Ah, but did it every leave them?
One of the important points of discussion at the Outlook Conference related to the wasted money and distortion of resource allocation associated with industry assistance programs, most notably to the passenger motor vehicle industry (which is going out backwards, in any case).
If we are looking for low hanging fruit, this is one area to which we should head immediately and kill the programs. And the sums are not insignificant.
Not surprisingly, Gary Banks, chairman of the Productivity Commission, made this point but there was general agreement on the point except, it would seem, from the Ai Group, now headed by former Downer adviser, Innes Willox.
He wasn’t having a bar of this. He claimed that:
- There are 250,ooo workers in the PMV industry;
- That we only spend some $17 per head on subsidising the PMV industry which is a fraction of what other countries spend on their PMV industries, including Germany which spends over $300 per head evidently;
- Their are no alternative job opportunities for displaced PMV workers. (Where will they be employed? came the exasperated question.)
- He also cited the ‘success story’ of GMH which, he claimed, had invested over a billion for a mere additional $250 million from us mugs. (This is not counting the billions of assistance that were already locked in.) Pity about the story this week of the company laying off 170 workers before Christmas because the Cruze – oops, evidently the Commodore - has tanked in the market.
So here’s the thing. The figure of 250,000 is completely erroneous (we have dealt with this before here at the Cat) – it is actually closer to 40,000, and that includes the workers employed in the components companies. The others are the retailers, distributors, car mechanics, etc.
In other words, the 200,000 odd workers that are associated with all us buying and driving cars would remain whether or not we have a local PMV manufacturing industry. The cars would just be imported. In fact, this number could actually grow if the price of cars fell with the removal of protection for the local industry.
As to the idea that Australia subsidises our PMV industry less than other countries, the obvious reply is: bully for them and good luck to us. We can enjoy the benefit of buying cheaper imported vehicles without burdening local taxpayers.
In any case, the numbers cited are clearly a complete fudge (Henry Ergas confirmed this). For instance, the German PMV industry is very R&D intensive and is therefore in receipt of generally available R&D tax concessions from the German government. But the real point is that these concessions are not industry specific.
You can just imagine the massaging that has gone on in producing the figures to show that the Australian PMV industry is not as subsidied as overseas – the unions are partners to this sort of game.
IT IS SIMPLY DISHONEST TO MAKE THESE CLAIMS.
For a while, I thought that the Ai Group was moving away from its protectionist roots – I was wrong.
And its behaviour in respect of the default superannuation funds also points to an aversion to competition. Gosh, if the Ai Group can nominate well-paid trustee positions.completely uncontested, to all sorts of industry funds, why spoil a beautiful arrangement?