Everyone is doing it – subsidising the auto industry

Dolly Shorten is banging on about this point – every other country with a car industry provides subsidies and our subsidies are the lowest of them all.  A figure of $US 17  per capita is trotted out for Australia compared with $US 264 in the US (which would amount to about $23,000 per car in Australia).

As you all know, I am firmly in the “if it looks wrong, it is wrong” school and so I went to the PC position paper on automotive manufacturing to find out the truth (the PC is really good at this sort of thing).

Here is the PC’s caution:

In the Commission’s view, care should be taken when comparing assistance arrangements across countries. As has been evident from the Commission’s research for this inquiry (and its previous work), and from analyses undertaken by
others (box 2.7), the feasibility of robustly quantifying and comparing assistance levels across countries is doubtful.

But go to page 61 of the position paper and you will find out where the $17 and the $264 figure come from.  For starters, a crazy year was selected – 2009 during the GFC.  And then the authors simply add up all sorts of different types of assistance (loan guarantees, cash grants, general industry assistance) to get the final figures.  And why use per capita as the basis of the comparison – per vehicle makes much more sense.

When the figures were reworked on a more sensible basis, the comparison of government assistance rates across countries is completely reversed.

Australia has the highest rate of budgetary assistance to the automotive industry at $US 1885 per vehicle, with the next closest Sweden at $297 per vehicle.  In point of fact, the figure for the US came in at only $166 per vehicle and Germany at $206 per vehicle.

Dolly may need to actually read something on this topic before he sounds off anymore.

PC - Cars
 

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72 Responses to Everyone is doing it – subsidising the auto industry

  1. Rabz

    When the figures were reworked on a more sensible basis, the comparison of government assistance rates across countries is completely reversed.

    Australia has the highest rate of budgetary assistance to the automotive industry at $US 1885 per vehicle, with the next closest Sweden at $297 per vehicle.

    Well, knock me down with a feather – who’da thunk it?!

    :?

  2. brc

    New Zealand has $0 per vehicle and has much cheaper, newer cars in its national fleet. I mean, if we’re going to make comparisons.

  3. Peter H

    Judith, Can the reworking of the figures be published ? and / or a comparison table produced and published.

  4. Ant

    Trusting the Beaconsfield Kid is like trusting a mobster shark to spend your protection racket payment wisely while trusting that he won’t give you a double tap to the head for non-compliance.

  5. harrys on the boat

    Im firmly in the “if Tits said it, its complete and utter bullshit” school.

  6. Yohan

    Finally someone is pointing out the car industry figures are nonsense when they quote assistance ‘per head’, because when the size of the industry is different in each country what matters is size of assistance per car.

    Thanks Judith, i’m just surprised no journalist caught onto this in December when the figures were being thrown around to justify keeping Holden’s alive.

  7. harrys on the boat

    Agree with Peter. Get the Oz to publish your rebuttal to Tit’s blatant lies.

  8. H B Bear

    Im firmly in the “if Tits said it, its complete and utter bullshit” school.

    Tits doesn’t need McSporran to feed him BS, he’s been doing it for a lifetime. Every time he appears on TV he looks more and more unimpressive.

    The fun part will be seeing how Big Bill Ludwig is going to get rid of him before the next election.

  9. papachango

    I’m just curious – where did ‘Dolly’ come from? One of JC’s nicknames? What is it supposed to mean?

  10. CatAttack

    Is there a reliable estimate for workers in associated industries that will be affected? Numbers bandied about seemed to vary from 30000 to 200000 and rising hourly. Before the weekend Shorten will have every one in Australia working in the component industry.

  11. JC

    There’s no real learning curve with these imbeciles. You would think the first thing they would deal with after losing government is the lying. They just can’t stop the incessant lying can they?

  12. I am the Walrus, koo koo k'choo

    JC, it’s all they have.

  13. dianeh

    I am sick to death of the lying from the Labor party.

    It is at the stage now, that is one of the MP’s makes a statement, I am pretty sure the opposite is true.

  14. sabrina

    brc – As an example new Toyota Levin sx manual hatch is A$27442 driveaway in Melbourne, and NZ$38990 in New Zealand
    1A$ = ~1.09NZ. New cars in New Zealand is not necessarily cheaper than here.

    As the Australian $ depreciates to its natural level towards 0.6US, the true cost of imported cars will be felt only then, particularly for the European or North American ones. Maintenance is an inevitable part of any car’s life cycle, and cost of the replacement parts for these cars will be quite high as the component manufacturing in this country will also come to an end.

    It is not inconceivable that chinese (and may be Indian manufacturers in distant future) manufacturers will penetrate our market more. There is nothing wrong about it as long as these meet Australian road standards.

    Judith – per capita, per vehicle are all different ways of the same measure. The “total” subsidy given is another variant of the same measure. That figure is low by other countries’ standards.

    I am not suggesting protection, but what surprises me is that successive governments in this contry had/have no credible plans for post-car manufacturing economy except continued handout, politicking, even though the writing was on the wall for at least half a decade. If you look at the education/training background of the relevant ministers, one can understand why. In some sense, our country is was/is run by poorly educated myopic stupids.

  15. Poida

    Just saw this story in The Age: Labor demands Tony Abbott detail a jobs plan

    Of course nobody here will be surprised at the bottom of the article is a survey asking “Are you confident that jobs can be created to replace those lost in the car industry?” to which at this time over 80% of respondents have indicated No.

    So I can only conclude that Age readers are economically illiterate or believe the economy will implode and never create a single new job for anybody laid off from Toyota. (The union thugs will no doubt be picked up by government departments once Labor are re-elected.)

  16. boy on a bike

    How about assistance per autoworker?

  17. brc

    New cars in NZ are cheaper or the same as Oz, but used cars are significantly cheaper. 40% of all imports into NZ are used vehicles. It is virtually impossible to import a used vehicle into Australia, except for some special cases.

    The aud has a ‘natural level of 0.60 USD?’. Well, you better short the living daylights out of it and retire wealthy.

    I am glad the government has no plan. Planning is for the soviets and the Chinese. If it becomes viable to manufacture here again, then companies will do so. But all the while we tax energy to appease greens and allow organized labour to conduct ransom, capital will wisely stay away.

  18. Empire Strikes Back

    Judith – per capita, per vehicle are all different ways of the same measure. The “total” subsidy given is another variant of the same measure. That figure is low by other countries’ standards.

    Manufacturers make stuff. Toyota’s stuff is motor vehicles. Expressing the subsidy as public cost per unit of finished product (per vehicle) makes sense.

    Even if the purpose of having a Toyota plant in Altona is to provide employment for AMWU members, per capita still doesn’t make sense. I would use per FTE job.

    If the real purpose of having a Toyota plant in Altona is to make Australians believe they have a viable passenger vehicle manufacturing industry, then per capita might be appropriate.

  19. Interested observer

    I have just done my daily browse through The Drum (well, somebody has to keep an eye on them) and note with amazement that the Factchecker has declared that Bill Shorten has (gasp), used outdated and irrelevant information in his claims.

  20. Infidel Tiger

    Does the US really provide $85-90 billion of assistance each year?

    That seems far fetched.

  21. Empire Strikes Back

    But all the while we tax energy to appease greens and allow organized labour to conduct ransom, capital will wisely stay away

    Why do so many have such great difficulty understanding this incontrovertible truth?

  22. Squirrel

    Listening to Shorten in (modified) sound and fury mode, as he tries to move a censure motion – waiting to hear his magic plan to save the remaining manufacturing jobs and bring back those already lost.

  23. Judith Sloan

    It’s about $50,000 per worker per year in government handouts in Australia.

  24. Empire Strikes Back

    It’s about $50,000 per worker per year in government handouts in Australia.

    So it’s cheaper to have an AMWU member on welfare than employed in a sham job. Wow.

  25. Fred Lenin

    In the follow on prosecutions from the Royal Commission when the alp /union crims are jailed. This will create masses of jobs to be filled .in unions ,business,bikie gangs and the alp ,this will more than make up for the car industry,and if the Law trade is investigated many more vacancieswill be created.let us look for morepeople to jail ,we will solve unemployment!

  26. Habib

    We have been being hosed for decades for a third rate product, at the behest of government, to keep a few extortionate AWU cretins farting through silk. I thought government was supposed to act in our interest.

    Ain’t I silly?

  27. Pyrmonter

    even the ABC, using somewhat different approach, agrees (albeit a bit half-heartedly):

    http://www.abc.net.au/news/2014-02-11/bill-shorten-car-subsidy-numbers-irrelevant-outdated/5251536

  28. Up The Workers!

    At the 2010 Federal Election, the A.L.P. adopted the motto: “MOVING FORD!”.

    They not only moved Ford out of Australia, they also moved Mitsubishi, Holden and Toyota too!

    Also at the 2010 Federal Election, the A.L.P. said that they were the ONLY Party who could protect jobs and make the Australian car industry prosperous again. The A.L.P.’s Bob Carr and Kim Carr were subsequently both given brand new jobs with hundreds of thousands of taxpayer-provided dollars each , and both looked almost as prosperous as a rat with a gold tooth!

    Carr industry problems solved – Labor style.

    Now the latest leader of the Australian Liars Party, Bull Shitten, says that we should be throwing even BIGGER subsidies at these multi-nationals in order to keep all his union boss knuckle-draggers rolling in cash.

    Perhaps he could ask his former Party President Mike Williamson (and sundry members of his family) for a lazy $10 or $20 million, or even get Alwaysleazy to pass the hat around amongst the 457 Visa girls at the Marrickville “Rub-and-Tuggery” he frequents a couple of times a week?

  29. Up The Workers!

    The A.L.P. has a long-standing relationship with organised crime and criminals, going back at least to the second world war.

    Thanks to the A.L.P., Australia’s only local involvement with cars is now the appropriation of OTHER people’s cars. We no longer make our own.

    Rather than using a micro-chipped key to access a car, before long we might find that the use of a bent wire coat-hanger will become far more common in this A.L.P. “workers’ paradise”.

    Now just where do all those high-paid union bosses and A.L.P. bigwigs park their limo’s?

  30. Habib

    Sabrina,m new retail price in NZ compred to here is irrelevant. NZ has higher costs to get the product to market, and a smaller market. Have a look at price of quality used vehicles imported directly into NZ.

    How about when you factor this- a Nissan GTR was around 80k as a grey import (mostly new or near new), when Nissan took the rights to import, the price doubled. A GTR is about $80k new in the US, and they have to do a special production run to build them in LHD.

    Like parity pricing for fuel, there’s more than a little collusion going on. It was hilarious when flacks from MB were whinging that open markets would result in death-traps on the market here. Are their products for other markets built at the Lada works? I can buy a late 2000s 300SLK at auction in Japan for about AUD5000.

    Please explain.

  31. sabrina

    Habib – I did not start the price comparison with new cars in NZ, just pointing out figures available on the web. I have visited NZ only thrice for only 21 days in total, last in 2012; hadn’t seen many new cars on the road as in here. But my experience is limited to 21 days.

    Re import of used cars – lobby your local members to change the laws. With car manufacturing gone, there should be no reason (there should have been none in the past, except the protectionist rackets in the government at the behest of lobby groups in the industry including the motoring bodies) to not allow imports of used cars. It should be a matter of individual choice and responsibility whether a user would buy a new imported car or an used imported car, as long as these meet Australian standards.

  32. hzhousewife

    I’m just curious – where did ‘Dolly’ come from? One of JC’s nicknames? What is it supposed to mean?

    papachango,
    Bill Shorten and Dolly Parton both have considerable “assets”, we have been provided with
    some lovely photos recently on this blog showing Bill’sdevelopment in this area lately….
    hence his new nickname :) very droll

  33. Habib

    Sabrina, it’s already in train, but the hacks from FORS and their redundant mates in the compliance caper are fighting like buggery. Last advice I had from industry was that ADRs are gone, however they’re keeping emission testing and blocking parallel imports to try a rearguard action for their sinecure. I doubt this government has the nuts to cut them off at the knees.

  34. Infidel Tiger

    Last advice I had from industry was that ADRs are gone, however they’re keeping emission testing and blocking parallel imports to try a rearguard action for their sinecure.

    Gutless pricks.

    Parallel imports could save every Australian family, whether they be trans-lesbian muslims or hetero-normative WASPS thousands of dollars. it could be the single greatest cost saving given to Australian families ever.

  35. Habib

    Couldn’t really care about them, as long as I save a 10-30k premium on a DB9 or a Viper, I’m relatively happy. Wish Caddy would build a RHD CTS-V, its mere existence should cause Bob Brown to have a conniption, and save us some super.

  36. Robbo

    Oh bloody hell now you are asking that little turd Shorten to start educating himself on a subject before he opens his mouth and starts spewing out his view. Surely you must realise that if he takes that advice he will have nothing to say that will impress his bosses in the unions.

  37. kelly liddle

    According to the marketing of this Australian owned car manufacturer they don’t need government subsidies so it is not universal. You need to be big to get the dosh.

  38. Tel

    Guy you have this figured out all wrong. I could get by on a mere million per year in personal subsidies. That’s a whole new industry for Australia doing whatever it is I do, and the cost is a piddling 5c per capita, per year! Five bloody cents, are you telling me you stingy bastards can’t afford that?

    I’d employ people too, someone to carry my beer for me, someone else to mow the lawn. I’m an industry that puts back into the community, buying girl guide cookies every so often. Five measly cents per year, less than one cent every two months, you wouldn’t bend over to pick that up. I’d be the lowest subsidised industry in the world.

  39. Fitter of East Melbourne

    I haven’t heard the luvvies distinguish between the nature of support. Yes, the yanks subsidise American auto companies, the Japanese their own too. Which nations other than Oz subsidise foreign companies?

  40. HK_Brother

    Big union presence with appeasing business managers…
    …Big need for Govt subsidies.
    …Financially unsustainable business.

    Meanwhile, on 2GB this afternoon, Grace Collier offers her perspective on the current Toyota matter.

    The more I think about it, the more I realise these primitive, big, industrial unions and their ALP friends are the ones who are stuck in the Industrial Age on the taxpayer’s dime; while the world has moved on to the global competitive age of the 21st century.

    The recent union related events demonstrate to us they are struggling to find a place in the 21st century. (The upper echelons of their membership can’t live like aristocrats any longer; as the manufacturing trend is about doing things quickly, efficiently, with quality, that meets the needs of people…All at a reasonable price.)

    Entitlement unionism kills a Nations’ industries. It seems like if one is to start a business, one should either do it elsewhere or make a condition of “no unions”.

    Here’s another example in a completely different market (child care) involving ALP Govt and a union…
    => Was Labor’s childcare fund only ever about the union?
    (You can thank Peter Garrett and Kate Ellis for this one!)

  41. 2dogs

    The Phillipines gives US $400 per vehicle for the f irst two years, still nowhere near Australia though.

  42. .

    I know a BMW M3 retails here for about 210k and in the US for about 67k.

    This makes me go into a blind, apoplectic rage.

  43. .

    Infidel Tiger
    #1185928, posted on February 11, 2014 at 3:16 pm
    Does the US really provide $85-90 billion of assistance each year?

    That seems far fetched.

    Perhaps not. Assistance includes the value of tariffs, non tariff barriers and subsidies.

    This explains the unenviable state of the US auto industry.

    http://www.heritage.org/research/reports/2012/06/auto-bailout-or-uaw-bailout-taxpayer-losses-came-from-subsidizing-union-compensation

  44. Pyrmonter

    7.46pm on 7.30 Report – McFarlane being asked the statists’ mantra “where are the new jobs”. And responding with waffle. Oh, dear, oh, dear. Why do we deserve these journos?

  45. Pyrmonter

    And leaving open assistance to Qantas. Why?

  46. Tel

    I know a BMW M3 retails here for about 210k and in the US for about 67k.

    This makes me go into a blind, apoplectic rage.

    So the difference goes somewhere right? Ask yourself who is subsidising whom here…

  47. Carpe Jugulum (don't call me sven) HenchCritter

    are you telling me you stingy bastards can’t afford that?

    Tel – unless i get half and dancing girls are involved then, no, no i can’t afford it.

    How ever i am willing to go into a partnership.

  48. Leigh Lowe

    Spud-peeler had a crack at me a few months back because I drive a VW and went into his rant about German subsidies.
    He was missing the point – quelle surprise – that I was perfectly happy with that as I am not a German taxpayer, but I do object to my taxes being used to prop up the indolent and inefficient.
    If foreign governments want to throw shitloads away in subsidies, which are proven to engender inefficiency, this simply improves our competitive position as against the subsidisers.
    Let them go for it.

  49. Dan

    Let’s be clear, the majority of cars are all ‘styled’ the same these days. Holden bored us to death with European Styling, WTF does that even mean? More importantly, who gives a toss. If an auto company today designed a car with the curves of a bel-air or running boards and rear wings it would be a fucking hit.

    When the PT Cruiser came out I was looking forward to a revival of sorts. Apparently, the only styles you can successfully recycle are Flares and peddle pushers.

  50. If an auto company today designed a car with the curves of a bel-air or running boards and rear wings

    Indeed, there’s a nice little earner in the niche market for good reproductions, and ol’-timey and sporty-looking fakes, and all sorts of nifty conversions. I saw recently that a cove in England took parts of old Morris Mini-Minors and made a Mini-Minimus therefrom—an extremely attenuated two-seater—, and a clever little company of automobile constructors, surely, could churn out copies of something similar for a maxi price.

  51. Leigh Lowe

    Let’s be clear, the majority of cars are all ‘styled’ the same these days. Holden bored us to death with European Styling, WTF does that even mean?

    It means that, if Beemer or Merc put creases in the bonnet or a sharper edge on the top of the boot, you will see it on a Commodore about 18 months later.

  52. Alfonso

    A decade or so ago Toyota HiLux dual cab diesel 4wds were identically priced in Aust and NZ.
    AUD42k….NZD42k.
    The exchange rate at the time was 1.0 AUD vs 1.28 NZD.
    Toyota pricing had nothing to do with cost plus, more whatever it was strategically assessed the retail market would allow. That 4wd drive cost me AUD 33k in NZ brand new. Lower Hutt Toyota tried to get me to sign an agreement not to export the vehicle to Australia. They took the money instead.
    Ya gotta love these ex subsidised little Aussie battler car makers.

  53. Pyrmonter

    LL, Deadman: have a look at the first ep of SBS’s Bradford: City of Dreams – fantastic example of enterprise from below:

    http://www.sbs.com.au/ondemand/program/1055/Bradford-City-Of-Dreams

  54. Dan

    Do you have a link to that Deadman?

  55. JC

    It means that, if Beemer or Merc put creases in the bonnet or a sharper edge on the top of the boot, you will see it on a Commodore about 18 months later.

    I reckon all Euroweenie and Jap cars are seriously fucking boring these days. They’re all designed by leftwingers, I think. They all look the same and have as much personality as a suburban trash can.

  56. JC

    So the difference goes somewhere right? Ask yourself who is subsidising whom here…

    If you have control of your brand, you have control of the price. BMW and Merc etc were selling cars here at comparable prices today to the early part of last decade when the Aussie averaged around 60 cents or so.

    These large mults generally don’t hedge currency risk because they’re in so many countries. They figure out what the local market can afford in price and set it from there going forward. The fact they are dealing in almost all the major and minor currencies means they have a sort of compensating natural hedge.

    That’s why they won’t alter their prices much in the OZ market. It’s small and they’re happy at the price point. The US is different. BMW, Merc lose market share there and they’re absolutely fucked. The US covers their fixed costs in terms of profit/sales while everywhere else is icing on the cake.

  57. JC

    The financial dynamics of the multinational car business is really freaking interesting. Every year the home office asks the offices around the world to bid for their share of production. All eyes are on the US market (now China too I suppose) because they will dictate what the others will be able to bid for. They have to get the US market right each year or they’re trouble. If they get it wrong, home office pushes the other offices to take more.

    I think that’s why we’re seen BMW advertising this year. They ended up with surplus production.

  58. Andrew

    LOL $23,000 per car is Reader Andrew’s Constant thanks to the Boltster. I’m just waiting for Abbott666 to read it into the Hansard

  59. H B Bear

    As Pyrmonter pointed out at 4:37 pm, the barbequed illegal immigrant story has certainly got the ALPBC on its best behaviour. Mr Virginia Vitrioli won’t be getting any horizontal action tonight after describing Tit’s industry support figures as “outdated” and “irrelevant” in the 7pm TV news bulletin.

    Gillard must now be wondering whether slinging $10m of our money to the ALPBC bought them anything at all.

  60. Pyrmonter, I have any number of profitable projects which I freely offer people, but none ever sees the potential profits.
    For example, instead of simple souvenirs made of fine Tasmanian timbers (such as Huon Pine apples!), I designed intricate wooden block-puzzles (pyramides and dodecahedra, and the like) with cunningly hidden super-magnets which would make them a bugger to solve but beautiful when put together: when I’ve suggest these puzzles to poor, unemployed joiners and the like they explained how troublesome it would be to arrange the required tooling.
    In the 90s invented a very cheap bushwalker locater, to find people lost in the bush—now superseded by cellular telephones and EPIRBs—which would require some basic administration and record-keeping of those walking in national parks; rangers now record walkers routinely but, back then, when I suggested this to the parks department, the bureaucrats complained that if they had to administer records they’d need more funding, and rejected my proposal.
    Many years ago, I proposed to a poor potter whose arty ceramics made very little money that he had the requisite skills to make replicas of ancient Greek vases; he, of course, rejected this idea as beneath his artistic soul, but I see that replicas of ancient Athenian kraters now sell for well over £1000, and even a fairly simply kylix can fetch £60.
    I could go on all night…

  61. Cool Head

    Audi R8 in Oz over $400k, here in the US $130k.. The locals are stunned and so am I.

  62. Cool Head

    Here in the US I can go to Europe buy the car and bring it back, not in Oz. It is a racket, a poor form of protectionism. Makes my R 8 look good. C’mon fix this.

  63. Armadillo

    C’mon fix this.

    You have to break some eggs to make a cake. The bowl is out, the beaters are ready and the oven is heating up. Once the union eggs are beaten, the R8 cake will look delicious.

  64. A young woman seemingly named after the Delachapelle has been in the news, but have you seen that marque’s range? Some Delachapelle automobiles look mighty fine.

  65. Up The Workers!

    I wonder how Dolly Parton feels about her name gracing the visage of a suspected rapist and embezzler?

    Somehow I suspect that neither she, nor “Lefty”, nor “Righty” would be all that enthusiastic.

  66. brc

    So the difference goes somewhere right? Ask yourself who is subsidising whom here…

    All ofit goes into foreign profit/loss sheets. Either the local manufacturers get to charge more for their vehicles, or the importers get to price wherever they feel like it – as already noted.

    The reason I brought up NZ was not because they price cars just under the level of OZ, but because you can bring in any old car you like, as long as it passes inspection. As a result used cars in NZ are cheap. The beneficiaries of the parallell import bans are the manufacturers who import and have a good brand. IE, benz, BMW, Porsche etc.

    If we had the same rules as NZ we could buy an M3 in Hong Kong and have it shipped to our door. Probably someone would set up a Internet dealer so you didn’t even have to get on a plane. We would save at least 50-100k and BMW would splutter and make faces but ultimately do nothing but watch their customers leave. And that would bring down the price, quick smart. Toyota made lots of noise when grey market toyotas started showing up – going so far as to say they were unsafe, despite coming out of a Toyota factory. That’s when the laws really got tightened down to where they are today.

    Remember NZ used to make cars as well, right up until the 1980s. I wonder how many kiwis miss their tiny factories nowadays. Any kiwi is more likely to be amazed t the prices in australia and laught at the dumb Aussies paying stupid prices.

  67. johanna

    brc, I suppose that a competitive market in high quality used cars would exert some pressure on the new car market as well.

    Win-win!

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