Economy $21.5b smaller without car making
Monday 4th November 2013 at 12:06pm
Author: Sam Hall
Source: Sydney Morning Herald, http://smh.drive.com.au/motor-news/econ ... 2ww0i.html

Report paints a bleak picture for Australia’s economy should the car manufacturing industry disappear.

Killing off car manufacturing in Australia would lead to a $21.5 billion hit to the economy and “heavily impact” regions such as Adelaide and Melbourne, a study commissioned by the Federal Chamber of Automotive Industries has found.

Australia’s gross domestic product would also be $7.3 billion smaller – or 0.6 per cent – in today’s dollar terms if the industry were forced to shutdown in 2018.

The study by the Allen Consulting group, which is being used by the FCAI to lobby for continued tax payer support and co-investment from General Motors Holden and Toyota, warns high-tech jobs and skills will be lost and significant foreign investment would be directed overseas.

“This report shows the value of automotive manufacturing to Australia,” FCAI chief executive Tony Weber said. “It details the benefits to Australia as a whole - to the economy, communities, the supply chain and other industries.

“I want to be clear: financial support for the industry is an investment in Australia and this investment needs to be long-term.”

Using economic analysis from the Monash University, the study claims about 33,000 jobs would be lost in Melbourne and a further 6600 jobs in Adelaide.

“These jobs would eventually return in both cities, but with lower real wages,” the study said. “And employment levels would not return until around 2027 for Melbourne and 2025 for Adelaide.”

The findings come as the industry awaits a crucial interim report by the Productivity Commission, due December 20, which will set the foundations for whether the Coalition commits to ongoing funding assistance beyond 2016. Both Holden and Toyota have reiterated the need for long-term policy settings to be known before they make a decision on their futures next year.

Independent South Australian senator Nick Xenophon said the report laid out the impact of a local car industry shutdown in ‘‘chilling terms’’.

‘‘Make no mistake - while the closure of the car industry would have an impact of earthquake proportions in Adelaide and Melbourne, those tremors would be felt right across the country,’’ he said in a statement. He said the $500 million per year automotive subsidies paled in comparison with the federal government’s planned $5.5 billion a year paid parental leave scheme.

The report tries to address criticism of ongoing taxpayer assistance by arguing Australia’s government subsidy program is about $500 million a year or about $US18 per head of our population. The same data on which those figures are based (from 2008-2009) found the equivalent figure was $334 per person in Sweden, $90 in Germany and $264 in the US.

“For that investment, Australians receive significant returns through direct foreign investment, employment, skills, training, technology transfer and research,” Mr Weber argued.

“And the investment also generates spill-overs that flow into other industries and areas of the economy. Without that investment, we lose these long-lasting benefits.”

The report pointed out the wider flow-on effects of manufacturing, such as in management positions. Some of Australia’s most respected chief executives, including Boeing Australia boss Ian Walsh and Rio Tinto executive Sam Walsh, actively credit the car industry for increasing productivity in their own industries.

The report found that if barriers to export were removed, the Australian industry could return to 2008 export levels (160,000 vehicles were exported), Australia’s consumer welfare would increase by $7.1 billion over time.

-With AAP

Putting aside the discussion as to whether the govt should or shouldn't subsidise the car industry, this article is spot on re the knock effect on support industry i.e. parts manufacturers in this country also closing down, the decline in economic activity due to the lower level of spending by those affected by a close down of the industry, reduced PAYE tax receipts and increased welfare spend by the Govt. Whilst I'm not a fan of the govt propping up an industry, the net effect of not doing anything in this instance is not a pleasant thought.

The clothing industry is gone white goods manufacturing is almost busted what's left is the car industry goes.

COXI

A few years back I did an internship at Alcoa and they were struggling because it is cheaper to send the raw material to Korea and come back sheeted then it is to do the processing here. The steel industry is facing exactly the same problem.

Now im in the printing game and find the exact same problems. Now its China and India making it hard for us. What consumers dont understand is that it might be cheap to buy now because things are getting made in second rate factories but just wait till they all wake up and want the same living and working conditions we have and see how the prices go up.

Im not into politics or finances to much but one thing I really dont understand is how are we supposed to have money to spend on things if we dont have a manufacturing industry exporting to make money for the country. The US has worked out that they need to have jobs and manufacturing to make money are we going to wake up before its to late, or is the hole already to deep.

Google the "Lima Declaration". You gets plenty of hits but most will give you flavour of what's happening and why. You can thank Gough for signing Australia up to this treaty.

Put me on a rocket to Mars. Thats depressing.