Why car subsidies are good economics

[KIWI-1]

Originally Posted by Dr Smith

The elecricity industry is very "interesting". It's privatised here in Vic and much of the cost increases are due to infustructure replacement. Being privatised they haven't spent money on maintenance like the previous goverment owned SEC. Now there are very strong rumours that those involved are actually "goldplating infrustructure", that is doing far more then is required because they are allowed to pass on these costs to the power retailers and hence on to us. Power company profit increases seem to suggest this is the case.

No rumour
"EnergyAustralia, which serves customers in Sydney's east and north, would need to increase its prices an average 19.2 per cent - an extra $6.50 a week or $338 a year, while small business owners would pay an extra $439 a year. Most of this cost was a result of the energy provider's investment in the electricity network's ''poles and wires''.

Read more: http://www.smh.com.au/environment/en...#ixzz21DbndQ7j.

EnergyAustralia (love the patriotic name) owned by Hong Kong based TRU.

[prydey]

Originally Posted by johnydep

No, just 1980's sales figures.

I don't know what the sales figures were then compared to now, but most people commenting on what Ford and Holden need to do, are just trying to say - car manufactures need to sell more cars to be competitive. They need to export. They need to build cars that appeal to a larger market.

At the moment we are handing them money to do this, yet their management is happy to tread water.

Does these foreign owned companies want their Australian production to grow and export? Do they want to invest in their plants on Australian soil?

If they do, make a commitment by investing their dollars. If they did that, I'm sure that most tax payers wouldn't mind the Government helping.

At the moment, it looks all to familiar - Mitsubishi Australia.

for them to do this (sell more cars) they would need to abandon the large car segment.

the size of the pie has remained fairly steady over the last few years (up to 1 million sales/year) and yet the pie is being cut into substantially more slices, so its only expected that some slices are going to become smaller as more slices are added.

as for investment, the foreign owners normally tip in at least the same or more of whatever subsidy the govt give so its not like they are just surviving solely on govt funds.

as for taxpayer funded!! i pay tax regardless of what the govt spends money on. i have no say in where that goes. its a throwaway line that many use to get the population on side. almost like trying to convince them that they are physically paying for these subsidies laughable. everyone pays tax. the govt spend it how they please. 'taxpayer funded' is just typical political jargon designed to win votes.

[mik]

Originally Posted by Jacko*

I think Ford Australia has been on a downward trend in sales for quite some time now, the world has changed a lot in the last decade but Ford Australia has only recently realized the need for a different product than what they have been marketing. There has been a steady move away from family sedans & wagons, with move toward suv's as it is perceived that they are more practical or economical. Ford Australia should have reacted more swiftly to offer the Australian consumer what they wanted. The Ford Territory is a world class vehicle but it's new diesel power plant should have been a four cylinder only across the range not a six. There are Korean built suv's running four cylinders that have better torque and power to weight ratio than the Territory selling for much less with a five year warranty. If the Territory was a four cylinder diesel not six, had 5 year warranty and was less than $45000 drive away I would have bought one, instead I bought a Hyundai Santa Fe. I don't think I am alone choosing a foreign built car, Australian car manufacturers need to recognize the need for change and act quickly, the government need to lead by example and buy Australian built exclusively and match tariffs imposed by other nations.
Just my 2c.

i`m pretty sure our vehicle would hold their own pretty good if it was`nt for the price differences
i think the main problem is our vehicles cost more to start with, to much to build(through no fault of theirs ) and too much initial purchase compared to the imports, as for the 5 year warranty, i`m sure the locals would do it if the money was there, again that level playing field thing.

[Wretched]

Originally Posted by prydey

wretched - what innovation would you like to see?? i notice you making similar comments in a few threads at the moment.

you want a lighter falcon? have a look at the cost of lighter large cars around the world. building with aluminium costs money. sure, you might save a couple 100kg, but you couldn't sell them for mid $30k. most weight is from making the car safe. FG is one of the higher scoring 5 star rated cars out there. that not innovative enough for you?

want a more economical large sedan? ecoboost? that not innovative enough. state of the art engine giving excellent economy in a large car.

the way some people carry on its like they think ford and holden have just continued churning out 1980's style cars!!

I think you need to experience other makes, other cars in the Ford family to understand.

5 star is not innovation, look it up in the dictionary.

I have said many times ecoBoost is a great idea and one they should have done years ago just like diesel in territory but these don't happen often enough. Ford rest on their laurels with the Falcon.

Innovation is continually striving to do better, to adapt and exceed to market expectations. The car industry is cut throat many have survived and many have died off. If the Falcon is to succeed it needs an overhaul, design to execution. They should be going to One Ford and using what is already there. yes weight loss is needed, the cars are getting heavy and to be economical they need to lose weight, all makes are doing it. ford are a large organisation they can afford it. They charge enough for the car.

You want an example of innovation just look at Mondeo and Focus. Each model is far better in almost ALL areas than its predecessor, i can't say that about Falcon.

[prydey]

Originally Posted by Wretched

I think you need to experience other makes, other cars in the Ford family to understand.

5 star is not innovation, look it up in the dictionary.

I have said many times ecoBoost is a great idea and one they should have done years ago just like diesel in territory but these don't happen often enough. Ford rest on their laurels with the Falcon.

Innovation is continually striving to do better, to adapt and exceed to market expectations. The car industry is cut throat many have survived and many have died off. If the Falcon is to succeed it needs an overhaul, design to execution. They should be going to One Ford and using what is already there. yes weight loss is needed, the cars are getting heavy and to be economical they need to lose weight, all makes are doing it. ford are a large organisation they can afford it. They charge enough for the car.

You want an example of innovation just look at Mondeo and Focus. Each model is far better in almost ALL areas than its predecessor, i can't say that about Falcon.

i think you are making a lot of assumptions

[johnydep]

Originally Posted by prydey

....

the size of the pie has remained fairly steady over the last few years (up to 1 million sales/year) and yet the pie is being cut into substantially more slices, so its only expected that some slices are going to become smaller as more slices are added.
.......

as for taxpayer funded!! i pay tax regardless of what the govt spends money on. i have no say in where that goes. its a throwaway line.... everyone pays tax. the govt spend it how they please. 'taxpayer funded' is just typical political jargon designed to win votes.

You do have a say on how Governments spend our tax dollars! Everyone has a say on how Governments collect and spend tax dollars! The electorate, the public, can talk to their representatives their local MP's. People can vote for change, they can voice their opinion by writing, emailing, twittering, etc.

None of this is new, people can/will only carry an industry or Government for so long, once personal costs get to high they will drop them. Look at the examples from the not so distant past; Mitsubishi, Nissan, the Soviet Union - all protected, all gone.

Governments have a poor record of choosing winners.

The best way to make an industry competitive is with a fair and efficient tax system, one that lets people have enough spare cash to buy, and business to grow and develop.

Yes it's a hard subject, in the late 80's I believed in what you do now; I couldn't understand why the Government was dropping tariffs at the expense of our car industry. However, the then Government was good at explaining itself, they planted the seed of understanding, and we saw the outcome - our industry had no choice but to compete with better overseas brands. Quality control increased, better technology was introduced, vehicles were more affordable, safety measures got better, etc.

Originally Posted by http://www.theage.com.au/opinion/pol...719-22d11.html

Government and car industry like Robin Hood in reverse

THE current package of subsidies for Australia's car industry should be their last. At what point can foreign-owned car companies be described as thieves for accepting taxpayer subsidies to 'protect' local workers while concurrently slashing jobs?

This week Ford said it was shedding 440 jobs. In April, Toyota sacked 350 workers. Holden cut its casual workforce in February. Meanwhile, the industry has collected billions of dollars under successive governments to help it stay afloat.

The Gillard government is doling out $5.4 billion of our tax dollars to help the sector until 2020, selling it on the promise that it will 'protect jobs'.

In providing tens of millions of dollars of support, the Baillieu Liberal and Weatherill Labor governments have mounted similar arguments. It was always a policy destined to fail.
Advertisement

The excuse for the lay-offs and falling profitability by local car manufacturers has been the high Australian dollar - it makes Australian exports less internationally competitive. But the far bigger factor is that the sector is wed to producing cars that no one wants in Australia and overseas. According to the government's own data between 2003 and 2010, the number of passenger motor vehicles sold in Australia has sat around 600,000 annually. In the same period imports purchased by Australians have gradually risen from 60 per cent to nearly 85 per cent. The trend began well before the dollar rose against other currencies.

With rising petrol prices, price-sensitive consumers are buying smaller, fuel efficient cars. Ford, for example, makes large cars. As a result of escalating subsidies the local industry has been insulated from the realities of the marketplace and hasn't built cars people want.

Since the 1980s, the industry has been forced to adapt as successive governments have progressively reduced tariff rates to make it more internationally competitive and outward looking. But that objective has been compromised. Governments have introduced and increased subsidies to reflect any loss by the industry with each successive tariff cut.

In his March speech to Wesley College, Paul Keating bemoaned how this process stopped economic adjustment. But the Australian car industry was always destined to fail because it was built off the back of artificial government protection. In a free market economy only an industry built off the level playing field of market forces can be sustainable. The government has also imposed unjustifiable Australian specific standards that foreign car companies love because they lock out competitor models without expensive adjustment.

Similarly, state and federal governments have preferential Australia-made car purchasing arrangements that provide an indirect subsidy and demand for vehicles. So long as an industry needs preferential trade, tax and regulatory arrangements to be sustained, it will always be unsustainable and turn to the government to be profitable. The perfect example is Holden in 2011, when it reported a profit of $89.7 million. That's the the same figure Holden collected in subsidies.

When big government and big business get together, taxpayers should protect their soon-to-be-raided wallets. And every dollar misdirected through tariffs and subsidies is a dollar lost towards creating and perpetuating sustainable industries. These are sustainable jobs that could employ former car industry workers. After helping workers move away from the sector, the most important thing for government to do is not repeat the mistakes of the past. But they are, by now tagging subsidies as ''co-investment''.

In the past, subsidies were designed to help the industry adjust to a lower tariff environment. Co-investment takes taxpayers' money and gives it to buttress the profits of multinational corporations. It's reverse Robin Hood stuff. Co-investment is also designed to perpetuate unsustainable business models. Politically, co-investment is a complete repudiation of the Hawke-Keating legacy of structural adjustment to get the government out of the heart of the economy.

In light of the recent job cuts, the Abbott opposition has announced if it comes to power it will review subsidies and introduce benchmarks. They are not enough. Both sides of politics should commit to this automatic industry subsidy package being the last.

Committing to an end to subsidies would send a powerful message to a new generation of workers not to gamble their futures on an unsustainable industry. Oh, and taxpayers win too.

Tim Wilson is director of the Free Trade Unit at the Institute of Public Affairs.

Read more: http://www.theage.com.au/opinion/pol...#ixzz21ObCiurH

[SB076]

Originally Posted by Wretched

You want an example of innovation just look at Mondeo and Focus. Each model is far better in almost ALL areas than its predecessor, i can't say that about Falcon.

But they are not selling that well either. A Toyota Corolla I would argue isn't that innovative, however it outsells a Focus.

I don't think car subsidies are a bad thing, provided they are used correctly and have conditions attached. The government (even though I dislike them) know we are better off with an automotive industry that without.

[prydey]

Originally Posted by johnydep

You do have a say on how Governments spend our tax dollars! Everyone has a say on how Governments collect and spend tax dollars! The electorate,

oh, please,

cmon, you're smarter than that!! govt's will spend the money how THEY want.

[johnydep]

Originally Posted by prydey

oh, please,

cmon, you're smarter than that!! govt's will spend the money how THEY want.

I take a keen interest in politics and economics, was a favourite subjects of mine. Governments will take as much rope as you allow them, most will try get that little bit extra, but no democratically elected political party will go unpunished at some point for poor decisions, stupidity, greed, etc.

Go to a library and borrow a few history books, you can go all the way back to federation, or as recently as Paul Keating's L.A.W. tax cut promise. Won't be long before Julia Gilard goes into the history books for her failed promise - "no Carbon Tax under my Government".

Please, don't be one of the sheep. People power is powerful, some Governments may spend our Tax dollars "how they want". but they'll pay for poor decisions and waste on election day.

Originally Posted by http://www.theaustralian.com.au/news...-1226432215596

AT the heart of Labor's problems is its reaction to the 2010 election. In that election, voters swung to the Right, but thanks to Julia Gillard's deal with the Greens, the government shifted sharply to the Left. Those opposing movements transformed a gap between Labor and the electorate into a chasm. And with voters sceptical of the Prime Minister's trustworthiness from the outset, that chasm now threatens to swallow Labor whole.

For ultimately, what is special to democracy is its insistence that it be the people who decide the direction in which the nation moves. Gillard ignored that in 2010; the consequences could haunt Labor for years to come.

[jpd80]

Originally Posted by SB076

But they are not selling that well either. A Toyota Corolla I would argue isn't that innovative, however it outsells a Focus.

I don't think car subsidies are a bad thing, provided they are used correctly and have conditions attached. The government (even though I dislike them) know we are better off with an automotive industry that without.

For so long, Focus and Mondeo have been supplied in restricted quantities from Europe
but now that Thailand has started build Focus it's hoped that volume will really start picking up.

Mondeo diesel is basically unobtanium from ford Europe, that's why FoA is advertising Ecoboost heavily discounted..

[Bossxr8]

I heard today they are predicting that the mining boom will be over in 2 years, but by then a large slice of our other industries will be gone, so, so much for riding on the mines back and expecting mining money to keep us all afloat.

[Wretched]

Originally Posted by SB076

But they are not selling that well either. A Toyota Corolla I would argue isn't that innovative, however it outsells a Focus.

I don't think car subsidies are a bad thing, provided they are used correctly and have conditions attached. The government (even though I dislike them) know we are better off with an automotive industry that without.

That's a little too simplistic to compare.
You need to look at availability of the product, european Fords are known to be scarce with long waiting times, even VW has that issue.

Then you need to look at reputation, deals made (Toyota have good finance offerings), servicing, insurance and even personal preference.

[Nikked]

If it wasn't for govenment monies, the first "australian" car, the 48-215, would not even been created...

[KIWI-1]

Originally Posted by SB076

But they are not selling that well either. A Toyota Corolla I would argue isn't that innovative, however it outsells a Focus.

I don't think car subsidies are a bad thing, provided they are used correctly and have conditions attached. The government (even though I dislike them) know we are better off with an automotive industry that without.

Why? ? ?

[KIWI-1]

Originally Posted by Nikked

If it wasn't for govenment monies, the first "australian" car, the 48-215, would not even been created...

The 48-215 was a rejected Chevrolet, about as Aussie as a peanut butter and jelly sandwich!

[bobthebilda]

Originally Posted by Bossxr8

I heard today they are predicting that the mining boom will be over in 2 years, but by then a large slice of our other industries will be gone, so, so much for riding on the mines back and expecting mining money to keep us all afloat.

I think it was the boom part of it will be over. That is all the mine development / creation will be over. We will still be left with all the current mines (up to that point) that will be exporting just as they are now, employing all the same people they do now. The people who wont be employed in two years time will probably be all the foreign workers they fly in to build the infrastructure for the new mines (you know those foreign workers we fly in for $100,000 jobs, when we subsidise those $50,000 jobs for the car workers).

You simply cant ride on the back of an industry that costs you more to run than it makes for you.

[Nikked]

Originally Posted by KIWI-1

The 48-215 was a rejected Chevrolet, about as Aussie as a peanut butter and jelly sandwich!

hence the " "...



But, it was still a car funded by Australians, for Australians, and not built anywhere else but here.

[Franco Cozzo]

You know what annoyed me this morning, we've got a government car come in, for us to look at as we might be doing all the flashing lights/sirens for the next few, I think Victoria Police.

$110,000 VW Tourag (spelling), they should be in Ford Territory, buy two for that price.

[SB076]

Originally Posted by Wretched

That's a little too simplistic to compare.
You need to look at availability of the product, european Fords are known to be scarce with long waiting times, even VW has that issue.

Then you need to look at reputation, deals made (Toyota have good finance offerings), servicing, insurance and even personal preference.

I suppose that's the point I was trying to make, I dont know why Ford sales are low, apart from the fact less people are willing to part with there hard earned for a new Ford. In reading the forums the responses vary, some will say poor marketing, some will cite a bad experience, some will suggest the product mix or offering is incorrect.

@ KIWI - 1 I presume you are questioning why the we are better off with an Automotive industry, I am suggesting the jobs the industry creates (both direct and indirect) outweigh the costs of supporting the industry. Plus even though the three remaining companies are overseas they (and their suppliers) still pay tax here (and there are different forms of tax and revenue that the government collects)

[KIWI-1]

How would forcing the Government to 'Buy Australian' help Ford?

They would only buy Holden Cruze and Toyota Camry Hybrid due to fuel economy and CO2.

[vztrt]

Originally Posted by Big Damo

You know what annoyed me this morning, we've got a government car come in, for us to look at as we might be doing all the flashing lights/sirens for the next few, I think Victoria Police.

$110,000 VW Tourag (spelling), they should be in Ford Territory, buy two for that price.

There are plenty of terri cop cars. Its the lack of Falcon cop cars out there that's sad...mind you seen a few undercover turbo's running around.

[Buntz]

Originally Posted by Bossxr8

I heard today they are predicting that the mining boom will be over in 2 years, but by then a large slice of our other industries will be gone, so, so much for riding on the mines back and expecting mining money to keep us all afloat.

Yeah that's the Government for ya. Too busy with their heads down, snout in trough, to look up and see that disaster is imminent.

With a slowing Chinese economy - being run down by arrogant, prideful, communists - that comes back to buy everything we dig up in dutch-disease Australia, and a Government that is failing to take measures of protecting local manufacturing... Australians that never knew the effects of the GFC - which was probably most of us - will probably be feeling the pain in the not too distant future.

Sad to think on. But not unbelievable. If China goes down, we are going to go down with it.

[JG34JA]

Here's a link from Bloomberg today:

http://www.bloomberg.com/news/2012-0...mports-1-.html

Let the washing machine wars begin

[tezxr8man]

Originally Posted by Wretched

Ok so what are the car makers doing to justify this continued support?
Where are their plans to expand their market share whether through exports or new products?
What is Ford doing with the Falcon and Territory? Are they to simply rely on government dept buying the cars? Is that really sustainable?

I am not happy to continue supporting a business that will not innovate or attempt to expand market share.

Why can't you be happy to buy Australian made bacause it's Australian made and not because they are trying to conquer the world? they can't even hope to gain market share in this country when everybody buys imported everything because Australian isn't good enough. if we don't buy our own how can they invest to make it better

[Wretched]

Originally Posted by tezxr8man

Why can't you be happy to buy Australian made bacause it's Australian made and not because they are trying to conquer the world? they can't even hope to gain market share in this country when everybody buys imported everything because Australian isn't good enough. if we don't buy our own how can they invest to make it better

I'm not interested in the local product because I don't need a large sedan, ute or SUV. Even then I am not blinded by one brand or country of origin. I buy what I perceive to be the best value for my $$ that also suits my needs.
A car may be a small purchase for you but for myself and others it is a significant purchase that requires thorough investigation to ensure the large amount of money being spent is done so wisely.

Ford AU is not a singular company it is part of an international multi billion dollar company. They should not be relying on government handouts or purchases to stay afloat. A good product range and business plan would ensure success among other variables. I am not seeing this with Ford AU. What are they doing to increase sales and in turn increase their revenue and later on make profit? They're making the same products and not really interested in adapting to change. The ecoBoost is the right step that should have been done when FG was introduced. This is what the product planners and marketing team are there to do.

If they want the government assistance, fine, then earn it.

[turbodewd]

Admittedly the OP is written by a union leader who is trying to keep the jobs of his members safe.

But nevertheless the auto industry is massively lucrative. I believe its the 2nd most valuable after oil globally. Indeed after crude and refined oil, autos are our 3rd largest area of imports by value. If it can be shown that govt support to Ford, Holden and Toyota has net benefits for the AU economy then Im all for it.

Im very happy with my XR6 Turbo. I want effortless power in an auto and I get in spades along with respectable economy. Nothing in the world comes close for under 50k in RHD.

[aualright]

Originally Posted by johnydep

I take a keen interest in politics and economics, was a favourite subjects of mine. Governments will take as much rope as you allow them, most will try get that little bit extra, but no democratically elected political party will go unpunished at some point for poor decisions, stupidity, greed, etc.

Go to a library and borrow a few history books, you can go all the way back to federation, or as recently as Paul Keating's L.A.W. tax cut promise. Won't be long before Julia Gilard goes into the history books for her failed promise - "no Carbon Tax under my Government".

Please, don't be one of the sheep. People power is powerful, some Governments may spend our Tax dollars "how they want". but they'll pay for poor decisions and waste on election day.

Yet middle class welfare seems to be entirely acceptable. I would rather the govt put money into industry of any type rather than dole out welfare to those of my ilk who don't really need it. Childcare rebates, Private healthcare rebates, child endowment, reductions in the rate of CGT, diesel fuel rebates, tax exemptions on imported 4WDs, soon to be Private School fees rebate..the list goes on.

Yet we'll whinge about unemployment benefits for a very few? Seems like middle class welfare is the biggest vote winner of all which isn't really fair now, is it?

****

[turbodewd]

Originally Posted by aualright

Yet middle class welfare seems to be entirely acceptable. I would rather the govt put money into industry of any type rather than dole out welfare to those of my ilk who don't really need it. Childcare rebates, Private healthcare rebates, child endowment, reductions in the rate of CGT, diesel fuel rebates, tax exemptions on imported 4WDs, soon to be Private School fees rebate..the list goes on.

Yet we'll whinge about unemployment benefits for a very few? Seems like middle class welfare is the biggest vote winner of all which isn't really fair now, is it?

****

Middle class welfare is a rort and should be scaled back. The Feds are doing this, i.e have made vehicle leasing FAR less attractive. So much so that I wont take out another.

Bludgers on the dole or those with fake back injuries are just as bad. Im all for a social safety net, but its gotta go those in genuine need.