Holden Billions in subsidies from Australian Goverment revealed.

http://www.abc.net.au/news/2013-04-0...sidies/4604558

My Take on this is that all countries do this to support their automotive companies and the many people who work in and around the industry.

Question, If car manufacturing would stop tommorrow would we end up with cheaper new cars
-OR-
Would we end up lik NZ and get totally ripped ?

(Personally i hope two local car manufactures will stick it out, Holden & Toyota as least it we keep a few local suppliers going).

I think the entire industry has received a lot more than that in the last few years (when you include Ford, Toyota etc) A LOT more.

Disgusting IMO. My brother just took the family manufacturing business to Sri Lanka due to the impossibility of actually doing anything in this over-priced country and now employs 200 people there. He would have loved a handout I am sure. Ultimately it is about the government keeping its union mates happy. Picking winners (choosing one industry to receive taxpayer funds while another does not) doesn't make sense and it almost always leads to a gross misallocation of resources and investment.

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Originally Posted by Vulture

I think the entire industry has received a lot more than that in the last few years (when you include Ford, Toyota etc) A LOT more.

Disgusting IMO. My brother just took the family manufacturing business to Sri Lanka due to the impossibility of actually doing anything in this over-priced country and now employs 200 people there. He would have loved a handout I am sure. Ultimately it is about the government keeping its union mates happy. Picking winners (choosing one industry to receive taxpayer funds while another does not) doesn't make sense and it almost always leads to a gross misallocation of resources and investment.

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And that's the problem, Vulture. We picked a winner in the car industry back in the 1940s. And it was a very good decision back then for many different reasons. We backed it with major protection - effective subsidies. However, we didn't withdraw the barriers when it was performing strongly in the 60s and 70s, to force it to become more efficient and to compete. Instead we waited until the competition was beating it and it was already struggling. Ever since then it has been a matter of chasing it to the cemetery with a bag of cash in hand. Would it survive without the life support? Doubt it. Should we be subsidising tiny manufacturers (in world car industry terms) in a mature industry, where there are much larger and very aggressively expanding players, with hugely better cost bases and vastly better product ranges than us. Probably not.

If we used the same logic, we would be subsidising extensively the TCF industry, the making of electrical appliances and TVs, building of cargo ships and so on. With a strange distorted logic, we invest, or rather sink, money into industries we don't have an advantage in and with little hope of survival and more so strong growth, but cast adrift industries that we have an edge for and with strong growth potential. Dumb really.

Two of the four manufacturers have left but become more profitable as importers. No-one would consider entering here as a manufacturer now or building a car new plant. Does it need to be more obvious than that?

Personally I see Holden through the eyes of an enthusiast rather than an accountant. It's cultural significance is enormous and it remains probably the world's greatest display of Australian engineering talent. As far as the business case goes, a large part of the problem is the death of the traditional Aussie qualities of loyalty, humility, pragmatism and the more united, less competitive culture of bygone decades.

When everyone is driving generic, overstyled 4 cylinder Chinese and European cars the world over I will say 'I told you so'. ;)

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Originally Posted by Troutman

Personally I see Holden through the eyes of an enthusiast rather than an accountant. It's cultural significance is enormous and it remains probably the world's greatest display of Australian engineering talent. As far as the business case goes, a large part of the problem is the death of the traditional Aussie qualities of loyalty, humility, pragmatism and the more united, less competitive culture of bygone decades.

When everyone is driving generic, overstyled 4 cylinder Chinese and European cars the world over I will say 'I told you so'. ;)

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Agree ... No kidding, The latest appliances Toyota Corolla vs Hyuandai almost look the same from the back.
I think from consumers to just about everyone else has lost interest - few 'car' people only left at work the rest buy on colour and price.

Thats why i bought a Volt to experiance something radically different, sad there is no EV Plug in Commodore to buy - but at least Holden made a killing thus far on My Volt imported from the US LOL!

Im pissed they spent 10 mil of that on footy sponsorship, FFS times must be tough.

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Originally Posted by Troutman

it remains probably the world's greatest display of Australian engineering talent.

When everyone is driving generic, overstyled 4 cylinder Chinese and European cars the world over I will say 'I told you so'. ;)

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Engineering talent.....hmmm, doing what other people can do better and more profitably, and much more attractively to the buyer? I think I would rather boast about things like the Cochlear implant, our agricultural developments, our high-end Defence systems capability, our CSIRO patents around wireless and a hundred other things, because frankly, we haven't done anything world beating in car manufacturing since...............hmmmm.

VW Golf GTi and R, R36, Porsche of almost any model, Toyota 86, Subaru WRX, Lexus IS-F and LFA, GTR, BMW M3, M5 or various others, Renault Megane RS250 or Clio, Veloster Turbo, yes I guess the Euros and Japanese and Koreans soon the Chinese will never make anything worth driving.

BTW, ever been to the Shanghai Motor Show? When you have, come back and tell us what you think. Your eyes will be opened, very wide.

Just don't let facts get in the way of a bad argument.

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Originally Posted by Troutman

Personally I see Holden through the eyes of an enthusiast rather than an accountant. It's cultural significance is enormous and it remains probably the world's greatest display of Australian engineering talent. As far as the business case goes, a large part of the problem is the death of the traditional Aussie qualities of loyalty, humility, pragmatism and the more united, less competitive culture of bygone decades.

When everyone is driving generic, overstyled 4 cylinder Chinese and European cars the world over I will say 'I told you so'. ;)

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Unfortunately enthusiasts don't pay the bills as they are the minority.. Thats just business.

Its sad that one day our chosen style of car will be gone, but it is what it is. Hold on to your classics.

$2.1 billion over 12 years. that's nothing.

Holden has paid 1.4 billion in taxes, plus taxes for direct holden employees, and indirect jobs generated from the automotive industry, I'd say the government has come out on top...

And in 10 years when our mines are not experiencing a massive but temporary boom and we have abandoned every other large industry what will we do? Do we let large chunks of Australia turn into Detroit? Once the car industry is gone it is gone forever and the social costs might make the current subsidies look cheap. Other countries heavily subsidise their car industry because they see the benefits in keeping people employed. Maybe we should contemplate the risks of putting all our long term economic prospects into one basket too.

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Originally Posted by Party Pete

And in 10 years when our mines are not experiencing a massive but temporary boom and we have abandoned every other large industry what will we do? Do we let large chunks of Australia turn into Detroit? Once the car industry is gone it is gone forever and the social costs might make the current subsidies look cheap. Other countries heavily subsidise their car industry because they see the benefits in keeping people employed. Maybe we should contemplate the risks of putting all our long term economic prospects into one basket too.

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We will become just like Nauru

http://en.wikipedia.org/wiki/Nauru

[' Nauru boasted the highest per-capita income enjoyed by any sovereign state in the world during the late 1960s and early 1970s. When the phosphate reserves were exhausted, and the environment had been seriously harmed by mining, the trust that had been established to manage the island's wealth diminished in value. To earn income, Nauru briefly became a tax haven and illegal money laundering centre. From 2001 to 2008, it accepted aid from the Australian Government in exchange for housing the Nauru detention centre.']

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Originally Posted by Jac001

We will become just like Nauru

http://en.wikipedia.org/wiki/Nauru

[' Nauru boasted the highest per-capita income enjoyed by any sovereign state in the world during the late 1960s and early 1970s. When the phosphate reserves were exhausted, and the environment had been seriously harmed by mining, the trust that had been established to manage the island's wealth diminished in value. To earn income, Nauru briefly became a tax haven and illegal money laundering centre. From 2001 to 2008, it accepted aid from the Australian Government in exchange for housing the Nauru detention centre.']

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I suggest you have a look at where Australia makes it money, including its export dollars. Service industries are up there, education is a very big earner, tourism etc. We earn lots of money from agriculture, food, professional services, and many more. CSIRO is a significant earner form licensing patents. Mining earns lots of money, even when here is no boom going on. Manufacturing, particularly commodity products, is really not that big in our economy.

As a high cost, high technology and highly educated country, there are much better places to invest our dollars.

Unless, of course, you would like to be a low wage, low conditions, low wealth country with lousy services, poor hospitals, etc etc. Fancy a 40% wage cut like the Greeks anyone? And 15-25% unemployment to push wages even lower? How about a dive of 50% in the dollar so Holden can export more Commodores, the imports get much dearer and that TV becomes $3,000 again instead of $1,000?

I thought not.

There has to be some compromises between making some people rich but putting others on the trash heap. Unfortunately many people will not be able to share in these great riches that economic rationalism predicts. A per capita income doesn't mean that everyone shares the wealth. And no, I am a long way from a left wing communist but I also don't believe in the idea that we should all simply let markets run the world and hang the consequences for those who for whatever reason happen to be on the wrong end of where that takes us. Alternatively, if you want a simple economic argument, all those people you put on the dole will no longer be paying taxes but will be collecting welfare which means that taxes have to increase for those earning the greater riches while services have to be reduced. The assumption which is often made is that people will simply find new employment in new industries but this is a big assumption.

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Originally Posted by powerd

I suggest you have a look at where Australia makes it money, including its export dollars. Service industries are up there, education is a very big earner, tourism etc. We earn lots of money from agriculture, food, professional services, and many more. CSIRO is a significant earner form licensing patents. Mining earns lots of money, even when here is no boom going on. Manufacturing, particularly commodity products, is really not that big in our economy.

As a high cost, high technology and highly educated country, there are much better places to invest our dollars.

Unless, of course, you would like to be a low wage, low conditions, low wealth country with lousy services, poor hospitals, etc etc. Fancy a 40% wage cut like the Greeks anyone? And 15-25% unemployment to push wages even lower? How about a dive of 50% in the dollar so Holden can export more Commodores, the imports get much dearer and that TV becomes $3,000 again instead of $1,000?

I thought not.

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I find it funny you equate the low of the standard of living with protecting the manufacturing industry when the exact opposite has been shown time and time against throught history. The industrial revolution is what made Western europe strong, it was the manufacturing industry that made the US a world power in the mid 1940 onwards. Would china economy and standard of living be rising if it wasn't investing in manufacturing?


Lets look at some facts:

in 2011
Manufacturing made up 12 % of GDP
Tourism is 2.5%
Agriculture makes up 3%

The idea that Australian manufacturing (everything not just Automotive) isn't that big is a falacy.

When large manufactuers fall smaller manufactuers fall with them, there is a terrible domino effect that occurs.


Lets look at exports then:

in 2009 car exports made up 0.83% of total export earnings.
Do know what the export earning were for fresh food (just fresh fruit and veg) that year? 0.35 %

How much of export earnings are made up from Mining/ resources? just over 60%! ($185B of $263B total) What do you think will happen when the the ore/ gas and oil are all sent overseas and there is nothing left in the ground? it might not happen today or next week, but at some point we know it will.

Investment into the country:

The CSIRO gets about $500m from non government sources each year and the government addes spend $700m to their budget on top of that.

For Holden to get most of the $2.2B they had to invest 3 x that amount (~$.6.5B) or around $500m/yr (on average) (under howard and Rudd before the rules where changed under gillard which is where most of the money was obtained).

Both of them bring about the same amount of money into the country each year, but in Holdens case the tax payer spends $150M/ yr to bring it in, where as the CSIRO the tax payer has to spend $700m/ yr to get the same money coming into Australia.

I find it funny you mention Greece. Before ww2, It used to have a moderately strong (non-automotive) manufacturing industry. They used to make stuff. They decided that they didn’t need to make stuff after ww2 they could just buy what they needed and became a service economy based on tourism, food export etc. Look at where that has gotten them.


But you are correct the service industries (finance, retail, professional services etc) make up a massive amount of our GDP, but they also did in Nauru and in Cyprus.

Our economy is worth about $1.3T yet we get upset about spending ~ $150M/yr to bring in investment of around $500M/yr into Australia.

^ This man speaks sense