Originally Posted by
unobtanium
Of course it is, look how well it worked for the local manufacturing and car industry.
The demise of the Australian car industry is commonly blamed on Unions and Australian wages in general.
That is not particularly true.
This guy sums it up pretty well when he notes the early 2000’s mining boom and it’s impact on doubling the value of the Australian Dollar:
…the fact that the [Australian] dollar went sky-high and made manufacturing uncompetitive across a range of things, not just the car industry,” says Dr. Lansbury. That currency boom, he argues, played a much larger part in the demise of Australian automaking than the role of organized labor.
He goes on to say:
Australian wage rates in the auto sector were not unusually high,” says Dr. Katz. “The unions as well were not particularly militantly adversarial. They were tough… but you didn’t hear, ‘we have about a zillion disciplines going on’ or ‘we have walkout strikes’ or ‘we have union leaders we can’t even talk to.’
The reality for automotive production in Australia was that the domestic market was too small to be efficient. The only way to make it efficient was to produce more vehicles, and the only way to do that was to have a large export market - and the resources boom caused the dollar to rise which made exports unviable.
We had our moments in a potential export market. I knew a few people involved in Holden - in the early 2000’s, the Monaro, for example, was exported and was becoming a bit of a hit overseas (in various names - I think it was a Vauxhall in the UK, a Pontiac in the USA, and a Chevy in the ME, but it was an Aussie Monaro, and it was well liked. The Top Gear guys loved it.)
When you compete in a highly competitive industry in which you don’t have the advantage of low cost labour, you must compete in other ways, such as producing an awesome vehicle, like the Monaro was. The Germans obviously learned that trick early - don’t be the cheapest, just be the best. That exact argument translates to Qantas. They can’t compete internationally on cost, so don’t try. They need another selling point. High quality cabin service, particularly in the premium cabin, is something they should be prepared to pay for. That goes a little bit further than training an 18yo to ask “do you want fries with that?”.
Government subsidies are also a red-herring for the car industry arguments.
This article from 2013 compared Australian subsidies to other countries. Germany subsidised at the time about 67% of our rate, and the USA about 150%. But the key metric is number of vehicles produced (and, I guess, exported - subsidies make more sense when they support national exports, that’s why we don’t even blink when subsidising mining). Germany had 3 times our population but manufactured 25 times the number of vehicles - obviously a net exporter of vehicles. German automotive employees are well paid, and their government continues to be happy to subsidise their industry.
The total Australian car industry government subsidy was around $400M/year during the decade prior to its demise. (If you had asked the average punter on the street at the time they would often have thought it was a lot more than that). We were producing about 200,000 vehicles per year, so about $2000 per car. They took most of that straight back in stamp duty at point of sale anyway. We were recently outlaying more than that per week just by doubling the dole during COVID (1.6M Jobseekers at an extra $250 odd per week). That alone over a year would have paid for 50 years of car industry support. Qantas spends nearly half that annually in it’s “marketing” budget.
That kind of puts Australia’s attitude towards car manufacturing into perspective.
It wasn’t killing the taxpayer to support the car industry, it was just that the Government decided in its wisdom that it didn’t want to do it any more. Pulling the $400M was enough to make the remaining automotive players in Australia pull out, with devastating effects on all the support and small parts manufacturing in the country.
That move apparently cost about 20,000 Australian jobs across the industry. $400M divided by 20,000 jobs is $20K per job. Given that, on average, each of those workers would probably have been paying $20K tax, they killed an industry for close to zero gain/loss on the books for the Nation.
The high ranking Government employees love it, because whilst they previously had to be chauffeured around in $70K Holdens by Government decree, now they get $400K Mercs and BMW’s because they no longer have to “buy Australian”. Even the coppers are now chasing me down the freeway in a BMW rather than a Holden, although, quite frankly, I think most of them would still prefer a Holden. Please allow me a gratuitous Blues Brothers quote: ‘
It's got a cop motor, a 440 cubic inch plant, it's got cop tires, cop suspension, cop shocks. It's a model made before catalytic converters so it'll run good on regular gas
.”
Regardless, our Government has done its sums on manufacturing in general and decided that we are not the country for that.
We only really have 2 export industries that we do well:
1. Digging holes and sending the ore-rich diggings off-shore on foreign-owned ships;
2. Food production (planting seeds and grazing animals).
Our secondary export industries that we do well are:
3. Tourism - which we destroyed during COVID by not letting them come here; and
4. Tertiary Education - which we destroyed during COVID by not letting them come here.
(Ironically, Scomo pretty much ignored both those industries while he was writing cheques during COVID. For example, University staff were deliberately disqualified from JobKeeper because sometimes they go on to become ABC journalists).
But, the automotive industry, along with any other manufacturing we dabbled with, was never on the above list. And reducing minimum wage would not change that. What it would do, is destroy the local economy, as many punters would no longer have expendable cash to keep the local economy pumping. Be careful what you wish for.