Productivity Commission report to question value of car subsidies

[BroadyFord]

Bye bye Toyota!

Productivity Commission report to question value of car subsidies

http://www.theage.com.au/federal-pol...131-31r9y.html

A Productivity Commission paper on government assistance to car makers will recommend the federal government reassess industry assistance and question the economic benefits of billions in subsidies.
Fairfax Media has learned the report, which will be released on Friday afternoon, will take a tough line on further funding requests in recommendations that will raise the stakes for Toyota's 2500 manufacturing workers.
The report will be a further blow to Victoria's struggling manufacturing sector, still reeling from the federal government's decision on Thursday to knock back a request for $25 million in assistance to fruit processor SPC Ardmona and from Holden's decision to announce in December last year it would quit manufacturing in 2017.
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Treasurer Joe Hockey engaged the Productivity Commission in November to examine the car industry's "productivity, investment, profitability, international competitiveness, exports, workforce structure and practices, skills levels and long-term sustainability".
The Victorian state government is believed to be already preparing for the worst, and is focusing on what assistance it can obtain for a much-needed restructure of the Victorian economy after recent blows to the manufacturing sector.
It's understood the report will find that $30 billion in funding has been provided to the car industry since 1997 and will question the argument, put by Labor and the union movement, that the multiplier effect of government co-investment in car makers outweighs the direct cost to government.
The report is expected to call for government subsidies to be reassessed and will argue that component makers would benefit from regulatory reform and increased labour market flexibility.
The Commission's final report on the automotive sector is not due to be handed down until the end of March, but the position paper gives a clear signal as to where the Commission's final report will land.
The report will increase pressure on Toyota, which is the last car maker in Australia and which will make a decision on whether to manufacture its next generation Camry in Australia later this year.

[BroadyFord]

UPDATE:

The report has been released.

The PC has called for an end to ALL automotive assistance outright, including rules restricting the importation of second-hand vehicles as well as government fleets.

All over. Toyota will now close and Australia will cease to have a vehicle manufacturing industry post-2018.

Report is here:

http://www.pc.gov.au/__data/assets/p...e-position.pdf

[mik]

215 pages....... eek, I'll take your word for it,
if that is the case , then that is a real shame to see a whole industry go down the gurgler.

[SB076]

Governments around the world are competing to secure jobs and investment and we seem to be doing the opposite. I am tipping a rise in unemployment and a reduction in our standard of living. Positives to come from this is a fall in the AUD, so there are checks and balances.

Mind you I don't believe funding is the answer. But we need to look at protecting our industries (all of them)

[BroadyFord]

The entire report is a load of bull.

It doesn't answer any of the terms of reference and fails to provide any meaningful ways forward, other than to shut the whole thing down because it's a waste of time and money.

As an example, the report says Australia's level of assistance cannot be compared with other countries because it's too complicated to analyse the large number of programs available in other countries.

The whole report is one big joke written by a bunch of ideologues who can't wait to see the end of this industry.

Shame.

[2011G6E]

There is nothing magical or special about being able to build a car in your own country. Sorry, but there isn't.

The car industry is a luxury that we can't afford any more if it needs endless taxpayer subsidies to prop it up.

[tranquilized]

Originally Posted by SB076

Governments around the world are competing to secure jobs and investment and we seem to be doing the opposite. I am tipping a rise in unemployment and a reduction in our standard of living. Positives to come from this is a fall in the AUD, so there are checks and balances.

How do you figure this is a positive? For a country that produces a lot of things, be it raw materials or finished goods for export, a low valued currency is a good thing, kinda essential. But increasingly, we are not one of those countries. We don't make much any more, and the stuff we do export - ie energy, iron ore, food - has a more elastic market place, being fairly essential items and all.

I think people need to be careful what the wish for. A weak aussie dollar will only benefit a small portion of the population. The rest of us will just have to pay a lot more for nearly everything we buy.

[tranquilized]

As for the report, it was probably irrelevant anyway no matter what they recommended. The current government are so hard right, so fiercely ideological that nothing else matters. Free market, small government = no assistance to anyone for any reason.

The thing about the Australian car industry is that it was never indigenous. Sure, we had the Commodore and Falcon which were designed and built in Australia for Australians, but ultimately the profits flow overseas (when they exist) I think that is a key point when comparing our industry subsidies to other countries.

Sadly, I believe it is time to accept the industry is completely dead.

[Dr Smith]

Originally Posted by 2011G6E

There is nothing magical or special about being able to build a car in your own country. Sorry, but there isn't.

The car industry is a luxury that we can't afford any more if it needs endless taxpayer subsidies to prop it up.

That's all good and well, however name an industry (and I mean any) in an overseas country where there is no support at all from their government be it in the form of direct cash payments, incentives through reduced tax incentives or rebates, relocation subsidies, reduced power charges, red tape fast tracking, FTA where Aust. has the upper hand, etc etc etc.. You have farming subsidies in the US and Europe, limit's on imports into Asia for Ag products and vehicles, also into Europe and the US (eg try importing a pick-up into the US), direct manipulation of currencies to make exports cheaper. There is no free market except in someone's "ideological text book" and usually those banging on about how we need to always live under this mantra don't actually work in an industry that's going to suffer from these changes.

We need our citizens to be fully employed or as much as they want. A nation of high unemployment will be a far greater disaster then the financial expense of industry support, whichever one you pick. We all can't be economists on $250K/yr. preaching that we cannot compare our industry support to another country and so therefore let's not factor that in our report.

[janddbone]

Governemt should buy Aus made, that goes for the rest of us too. Be it cars, boots, timber, airline tickets, or tinned fruit.

If we want here, support it, all of us.

[BroadyFord]

I know exactly what will happen from here onwards:

Toyota will want money to stay; the government will say "we've already said no more money, and there is still money allocated until 2020 for 'the industry' (i.e. 'you'). That's our offer, take it or leave it."

One week later the media will be camped outside Altona waiting to ask workers how gutted they feel about "today's announcement".

[Bill M]

Originally Posted by tranquilized

How do you figure this is a positive? For a country that produces a lot of things, be it raw materials or finished goods for export, a low valued currency is a good thing, kinda essential. But increasingly, we are not one of those countries. We don't make much any more, and the stuff we do export - ie energy, iron ore, food - has a more elastic market place, being fairly essential items and all.

I think people need to be careful what the wish for. A weak aussie dollar will only benefit a small portion of the population. The rest of us will just have to pay a lot more for nearly everything we buy.

An Australian dollar at $0.80 - $0.85US gives us a competitive position and makes the cost of doing business with us worthwhile,
sorry your ipod/iphone will cost more

[tranquilized]

Originally Posted by Bill M

An Australian dollar at $0.80 - $0.85US gives us a competitive position and makes the cost of doing business with us worthwhile,
sorry your ipod/iphone will cost more

Yeah for sure, some industries would benefit enormously - tourism, exporters.

But for everything else, like ipods and iphones yes, but also petrol, a surprising amount of the food we eat, cars... the list goes on. Nearly everything that anyone buys would cost more.

So the question is, where is the sweet spot? Im not saying I'd like to see the AUD surge to US$1.50 or anything like that, but equally I'd hate to see it drop to US$0.70 or below. You might be right in saying 0.80-0.85. I wouldn't mind the 0.85-0.95 range myself...

[GasoLane]

I've often wondered if companies like Mercedes, BMW and VW get handouts from the German Gov.

If not, maybe the management in companies like Ford and GM are doing something wrong.

[Brazen]

Germany provides approximately $7.5 billion annually in vehicle making subsidies.

[Bill M]

Originally Posted by tranquilized

Yeah for sure, some industries would benefit enormously - tourism, exporters.

But for everything else, like ipods and iphones yes, but also petrol, a surprising amount of the food we eat, cars... the list goes on. Nearly everything that anyone buys would cost more.

So the question is, where is the sweet spot? Im not saying I'd like to see the AUD surge to US$1.50 or anything like that, but equally I'd hate to see it drop to US$0.70 or below. You might be right in saying 0.80-0.85. I wouldn't mind the 0.85-0.95 range myself...

I only use the point of $0.85US as that is what I'm told is the ceiling point of favourable exchange for doing business with overseas clients.
I do purchase many parts from the USA and a favourable exchange rate from a purchasers point of view is great but if I have no work because the $AUD is too strong then I cannot buy!
I prefer $0.80- 0.85 as a happy medium, good for me and good for the country as a whole. I'm with you, $0.70US and below sucks!
Bill.

[CyberWasp]

Australia the once glorious country that manufactured just about every thing you could name.

Now all we manufacture is Dirt and Cappuccinos.

One day there will be Treason Trials and many politicians from many successive governments will be trialed. I don't know who they work for or represent but they sure as hell don't work for the Australian people.

I vote we have a productivity commission report as to the value of politicians. If we base the results and findings of the car industry to politicians then all income should be removed immediately.

[Joe5619]

Originally Posted by tranquilized

Yeah for sure, some industries would benefit enormously - tourism, exporters.

But for everything else, like ipods and iphones yes, but also petrol, a surprising amount of the food we eat, cars... the list goes on. Nearly everything that anyone buys would cost more.

So the question is, where is the sweet spot? Im not saying I'd like to see the AUD surge to US$1.50 or anything like that, but equally I'd hate to see it drop to US$0.70 or below. You might be right in saying 0.80-0.85. I wouldn't mind the 0.85-0.95 range myself...

I assume you’re talking processed stuff as nearly all fresh fruit, veg & meat is Australian!! It might help people move away from processed foods (the imported stuff) & help with that obesity problem Australia has..

Back on topic.. How can any report be saying governments should drop the 'buy Australian' policy? Just disgraceful!!

[Dr Smith]

Originally Posted by CyberWasp

Australia the once glorious country that manufactured just about every thing you could name.

Now all we manufacture is Dirt and Cappuccinos.

One day there will be Treason Trials and many politicians from many successive governments will be trialed. I don't know who they work for or represent but they sure as hell don't work for the Australian people.

I vote we have a productivity commission report as to the value of politicians. If we base the results and findings of the car industry to politicians then all income should be removed immediately.

Lol, and I'm going to find out who is on the Prod. Commission, what experience they have, do they do their own grocery shopping and how much they're being paid.

Edit: very quick search showed top 35 execs of Prod. Commission shared $6mill, lowest $100K to highest $500K (inc. super for all) and all look like grandfathers/mothers, where's the representatives from self employed tradie, small business owner, stay at home mum, heavily mortgaged family, struggling business owner with cash flow because big business has them in a noose.....
I say we outsource the commission to India and save 50%.

[mik]

I had a pretty good full page responce written up, meh, ............but all i'll say now is we have handed this industry among others to artificially low cost countries that we have helped make economic power houses to our own countries detriment, and this like many other foolish decisions and events in Australia over decades past will come back to bite us on the *** in the future, of that i have no doubt.

[Franco Cozzo]

Lets outsource politicians to 457 Visa workers LOL.

[Bill M]

Originally Posted by BroadyFord

The entire report is a load of bull.

It doesn't answer any of the terms of reference and fails to provide any meaningful ways forward, other than to shut the whole thing down because it's a waste of time and money.

As an example, the report says Australia's level of assistance cannot be compared with other countries because it's too complicated to analyse the large number of programs available in other countries.

The whole report is one big joke written by a bunch of ideologues who can't wait to see the end of this industry.

Shame.

I would have to express disbelief/astonishment at this paragraph,

As an example, the report says Australia's level of assistance cannot be compared with other countries because it's too complicated to analyse the large number of programs available in other countries.


To write a report and ignore one of the major factors of the subsidies in the first place is just plain lazy. "Too complicated to analyse! WTF!
It gives the impression this "report" was cobbled together in a hurry.
Incredible! It would be interesting to see how much this report cost do

[Dash_XR]

Another Aussie casualty of globalization, it's sad but kinda inevitable. Big fish eats little fish.

[SB076]

Originally Posted by tranquilized

How do you figure this is a positive? For a country that produces a lot of things, be it raw materials or finished goods for export, a low valued currency is a good thing, kinda essential. But increasingly, we are not one of those countries. We don't make much any more, and the stuff we do export - ie energy, iron ore, food - has a more elastic market place, being fairly essential items and all.

I think people need to be careful what the wish for. A weak aussie dollar will only benefit a small portion of the population. The rest of us will just have to pay a lot more for nearly everything we buy.

No point having cheap goods and a high unemployment rate. Why do you think US, China and Japan all employ various measures to keep there dollar low?

[paule11]

Keep voting the same politicians in keep getting the same results

[SB076]

Originally Posted by 2011G6E

There is nothing magical or special about being able to build a car in your own country. Sorry, but there isn't.

The car industry is a luxury that we can't afford any more if it needs endless taxpayer subsidies to prop it up.

Yet governments around the world fight for it, makes you wonder why?

There is also a bigger picture that this affects every industry. I receive a lot of emails i can hire IT software development etc for $5 USD per hour a virtual receptionist for $3 USD per hour or an accountant for $7 an hour (who is trained an upto date with all relevant Aus standards.

[XplosiveR6]

Originally Posted by Brazen

Germany provides approximately $7.5 billion annually in vehicle making subsidies.

And your point is? Germany's car industry is one of their largest exporters, which adds a huge amount of GDP, we export next to nothing, which has little benefit to our economy in comparison.
We need to be investing in industry's that bring money into the country. This is what enables a country to prosper, not simply make things just for ourselves.

[robertjp]

Okay if the productivity commission is so against subsidies, remove them from the mining industry, watch them scream....

This is starting to become ludicrous with all the industries that are being left to wither, at what point is the goverment looking after the people and not ideologies.

[jpd80]

The politics of "it's cheaper to do nothing" is replacing the vision of local enterprise and production.

In one generation, this country has gone from can do to just don't even try.....

One day our efficiency experts and politicians will wonder what happened to Australia's GDP and why so many are unemployed..

Once the Gas construction boom finishes, there will be a lot less business activity in Australia
and when all the fly in fly out jobs are replaced by foreign workers, our elite workers will realise that we're all screwed...

[robertjp]

Why are the libs intentionally sending Australia destitute!Remeber that Mr Abbott said he was going to create 2 million jobs, has anyone done a count of job losses so far?

Do these guys really think that they will win the next election or are they deluded?