Subsidies are bad – ABC

I discovered this morning that the ABC has a comedy segment on AM Agenda.

Japan has begun injecting new tax-payer-funded subsidies into its whaling program in a bid to keep the fleet afloat, the ABC has learned.

That’s not the funny bit. The funny bit is how the ABC report this outrage – imagine government giving subsidies to failing industries! Damn foreigners. It would never happen in Australia.

“This subsidy is supposed to help fishermen in financial trouble,” investigative journalist Junko Sakuma said.

“Now it’s propping up the unprofitable whaling fleet, and if they keep running a loss, they won’t even have to pay it back.”

I hate it when that happens. Then we get a touch of Milton Friedman:

Masayuki Komatsu is a former Japanese delegate to the International Whaling Commission and one of the architects of the country’s scientific research program.

He warns that the injection of this new subsidy is a sign that program is in big trouble.

“It’s not sustainable, right. How long can you get such money from the government? Everybody likes money, particularly other people’s money,” he said.

Love the question: “How long can you get such money from the government?” The ABC itself doesn’t get a subsidy from the government it is 100% government financed. When will we see similar arguments looking at subsidy here in Australia?

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52 Responses to Subsidies are bad – ABC

  1. Billy

    Subsidy, Bernard, is for art and culture. It isn’t to be used for what the people want. It’s for what the people don’t want, but ought to have!

  2. tbh

    Too funny, especially coming from a taxpayer funded enterprise. So can we expect the management of the ABC to petition the federal government to privatise them? Thought not.

    The general point is well made though: subsidies don’t work and confer benefits to a small section of the economy at a higher cost to the rest of us.

  3. blogstrop

    The ABC point of view:
    You are on welfare. They are subsidised. We are an essential service, a shining beacon of truth and decency.

  4. Rabz

    The ABC itself doesn’t get a subsidy from the government it is 100% government financed.

    Err not quite, Sinc.

    As much as I hate to admit it, the ALPBC does actually earn some revenue from other sources – its “own-source income” in 2011-12 was $173.1 million. Transfers from gubberment were a mere $997.4 million.

  5. “s much as I hate to admit it, the ALPBC does actually earn some revenue from other sources – its “own-source income” in 2011-12 was $173.1 million. Transfers from gubberment were a mere $997.4 million.”

    So, it’s commercially unviable 6 times over? Your tax dollars at work…

  6. Rabz

    So, it’s commercially unviable 6 times over? Your tax dollars at work…

    I’ve always maintained – remove the gubberment subsidy and let them survive on the income from their “own sources”.

    If nothing else it would make for a far leaner and hungrier ALPBC…

  7. zipping

    I had the ABC after cricket yesterday and heard this segment on the way to work. Talk about twisting arguments to suit your own agenda. Subsidies bad if for whaling but good if for Climate change or the ABC etc etc

  8. Token

    Are we to assume that there is a logical/ethical framework to the way the ABC manufactures its outrage?

    Compare and contrast the ABC’s view of corporations lobbying and the way the management & staff acted with the TV Australia tender.

    How about the view of ABC staff that manipulating the stock market is ok if you do it for an environment purpose and don’t make a commercial gain.

  9. Token

    I’ve always maintained – remove the gubberment subsidy and let them survive on the income from their “own sources”.

    If nothing else it would make for a far leaner and hungrier ALPBC…

    Think about it, the Bananas in Pajama’s hate subsidising Kerry O’Brien’s mega salary.

  10. “It’s not sustainable, right. How long can you get such money from the government? Everybody likes money, particularly other people’s money,” he said.

    Liberty quote.

  11. H B Bear

    Ask GM and Ford.

    Answer: 60 years and counting.

  12. Leigh Lowe

    The irony of being part of an organisation which pisses away $1 billion a year complaining about subsidies in other countries.

    “Go to Japan and eat a big whale steak” has now been promoted to the top twenty on my bucket list.

  13. cuckoo

    Incidentally, whatever happened to that recent move to reveal the salaries of ABC staffers? Apparently the ABC lost the second appeal against an FOI request by the Herald-Sun.

  14. Chris

    Ask GM and Ford.

    Or pretty much any large company in Australia.

    “Go to Japan and eat a big whale steak” has now been promoted to the top twenty on my bucket list.

    Shouldn’t be hard to find as they have lots in storage because demand is a lot lower than supply. I suspect they’re pretty much only continuing whaling out of pride.

  15. .

    Or pretty much any large company in Australia.

    Please tell us which other firms in the ASX 200 get subsidies at all, or like Ford and GM.

  16. C.L.

    I also like the way ABC-type luvvies dispute the claim Japan makes regarding its traditional cultural connection to whaling. But the ‘welcome to country’ – invented by Ernie Dingo a few years ago – is hailed as ancient, if not geological.

  17. .

    I can’t believe Rudd didn’t try to be a hero to the Green left and engage in practical, results driven economic policy by lowering trade barriers with Japan in part for an end to subsidies flowing to Japanese whaling.

    He had a chance, but he failed.

    An incoming Liberal Government doing so would make the Green left as a political bloc somewhat redundant.

  18. papachango

    Subsidies are bad – ABC

    for some reason I think of the South Park counsellor. Subsidies are baaad, mmmkay?

  19. Chris

    Please tell us which other firms in the ASX 200 get subsidies at all, or like Ford and GM.

    One example is that its common for large companies to get payroll tax discounts. But they don’t advertise that they do so.

  20. tbh

    Care to elaborate Chris?

    Payroll tax doesn’t kick in until a company is of a certain size, at least here in WA anyway.

  21. Gab

    One example is that its common for large companies to get payroll tax discounts.

    So if you had to pay me $100 for something and I said, nah, just make it $90, you’d call that a subsidy?

  22. Yobbo

    The Australian media is completely retarded when it comes to this issue.

    The Japanese government is subsidising the whaling fleet because if the fleet stopped they would lose all kind of fishing rights that they consider to be vital for their future food security.

    It has nothing to do with whales at all, and everything to do with the tragedy of the commons inherent in any discussion of oceanic fishing rights.

  23. .

    One example is that its common for large companies to get payroll tax discounts. But they don’t advertise that they do so.

    Chris
    4 Feb 13 at 11:35 am

    Care to elaborate Chris?

    Payroll tax doesn’t kick in until a company is of a certain size, at least here in WA anyway.

    tbh
    4 Feb 13 at 11:40 am

    Yeah chris. You need to explain how this works.

    Cut this “one example” bullshit. Tell us who in the ASX 200 gets subsidies.

  24. .

    The Japanese government is subsidising the whaling fleet because if the fleet stopped they would lose all kind of fishing rights that they consider to be vital for their future food security.

    Interesting Yobbo. That’s the first I’ve heard of that.

    Can you elaborate this further? It makes my idea unworkable.

  25. Yobbo

    It’s goes a bit like this dot: Japanese keep on whaling because to stop would be to accept that other countries have a right to tell Japan what kind of stuff they can take out of the ocean.

    Japan will never accept this, since the ocean has provided the vast majority of their protein for thousands of years. They cannot afford to have their primary source of food subjected to the whims of western environmentalists.

    So they keep on Whaling to prove their opposition to worldwide treaties on ocean fish stocks.

    Japan made an offer to the US government to voluntarily abandon whaling altogether 30 years ago in return for the US guaranteeing them continuing access to US fishing zones. The US agreed, and as a result, Japan signed the whaling moratorium. But the US then later renegged and banned Japanese vessels from its waters anyway.

    The Japanese are terrified that acquiescing to any western demands for “treaties” on oceanic fishing laws will result in less fish for Japan. And they have very good reasons to believe that. So they just refuse to play the game at all. Whaling is how they tell the world they aren’t playing any more.

  26. Steve of Glasshouse

    I think they want to get Bob Brown..

  27. Steve of Ferny Hills

    Tell us who in the ASX 200 gets subsidies.

    Virgin and Qantas have received subsidies from the Queensland govt.

  28. blogstrop

    much as I hate to admit it, the ALPBC does actually earn some revenue from other sources – its “own-source income” in 2011-12 was $173.1 million.

    And if you took away their free advertising or even costed it notionally at commercial rates against the income, what would that drop to?

  29. Chris

    tbh – thats why I said large companies. Here’s one example that was reported (often they’re not):

    For example, iTnews can reveal that Macquarie Telecom was offered a payroll tax deduction for the 40 new positions created through the building of its customer contact centre.

    “The incentive provided to Macquarie Telecom was in the form of payroll tax rebates against employment milestones for new positions established in NSW,” a spokesman for Roozendaal confirmed in a statement.

    Roozendaal’s office is convinced that payroll tax rebates are a better incentive than cash payments.

    http://www.itnews.com.au/News/219637,analysis-is-victoria-stealing-new-south-wales-ict-crown.aspx

  30. Leigh Lowe

    Yes Steve …. state governments frequently hand out PRT subsidies or holidays for “new businesses” opening in their state.
    Usually these are merely interstate relocations so net gain to the country as a whole is zero, and they are inevitably in sexy industries which afford pollies lots of ribbon-cutting promos in office and possibly a comfy sinecure in retirement as a consultant.

  31. tbh

    Ah, so that’s a state based initiative. In other words, states competing with each other to see how much they can bankrupt themselves attracting businesses to operate there. Been going on since before Federation.

    You know there are also rebates available for small businesses over here in WA for small businesses:
    http://www.finance.wa.gov.au/cms/content.aspx?id=15855

    Now let’s talk about subsidies for ASX 200 companies (like mine) from the Federal Government.

  32. .

    Let me guess Chris did not complain when Virgin and Qantas were given subsidies.

  33. Leigh Lowe

    much as I hate to admit it, the ALPBC does actually earn some revenue from other sources – its “own-source income” in 2011-12 was $173.1 million.

    …. and how much of that is merely re-badged BBC mrchandise acquired as part of distribution rights for content purchased with our money (eg David Attenborough Saves the World on DVD, or Michael Palin’s books about being bemused that Brazil is not like Brighton, or Stephen Fry being a 21st Century John Inman)

  34. “Roozendaal’s office is convinced that payroll tax rebates are a better incentive than cash payments.”

    Well, there’s your answer. Labor distorting markets for opaque political reasons.

    Why do we have a situation where states need to tax employment at all? Who wouldn’t want 1/2 of payroll tax paid on their behalf put in their pay packet in return for the other half being saved by their employer as a reduction in employment costs?

    Of all taxes levied by governments, payroll taxes are arguably the most counterproductive taxes of all.

  35. Chris

    Let me guess Chris did not complain when Virgin and Qantas were given subsidies.

    Why would you claim that? I think that often the subsidies are given without adequate conditions attached. Companies take the money and then leave anyway or don’t deliver on the jobs. Giving companies monopolies is also a form of subsidy. Eg landing slots at airports and often just results in consumers paying more due to decreased competition.

    As Leigh mentions its often a zero sum game between states and just results in welfare for companies. Car tarrifs/subsidies are an example of a similar thing happening on a international level.

    Of all taxes levied by governments, payroll taxes are arguably the most counterproductive taxes of all.

    I’d agree it’s a pretty stupid tax to have. Better to get the taxes out of land/resources which are much harder to avoid.

  36. Milton Von Smith

    You missed the key part of the story. They refer to “militant Sea Shepherd activists”.

    In ABC-land, “militant” is the term they use for “terrorist”.

    So the ABC seems to be saying they are terrorists.

    Does that go for Bob Brown as well, who has taken over the leadership of the Sea Shepherd?

  37. .

    I think that often the subsidies are given without adequate conditions attached.

    They shouldn’t be attached at all. They shouldn’t be granted in the first place.

    Giving companies monopolies is also a form of subsidy. Eg landing slots at airports and often just results in consumers paying more due to decreased competition.

    So you’d agree with the catallaxy collective and LDP policy of across the board privatisation, cutting artificial barriers to entry and allowing competition?

    As Leigh mentions its often a zero sum game between states and just results in welfare for companies. Car tarrifs/subsidies are an example of a similar thing happening on a international level.

    No. Both are negative sum games. Not only do they cost, they lead to prolonged financial distress along with lower quality output and a general economic decline. They do not and cannot self fund on top of the general welfare effects.

    I’d agree it’s a pretty stupid tax to have. Better to get the taxes out of land/resources which are much harder to avoid.

    It is a tax on labour. I agree that taxes on labour ought to be abolished. Payroll tax is also regressive to boot. It keeps people out of jobs

  38. Borisgodunov

    If the ABC charged the alpcommecial advertsing ratesbfor all the freebiesthe luvies who “work” there ,the Taxpayer wouldnt have to pay anything to the ABC,and the alpnwould have to steal tax money to pay the bill!

  39. Rob

    Roozendaal’s office is convinced that payroll tax rebates are a better incentive than cash payments.

    Funny they should say that, cause I kind of thought that discounted cars were a better incentive than “subsidies”

  40. Walter Plinge

    Why would you claim that? I think that often the subsidies are given without adequate conditions attached. Companies take the money and then leave anyway or don’t deliver on the jobs.

    A terrible example of this is Kodak in Victoria:

    The jobs of more than 400 Kodak Australia workers are under a cloud after the company’s US parent unveiled its strategy to shift away from film as it embraces digital imaging…

    In 1989, the former federal Labor government gave a $36 million three-year subsidy to Kodak to stop it closing its Australian operations.

    Kodak took the money — then gave Australia the two-finger salute.

    http://www.smh.com.au/articles/2004/01/23/1074732597265.html?from=storyrhs

  41. .

    In 1989, the former federal Labor government gave a $36 million three-year subsidy to Kodak to stop it closing its Australian operations.

    THE AUSTRALIAN LABOR PARTY

    Not a surprise at all.

  42. “I’d agree it’s a pretty stupid tax to have. Better to get the taxes out of land/resources which are much harder to avoid.”

    That’s not the point, Chris. Taxing “because you can” is revenue raising without consideration for the consequences. They should tax where the distortions and negatives are minimized.

  43. Tapdog

    “How long can you get such money from the government?”

    If as I do, you look at the ABC as a political lobby group with a broadcasting network attached the way ahead is pretty clear. I have never heard a cogent argument in favour of maintaining its current form and funding and it’s not for want of searching.

    Yesterday’s Landline program spent a good slab of its time slot pushing long discredited information about changes in climate both past and projected (by Ross Garnaut the emminent climate scientist but of course) If they were actually trying to rip the hearts out of our farming community families, they could scarcely have done a better job of it. ‘Pure bastardry’ is the term that comes to mind.

    For my eight cents I would be more than delighted to see it scaled right back to a bare bones news and information service for metro but especially remote and regional areas. There must some kind of managerial/ editorial regime that can make a decent stab at political impartiality. He said hopefully.

  44. blogstrop

    No, Tapdog, no “news & information” for the metro brigades. That is exactly where they’ve gone too far. Leave the Classical music, a local rural service to those areas where stations are few and far between, but scrub the rest. They can’t even do TV drama without having a message! Look what they’ve done to the Gardening Australia segment, FFS. Particularly nice to see all those RN arty lefties that harp on about books, law reports, biased histories and social commentaries get the boot. Incidentally, speaking of books, Nick Cohen’s “What’s Left” is a must-read. Erudite and scathing.

  45. Tapdog

    no “news & information”

    Information (in no particular order of importance) = weather forecasts, fire and flood warnings, local emergency information and cricket.

  46. Walter Plinge

    Incidentally, speaking of books, Nick Cohen’s “What’s Left” is a must-read. Erudite and scathing.

    As indeed is C. Northcote Parkinson’s Left Luggage (1967).

  47. gary

    Here the ABC’s Alan Kohler presents a good argument for privatisation of electricity assets in QLD. It could equally apply to privatisation of the ABC.

  48. William Bragg

    This post is just another misdirected and really quite pathetic Catallaxy beat-up. Subsidies for the ABC have a legitimate public good rationale; there is no such rationale for whaling subsidies, which are just industry assistance. So, it is not the case that ‘a subsidy is a subsidy is a subsidy’. There are legitimate distinctions between different subsidies, and so there is nothing wrong in a publicly funded organisation that provides public goods bemoaning subsidies for organisations that don’t.

  49. Yobbo

    No, you have it completely backwards William.

    A subsidy on an already thriving industry is even worse than one to prop up an industry that couldn’t exist without subsidies.

    At least you can make the argument that without the subsidy there wouldn’t be an industry in the 2nd case. In the case of the ABC, there are dozens of TV channels in Australia doing perfectly fine without any subsidies at all. It’s completely unnecessary.

  50. .

    This post is just another misdirected and really quite pathetic Catallaxy beat-up.

    Shut up you clown. You don’t have the wit, wisdom or nous to cut it here as a civil and serious commentator.

    Futhermore your umbrage is like being flogged with a warm lettuce.

    You fucking neanderthal. You completely missed the strategic reasons why the Japs do this.

    “ABC GOOD, WHALING BAD”

    Moron.

  51. William Bragg

    Dear Yobbo: That some private media firms are ‘thriving’ does not mean that subsidy is not required. The public good aspects of the ABC are associated with the nature of the content provided. Private incentive do not lead to optimal content, due to various market failure issues.

    Dear Moron: Even if I were to lack the ‘wit, wisdom and nous’ to cut it as a serious commentator in most fora, fortunately I am posting on Catallaxy, so the requisite standards are much less challenging.

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