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?
Figures for August show the Cruze at number 3, outselling the Camry, i30 and even Commodore. Hardly tanking. Commodore is where the money is and that car is indeed heading down the tubes, though not as dramatically as its Ford rival.
Paul
3 Nov 12 at 12:17 pm
Link please.
.
3 Nov 12 at 1:51 pm
I wouldn’t mind some links from the blog post. There are none.
Adrian
3 Nov 12 at 2:06 pm
Link please? Wheels magazine. The link is at your local newsagent.
Paul
3 Nov 12 at 3:01 pm
Figures for August show the Cruze at number 3 etc. So that’s for August. What about before August, after August? What is the trend? Or is one month’s figures all that we need to go by?
Gab
3 Nov 12 at 3:09 pm
Hardly anything to brag about
http://www.caradvice.com.au/189716/new-car-sales-figures-august-2012/
.
3 Nov 12 at 3:16 pm
The peak business groups in this country do nothing to advance to cause of sound economics. Mostly they are lining up at the dole office asking for more welfare. Screw those guys.
tbh
3 Nov 12 at 5:37 pm
It’s not just the local protection via subsidy that has to go. You also need to remove the Byzantine personal import rules that prevents parallel imports of vehicles. You say that the Germans support their local industry via subsidies. Well, the Australians also subsidise the Germans and other car makers by preventing parallel import of motor vehicles from lower priced countries. There is no reason at all why a BMW or Mercedes should cost double what they sell for in the USA. The local import rules allow the importing manufacturers to gouge the locals blind.
This alone stymies the local market by reducing the number of sales.
After we’re done with that we can talk about the regressive luxury car sales tax, a tax which dents demand for higher priced vehicles and robs the governments of higher volumes of sales of these cars, which would probably deliver them more in gst. The definition of a luxury car is ludicrous – a bar which was set in the 1990s and which inflation has taken care of.
The enitre motor industry in Australia is a giant mess, all because we’re trying to protect a relative handful of union jobs. Well, it needs to stop.
brc
3 Nov 12 at 11:31 pm
Well said, BRC. I agree with every syllable of it.
tbh
3 Nov 12 at 11:34 pm
FFS
BRC is absolutely correct.
A mid level “luxury” BMW sells for 200 000 AUD in Australia, but sells in the US for about 65 000 AUD.
Ferkin ridiculous!
Why would anyone own a HSV if those rules and tariffs were axed!?
.
3 Nov 12 at 11:44 pm
Dot, it’s ludicrous what we pay for cars in this country. Totally agree.
tbh
3 Nov 12 at 11:49 pm
Correct tbh, . and brc.
But it’s an appeal to class envy that keeps the tax in place.
Winston Smith
4 Nov 12 at 1:42 pm
What Gab? It goes to number three for one month, then doesn’t sell at all for each month either side? Wheels publish the sales monthly and the trend is of a car on the way up over the longer term and routinely in the top 10, mostly in the top 5 these days.
Paul
4 Nov 12 at 1:44 pm