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Taxpayers' money 'wasted' on Ford assistance: Hockey
16/01/2013 - The federal opposition says it's happy to make the next election a referendum on the future of manufacturing. Paul Osborne
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Labor has challenged the coalition to come clean on its commitment to industry assistance, as steel and car makers shed jobs.
Shadow treasurer Joe Hockey says the federal government has wasted taxpayers' money on industry assistance for Ford Australia, which had cut 200 jobs late last year despite receiving a $34 million government grant.
Another recipient of taxpayer funds, BlueScope Steel, shed 170 jobs this week.
Hockey told Macquarie Radio on Tuesday that the government had made some "heroic announcements" about extra jobs at Ford, but they had not eventuated.
"It ended up that not only were those 300 jobs never created but, in fact, Ford sacked 300 people. That is just a waste of taxpayers' money," Hockey said.
"The fact is, Australia is becoming an incredibly expensive place to produce things."
Part of the reason was a high Australian dollar, but the government was also making everything more expensive, he said.
"When they increase taxes, they increase the cost of production in Australia," Hockey said.
"That is why we are seeing manufacturing jobs, retail jobs and others go overseas."
A spokeswoman for acting industry minister Chris Evans said Hockey's comments showed the opposition would oversee an end to the manufacturing industry, which employs 250,000 people.
"Unlike the Gillard government, which is supporting a competitive and economically sustainable Australian automotive industry through its $5.4 billion New Car Plan, Joe Hockey and Tony Abbott's policy is to slash this support by $1.5 billion," the spokeswoman told reporters.
"These stark policy differences between Labor and the coalition mean the 2013 election will be a referendum on the future of automotive manufacturing in Australia."
Opposition industry spokeswoman Sophie Mirabella told reporters on Tuesday the coalition was committed to a car industry transformation scheme of at least $1 billion to 2015.
Mirabella said the coalition would ensure the long-term viability of the industry through a Productivity Commission inquiry, which would lead to new benchmarks.
"Workers would know what their companies need to achieve in order to get the funding," Mirabella told reporters.
She said she was "very happy" to make the next election a referendum on the car industry.
"Ms Gillard needs to explain why every single indicator for the car industry has been negative for the Labor Party and why it was positive under the Howard government," Mirabella said.
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Robin Mark | 16/01/2013 10:32 1
This concerns me. I do not understand why we pour millions of dollars into industries such as this. Australia cannot make everything for itself, nor make it cheaply. I believe we should accept that and import our cars, computers etc. Find our strengths and export those goods or skills. For example, if I were buying a new CNC machine, I would look to Italy etc due to the quality. For the amount I would be spending I know I would have reliable machinery with minimal down time. I would not try and penny pinch cheap products from China which would break down and cost me lost production. On the other hand, i would buy my laptop made in Asia. I would also invest in genetic technology from New Zealand. The wasted money artificially keeping costs down, and a handful of workers in jobs (though in this case not even that) should be developing those areas.
Ken F | 16/01/2013 11:10 2
What concerns me Robin is your attitude i own an electical switchboard manufacturing company. We get no assistance and still survive. However i do not wish to drive small rubbish diesel overseas European cars the Auto Industry in Australia is vital it keeps more than just the Car Manufacturers in work. In Fact ALL European and American Car Industries ARE Goverment supported it's a known fact.Baraque Obama won the election over their due to the same situation with his opposition. And your right we don't buy Chinese Junk Either.
Hedley | 16/01/2013 12:37 3
Well Robin you have led with your chin on this one. Our society, like the rest of the world, chooses to use government to influence how we interact financially with each other. Our universities receive grants for all sorts of wonderous things to keep the arts going. As an engineer, I accept that, in the main, for our society would be poorer should we suddenly cease funding the arts. Most, of course, is totally unsustainable financially without government funding. So, like the arts, the engineering segment of society is an employer and allows those of us less suited to being an actor or musician, even a professor wishing funds to study some old culture ($24million last year), to actually work with our hands. That's just how our genetics built us. I hated school. But loved working with my hands making things and this kept me from being unemployed and to become an employer. So, to argue that "subsidies" are unique to the automotive industry must lead you, by the same logic, to demand a serious review be undertaken on just what government money (our money) goes to the numerous other sectors to prop them up the way you say government props up the automotive sector. Look deeper, Robin, into how the engineering skills, spread from the car companies, impact on our modern society. Without them, we would indeed be a poorer society and one with a great many more unemployed.
Ian N | 16/01/2013 12:39 4
After reading the blog about Ford, also comments by both Robin and Ken, I can't help but think the Government is hypercritical. We who are still in Business are all struggling after the stinking carbon tax along with the Labor Parties "high fives" went through the senate, yet the Government on both sides took a 30% pay rise. You cannot tell me that Julia Gillard should be paid more than Obama in the USA, yet he is on approximately $400,000 per year, she is on $480,000 per year. If she thinks that she has more importance than Obama, then she is dillusional. The main reason that Australia is not as viable for manufacturing as it used to be back in the 50's, 60's and even 70's is that we tend to live beyond our means. We are always looking for higher wages as Australians tend to live a life that is of a relatively high standard (which needs higher wages) whereas Korea and China seem to be able to live on low wages. We are even forced to pay Superannuation which including the money that the Employer has paid can be lost overnight on the stock market. If we as employers are made to pay that money for Superannuation, then the principle as least should be Goverment guaranteed. It took us a while to get into this ridiculus financial situation, but whilst the leaders of this country "on both sides" are living in a dream enjoying the high life I can assure you it will take even longer to turn it all around. The first thing we need to do is "Buy Local".
Sir Rohsis of Liver | 16/01/2013 12:49 5
How hard is it for you lot to understand? It's not just Ford, Toyota and Holden and the people they directly employ. It's also the many medium and small firms (and their employees too) that supply them. Then we have the trickle down effect that this has to the rest of the economy. These start with all these now unemployed no longer paying taxes but receiving welfare instead. These legions of newly unemployed will have reduced buying power, this will effect all other industries. The resulting ripple effect throughout the rest of the economy will cause more businesses to go belly up. The risk of this becoming a runaway vicious circle is quite real. Add to this the government missing out on further taxes from all those companies. The damage to the balance of payments by importing all those extra cars. So when the population and the government have no money to buy your product, how do you expect to stay in business? Now the other point is the Oz dollar isn't going to be up forever especially if we destroy our own economy. So when the arse does fall out of the Oz dollar we will have to pay too much for everything that we used to make here causing more damage to the economy. But because we thew away the manufacturing infrastructure and know how, it'll be too late and too hard to restart, especially as there will be no capital left to invest. No in the long run it's probably a damned side cheaper to give key industries some aid that it is to deal with the consequences! I hope all you that begrudge any industry other than your own getting assistance enjoy living on the dole because that will be you destiny if there is no industry assistance for key industries.
dave d | 16/01/2013 12:49 6
Robin & Ken ,agree with comments from you both .I think more to the point from the laymans view is whether the assistance is to "prop up" the business or is it offered to build the the business to the point it can be competitive in the market place.Sceptics would say this "subsidy" has always been offered to keep the unions quiet and quite possibly so. Regardless of the party in power I believe there should be a clear expectation of the Industry involved by way of a clear plan as to what results/returns can be expected by the Taxpayers whether it be for Employment retention or profit returns etc.
Robin Mark | 16/01/2013 12:56 7
Well well. After the above comments I have had a rethink. After all, that is the whole point of open discussion. @Hedley, you make comparisons I had not in truth considered. In regards to the arts, or funding for pure knowledge (physics, engineering etc) I have always been a strong supporter. I can see how that would be at variance with my post. So, I will reconsider the whole thing. @Ken, I hear you. However, do you think that we should be funding a company to produce products currently easily available through Schneider etc? Also, unless we are talking about standard distribution boards or load centres then would it be profitable to import a custome made switchboard? I don't know, by the way, I am asking you. Go easy on me guys, I am gentle at heart.
Ken F | 16/01/2013 13:49 8
Hi All Everyone in this discussion seems to agree with each other in some way. I believe our dollar will drop before September this year due to the ming boom droping off and it will 50% of our business relies on specialised switchboards for. underground Coal Mining we can see the drop off in QLD already. As China's insatiable appetite for our resources drop. No oversea's companys make as good a custom built quality switchboard as us and most of our competitors do Robin and no offence you are and we all are concerned about where the dollars go but as Sir Rohsis stat better to have people in work than on the dole as it costs us all more in taxes. All keep plugging on as eventually China will outprice itself as did Japan and Korea years before especially with the highest pay rate rises in the world 15% to 18% Apple are moving their airbooks back to USA followed by their Ipads in 2014 so things will pan out. Buy local and good luck to you all.
Sir Rohsis of Liver | 16/01/2013 15:41 9
Of course The government could make the situation a lot better by buying the local product where ever possible. It wouldn't matter if the government had to pay more for the local product than the imports because by supporting the local industry they would recover the extra cost in taxes paid by the workers building the local product, reduced welfare, sales taxes for the workers buying power, improved balanced of payments etc. Infact the premium they would pay to buy local should not be seen as an additional cost but an investment in the future! It's a pity both sides of politics can't see past their petty oneupmanship and shortsighted focus. The Chinese are looking 20, 50 and 100 years ahead, our lot can't see past tonight's news bulletin!
Robin Mark | 17/01/2013 08:04 10
Interesting point Sir Rohsis (which reminds me, I have a bottle of red open somewhere here). Going by what was written above, plus your comments, would it not then make sense if these sort of financial bailouts were given in order to help companies compete and develop, rather than just keep going? And also, if we are going to be putting tax payer money in, should all government then buy only Australian made vehicles? It seems to me to be odd to be giving away taxpayers money to prop up an industry if the same taxpayers are not going to be purchasing the fruit of their profits? Probably led with my chin again, so feel free to take a few jabs gentlemen.
Hedley | 17/01/2013 10:51 11
No problem from me on this logic Robin. But how do we get this message thru to the politicians? The Canberra-centric nature of the current lot of our elected representatives has them isolated from the rest of us. I would like to see some disection of the "great economy" of ours so that we were all able to see the real spread of the two economies: the one tied into mining and the other tied into the non-mining part. The latter is in real trouble and unfortunately that is what we will need when the mining slows down. But from where I am, a machine shop involved in maintenance across a broad range of engineering, I am very concerned about the demise of the TAFE and the serious reduction in engineering drawing and metalurgy subjects available to apprentices. This is not exactly off our subject in that a lot of innovation and problem solving comes from the shop floor. Without the right base training in metals and drawing I fear it wont only be the loss of engineering businesses but the fact that young people are not being trained for the task ahead. I overcome this in-house but why did our ship-builders make a hull that just didn't fit and why did the submarine camshaft issue take so long to identify? I suspect that the base training at trades level is being lost. As for the broader issues raised, aren't we all of the opinion that our economy needs a serious shake up? We either cut our overheads to match the asian economy or we continue to wait for the mining boom to bust which will then force the changes. Examples: Cease milking the manufacturers by way of work care, EPA,quantity of public servants and their superannuation costs, etc. and more controversial issues in the too hard basket. But China does not operate with these overheads, which, with their lower wage costs, are taking our future living standard away from our children. In my view, that is not responsible on our part.
Stuart Fox - Inventor | 19/01/2013 13:28 12
Industrial assistance may be justified but instances of ‘unsatisfied’ subsidy are more than embarrassing - they seem virtually fraudulent and need urgently addressing with a view to reimbursement for failed undertakings – full-stop. While it may be unrealistic to maintain we can manufacture everything in Australia and maintaining awareness of all the contributing factors, perhaps it’s not only or so much a case of Australia becoming an expensive country in which to manufacture, even without the detriments of impediments, but also or more so, an ability, willingness and necessity for others to make many products at a cost + margin that makes them very attractive to overseas markets, aided by efficient containerised transportation rather than individual crates. Bashing the quality of such imports is not always justified as many of the products (many of which are nowadays only available from Asia), like our own, are superb in both ingenuity, aesthetic design and quality…. and yes … otherwise. Final pricing is not always the only or dominant factor either – for example one very prominent and innovative vacuum cleaner manufacturer, enjoying a substantial global market share, transferred its production base to Asia and still maintains its internationally high retail pricing based upon its inventiveness and reputation – ditto many other goods where lower cost procurement glaringly demonstrates that profit lies in the distribution / selling rather than merely the factory floor (and has not always equitably benefited the consumer pricewise). Some specialist / niche manufactures may currently feel secure, though considering the increasing off-shore sourcing of a range of diversified specialist products, even custom one-off supplies such as dental prosthetics, ornamental balustrading, high precision toolmaking (for which Asian producers advertise their extremely expensive for them, possession of European machinery and materials) for plastic moulds and pressings, and likely switchboards etc. this may not be guaranteed ad infinitum. On the other hand, one day those hard workers, who are currently enabling our enjoyment of the wide range of goods we were formerly willing to purchase for several times the price in real terms when produced locally, may inevitably and inarguably demand to share more equitably in the outcome and many believe we may not ultimately be in a good position – every demised industry has a domino effect potential. With willingness, endeavour and innovativeness – especially where fortifiable by IP - it can and still is being demonstrably done in countries such as Australia – ranging from machinery and electronics to even a conventional mousetrap manufactured in country NSW and retailed competitively with imported traps. Stuart Fox - inventor
TO | 22/01/2013 08:27 13
Ken, I certainly agree with your last comment, about China overpricing itself. The living standards in China are on the rise, and as the Chinese population continues to realise what life is like, in the western world in particular, they aren't going to continue working at the cheap wages of yesteryear – and, as you say, as a result, companies are already moving manufacturing back to their home country. On Sir Rohsis' and Robin's last comments', there is an interesting article on Carpoint.com.au, www.carpoint.com.au/news/2012/large-passenger/ford/buy-australian-says-government-34006?R=34006, which gives the numbers percentage-wise etc. as to how many locally made cars government sectors purchase. If this number was lifted to say 75% in each state, (it can’t be 100% as there are no tradie Ute’s such as the Hilux/Ranger/Colorado manufactured in Australia), then the car industry would be helped along a lot. Let’s all hope that car manufacturing stays in Australia, and also hope that rear-wheel drive cars such as the Commodore/Falcon continue to stay in production – there’s nothing else like them in the world!
TO | 22/01/2013 08:42 14
Another thing, why doesn't the Australian government increase tariffs on imported vehicles, instead of continuing to decrease them? Then the Australian car manufacturing industry might have a chance of competing against all of the cheap imports?! And how about making the tariffs less for car companies that have manufacturing facilities in Australia - this may help imcrease investment in that sohere also. But as if that would ever happern...
Robin Mark | 23/01/2013 10:36 15
@TO thanks for the link, also good comment re tarriff
Sir Rohsis of Liver | 23/01/2013 11:34 16
Now this is just a rough idea I've just cooked up in the last 1/2 hour but: Another way that our local products could be promoted is a campaign that highlights the gulf between the exploitative conditions that foreign works suffer in comparison to the high level of OH&S, super, leave, etc that our workers enjoy. This should be slanted into guilt tripping the consumer that buys the imported product whist giving the consumer buying the local product a nice smug warm and fuzzy feeling! A sub text that implies taht if the consumer wants to maintain their standard of living, they'd better buy local or end up living in a third world toilet! Critics of such a campain might say something like: if we don't support these people they will be even worse off. To which the reply might be: these foreign manufacturers can't just compete on price they now have to compete on improving the conditions of their employees. After all who in their right mind would want to win the race to the bottom?
Robin Mark | 23/01/2013 12:09 17
Sir Rhosis, I think that you will find that idea would not fly. People already know about sweat shops, child labour etc. Whilst it is very trendy to sip a latte and bemoan this terrible explotation, the same worried people are still buying from the very countries they are disparging. Bottom line is, people care about their bottom line. Sad, but I am pretty sure I am right here.
dave d | 24/01/2013 10:21 18
Again, while agreeing with the majority of comments made we generally tend to over look a few things . firstly that being that people buy imports purely because of wanting to- there are many families that buy imported furniture, electrical goods ,vehicles, fruit vegetables and on a local basis the cheapest bread,milk, etc etc. because they have to due to high interest loan repayments, lack of skills for employment opportunity,single parent families - and the list go on -so unfortunately as mentioned I agree with most comments however I don't think there is a "quick fix solution -or a one size fits all answer?
Hedley | 25/01/2013 09:47 19
I'll come back in at this point to mention that my industry group associates are very much into innovation and developement of new business models. Our competitors who have not changed, just closed up. We mostly accept that we can't drive the old models any harder. Nonetheless, that on its own does not fix our economy. That is where Hockey, Emerson and Co., have a final say. I just hope that, unlike Button who went for the manufacturers like a bull at the gate, torn down the "protection", before realising that he had been talking to the accountants and not the engineers, and did a great deal of damage. We (engineers) didn't even know that Button was going to pull the plug. So, unlike when Button tried, and then there's Dawkins who wrecked the tech schools, I am in the debate whenever I can. I'm for the position where it is not just the car companies at risk, but the supply chain that feeds them and those others who benefit from the scale of volume that the car companies deliver to our economy: Engineers supplies (metal alloys, tooling, consumables,) training, (production planning & scheduling, estimating, plant layout and project management & apprentices). Should Hockey, Emerson & Co, be reading our debate, please take a lesson from the Button and Dawkins era. That hurt us severely and still impacts on apprentice TAFE training today. Please look for a better way forward rather than pulling the plug and "allowing market forces" to find the new way forward. That is just ignorance, even arrogance, and we need more from todays' politicians.
Robin Mark | 25/01/2013 13:28 20
That is why I like this discussion site: if you have an open mind you can learn something. My opinion has changed somewhat and I am going to have another think about my position. Thanks guys, have a great long weekend
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