Subsidies are evil


The Australian taxpayer must be wondering today just exactly what their AUD$34 million of federal funding for Ford earlier in the year got them. Billions of dollars more has been poured into the industry that is now almost dead.

About $10 billion over seven years. That’s how much has been pumped into the car industry by federal and state governments.

But has it been a case of throwing good money after bad, especially after Ford Australia’s announcement today that it was going to halt its local manufacturing operations in 2016?

Ford Australia president Bob Graziano said for every $1 the governments gave to his company, it returned $6 back to the economy. But at the same time, he said the firm’s cost structures in Australia were uncompetitive.

“Our costs are double that of Europe, and nearly four times Ford in Asia,” Mr Graziano said, adding that the company made a net loss of $141 million in the past financial year and had a total of $600 million over the last five years.

The local automotive industry has struggled in recent times as consumers switched to smaller, fuel-efficient cars and following the financial crisis, market research firm IBIS World said in a February report.

Car industry analyst Dr Danny Samson said the governments had been getting value for their subsidies to the sector.

“The subsidies have kept the industry here in my opinion for 30 years longer than the industry otherwise would have been here,” said Dr Samson, a management professor specialising in manufacturing and business competition at the University of Melbourne.

“If not for those subsidies, the industry would have completely evaporated decades ago. Every country that has a car industry has government subsidies. It’s not like the only one. It’s just the way it works to keep those jobs.”

Subsidies are evil, and now the gravy train is at an end.

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.