Ideas@TheCentre
Car industry handouts are childish
An article in the Australian Financial Review last week opened with a question to the prime minister from a Ford Australia worker: ‘Will I have a job in 2016?’ The question came after Julia Gillard announced an additional $34 million in emergency subsidies to assist the automobile industry for another four years.
The question raises several unnerving issues about this particular worker and society in general: the blatant self-interest of an appeal for handouts, the disregard for the property of his fellow citizens, or the short-sightedness of what is effectively a bailout policy. Perhaps most striking is the sheer immaturity of a grown man demanding a job from his prime minister, like a child demanding a gift from Santa Claus.
Gillard is not Santa Claus, and she’s not giving away her own money. She is spending taxpayers’ funds, and this money is first confiscated from hardworking Australians before being doled out.
Of course, this sort of attitude is not uncommon among subsidised industries, and to some degree, it is to be expected. Car manufacturing in Australia has been protected and shielded from market pressures since its inception – either by tariffs, subsidies or both.
The economic arguments against industry subsidy are well known and well understood. They reward poor business practice, perpetuate reliance on handouts, waste valuable revenue on economically unviable projects, and prevent important structural adjustment.
But putting the economic arguments aside, policymakers and politicians should expect that after receiving assistance for half a century, employees not only grow dependent on handouts but begin to feel entitled. When subsidies are continually renewed, it is not hard to see why employees hold the government responsible for their employment circumstances rather than themselves.
Government should terminate these wasteful and corrosive subsidies and allow the employees of companies like Ford Australia the opportunity to finally bite the bullet and search for more economically sustainable and stable employment.
Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.
