ACT Crusader:
He may be experienced and have a lot of valuable things to write about aviation but his reading of the automotive sector is way off in my view.
You are absolutely entitled to our opinion and I haven't explained the thinking behind mine in enough detail to perhaps convince you of where Tony Abbott is taking us, not that Labor would be that much different...yet.
As for the car companies, it is common knowledge that there has been global over capacity in the car industry for at least Twenty years. The reason being that developing countries use the automotive sector to drive the development of their economies through stimulating the development of their secondary industries, the latest I believe is Saudi Arabia.
Auto industry ?can create 77,000 jobs? | Arab News ? Saudi Arabia News, Middle East News, Opinion, Economy and more.
The basic reason for this is that the difference between third world and developed countries is their ability to sustain a capacity for manufacturing elaborately transformed manufactures (ETM) - generally thought of as the ability to sustain a precision metal product manufacturing industry, starting with the necessary tooling. This is about doing stuff with machines like these - which incidentally make many of the components of your aircraft - and training and employing smart guys to use them.
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..And of course such a capacity is also necessary for defence, as Australia found out the hard way in 1939.
Now the American car companies in particular are experts at shaking down states who want this capability, they practiced on their own 50 states for at least Fifty years - running bidding wars for plant locations. They negotiate tax holidays, co investments, free greenfield sites, etc.with considerable success because they know just as governments do, what the economic multiplier effect of car industry jobs is worth ( generally thought as Eight to One).
So fast forward to Australia in 2014. We now have Two political parties whose elected members think politics is a "career", who have no work expereince outside politics and who therefore intend to provide for themselves and their families through politics. These folk, in both parties, are for sale to the highest bidder. There is nothing they will not do to advance their personal interests, including selling the Australian people into servitude if it suits them.
Add to that the competing agendas of big business. The miners are in the ascendency at the moment and they have always wanted Two things: A low Australian dollar, like the Agriculture sector, because they are commodity price takers in US dollars, and an end to secondary industry protection in any form because it raises their cost base.
To put that another way, the miners and farmers see any government assistance / support for a manufacturing sector as a tax on them, and in a sense they are right.
However this is still special pleading. The miners get the diesel fuel rebate and God knows what in infrastructure investment. The farmers get income equalisation and drought relief and of course SPC just got 22 million from the Victorian government to modernise its food packaging systems !!!!! Nobody is pure!
So we have the miners and farmers in the ascendent. Now add a healthy dose of grind the faces of the poor capitalism and a healthy dose of hatred for unions which is often well earned. Then add a sprinkling of acadmic fanaticism about free markets and creative destruction - "new industries will arrive and thrive to take advantage of the resources freed up by the destruction of the car industry, yadda yadda," Then add the accountants and bankers screaming about "labor costs are too high" and guess what is going to happen?
These are the folk who say "Australia can't build anything, Australia shouldn't build anything because we aren't competitive". These folk always turn out to be allied with the farmers and miners. "We are a farm and a quarry" they say. These are the same folk who strangled what aviation manufacturing industry we had and now they will strange the rest of secondary industry f they have their way. They are in the pay of miners and Agribusiness.
That is right. There is going to be no support for any manufacturing or service industry sector that cannot prove to the Govenrment that it is actively trying to impoverish its staff and destroy union influence.
Furthermore anything that is in public ownership that Macquarrie Bank likes the look of is going to be sold, starting with Medibank private and Australia Post. Tell me again how the sale of major airports worked out?
So this is what you are going to see:
1) Major increase in private rent seeking - health insurance costs, postage, energy and food will rise with the removal of Government checks and balances.
2) Major rise in long term unemployment - this has already started, the economists were surprised at yesterdays figures, I was not.
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3) Major decrease in value for money and quality of goods and services both private and Government.
4) Major decrease in income support for the unemployed.
5) The contempt of both political parties for the unemployed, after all they have no money to buy politiciians.
6) No government investment in retraining or education.
7) A decrease rather than an increase of tax on the well off.
8) More imported American Conservative bull**** about "personal responsibility" (code for not helping the poor) and "choices" (code for blaming people for being poor).
The net result of that is going to be the creation of a rather nasty underclass of disenfranchised and rebellious unemployed folk. Some of them will make the connection between mining investors and their own plight, but the Pilbara is too far away for them to go and sabotage the mines as poor folk in Africa seem to do when they feel they aren't getting their fair share of the wealth.
...And of course this is a zero sum game. You will pay what you were paying in indsutry supportf for increased security and insurance costs as well as all the increased charges for food, fuel, etc, that the rent seekers will suck out of you.
The growth industries are going to be prisons and law enforcement.
But high labour costs, you ask? Don't make me laugh, we have been stripping labour costs out of industry for Thirty years - led by the car industry. The reason we aren't exporting cars is not labour costs, its straight out corporate policy as dictated by Detroit and Tokyo. It has everything to do with transfer pricing and tax minimisation.
Remember these? The decisions about where to build and export are political. Direct labor costs are just an excuse.
and this?
