Saturday, 17 August 2013

Throwing another $500 million

at the Australian car industry is not going to save it. Plans to increase that amount to $2bn by 2025 are ridiculous.
All these plans are probably just election posturing. Both sides of politics are saying that they will provide more support for the car industry. It will be a waste of money.
I know that money sometimes has to be wasted in order to save some jobs in the short term. There are situations in which there needs to be a transition period.
The problem here would seem to be that the money is not being used for a transition period. There is vague talk of a new, "Australian designed" car but that is not going to employ enough people to save the industry and all the component industries.
I really doubt we can make cars at a competitive price in Australia. It is simply too expensive to pay people to make cars - and do a lot of other things.
Australians expect to be well paid. They expect to have what is really a very high standard of living for most people. It is not seen like that of course. The expectation is still that you should be able to own your own home on a decent sized suburban block, run at least one (and preferably two) cars, have all the basic modern conveniences and give your children access to extra-curricular activities. That is pretty much a minimum. By no means everyone achieves the "own your own home" any more but the vast majority of people do have access to a car, a 'fridge and a stove in rented accommodation at very least.
There are people who live below the poverty line in Australia. Shamefully many of them are indigenous Australians. Like indigenous Australians others who live below the poverty line often do so because other issues have intervened - mental health, law breaking, alcohol, drugs, other health issues and an inability to handle their own affairs are all issues.
I doubt any of that is news to anyone so why am I worried about throwing more money at the car industry? Won't it stop people being unemployed? Won't it stop the flow-on to all the component industries which also employ thousands of people?
I think that's the problem. I doubt it will. It is a Band-Aid solution. It won't last. It is just a short-term fix. We really need to spend that money on developing other industries with long term employment prospects. We need to provide the people who are now employed in that area with new skills so that they can make the transition to new jobs.
It puzzles me that governments must be able to see this but they do almost nothing about it. The car industry situation seems to frighten them. It has employed thousands upon thousands of people over the years. As a child I can remember frequently travelling into the city past a car factory in the suburbs. If you were travelling past at a shift-change (as we often did in the afternoon) there would be a traffic jam because there were so many workers spilling out of the gates.  The number of workers now is less than a third of what it was then - and it costs more to produce the cars.
Unions would say they had done a good job. The workers who remain have excellent working conditions. Some of them have just agreed to take a pay cut in order to keep their jobs which suggests they have also been very well paid. Have the conditions been too good? Have they been too well paid? Naturally they would say no but perhaps it is time to ask why it costs so many taxpayer dollars to produce a car here. 
I feel sorry for the people who work in the industry. The uncertainty about the future must be a constant anxiety. But I also think we need to give much more thought to what is going to happen next and spend the money on that instead. Or perhaps I just don't understand economics.

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