Monday, December 30, 2013


'Australia's rent seekers are firmly on notice: it's the end of corporate welfare. Prime Minister Tony Abbott has never been so direct: no government has ever subsidised its way to prosperity, he declared, adding a good kick from his R.M. Williams boot to the stupidity of ''knee-jerk piecemeal deals''.

What a difference a few months makes. During the election campaign, Tony Abbott flew to Tasmania and blithely handed a gift of $16 million to the Cadbury chocolate factory. Cadbury, owned by a multinational giant, had reported a 64 per cent burgeoning in its profit to $74.9 million last year.

Abbott at the time argued that Tasmania had been ''left behind, big-time'' on almost all economic measures, and his was a pragmatic approach to a special case in aid of ''job, jobs and jobs’'.

It was, of course, an election campaign, and Abbott, not yet prime minister, had his eye on some juicy Tasmanian seats. You could call his gift politically pragmatic, but you could also call it corporate welfare and a campaign-driven knee-jerk piecemeal deal.

Now he is prime minister, and a vastly bigger company, GM Holden, has announced its decision to quit Australia, Abbott has seized the opportunity to return to what has been his reasonably consistent theme on corporate welfare, if you ignore Cadbury.

Faced with a ballooning deficit, Abbott needed to elucidate a coherent approach. With Holden going, Qantas is also knocking on the government's door for assistance. So is SPC Ardmona.
''We're not here to sort of build a field of dreams,'' the Prime Minister offered. He had the same sort of message for SPC Ardmona that he had given Qantas: get your own house in order. His response to the thousands of car industry workers who will find themselves out of jobs is less coherent.

A package of about $100 million - $60 million from the Commonwealth, $12 million from Victoria, incomplete negotiations towards another $12 million from South Australia and ''$20 million, perhaps, out of Holden'' - is insignificant compared with the vast amounts the Coalition had previously committed to the car industry.

Labor was promising $1.5 billion in industry assistance to 2015, and $300 million a year after that. The Coalition had promised to strip $500 million from that pre-2015 funding - which still left $1 billion - and still on the table was $200 million a year for the five years to 2020.

That's $2 billion, or $1.9 billion more than the government is now promising to pull together ''to support economically responsible initiatives in regions facing pressure in their manufacturing industries''.

Precisely how this will work depends on the findings of various reviews, apart from vague promises to help component manufacturers switch to non-automotive and export operations, assist businesses that employ former automotive workers and grants for research and development.

Beyond that, former workers will have to rely on the dole, redundancies or - on the advice of the Industry Minister, Ian Macfarlane - move to other regions to find work.
The promised end of corporate welfare, in short, is being matched by a parsimonious approach to worker welfare.

Cadbury and its employees, who got more than a quarter of the amount the government is now offering the endangered car industry workforce, should consider themselves mightily blessed by old-style campaign pragmatism.'  

The Age Newspaper, 19th December, 2013