A long, long time ago – before the September election – an eager opposition leader declared “let the message go out … to the manufacturing heart of our country, that we must be a country that continues to make things''.
They were the heady high-vis vest years for Tony Abbott, when he could say stuff like “any government which makes it harder to manufacture cars is making it harder for us to continue to be a first world economy because without cars, without steel, without aluminium, without cement, we don't have these manufacturers in Australia, we are not really a sophisticated economy anymore''.
But then came the suit-and-tie responsibilities of government, and the sentiments of opposition crashed into the realities of managing an economy and reducing a budget deficit, and it turned out that continuing to “make things” like cars, or tinned tomatoes and peaches, was going to be expensive, and the Coalition decided on a very different path to economic sophistication.
If you set aside that very large discrepancy between pre-and post election, it’s entirely defensible for the Abbott government to draw a new “line in the sand” on corporate handouts, especially as it re-examines government payments to families.
The problems are, we still don’t actually know where the line has been drawn, and the government is refusing to accept responsibility for the fact that this kind of line-drawing has consequences, not just for businesses, but for people – the kind of blue-collar working people they were appealing to before the poll.
The “line” came with the government’s
refusal to grant $25m to SPC Ardmona to retool its loss-making Shepparton factory. SPC’s request was not especially large or unjustifiable as these things go – the company just had the misfortune that its request landed on the cabinet table right at the time the government needed to make the point.
And the government could have said exactly that – this was the kind of request that might have been considered in the past, but could no longer be afforded, and that if the refusal meant the plant had to shut, it stood ready to help the workers retrain and the region find other employers.
Sure, SPC’s enterprise agreement has some provisions most employers would think should not be there, but as the company eventually clarified in an unusually blunt statement, some of the conditions being cited by the government were either no longer there, or were no longer paid, or were the result of trade-offs with the workers. And in any event, the total cost of the conditions was tiny compared with the cost to the company of the high dollar and cheap foreign imports, “piffling” in the words of the increasingly outspoken local Coalition member Sharman Stone. (That central point turned out to be far less newsworthy than whether she had called the prime minister a liar.)
The government also presented SPC’s parent company, Coca-Cola Amatil as a greedy, mega-profitable business with “a stronger balance sheet than the commonwealth”, trying to shift to taxpayers costs it could easily afford itself.
Yes, as the prime minister has repeatedly told us, Coca-Cola Amatil makes a hefty profit, but for years SPC has been making big losses. What any company, greedy or otherwise, does in that situation is close the factory – which is exactly what the CCA board has been contemplating for some time. But SPC happens to be the biggest employer in a region that already suffers very high unemployment, a situation which, in the past, might have prompted governments to offer some assistance to retool the plant and allow it to stay open.
And it is also unclear exactly where the “line” has been drawn.
Joe Hockey, the driving force for the government’s new economic philosophy, has come closest to a definition.
He told the Australian Financial Review on Thursday that Qantas, for example, could still qualify for some kind of government assistance for two reasons – it was constrained from operating freely by government-imposed law (the Qantas Sales Act) and it was not operating on a level playing field because its major competitor, Virgin, was backed by three state-owned airlines, Air New Zealand, Singapore Airlines and Etihad.
The first is a clear point of difference between SPC and Qantas. But SPC has a good case to argue that its playing field is also pretty skewed by unfairly cheap foreign imports – it only needs to point to the finding by the anti-dumping authority this week that it is competing with Italian canned tomatoes dumped in Australia at up to 26% below cost.
The only criteria that can explain the difference between the government’s “no” to SPC and
“yes” to Cadbury before the election is that the Cadbury decision came when the only line in the Coalition’s sights was the election date.
And the difference between helping a company struggling with dumped imports and a high dollar – both beyond its control – and farmers battling a drought beyond their control is also not yet clear.
With cabinet yet to decide on drought assistance, Hockey hedged his bets on that one.
“There are slight differences as there are differences between government stepping in when there is a natural disaster and governments stepping in when simply the company is asking for help with the financial restructure,” he told the AFR.
Still, the government is beginning to define a coherent economic direction.
Now, following Tony Abbott’s script of how-to-be-a-successful opposition leader, Bill Shorten is donning the high-vis vest to score political points from a government making difficult decisions.
Shorten at least has actual job losses at Ford, and looming job losses at Holden, and most likely at SPC Ardmona, to bang on about. Abbott for the most part had to resort to wild conjecture to find the jobs about to be destroyed by the so-called “wrecking ball” of the carbon tax.
But like opposition leader Abbott, Shorten is also taking the easy shots in the argument. He says governments should “stand up for workers” and “fight for Aussie jobs”, which is all very nice, but avoids the much more difficult question of exactly which industries should get assistance and in what circumstances.
The Coalition has not yet explained how it will help the workers who will inevitably be left behind in Geelong, or Shepparton or Broadmeadows, even if its new economic strategy boosts overall growth and employment.
And Labor has not explained how continued “co-investment” with carmakers and fruit canners will succeed in protecting Australian jobs in the future when billions of dollars of manufacturing “co-investment’ in the past hasn’t prevented the inexorable contraction of the sector.
