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March 23, 2012
So Holden will only stay in Australia and produce cars if it is subsidized by the federal and state governments. These days the subsidy is badged as co-investment---a strategic co-investment, not a handout says the PM.
From what I can gather manufacturing is being hammered by the high dollar, and Holden General Motors would have left town without government subsidy. Its a strange old world isn't it when governments pay the big miners making super profits from the mining boom a diesel fuel tax rebate that now costs the federal government about $2 billion a year.
Pulling the plug on that rebate to the big miners--not just tighten it---would be a good way to address the ongoing problem with revenue shortfalls and help bring the budget back to surplus. It represents spending cut which is what will be needed to get the budget back to surplus.
In The Australian Judith Sloan critiques the propping up of the car industry from a neo-liberal perspective. She says:
let the car firms get into shape and, if they want to quit Australia, let this happen. We can then devote resources to assisting the displaced workers. With unemployment close to 5 per cent and structural adjustment creating jobs in other sectors, the timing is close to perfect. Alas, the government has come to a fork in the road and taken the wrong path. By propping up an uncompetitive industry and sucking resources from elsewhere, we are all poorer and less equipped to meet future challenges.
She doesn't mention the subsidies to the miners or the aluminum or coal industry. Presumably these are competitive industries, whilst the car industry isn't? So the issue isn't government intervention per se that is the problem----it's the protection of uncompetitive industries.
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Perhaps it would be fairer if the goverment paid the buyer $1000 for buying a locally made car a let the punters decide which plants stay open and close based on quality and value for money.