

Given the above, the only reasonable conclusion that can be drawn is that the current Coalition Government is primarily responsible for the announced cessation of all Australian automotive manufacture.

Can the Coalition bring themselves to adjust the Australian automotive manufacturing national policy environment sufficiently strongly that Toyota, Holden and possibly also Ford can be persuaded to continue local automotive manufacture beyond the announced closure dates? This is not very likely even though it is strongly in the national interest on so many levels, as it would basically entail the partial abandonment of their neo-liberal economic philosophy which they possibly hold as being more important than the national interest. Perhaps it is time for a leadership spill in the Federal Liberal and National Parties?

Can the next Federal Labor Government, which has every opportunity to win in 2016, bring about a policy environment sufficiently realistic and powerful that Toyota, Holden and possibly also Ford can be persuaded to continue local automotive manufacturing? Despite all the gloom I think that is possible. Even if some or all of the original manufacturers choose not to continue with local manufacturing, it is plausible that other players whether local or foreign may take over the current manufacturing facilities, perhaps even with the original manufacturers holding a minority share of the ownership.

We will see.

“We will decide what rights you have, and the circumstances under which you have them.”

Image courtesy of the couriermail.com.au

Image courtesy of the couriermail.com.au

Treasurer Joe Hockey has bluntly warned Australians that the days of governments saving businesses and jobs had passed, telling them, ”the age of entitlement is over, and the age of personal responsibility has begun”.

Mark Kenny “The Courier”, 4th February, 2014

So I guess, he’s also talking about this:

Agriculture Minister Barnaby Joyce billed taxpayers more than $4600 for ”official business” travel to attend rugby league games, including the 2012 State of Origin. The revelations come as the Abbott government hinted it will tighten rules on politicians’ entitlements.

Mr Joyce, who was given free tickets to watch the 2012 State of Origin and NRL finals in corporate boxes, claimed flights to Sydney, Comcars and overnight ”travel allowance”, costing taxpayers $4615. His spokeswoman told Fairfax Media that attending the matches was legitimate ”official business”.

The Sydney Morning Herald November 6, 2013

But what exactly does Hockey mean by the “age of entitlement”? In the lead-up to the election, he used to refer to what he called “middle class welfare”. And, of course, those people on the dole need to forget any ideas of entitlement.

So, basically the Government’s subtext seems to be: We don’t owe you anything – get over it!

And in the debates about company bail-outs, middle-class welfare and work-for-the-dole schemes that message might be lost. Yes, we’ve been told over and over again how the Liberals believe in “small government” but like so many words that are used we often overlook their actual meaning. Does small government mean reducing the number of MPs or reducing their staff and entitlements? Of course not, just the number of public servants, because public servants are just a burden. You want to speak to a public servant? The Age of Entitlement is over! I mean, trying ringing Centrelink, they don’t even answer the phone, so who’s going to notice that there are less?

But let’s just remind ourselves of what words mean because, as I said before, when we hear them over and over they can lose their meaning.

Entitlement: the fact of having a right to something

Oxford Dictionary

So, is Joe Hockey saying that the age of having a right to something is over?

Ok, maybe I’m just being tricky with language by pointing out the actual definition of what he’s saying. Maybe we shouldn’t presume that Hockey means what he’s saying. After all, that’d be rather unusual for a Minister in the Abbott government. (Although one of their backbenchers, Sharman Stone was rather forthright.)

But it’s also the concept of corporate and middle-class welfare that probably needs to be questioned. Again, consulting the dictionary:

Welfare

  1. the health, happiness, and fortunes of a person or group.
  2. statutory procedure or social effort designed to promote the basic physical and material well-being of people in need.

When we talk about middle-class welfare, then we’re clearly either using the first definition, or we’re using an oxymoron. As I don’t think that many in or out of government wish to eliminate or reduce the health, happiness and fortunes of the middle class, let’s presume that it’s the second defintion of welfare that we’re talking about. Therefore, if it’s the provision of the basic needs of people, then it can’t be given to those who have already provided these for themselves.

So, if we assume when people talk about middle-class welfare that they’re not talking about “welfare” at all, the use of the phrase suddenly becomes loaded. It implies that these people should not be receiving whatever handout, money, subsidy, tax relief being discussed, because it’s not welfare. We’re already being encouraged to think of it as government largesse and extravagant.

Economics is all about making decisions, of course, and all governments have a right to decide how money is spent. However, providing “welfare” is not the only role for a government in deciding who receives what.

When the government announced that it wouldn’t be supporting Holden or SPC-Ardmona, they were making a decision that has consequences. I’m quite prepared to have a discussion about whether it’s the right or wrong thing, but a decision like that can’t be defended with a glib, “the age of entitlement is over”. (With this government, I suspect that the age of reason is also over).

Similarly, just because a person is not on skid row is no reason to argue that they shouldn’t receive any assistance from the government for anything ever. We all pay taxes in some form or other – even if only the GST on what we purchase – and we have a right to expect something back. An entitlement, if you like. And as I said, who gets what and when they get it, is something that needs to be decided by government. Will the money be spent on a non-means tested baby bonus, or would the money be better used building another freeway or supporting the opera? Different people will have different priorities and will see some things as a waste. Whatever, people are entitled to expect that the government will be giving something back in return for our taxes. It’s a large part of what election campaigns are about. You know, that time when politicians sympathise about the cost of living pressures for working families.

Don’t expect anything from us is Joe’s message. Personal responsibility, he says. You’re not ‘entitled’ – unless we say that you are! And that includes what information we think that you should know and the broadband speed at which you know it.

And, by the way, if you’re earning less than $80,000, you’re paid too much!