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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

corporate welfare + Gunns « Previous | |Next »
March 20, 2007

One definition of corporate welfare: privatize the profits in good times and socialize the losses in bad times. It is the other side of the coin of those whose mantra is “self-regulating free markets”, who love no regulation and little taxation of capital, and claim that it is government regulation and interference that is the cause for why things go wrong in the market place. Two examples of corporate welfare neo-liberal style: both farmers and financial markets are bailed out when times are tough.

A recent example of the corporatist form of corporate welfare is the government payment to Gunns in Tasmania for its proposed pulp mill to produce its low value, pulp and woodchip products sourced from cutting down old growth native forests.

Zap + e-collegiate network, too-much-horse

This is an industry that is heavily propped up (subsidised) by the state Lennon ALP government, whose industry policy is to rely on a monopoly producer selling a low value, bulk commodity into a world market. The Lennon Government appears to be indifferent to Tasmania's vulnerablity to external market forces that are well out of its control.

How does Gunn's chlorine bleaching pulp mill stay competitive with the booming South American pulp industry that enjoys the benefits of cheap woodchips, labour, chemicals and manufacturing? Corporate welfare.

As Mike Bolan points out in a public debate hosted by the School of Government at the University of Tasmania's Launceston campus last year this is:

an industry which is clearly in trouble and which relies on tax subsidies at every stage of its operation in order to survive. That’s payments by us. They’re paid by us, we put in roads, we put in bridges for them, we’re supposed to provide them with extremely cheap timber, all kinds of access. They have tax subsidised plantation acquisition. They’re acquiring our farmers' land courtesy of the taxpayer. And its not costing them a thing.

What’s good for Gunns is good for Tasmania is the stance of the Lennon Government. Bolan goes on to describe the losses to Tasmania from Gunns. He says:
I believe that the glue that holds Tasmania together and the country is water. If there is no water we have to leave. If there’s no water we can’t grow our own food. We can’t do anything without water. Water is vital and yet this entire industry presents a massive threat to our water supply. First of all by removing the catchments. The second is when the plant plantations in these huge densities, these trees growing are very hungry for water. And they start taking massive amounts of water out as they tree grows from the dwindling remaining water supplies. Remember they’ve already been reduced because we’ve lost the upstream catchments, we’ve lost that rich soil that holds everything back. So suddenly we’ve got two problems.

Paying for the community costs of that is another form of corporate welfare.

| Posted by Gary Sauer-Thompson at 5:14 PM |