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I think its because they want a budget surplus. Yes, the vision is that small. Please prove me wrong. (Hang on I just did: here)

Data in this post largely plagiarized from Political economist Dr Remy Davison from Monash University speaking on The World Today

The Australian Motor Vehicle Industry and associated components manufacturers provide 50,000 jobs. The level of subsidy Australians provide is relatively low by international standards. The US government just subsided its own car industry to the point of partial nationalization. ALL national governments heavily subsidize their Motor Vehicle Industry: China, Japan, South Korea, Germany and France.

The level of subsidy may well be $48,000 per year, per job as Treasurer Hockey says, but that’s $25 per head annually which is what the current assistance of $500 million amounts to.

The Motor vehicle Industry produces a $23 Billion dollar gross value add to Australia’s economy and is a $3.6 Billion dollar export industry.

Sorry. I am not seeing the urge or logic here. Where is the over-spend ? Isn’t it obvious that the asset has value ?

Australian banks are subsidized at least 4 times as much as the Motor Vehicle Industry at least $100 per person per year.

The Mining Industry receives $4 billion a year in subsidy. That’s about $200 per year per head or 8 times as much as the Motor Vehicle Industry.

The Australian car industry spends over $600 million per year on R&D. That will stop if the Motor Vehicle Industry dies.

Wasn’t Abbott and his team hysterical when Rudd announced the end of Fringe Benefit Tax concessions on Company Cars during the 2013 election campaign? Wasn’t that going to decimate the car industry ? The same one they are now willing to let die as a costly festering Stone Age heap of useless slag ?

Here’s a quote from the Coalition’s election material on Rudd’s FBT changes:

The Coalition does not support Labor’s $1.8 billion hit on the car industry.

Tony Credlin-Abbott said that Rudd’s FBT cancellation was

a disaster for a motor industry which is already under pressure

and that the FBT concessional support should be maintained to support the industry.

Today it seems the Coalition is happy to see the Industry gone altogether. No, not true. They sincerely want it to survive, but without one cent of government assistance. Which happens nowhere in the world. Its a fantasy.

As Ian Credlin-McFarlane-Credlin, our current Federal Industry Minister said just six weeks ago

every vehicle in the world was subsidised, either directly or in kind, be it through tariffs, currency manipulation or other means…All countries subsidise. Most subsidise much more than we do…If you don’t subsidise the industry, it won’t be there. I accept that argument. I’m not sure that my colleagues do yet.

What drives the Coalition fantasy of a subsidy-free Motor vehicle Industry ? A small headline saving on the 2014 budget spreadsheet ? One which would be dwarfed by the ensuing loss in economic value add ?

Surely not.

Something Worth Subsidizing

So what does the Coalition think is worth subsidizing ? Well, hospitals in marginal electorates. In 2010 Abbott offered Andrew Wilkie $1 bn to re-build Hobart Hospital in exchange for Wilkie’s support in a minority government. The promise was unfunded.

So 50,000 jobs in the Motor Industry is not worth a $500 million subsidy.
1 job in the Federal Parliament, the PMship for Mr. Tony Abbott, is worth a $1 bn subsidy.
Taxpayers should feel…informed.

PS

Actually, back on Hockster’s per job figure I’ve just calculated it. That’s a subsidy of $10,000 per job. Not $48,000 as per Hockster, who must be using direct jobs in direct car manufacturing alone even though he knows the direct manufacturing jobs support the entire component industry. Sneaky old Hockster.

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