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Losing the car industry means we risk our technology

As I’ve argued before and it’s generally accepted, the car industry is a critical part of Australia’s science and technology base. The sector spends A$600 million a year on R&D and another $800 million…

The link between manufacturing cars and developing technology has been fundamental in Australia. AAP

As I’ve argued before and it’s generally accepted, the car industry is a critical part of Australia’s science and technology base. The sector spends A$600 million a year on R&D and another $800 million on buying inputs from the computing, engineering and consulting industry. So it’s a major producer and user of knowledge.

It also supports an incredibly diverse array of technologies, such as light metals, computerised machining, electronics, chip manufacture, plastics, chemicals, metallurgy, and a diverse range of robotics - technologies involved in assembling cars or making the components in cars.

All that will be lost with complete shutdown of the industry. There will be some of the auto component makers who are trying to diversify out, but a lot of those will fail, due to the sheer difficulty of innovating out of the auto sector. It really is a very difficult exercise to identify a new market and diversify into that market. It requires a lot of innovation and clever management.

Its affect on job creation

One of the positive aspects (in managing the transition away from a reliance on the car industry) is the long lead time on the three year shutdown. However, it’s important to note that is a maximum and it could well be - and appears to be happening at Ford - that the actual cessation of production could happen before that.

The critical aspect of labour redeployment is it very much depends on the quality and effectiveness of the measures put in place. What we know from many academic and government studies of redundancies in the Australian and global car industries is that it’s not a pretty picture.

As a rough rule of thumb, one third of workers will cease work altogether - they will retire, or go on the dole or the disability pension - or get a job at a lower level of work at lower wages and conditions, in either part-time or casual work. Another third will gain work in an equivalent or possibly higher level.

There are 45,000 people employed in the auto sector in what are reasonable quality jobs - mostly full time, with average weekly earnings and reasonable job tenure and a career path as well. What we know from our study for the Mckell Institute is the flow of new jobs into the economy over the last four decades has had mostly undesirable characteristics, such as the development of part-time casual jobs, contract work. Many automotive workers end up in retail, hospitality or aged care, cleaning, or security guard work.

About 80-90% of net employment growth - that is, hours worked - over the last four decades has been in industries with below-average productivity. This is one of the ironies. The Productivity Commission argues that getting rid of assistance to the motor vehicle sector will raise productivity across the economy, but misses the whole point. The reality is that it will almost certainly lower it.

Some sectors more deserving of assistance than others?

A really important thing to remember is the scale of the assistance to the sector. The Productivity Commission estimates the net value of assistance to the automotive industry is A$1.1 billion, calculated by the dollar equivalent of the tariff plus the direct budgetary assistance, or the cash transfers. But the actual value of output of the sector is around $21 billion. That is not a bad return of funds invested - the assistance is about 5% of the total output.

To put this in perspective: each year the ATO puts out a report which shows the value of the tax foregone for various industries. The 2013 report showed the superannuation industry received A$33 billion worth of tax concessions. This tax foregone was made up of the contributions on superannuation which taxed only taxed at 15%, and concessional tax on capital gains paid by super funds, which is also taxed at 15%. In addition there is the zero tax paid by those receiving a superannuation pension.

Then there is the $1.5 billion private health insurance rebate; or the $4 billion mining diesel fuel rebate. These are not classified by the Productivity Commission as industry assistance - while its definition would appear to include that, it seems to have made an arbitrary decision not to include a lot of these tax expenditures or define them as assistance.

What is going on here is almost certainly a quite conscious move to dismantle the whole post-war reconstruction view of the state and its active role in industry policy - it’s clearly a repudiation of that world view. In effect what we’re going to end up with in terms of our export base is regressing to a 19th century model of unprocessed agricultural and mineral resources.

Join the conversation

219 Comments sorted by

  1. Trevor Kerr

    ISTP

    That's a doleful conclusion, Phil. Of course, political leaders are saying "O, no, not at all. We, as true-blue Aussies, own a deep well of untapped innovations, all we need do is restructure somewhat." Yeah? How did Perestroika turn out? Govt is flat out denying the facts of unsustainable, Soviet-like industry patronage as listed here. Unless the mythical (foreign-born) fairy godmother pops up on the scene, the negative-gearing industry is looking awkward, for one.
    Govt's first tasks ought to…

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    1. Peter Redshaw

      Retired

      In reply to Trevor Kerr

      Tony Abbott has said the private sector will create all these jobs in new industries to replace these jobs that are to be lost. But he has not said how and where. What he has said is the the private sector cannot expect any largess from the government to help support and drive these new industries and jobs. I have one problem with that argument. I have not seen that work anywhere in the world.

      The economies of every modern economy has been based on a relationship of government working with…

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    2. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to Peter Redshaw

      The Abbott government appears to be implementing a laissez faire, free market,small government ideology, beloved of the IPA. They are rapidly shaping up as one of the more extreme governments in the history of this country.

      It will be an interesting economic and social experiment.

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    3. Daniel Boon

      logged in via LinkedIn

      In reply to Peter Redshaw

      Abbott & Co wanted the top job because - to their mind - it afforded them an opportunity to rearrange the management of Australia; their economic ignorance prevented them for seeing that they are holding the last of an economic chain letter ...

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  2. Jack Ruffin
    Jack Ruffin is a Friend of The Conversation.

    logged in via email @hotmail.com

    On your figures Phil, there seems to be a good case for continued support for the car industry. Was our government's policy more concerned with ideology than reality? They were certainly taken by surprise.
    I feel for all the workers and their families.

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    1. Adam Johnson

      n/a

      In reply to Jack Ruffin

      Agree Jack and have seen figures elsewhere (can't find them again lol) which showed the cost of losing the industry against the benefit of retaining it by providing assistance.

      There will be a high cost for each job lost and a high cost for each industry lost. It certainly isn't economically wise to leave the industry go and it is adverse for our future. Purely an ideological position/decision from the government.

      I don't think they were taken by surprise as much as they didn't care what happened. One of the first things Abbott should have done as PM was to get on the phone to Holden and Toyota and start meaningful discussions to find the best way forward. But, in reality, he just wasn't interested.

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    2. R. Ambrose Raven

      none

      In reply to Jack Ruffin

      Our government's policy is more concerned with class warfare, whatever the reality. Brutal Austerity is the whole idea - it is being practiced in Europe and the U.S. with religious zeal.

      In Europe and the U.S. the filthy rich – the 0.1% - have done very very well from brutal Austerity; to plunder similarly here, they need to inflict similar pain. Therefore, as representative of the filthy rich and of transnational capitalism Abbott the Hun's agenda (equally driven by Hockey the Hatchet-man…

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    3. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to R. Ambrose Raven

      You are probably correct about the likely outcome of "Hockeynomics", but I don't think that Abbott INTENDS to wreck the economy so as to further advance the interests of international capital. After all, with no economy at all, transfer of wealth from the bottom of society to the top also ceases. Connect the dots: there is a huge increase in wealth at the very top of society and a (corresponding?!) huge increase in private and public debt.

      I think that Abbott and hockey just never bothered to think things through properly. They, and all too many others, just accept unquestioningly standard hand-me-down neo-con economic orthodoxy.

      I've read Tony's book: not exactly scintillating stuff.

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  3. John Crest

    logged in via email @live.com.au

    Hi Phillip, what sort of car do you own?

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    1. David Arthur

      resistance gnome

      In reply to John Crest

      While I can't speak for Phillip Toner, I can confirm that like many Australians I have never owned a family-sized 6-cylinder sedan. My circumstances are such that such a vehicle would not well match my requirements or preferences.

      The major failing of the Australian vehicle industry is that, while under foreign ownership and control, it has never sought to satisfy demand from vehicle owners such as myself with Australian-built vehicles.

      Once Toyota is departed from Australia, the way will…

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    2. Lee Hatfield

      logged in via Facebook

      In reply to David Arthur

      i quite agree with that. i have a navarra, former fleet vehicle. low milage, cheapish,well maintained., no electric doors and windows.exactly what i want! my daughter has a girl car. small , cheap, red getz. we often swap cars, depending what we are doing,holden made nothing that was as useful and cheap. i have never had one.i live in a wet boggy part of victoria.she lives in the town.they never kept up with the times...people don't want big cars with limited abilities anymore.they don't have large families. they like camping , fishing and boating,etc,or have a farmlet, or dogs. maybe horses. parking is easier,too, for city folk with a small nippy car,

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    3. David Arthur

      resistance gnome

      In reply to Lee Hatfield

      My prediction is, if given the contract to supply public sector fleet vehicles, the aXcess consortium of Australian-owned and based components manufacturers will mass-produce (on a site and with a workforce abandoned by any/all of Ford/Holden/Toyota) its Mk III: a small, nippy city vehicle, either hybrid (biofuel compatible) or full electric.

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  4. Christopher Seymour

    Business owner at Location

    There is something a bit wonky with your figures. Actual number of cars manufactured in Australia is around 200,000. If the industry is really worth $21 billion, that makes it $105,000 per car. If true this would go a long way towards explaining the demise.

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    1. R. Ambrose Raven

      none

      In reply to Christopher Seymour

      FYI the industry is foreign owned, part of a globalised network. They made here what Head Office permitted them to make.

      I hope you manage the numbers in your business better than you do here. You are comparing annual manufacture with an undefined "worth", then deriving a profound conclusion. It goes nowhere in explaining the demise. You'd better check your own performance if you don't want your own business to follow that example.

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    2. Peter Horan

      Retired

      In reply to Christopher Seymour

      Your calculation ignores the multiplier effect of a dollar being spent several times down the supplier chain.

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    3. Christopher Seymour

      Business owner at Location

      In reply to R. Ambrose Raven

      The actual claim in the article was
      "But the actual value of output of the sector is around $21 billion."
      The sector we are talking about is the manufacture of cars in Australia.
      The author doesn't specify that this is an annual figure, but the context suggests it is.
      With 200,000 cars being manufactured, $21 billion divided by 200,000 is $105,000 per car.
      You certainly wouldn't get a job in my business because comprehension skills are needed.
      For a viable business manufacturers need to make cars for less than $20,000 each.
      A better use for the $1.1 billion spent on assistance would have been to have given every buyer of an Australian made car $5,000. That way we could have appreciated clearly the cost of keeping these jobs.
      Subsidising one industry isn't costless - the increased taxes necessary to provide subsidies are a drain on every other industry.

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    4. Christopher Seymour

      Business owner at Location

      In reply to Peter Horan

      The multiplier effect usually means the added effect of wages or purchases in the local economy. But the $21 billion is not the spending on wages or supplies. Its the value of the total output of the industry. There is nothing left over for multiplier effects. The multiplier effect of this industry is less than unity.

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    5. Christopher Seymour

      Business owner at Location

      In reply to Christopher Seymour

      The government's own website on the car manufacturing industry (http://www.innovation.gov.au/industry/automotive/Pages/AbouttheAutomotiveIndustry.aspx) claims that in 2011/12 , the value added was $5.4 billion. In the same year the website reports that 145,000 cars Australian made cars were sold in Australia. The site does not report on the number exported but an article in the Age (http://www.theage.com.au/national/vehicle-exports-slump-20120202-1qvnv.html) claims 70,000, earning $2.1 billion…

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    6. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to Christopher Seymour

      Interesting comments. Do we need to get The Conversation to run a Fact-Check?

      However, regardless of how the actual figures stack up, there will remain a fairly big hole, as far as employment and income is concerned, and very little convincing planning of how to fill it.

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  5. Laurie Strachan

    Writer/photgrapher

    Though I can find little about Abbott and his crew to like, the destruction of the car industry isn't their fault. The Button Car Plan was introduced around 30 years to fanfares from the media and no one seemed to notice that it was simply a way to start winding the industry down and eventually closing it.
    What's more important for Australia - the right to buy a cheap Volkswagen or the loss of our manufacturing and engineering base and reversion to a pre-industrial society?
    For 30 years I've listened to neo-liberals saying there are more efficient ways to use our skills and capital and never heard a single suggestion as to how.
    Ideology triumphs over sense, driven of course by the rich who get richer all the time.
    It was long ago time to wake up to this nonsense, Now it's too late.

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    1. Adam Johnson

      n/a

      In reply to Laurie Strachan

      Laurie, I agree with you in part regarding Abbott's role in the loss of car manufacturing. But two questions need to be asked of Abbott who is in the role of prime minister:

      a) What did he do to help the industry?
      b) What did he do to hurt the industry?

      He and his treasurer basically dared and bullied Holden to leave even before the relevant inquiry had released its findings. And he has done nothing to help them stay at all. His attitude towards manufacturing etc is evidenced by his approach to SPCA. He is responsible for his own actions and decisions. He cannot avoid responsibility by using the old "it was like that when I found it" trick.

      In time we will see just how disastrous the loss of manufacturing will be for Australia.

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    2. Garry Baker

      researcher

      In reply to Adam Johnson

      "" He and his treasurer basically dared and bullied Holden to leave even before the relevant inquiry had released its findings.""

      Exactly, Hockey's prime focus was a media display showing how tough he was - A stop the waste mantra

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    3. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to Adam Johnson

      Abbott and Co have sought to label Bill Shorten "electricity Bill".

      In turn, given the events over the car industry, SPC Admona and others on the lengthening list, I offer a few names for Mr Abbott: Rust-bucket Tony or Tumbleweed Tony.

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    4. wilma western

      logged in via email @bigpond.com

      In reply to Adam Johnson

      My theory is that the Toyota closure has actually taken Abbott and co by surprise . Abbott claims that he's "devastated"....but still goes on to blame the EBA recently agreed by Toyota itself, later challenged by them with help from the Abbott govt in a losing court case.

      The SPC Ardmona announcement of industry policy was a big victory for cabinet dries who won the argument by saying there was really no likelihood that SPCA would close - the co-investment plan would just increase CCA's return…

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    5. Adam Johnson

      n/a

      In reply to wilma western

      Wilma, you highlight some great issues and telling discussions in your post, ending with the biq question: "What if we are headed for a recession we didn't have to have?"

      The long-term implications of this government's thinking and decision making really concern me. Too many of their decisions have underlying ramifications and effects that will come as a shock. I have no doubt that if things continue in their current direction we will have a recession forced on us by our own government.

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    6. Daniel Boon

      logged in via LinkedIn

      In reply to Henry Verberne

      what about 'Abbott kicks the can down the road' ... or the country's prospects under the LNP depict a hockey stick upside down ..

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    7. Terry Reynolds

      Financial and political strategist

      In reply to Henry Verberne

      Henry, as Abbott consistently repeats everything he says, should we not call him "Two-Time Tony?"

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    8. Garry Baker

      researcher

      In reply to wilma western

      " What if we are headed for a recession we didn't have to have? ""

      Wilma, you can remove the "What if" expression altogether

      Economists and politicians can mull over their fanciful ideas all they like about replacement industries and occupations - But it ain't going to happen.

      Yes we know Mr Abbot harbors a few dreams about his own brand of a Wirtschaftswunder - but he and his ilk aren't made of the stuff to get anywhere near it - Indeed, his tribe will be gone from politics (as Rudd…

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    9. David Arthur

      resistance gnome

      In reply to Laurie Strachan

      "For 30 years I've listened to neo-liberals saying there are more efficient ways to use our skills and capital and never heard a single suggestion as to how."

      Thanks for this, Laurie, I've always wondered why I've come away from dialogue with neo-liberals in some dismay.

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  6. John Lyons

    Professional Engineer

    Philip, there certainly does appear to be a plan, shared by both main political parties to revert to a 19th century economy. Stefan Jacoby (the GM executive who decided to close Holden) cited only one factor affecting his decision which was under the direct control of the government; the determination to have free trade agreements (with every low cost manufacturing country in the world).
    However, when looking at the automotive industry, we need to separate manufacturing from product engineering…

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  7. David Arthur

    resistance gnome

    You do realise that one way of 'closing the gap' between Indigenous and non-Indigenous Australians is drive all industry out of the country?

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  8. Comment removed by moderator.

    1. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to account deleted

      I like the argument of the author of this article better. Less ideology being pushed, more evidence to back up his assertions.

      I disagree that the article is all over the shop: he illustrates that superannuation tax concessions are much greater than for the car industry.

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    2. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to account deleted

      Ah yes, it's all the unions fault, never mind that some time ago they persuaded SA Holden workers to accept a freeze and cuts to wages and entitlements. Or that the Australian market is now one of the least protected on the planet. And decisions made by parent companies in the US have not favoured their market or ours, (too little too late). But keep using the word union, combined with ALP, and you nicely deflect the premise of this piece, which is that the impact of losing this industry totally…

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    3. In reply to Alice Kelly

      Comment removed by moderator.

    4. Peter Heffernan

      Chartered Accountant and Employer

      In reply to account deleted

      Michael, refreshing to read a rational comment amongst all the hand wringing uninformed economically illiterate and socialist pap. Phillip's article is all over the place - doesn't know what he wants to say, just intellectually sounding motherhood comments with no evidence of a serious policy direction and suggestions he believes the Government should take up.
      Worse though is the BS being peddled in this debate which is simply appalling. Here we have an opposition leader trying to be taken seriously…

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    5. Michael Shand

      Software Tester

      In reply to account deleted

      Public funding for manufacturing 20th century technology no less - if companies simply refuse to evolve and insist on continuing to make petrol cars then at some point they are going to hit a brick wall regardless of how much money we give them

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    6. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to account deleted

      Thanks Mike, I'm sorry but didn't deregulation of the car industry start with the 'Button Plan' in the 80's, and haven't both parties been watching it's decline ever since? Also I think we rely too heavily upon skilled migration, there are longer term approaches which could achieve industry outcomes by further skilling the Australian workforce, as other countries do. Competing with China is an issue which could be taken head-on. Solar panels are cheap, but this isn't the only issue here surely? The amount of skilled people and innovative industry which has left Australia because the political will has not been favourable to them for the last twenty + years has been staggering. And we are allowing this to happen again, after just one year of the implementation of the carbon tax and the clean energy finance corporation being in place. This industry if left in place could be one antidote to the loss of the car industry surely. Both at once?

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    7. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Peter Heffernan

      as a socialist pap... and those figures from the oz includes spending on education by the company and government to train their workforce to make beautiful cars everyone on the planet wants? Or has she ignored the issue.
      What is the level of education spending per person in these industries in Sweden and Germany which contributes to the wealth of these companies and countries?

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    8. In reply to Alice Kelly

      Comment removed by moderator.

    9. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to account deleted

      Fair enough Mike, we can agree on some of this 'stuff'. I never mind a bit of an argument, and thank you for your considered politeness. I see this as a deeply complex problem, which deserves an informed whole of economy response. Governments of both persuasion have a history of reducing issues to slogans, tinkering at the edges, or making bad decisions. Conversation can be good though. thanks.

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    10. wilma western

      logged in via email @bigpond.com

      In reply to account deleted

      In 2012 Toyota and Gillard announced plans to produce a new hybrid engine in OZ.Unionised Holden workers suggested and agreed to reduced work conditions.

      Don't let facts interfere with your story.

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    11. wilma western

      logged in via email @bigpond.com

      In reply to Peter Heffernan

      Subsidy per vehicle is not the same as subsidy per worker. Did Ms Sloan divulge the subsidy per Canadian vehicle ? Did she look at the economic and social costs of the wasteland that is Detroit? Did she examine how much of the greenfields southern US car plant workforce is made up of illegal migrants paid a pittance? When the minimum wage is just over $7 per hour of course costs and subsidies are lower.

      And of course the real problem according to Peter is workers wages- not the high dollar, free trade agreements and the small Oz market, so he and mr Abbott apparently know nbetter than the car company head offices what the problems are for unsubsidised car manufacture here.

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    12. wilma western

      logged in via email @bigpond.com

      In reply to account deleted

      Michael it's pretty obvious you know little about the whole of the auto manufacturing industry in OZ,including the high-level design/engineering sections and parts makers . very vocal about the ideology though .

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    13. Terry Reynolds

      Financial and political strategist

      In reply to account deleted

      Mike, stick to engineering for goodness sake!

      Whether, the Government foregoes revenue by way of the massive tax concessions of $30 billion per annum on superannuation, $4.5 billion on the mining diesel fuel rebate or pays out $0.6 billion a year to assist Ford, GM and Toyota to maintain a car manufacturing industry in Australia it all means that is money the Government cannot put away into Treasury and meet our other costs of Government.

      The Government expenditure is 24% of our $1.5 trillion…

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    14. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to account deleted

      Where did I say or infer that I wanted my super "hijacked"?

      The article made a comparison between the generous tax concessions given to super (with no cap on the earning of the funds) and the reluctance to spend money on retaining a car industry or seeing it die-along with thousands of jobs, direct and indirect.

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    15. Henry Verberne

      Once in the fossil fuel industry but now free to speak up

      In reply to account deleted

      Yes and industry super funds have an enviable record in achieving better after-fees returns for its members.

      But the large funds, renowned for creaming off large commissions of themselves and some financial advisors do not like that- may impact on their profits and rent-seeking?

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    16. Mike Stasse

      Retired Energy Consultant

      In reply to account deleted

      0-100 in 6 seconds..... just what I need to go to the shops.

      Imagine if the same car had just enough power to do 0-100 in 12 seconds..... maybe it's do 3L/100km...

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    17. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to account deleted

      You seem to think of technological innovation as a reliable main driver for job creation. I really can't see that happening. What new products (gadgets, widgets, fads) could possibly take the place of automotive manufacturing, employing large numbers of workers at rates of pay that enables them to participate meaningfully in Australia's economy?

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    18. Terry Reynolds

      Financial and political strategist

      In reply to account deleted

      Mike, for anyone with a modicum of comprehension my post was quite clear.

      Oil at $9 a barrel was the world price in 1999 and that spelt the death knell to the attempt to build electric cars in the US by GM. The fact that because of the Iraq War and 9/11 the price of oil shot up to US$150 a barrel, was to demonstrate the difficulty for the chiefs in Detroit to decide what size car and engines to make. The are market driven. Hence from about 2020 when the US has installed its natural gas pipeline…

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    19. In reply to Mike Stasse

      Comment removed by moderator.

    20. Mike Stasse

      Retired Energy Consultant

      In reply to account deleted

      Fact of the matter is, the US economy was ONLY ever based on cheap and abundant fossil fuels. Until 1964, the US was the largest oil producer with the biggest oil reserves in the world. It also had more coal than even Australia....

      Renewable energy "fuels" can only be achieved with said cheap and abundant fossil fuels.

      With fossil fuels, you can do ANYTHING..... even build renewable energy systems!

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    21. Mike Stasse

      Retired Energy Consultant

      In reply to account deleted

      Rubbish. Acceleration is directly proportional to power and mass... nothing to do with storage. I recently drove a Suzuki Alto (1L, 3 cyl) all over Tasmania and achieved 3.75L/100km. I defy you to get that on the highway with a Prius that is heavier and has a bigger engine...

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    22. In reply to Mike Stasse

      Comment removed by moderator.

    23. Mike Stasse

      Retired Energy Consultant

      In reply to account deleted

      I don't own a Suzuki, I rented one, and came away mighty impressed. I don't understand why you think I'm vicious about storage. Electric cars ALREADY out accelerate ICE cars.

      My point was that instead of craving acceleration, electric cars should be designed to be energy efficient, like gutless Suzuki that can do 900 km 0n $46 worth of petrol.......

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    24. In reply to Mike Stasse

      Comment removed by moderator.

    25. Peter Horan

      Retired

      In reply to account deleted

      One cannot operate a heat engine without having to discard heat energy. That is, the work produced must always be less than the heat energy fed in to the engine because the heat is discarded to the environment. The work available is limited by the "Carnot efficiency", and this cannot be exceeded.

      Large coal and oil based power stations can achieve 33%. Sophisticated combined-cycle gas fired stations can achieve perhaps 55% or so.

      Fuels cells are not so limited as they are not heat engines. They convert chemical energy directly into electrical energy without having to get rid of heat.

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    26. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to account deleted

      I'm pleased to read that theoretical energy can now be used to drive the combustion engine. The wonders of engineering. We no longer have to worry about peak oil and using all that real energy. I'm just wondering how many kwhrs of theoretical energy was used in reaching this conclusion ; )

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    27. In reply to Jeff Payne

      Comment removed by moderator.

    28. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to account deleted

      It was intended as a joke Mike. I was saying that it is not 'theoretical energy' but 'real' energy theoretically. You intended, and I'm just joking, what you have written is fine for communicating your point, but you intended, "theoretically there are 10kwhrs of energy available per litre" whereas you wrote "apparently there are 10kwhrs of theoretical energy available per litre". All strength to you Mike and wishing you well. I wrote this at like 11 o'clock at night. No offense intended and I'm sorry if I offended you in anyway. That is why I ended with a smiley face ; ).

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    29. In reply to Jeff Payne

      Comment removed by moderator.

  9. Daniel Boon

    logged in via LinkedIn

    I don't accept the statement "it’s generally accepted, the car industry is a critical part of Australia’s science and technology base" at all ...

    Chrysler, Ford and GMH (as an example), all used antiquated suspension systems and old technologies in the cars they sold us; it was the realization that we could buy superior, safer cars and in some instances cheaper ...

    They did not address fuel efficiency, reduce the size of their locally produced cars to meet the needs of the buyers ... what were these 'industry leaders' thinking as they drove to and from their offices, surrounded by smaller, better equipped cars?

    It was the free cash from Canberra arranged by pork-barreling politicians and their spin knobs quoting the 'jobs, jobs, jobs' mantra ...

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    1. Mike Stasse

      Retired Energy Consultant

      In reply to Daniel Boon

      I have to agree. My 17 year old Citroen has better technology in it than any Falcon or Commodore......

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    2. Eric Ireland

      logged in via Facebook

      In reply to Daniel Boon

      Camry Hybrid is very fuel efficient, especially when you consider the size of the car. The Vic state government tried to get Ford to make the Focus here, without success. Maybe the competition from overseas was too great. I don't understand how you can say locally produced cars are antiquated or under-equipped. As far as I can tell, they have similar equipment to imported cars in the same price range.

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    3. Daniel Boon

      logged in via LinkedIn

      In reply to Eric Ireland

      did you read what you wrote Eric?

      efficient Camry, Vic government asks Ford to build similar car locally, (not done) and you don't understand why I say local cars don't meet the needs and are inferior ...

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    4. Courtney Dalionsleepstonite Cregan

      some guy

      In reply to Mike Stasse

      REally Mike? So your 17 year old citroen has multiple airbags, 4 wheel disc brakes, cruise control? It can shut down cylinders electronically when not needed making it as efficient as some 4 cylinder cars? traction control? crumple zones? blind spot alert? lane departure warning? forward collision alert? head up display? auto park assist? GPS? Internet connection? keyless entry? electronic start?
      The tired jibe that australian cars are poor quality is just not true anymore, and hasn't been for some…

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    5. Michael Shand

      Software Tester

      In reply to Daniel Boon

      Completely agree, 20th century tech in the 21st century is destined to go the way of the horse and cart

      How long do you keep propping up horse and carts manufacturers?

      When do we start propping up wind tower manufacturers like in Victoria?

      heaps of tears for cars, no assistance for wind towers

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    6. Michael Shand

      Software Tester

      In reply to Courtney Dalionsleepstonite Cregan

      Bottom line is they are all still petrol - that's done son, pack your bags and go home, this is the 21st century - for reals, it's time to evolve or go the way of the dinosuars

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    7. Mike Stasse

      Retired Energy Consultant

      In reply to Courtney Dalionsleepstonite Cregan

      Well, it only has one airbag.. but I've NEVER used airbags. 4 wheel disc brakes? Citroen were the first to do this in 1956. Cruise control? Pass...... I get better fuel consumption from my right foot control than any cruise control.

      My car will turn ALL cylinders off going downhill with a closed throttle. It weighs 1300kg, has a 2L engine, and regularly returns 7L/100km....

      crumple zones? Standard stuff on Citroen for well over 20 years.

      And WHO needs blind spot alert? lane departure…

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    8. Daniel Boon

      logged in via LinkedIn

      In reply to Mike Stasse

      courtney-asleep-at-the-wheel ...

      thanks for that Mike, there was stuff I wasn't aware of .., what do they sell for (as a matter of interest) ... (no BMW remarks please)

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    9. Mike Stasse

      Retired Energy Consultant

      In reply to Daniel Boon

      You can't buy a Xantia anymore of course.... and to get Hydropneumatic suspension you need a C5 or better, which cost ~$10,000 for a used one up to $48,000 for a turbo diesel w 6 speed auto and all the toys Courtney likes..! And it does 6L/100km!

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    10. In reply to Daniel Boon

      Comment removed by moderator.

    11. Courtney Dalionsleepstonite Cregan

      some guy

      In reply to Michael Shand

      I dont disagree, but that isn't the argument we are having here. Mike's sole argument is that a 17yr old citroen has more technology than a new commodore. That is blatantly not true, backed by any evidence what so ever. I am asking that some perspective be kept in this argument. It isn't a lack of quality per se that has caused the close of the industry, it is a multifactorial complex issue that cannot be boiled down to such simple heuristics.

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    12. Michael Shand

      Software Tester

      In reply to Courtney Dalionsleepstonite Cregan

      I have no opinion on which 20th century internal combustion engine car add more gimics, the closing down of the horse and cart operation was inevitable, these manufacturers could of designed the future but instead choose irrelevence by maintaining the status quo

      dinosaurs will die

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    13. Courtney Dalionsleepstonite Cregan

      some guy

      In reply to Mike Stasse

      Ah Mike, straight away you have had to resort to belittling people with jibes like " i suppose you've never even heard of that." How could you possible know what I have and haven't heard of Mike?
      let's examine the nuts and bolts of your comment shall we. your sole argument in your post was "My 17 year old Citroen has better technology in it than any Falcon or Commodore.." Something that is clearly not true based upon the list i outlined, which is by no means comprehensive or exhaustive. You made…

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    14. Mike Stasse

      Retired Energy Consultant

      In reply to Eric Ireland

      Hybrids are only ever superior in stop start traffic, and anyone driving in such conditions needs their head read...

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    15. Mike Stasse

      Retired Energy Consultant

      In reply to Courtney Dalionsleepstonite Cregan

      So, what were you saying about facts...?

      The first 100s (series "BN1") were equipped with the same 90 bhp (67 kW) engines and manual transmission as the stock A90, but the transmission was modified to be a three-speed unit with overdrive on second and top. The 2660 cc I4 engine featured an undersquare 87.3 mm (3.4 in) bore and 111.1 mm (4.4 in) stroke.

      Girling 11 in (279.4 mm) drum brakes are fitted all round. Front suspension is independent using coil springs and at the rear is a rigid axle with semi elliptic leaf springs. The steering is by a cam and lever system.

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    16. Courtney Dalionsleepstonite Cregan

      some guy

      In reply to Mike Stasse

      I see you discovered Ctrl V/Ctrl C. I still cannot see the relevance to your initial claim. All I am asking you to do is SUM column A (technology in your citroen) and SUM column B (the commodore) and see which number is larger. This will prove the validity of your initial claim, which i still maintain is incorrect.

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    17. Mike Stasse

      Retired Energy Consultant

      In reply to Courtney Dalionsleepstonite Cregan

      The technology you so desire is not necessary. In fact, it makes cars heavier and therefore less fuel efficient. I contend that bluetooth technology and GPS are the cause of a lot of 'unexplained' crashes..... probably why airbags are so popular!

      I reckon my Citroen's suspension technology is way ahead of anything made today. It gives the car such surefootedness and handling dynamics that you are far less likely to be involved in a crash than when driving a common car......

      While looking for something else, I found this: http://www.cats-citroen.net/citroen_2cv/2cv_crashtest.html check it out...

      Look here... http://www.kolumbus.fi/perhe_pitkanen/xw/activa.htm

      My Citroen stops better than Ferrari F 355 Spider, Mercedes S 600
      Coupé, Audi A8 4.2, BMW 328i, and is only 2m short of a Porsche 911 Turbo that costs three times as much and is a sports car as opposed to a sedan.... THAT is the sort of technology I like..... not your wanky toys.

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    18. Mulyadi Robin

      Researcher

      In reply to Courtney Dalionsleepstonite Cregan

      Well Courtney, I don't think that those technology were 'invented' in Australia.

      That defeats the purpose doesn't it? If we are just all about assembling cars ... with technology from overseas... where does RnD happen again?

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  10. Ben Marshall
    Ben Marshall is a Friend of The Conversation.

    Writer

    Terrifying article, Philip. I hope you're utterly wrong and the Coalition have a big top-secret plan to restore our innovative creative and manufacturing industries - okay, they'll have to do it with a crap NBN, and it can't have any connection to [whispers] sustainable, environmental stuff that might mitigate climate change and turn our economy into a low-emissions one [resumes normal voice] and it won't be to do with mining or agriculture, or science and research, or education and health, but I've got my fingers crossed they're going to pull a rabbit out of a hat.

    Has any commenter here got any clues about what industries fifty thousand workers are going to shift to?

    [Disclosure: I own a 2000 Hilux ute.]

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    1. Mike Stasse

      Retired Energy Consultant

      In reply to Ben Marshall

      How about building wind turbines and solar thermal power plants? You know, something we will actually be able to use in a post oil future?

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    2. Henriette Vanechop
      Henriette Vanechop is a Friend of The Conversation.

      retired

      In reply to Ben Marshall

      Recycling ? Used cars yards must contain a wealth of re-usable materials, (the ones used when articles were made to last, not on a planned obsolescence basis).

      When we consider what vintage cars lovers can do with old wrecks (sorry, treasures), any chance of stopping importation and transforming what is sitting here ? Convert to electric, solar, pedals ? About 50 years ago a motorbike was shown on TV in Scandinavia, the battery driving up-hill and recharging down -hill. OK, not for crossing…

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    3. Brian Muntz

      Retired

      In reply to Ben Marshall

      I think I remember Tony promising us all a Green Army of 100,000 immediately he got into power as part of his Direct Action Climate Change initiatives!
      So definitely no surprises under a government he leads, here they are, ready made Arboralists, a little training and work for the Dole a' la 1930s.

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    4. Tom Fisher

      Editor and Proofreader

      In reply to Anthony Waring

      We already have iVEC and the Murchison Widefield Array with its attendant Pawsey high-performance computing centre, part of the SKA facility jointly hosted with South Africa. We are right there with the rest of the planet on astronomy and space technology, we have oceanographers and astronauts, why not launch satellites?

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    5. wilma western

      logged in via email @bigpond.com

      In reply to Brian Muntz

      He also promised one million new jobs in his first year.
      Quote from Tony from the Coalition party room ( secretly recorded??) :"There have been economic shocks and there will be more to come...We feel concern for people.... but our concern shouldn't allow us to depart from the truth that only profitable businesses create jobs".

      Looks like all those employed in not-for-profits and public service, admin at 3 govt levels etc....education, "The Australian" and other 20th century media...etc should be shaking in their shoes??

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    6. Dianna Arthur

      Environmentalist

      In reply to Alice Kelly

      Maybe Abbott can spare some of his "green army" to conduct a review and report back...

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    7. Jane Middlemist

      citizen

      In reply to Alice Kelly

      the task force will recommend an investigation into the committees which will come up with a suggestion for a commission to …

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    8. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to Dianna Arthur

      ..., after protracted negotiation at state/federal level, enable Premiers and Prime Minister to produce a 'Roadmap to Full Employment' - aka a fatuous statement of intent to do something about this problem eventually

      (definition of 'roadmap' courtesy of a contributor to Column 8 in the SMH. I love it. I couldn't resist. Sorry)

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  11. R. Ambrose Raven

    none

    Don't forget the media's role in all this. At The Australian, the duplicity of ideologues is gloating over the closure of the industry, chortling over the money it will make for Big Mining through devaluation and wage cuts, and gushing over the further weakening of unionised labour.

    Notwithstanding the rise of social media, media mediocrity and mainstream media organisation agendas still dominates society and many aspects of public expression and discussion. Media trivialisation of important issues…

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  12. James Jenkin

    EFL Teacher Trainer

    'The net value of assistance to the automotive industry is A$1.1 billion ... but the actual value of output of the sector is around $21 billion. That is not a bad return of funds invested - the assistance is about 5% of the total output.'

    Someone in a nice suit tried to sell me a timeshare like that once: 'Just invest a thousand dollars and you'll get twenty thousand back, guaranteed!'.

    It's not that simple. We seem to assume putting up the cash means the company will survive, and the jobs will be saved. Plus we get this amazing 2000% return on our investment.

    That's what they said a couple of years ago, and it hasn't worked out that way.

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    1. David Stein

      Businessman

      In reply to James Jenkin

      James, for government to collect tax revenue, people need to be employed. Otherwise they become part of expenditure through welfare. There certainly is a valid cost benefit calculation to be done from supporting existing industries through periods like the currency shock they recently faced which decimated exports. Just look up 'dutch disease' to see what currency shocks can do to non-resource sectors of a booming resource economy.
      You have to deal with the economy you have, not the economy that…

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    2. wilma western

      logged in via email @bigpond.com

      In reply to David Stein

      Thankyou for this reasoned and reasonable response, David.

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  13. Mike Stasse

    Retired Energy Consultant

    Its affect on job creation

    REALLY? I would have hoped that an Honorary Senior Research Fellow Department of Political Economy at University of Sydney would know the difference between 'effect' and 'affect'.....

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    1. Courtney Dalionsleepstonite Cregan

      some guy

      In reply to Mike Stasse

      What is your major issue Mike? Have you seen the spelling and grammar Shakespeare used? Does it detract from the importance, elegance or beauty of what he wrote? By all means disagree with what he says, but cheap shots on a point of grammar, I think you can do better than this.

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  14. Geoffrey Sherrington

    Surveyor

    As I come from a career in mining, the concept of closing down a large project is part of the normal scene and not a reason for emotion.
    As we face the closure of the Australian car manufacturing sector, we can choose to do it with or without emotion.
    One form of test would be the reaction to the proposal to provide a new industry for some of the displaced workers.
    Nuclear has been proposed, both the building of nuclear power plants and related work like nuclear powered submarines. Can we now make an evaluation of nuclear that is free of emotion? Or has Australia become too soft to do that?
    (This is not an invitation to side track the discussion with numerous recitals of hoary old problems of nuclear power. It is about keeping a calm society in a time of sudden change.)

    Disclosure: I have never owned a foreign-made car. Why support needless freight between countries?

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    1. Michael Shand

      Software Tester

      In reply to Geoffrey Sherrington

      I have this crazy idea that if we build nuclear and CSP and wind plants around australia, then write off the cost of construction, then we will have surplus electricity for desalination, smeltering, etc

      We can then say to the world...hey uhhh, does your industry use lots of energy? come to australia, it's basically free

      if you create an environment for business to thrive, they will

      indoor farms great for water use, pest control, climate protective but require lots of energy...not a problem

      Aluminuim smeltering in huge demand but the energy costs are significant...not a problem

      And it would all be low emmissions, if not emmissions free after transition

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    2. David Stein

      Businessman

      In reply to Geoffrey Sherrington

      Geoffrey - helpful comment.
      I may be in the minority, but I agree with nuclear - perhaps building it adjacent to an existing gas/coal plant would mean it could easily hook into the grid. Port Augusta seems to be the perfect location since it's not close to any major city and is on the ocean meaning it could use seawater to cool in an emergency. The major Victorian and NSW plants appear to be both too close to cities and far away from the ocean.
      As far as the Abbott government investing billions…

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    3. Michael Shand

      Software Tester

      In reply to David Stein

      Nuclear is not just Nuclear and you would find much greater support if you specified which type of nuclear you are in favour of

      I'm guessing your not advocating for a GEN I reactor are you? so what type of nuclear are you in favour of

      HINT: If you say all or any, you don't know what your talking about, no one anywhere in the world would waste their money building a GEN I reactor

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    4. David Stein

      Businessman

      In reply to Michael Shand

      What point are you trying to make? If you have something to contribute, please do so - you appear to be attempting to win an argument, rather than having a sensible conversation.

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    5. David Stein

      Businessman

      In reply to Michael Shand

      And - you are correct. I don't have a clue about nuclear more than understanding that nuclear power could be an alternative source of energy. I also thought it made sense to build next to the ocean - that's where many of them appear to be - the ones I have driven past on US freeways at least. So, instead of attempting to pull one bit of a contribution out and triumphantly claim you have 'won', why don't you be a little bit helpful and let us know about nuclear power, the various options and what might or might not work in Australia. I don't come here to win arguments, I come here to learn stuff.

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    6. Michael Shand

      Software Tester

      In reply to David Stein

      No not at all, we need nuclear as part of our future and we need people to advocate for it, so was just trying to find out what your position was more than anything.

      Building near the sea is a double edge sword, with evetual sea rise, storm surges, wild weather, it may turn out not to be the best palce for it. The main reason they build on the coast is access to water for cooling but with new plants this is not an issue.

      http://www.youtube.com/watch?v=N2vzotsvvkw

      This is a great starting…

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    7. wilma western

      logged in via email @bigpond.com

      In reply to Michael Shand

      Gee Tassie and Malcolm Fraser tried that angle back in the 80's - our cheap hydro and coal-fired lectricity would attract industry in droves. Sorry we got the recession.

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    8. wilma western

      logged in via email @bigpond.com

      In reply to David Stein

      You disappoint me David. Port Augusta is a good-sized town in a state that is ahead of everyone else with windpower ...and Port A is rather remote to transmit power to large pop centres that might need big boosts . Adelaide is the other city beside Melbourne that will be hit by the plant closures , ergo less immediate requirement for more electricity.

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    9. Michael Shand

      Software Tester

      In reply to wilma western

      That is not really comparable to what I was suggesting for several reasons including the fact that it was coal and tasmania is rather isolated from our big trading partners

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    10. Michael Hay

      retired

      In reply to Michael Shand

      NZ did this with Manapouri Power Scheme. Built a huge hydro generator and then asked someone to use the electricity. Soon an aluminium smelter at Gore.
      Why are the Kiwi's so better at logic than Aussies?

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    11. Daniel Boon

      logged in via LinkedIn

      In reply to Michael Shand

      we don't "need" nuclear .... only the indoctrinated spout such high embodied energy low energy return ideas ...

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    12. David Stein

      Businessman

      In reply to Michael Shand

      Thank you Michael - very helpful. Perhaps a pitch for TC to prepare a post on current nuclear power technologies available might be in order? I see nuclear as a possible bridge between fossil fuels and renewables - not a topic that's very easy to discuss, as I see from the comments...

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    13. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to David Stein

      David, You may think Port Augusta should have nuclear energy , but those people who live there want a solar thermal energy source, overwhelmingly. http://repowerportaugusta.org Every time a north wind blows they get radioactive dust because there is plenty of uranium in soil to the north, I think some south australians feel quite strongly about this. I can comprehend the validity of your proposal, but it's something which shouldn't be dumped on communities

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    14. Michael Shand

      Software Tester

      In reply to Michael Hay

      Coming from NZ myself I can only assume it's something in the water...

      What I have noticed is that the bigger an economy a country has, the more vested interests there are in politics and the harder it is for truth to break through the noise

      It's the same reason that NZ can move on women's vote, gay rights faster than Australia, the bigger the country, the more inertia, the harder it becomes to get anything done

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    15. Michael Shand

      Software Tester

      In reply to Daniel Boon

      Daniel I feel we can disagree without you accussing me of having a religious ferver

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    16. Michael Shand

      Software Tester

      In reply to David Stein

      Yeah, it's a mixture, it's at least a decade between agreeing to build nuke and it working and we don't have that time anymore, so we need to move on both, we can start implementing renewables today, the government can fund the projects and source most of the parts in Australia - driving the new industry

      at the same time we need to start planning the nuke plants

      what we don't need is gas or coal or any other source that emmits carbon and also requires a constant source of fuel - thorium uses very little fuel and we have it in abundance, others can use existing nuclear waste - What's his name Gates from microsoft is working on one of these.

      It's a big topic so I'll just stop here for this week I think

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    17. David Stein

      Businessman

      In reply to Alice Kelly

      Hi Alice,
      Thanks - interesting link. Certainly seems there would be few better places for a solar farm than northern South Australia.
      I'm thinking of a bridge between fossil fuels and renewables. I'm not convinced we are the point where we can just rely on renewables, so why not look at alternatives to get us there? Michael Shand referred to a lot of nuclear technologies I wasn't even aware existed - just like technology in wind and solar, no doubt nuclear has also come along in leaps and bounds. It seems a prudent risk management approach not to put all your eggs in one basket. At least something to have a discussion about, no?
      As far as Port Augusta - would locals really be opposed to the jobs nuclear will bring in addition to wind and solar?

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    18. David Stein

      Businessman

      In reply to Michael Shand

      Excellent points Michael. I think I overreacted to your earlier comment - I seriously think you should push for nuclear to be its' own post on TC. Too little understanding of recent technology, myself included!

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    19. Michael Shand

      Software Tester

      In reply to David Stein

      Most people have a life and other things to attend to, not such a problem for me.

      The Conversation are probably sick of me suggesting topics to cover but they have touched on it before but because their authors are all institutionalised academics, many of them have a status quo, conventional wisdom, inside the box mentality. There are some great authors don't get me wrong, I'll suggest it and hope for the best.

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    20. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to wilma western

      Exactly. Vast amounts of public money would have to be poured into this scheme, which basically amounts to offering publicly subsidized energy for industries which may or may not decide to take up the offer. Australia might as well continue to subsidize the car industry. At least it's here already.

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    21. Arnd Liebenberg

      self-employed carpenter and joiner; exploring the possibilities of post-capitalist society

      In reply to Michael Hay

      See my comment above: N.Z. seems to be subsidizing an aluminium smelter through the provision of publicly funded electricity.

      Besides, places like South Australia aren't exactly blessed with abundant rainfall to run hydro-electric schemes, being the driest state on the driest continent an' all...

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    22. Michael Hay

      retired

      In reply to Arnd Liebenberg

      I think you will find that the hydro scheme was funded with public funds but the smelter purchases the electricity it requires.

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  15. David Coles

    logged in via Facebook

    OK, so let's do a proper tidy up of industry and really open the country for business. Apply the same test to other areas as we have to the car industry. Grazing sheep and cattle in country that already has difficulty sustaining the loads placed on it and which is going to find it harder with climate change is clearly not productive so why is drought assistance being considered? Why should we be supporting a mining industry which is clearly well able to stand on its own with a $4billion per year fuel rebate? Surely people are smart enough to invest in their superannuation without the gift of massive tax concessions.

    There you are Joe. That should make the bottom line a bit better and at the same time let all of those innovators get stuck in and employ everybody.

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  16. Brian Muntz

    Retired

    In reply to Ben Marshall
    Perhaps manufacturing disposable Orange Lifeboats should keep us going as soon as the monsoon season is over up north!
    ( Although maybe that's too seasonal!)

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  17. Mark Lawson

    senior journalist at Australian Financial Review

    This academic manages to completely ignore all reality and ignore the Productivity Commission report which refutes all of his arguments point by point, to simply restate the special pleading for the car industry. The multiplier effect argument, in particular, has been shown to be nonsense - read the PC report. If we put money into the car industry and get that effect, then why not put it into another, more profitable industry? What happens if the support is withdraw and we get cheaper cars.. and so on?

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    1. Michael Shand

      Software Tester

      In reply to Mark Lawson

      I really enjoyed reading your comment mark because for once, we are in complete agreement, thanks for commenting

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    2. David Stein

      Businessman

      In reply to Mark Lawson

      The productivity commission provided no modelling and nothing to actually test the veracity of their claims. They make a bunch of statements which apparently serious people in the commentariat just 'know' to be true without data to back it up empirically. Their conclusion was 'just trust us - we know what we are talking about.' They also assume an economy in general equilibrium which is absurd. Just not good enough. What are we paying these PC people for if they can't put a model together to…

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    3. Trevor Kerr

      ISTP

      In reply to Mark Lawson

      Mark, if you were an overseas investor (OK, an East Asian billionaire) sitting on a pile of spare cash and with a yen to keep investing in manufacturing, what work-force indicators would you be looking at, if Australia seemed a worthy target? I'd be looking at nimble, literate and ambitious. The simplest measure of all that could be the trend in sizes of clothing supplied by employers. I'll go further and suggest that the future of manufacturing here lies in our will to keep encouraging skinny immigrants.

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    4. Mark Lawson

      senior journalist at Australian Financial Review

      In reply to David Stein

      David - the PC report did not require modelling - that's an excuse people who don't like its conclusions use - and the points are simple and obvious.. if we're going to get this multiplier effect why not invest in another industry? what are the effects of not investing? what are the effects of freeing up the resources used in the car industry so that it goes to more productive areas? If you are concened about unverified statement the statement in the article about one third retiring or going on the dole is questionable..

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    5. Mark Lawson

      senior journalist at Australian Financial Review

      In reply to Trevor Kerr

      Trevor - no east Asian billionaire would go near the car industry. It has massive over-capacity, world-wide. Otherwise mass manufacturing (cars, clothes) is simply not our thing, so no one will invest here unless they were forced to (like GM and Ford were basically forced to) .. specialised manufacturing or services is it.. o/s investment goes mainly into resources or property., I know that's not what a lot of people want to her but it is, regretably, the truth..

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    6. David Stein

      Businessman

      In reply to Mark Lawson

      Mark - I really have to congratulate you for your honesty since you have made the case better than I could ever believe possible. Forget evidence based analysis - no modelling is needed to prove out claims. It's all "simple and obvious". You just 'know' certain things to be true. Yikes - the size of the fact-free crowd really is worse than I thought. I suppose the simple and obvious point is if it were so obvious, then modelling would be a cinch so why not do it?
      Modelling would identify that…

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    7. Trevor Kerr

      ISTP

      In reply to Mark Lawson

      Mark, I get your point about property, and who is paying top dollar for residences in Sydney & Melbourne. Does that mean the families who will be living in those houses have high expectations, or is it just that they are getting away from pollution? Anyway, their progeny will be heading into the high ends of healthcare and finance. That's "our thing" for now, as Malcolm Maiden's article with its beaut interactive graph says.
      Hang on, though, all those jobs in Health & Social Care, and Finance, don't seem to be part of a sustainable future. What is?
      Dhan'yavāda.

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    8. wilma western

      logged in via email @bigpond.com

      In reply to Mark Lawson

      Toyota volunteered after the success of its 4wds imported for the Snowy Scheme.

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    9. Mark Lawson

      senior journalist at Australian Financial Review

      In reply to Trevor Kerr

      Trevor - sustainable future? I'm not sure what you mean by that but the reality is that car manufacturing was an indulgence for Australia, it wasn't an answer. We were never serious about it as we were never in a position where we had to make it work, and we finally got sick of paying for it. The real tragedy is that the industry was kept going, employing people for so long that they will now have trouble finding work elsewhere.

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    10. Mark Lawson

      senior journalist at Australian Financial Review

      In reply to wilma western

      Wilma - sorry but I don't understand you post.. another time perhaps..

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    11. Trevor Kerr

      ISTP

      In reply to Mark Lawson

      Fair enough, Mark. 'Sustainable' is one for another day. Hans Rosling's presentations on global demographics are impressive.

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  18. Mike Puleston

    Citizen

    Time to get smarter and diversify - as some car components makers are already doing, making clever little all-terrain mini-jeeps for export. How about Australia taking the lead in cheap electric cars and ubiquitous recharge points? Local production of trains, trams, ferries etc? The potentially massive renewable energy sector technology, that we've allowed to wither and almost die? Etc etc etc. But the free market won't do it on its own - it will just further the trend towards us becoming a nation of miners and barristas. Government should take the lead, identifying desired areas of manufacturing innovation and supporting them - targetted re-training programs, R+D support, providing incentives to set up industries in depressed areas - or for workers to move to new areas. Ah, but I forget that we have a government committed to applying the law of the jungle - and an opposition that no longer knows what it's about.

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    1. Daniel Boon

      logged in via LinkedIn

      In reply to Mike Puleston

      I read you observation with interest until I read "Government should take the lead" and realized the futility of the situation ...

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    2. wilma western

      logged in via email @bigpond.com

      In reply to Mike Puleston

      Nice idea , but Tony says "we" must not " depart from the truth that only profitable businesses create jobs". Whatever dreams anyone might have( including M Turnbull) for the products and processes of the future, they'll have to do it all by themselves - no govt incentives whatsoever.

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  19. John Canning

    Professor at University of Sydney

    Good article Phil.
    One of the things that has long puzzled me though has been that the foreign owned businesses have not taken investment in Australia as seriously as they would have you believe for decades. For example, as I understand it most modern car manufacturing plants in OECD countries upgraded their facilities to have the latest technologies such as laser welding which uses much less energy than gas welding and I understand is considerable cost to the industry. I suspect it is the technological…

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    1. Peter Heffernan

      Chartered Accountant and Employer

      In reply to John Canning

      Nice idea John.
      But have you considered for one minute what volume of cars would be needed to recover the investment cost of robotic lasers et al? Clearly not. If it stacked up, the car manufacturers would have done it long ago. Worker cooperatives a solution? Good grief! That takes the cake.

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    2. John Canning

      Professor at University of Sydney

      In reply to Peter Heffernan

      Its obvious the market in Australia is not the driver but the overseas market is. That applies to Germany and any other country as well.

      Your animosity with the auto industry and manufacturing is noted - what other sizable industry do we have that actually makes anything and has the chain of supply that is characteristic of all large manufacturing sectors? Once you lose manufacturing (cars or otherwise) you lose the relative impact ratio across the board including the need for accountants to service that industry. You laso lose skills. But there are other non-economic factors - in WWII where did the skills come in to supply weapons and vehicles for our armed forces come from?

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    3. John Canning

      Professor at University of Sydney

      In reply to Peter Heffernan

      Regarding robotic lasers Peter - gas welders are already on robots. Replacing the welder with a laser is straightforward enough and has been done everywhere else. Why have an inferiority complex about Australia adopting high technology?

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    4. David Stein

      Businessman

      In reply to Peter Heffernan

      Peter - you invest in as many lasers as you need. You don't buy as many as a plant in China needs. The amortization cost per vehicle produced is what matters.

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    5. David Stein

      Businessman

      In reply to John Canning

      John - interesting ideas. You remind me of a very interesting proposal that came out of the collapse and government rescue of the Detroit big 3 when they were shedding brands in the face of plunging sales. One Southern California GM dealer proposed to purchase the 'Saturn' brand and plant and turn it into a 'private label' auto manufacturing concern. The whole deal fell apart, but private label, or perhaps better described as contract manufacturing for the auto industry is an idea which could…

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    6. John Canning

      Professor at University of Sydney

      In reply to David Stein

      There are certainly different things to try - I agree with much of what you are saying and it worth a look at new ways of doing things as clearly the way it has been done has not been working as well as it could. For example, I saw an article in a trade magazine describing research to develop next generation of printers that can manufacture metal car parts directly – if our own parts industry is not paying attention to this then it too may die eventually even with government intervention into the…

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    7. Daniel Boon

      logged in via LinkedIn

      In reply to John Canning

      (shakes his head) ... "profitable nuclear power industry" name one profitable nuclear power plant anywhere in the world (even leaving aside the attempted disposal costs of wastes) ... (full references please) ... and how many "skills based jobs" would there be? and paradoxically the comment "developing nuclear weapons"; so we can blow ourselves up before peak oil, food, population, global warming kicks in ... (and you are a professor; WIBF)

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    8. John Canning

      Professor at University of Sydney

      In reply to Daniel Boon

      You've just breached the code of conduct on responses one expects from this site. It would be best not to respond if you have nothing of substance to say - I would hope these two last comments are removed.

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    9. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to John Canning

      I think you're being a little sensitive John. Surly you have enough self esteem to accommodate the last sentence. You're forcefully advocating a position which, by my understanding, is highly debatable. The questions Daniel raise are more than fare. I want to express my support for Daniel's right to raise these legitimate questions and challenge Professor Canning to respond.

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    10. John Canning

      Professor at University of Sydney

      In reply to Jeff Payne

      Happy to follow up personal vagaries in private but not online - its not an esteem thing Jeff. Expressing well thought out and polite opinions is another thing entirely.

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  20. Michael Shand

    Software Tester

    Stop with this "The sky is falling, the sky is falling" nonsense, as you said we have 3 years to make a change to a new industry

    Manufacturing of cars does not have a monopoly on skills, knowledge or technology, stop the nonsense

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    1. wilma western

      logged in via email @bigpond.com

      In reply to Michael Shand

      Ford has announced earlier than promised reductions in its workforce.

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    2. Michael Shand

      Software Tester

      In reply to wilma western

      Yeah 20th century technology is fast becoming irrelevent in the 21st century...suprise face*

      it doesn't therefor follow that the world is goign to hell in a hand basket, it's a transition phase that had to happen at some point - now, instead of continually shelling out hundreds of millions to simply delay it until your not in government, now we can actually address the problem, we need to start manufacturing other things besides internal combustion engines, not a big deal

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  21. Graham Palmer

    Retired

    What this government has failed to do is explain what its policy is to absorb the tens of thousands of workers who will be directly displaced and the hundreds of thousands who will be indirectly displaced.
    Remember what Abbott said in his victory speech.... "Australia is now open for business". Was that a non core promise or simply a bare faced lie?

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    1. Daniel Boon

      logged in via LinkedIn

      In reply to Graham Palmer

      it was a statement of arrogance made by an man who has no real ideas; just thinks he knows better and taking a contrary position will work ... the LNP and Labor have no plans aside from gaining power, they are unable to manage their own affairs, so why expect them to be able to manage Australia ... Abbott will do a Rodney Adler ...

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  22. Joseph Phillips

    Self employed

    This is a situation which will have considerable adverse effect on our society.
    The government has disregarded it's social responsibilities and the we will have to bear the consequences that flow from shutting down manufacturing.

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    1. Daniel Boon

      logged in via LinkedIn

      In reply to Joseph Phillips

      social responsibilities is the last thing on the government's mind; its all about corporate government ... but they are starting to realize that tax and profit revenues will not be met by bringing more people into the country ...

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    2. In reply to Daniel Boon

      Comment removed by moderator.

  23. Jeff Payne

    PhD in Political Science and Masters in Public Policy

    Good level headed middle of the road response Philip and I mean this truly as a compliment. We live in an age of radical ideas and these are just dangerous. It is good to read someone not driven by ideology but informed by the reality of the world (perhaps that most dangerous threat to contemporary capitalism).

    I believe we are seeing an expression of that crazy idea of 'creative destruction'. This idea, simply, is that capitalism, innovation, creativity, profits, emerge, like the mythical Phoenix…

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    1. David Stein

      Businessman

      In reply to Jeff Payne

      Phew - got through it! Thanks Jeff... Interesting insights.
      One thing to definitely ponder is the motivation of those who have enormous pools of capital. In the first place, they are furious at the inflation-generating policies of reserve banks around the world. Now, inflation is not necessarily a good thing, but it's good to have in small doses. Deflation is terrible since it discourages investment - why invest if your money is going to simply increase in value by doing nothing? So, central…

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    2. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to David Stein

      Yes, it is toooo long. I wrote it just as much for self clarification as to inform anyone who would read it. I assume long posts aren't read. I'm hoping to expand on the ideas and turn it into a blog post on my new website at www.musingunderamangotree.com. It is in desperate need of content.

      I agree with what you say as far as I understand it. The take home message, deal with reality not with ideology. I think you are spot on. It is really our relationship with the practice of 'economics'. Do we believe it is a science or a kind of rough guide that needs to be tested in reality. I definitely see it as the latter. China has a perfect relationship with economics and smart people will emulate its practices.

      We are ran by a proven class warrior who is driven by ideology. He is about to have a sympathetic senate. Hang on everyone, we're in for a bumpy ride. Who voted for this clown anyway?

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    3. wilma western

      logged in via email @bigpond.com

      In reply to Jeff Payne

      To paraphrase our dear PM - some jobs are lost;new jobs are found.....Coles will open in provincial centres with 1000 "new" jobs...reply from manufacturing worker(SPC) I want to work in manufacturing....To the Coalition party room Tony said :"There will be economic shocks and there will be more to come....We feel concern for people.....but our concern shouldn't allow us to depart from the truth that only profitable businesses create jobs"

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    4. Pat Moore

      gardener

      In reply to Jeff Payne

      You're right Jeff and these complex matters can't be discussed in shorthand. The exact same thought dawned on me this morning. This is indeed a perfect example of the doctrine, only what I was going to point out was that Schumpeter's version (in his Wikip profile) was opining that the corporatizing long term effect of capitalism, its inbuilt tendency towards monopolisation, market control, empire etc was the seed of the destruction of capitalism itself. That is, its nemesis is self-contained and…

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  24. David Stein

    Businessman

    Phillip - thank you for this excellent contribution. The government appears to be in the grip of a particularly dubious claque of classical economists. Their theories assume full employment, that people can easily transition from one job to the other seamlessly. That we shouldn't look at the economy the way it really is but the way it appears in classical economic theory. They don't rely on modelling, but just rely on the theoretical principle that government spending is bad, and private investment…

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    1. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to David Stein

      Absolutely agree David. Nicely put. It really is class war and it has been going on for over 30 years. I agree, Philip is being brave. They are playing a very tough game and prepared for anything. Now the question is simple, as Billy Bragg asked, "Whose side are you on?" It is us vs them and the Labor Party generally presents no solutions. The big question is how do we respond?

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    2. Michael Shand

      Software Tester

      In reply to Jeff Payne

      "Just because your better than me, doesn't mean I'm a lazy, just because your going forward doesn't mean I'm going backwards"

      not really relevent but just felt like quoting braggs

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    3. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to Michael Shand

      I've never really understood that song Michael. I've thought about this more than I should. Is he making the claim that the other person thinks they are 'better than me'? Further, is he apologizing for the 'system' by arguing that the claim that as long as nobody is losing out then everything is fine? Sorry, I've just always been confused by these lyrics.

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    4. Michael Shand

      Software Tester

      In reply to Jeff Payne

      It actually relates to an article the conversation posted regarding lottery winners who after they win are more likely to take on conservative values. it also relates to the monopoly study which is where they give one player an unfair advantage, more money for passing go or three dice not two, etc

      The end result of the study is that the person with the unfair advantage starts eating more pretzels, knocking over others hotels when he takes their property instead of just picking them up and even…

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  25. Russ Hunter

    Healthcare Professional

    I'd have a bit more sympathy for our governments letting car manufacturing and fruit-canning die off if they seemed like they had a plan -- things like building a world-class broadband network and embracing Renewable Energy technologies.

    But the Coalition are smashing these things at the same time. They say they need time to come up with a plan when they have had decades to do so.

    I think they are making a meal of our country. The only winners I see are Clive, Gina & Rupert. It stinks to me.

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  26. Tom Fisher

    Editor and Proofreader

    What is wrong with this argument, apart from the implicitly isolationist, monocultural, White Australia view of this country which simply fails the most cursory scrutiny, is that all of this expenditure has not resulted in the productivity required to compete globally.

    It is not a simple matter of "cheap imports" but of economies of scale, which when applied to Japan, China and Korea, and here I would tend to include Taiwan for slightly different reasons, emerge as enormous. R&D in electronics…

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    1. Michael Hay

      retired

      In reply to Tom Fisher

      Tom, at an individualistic level you are absolutely right and I can confirm that such an overseas move happened to me 45 years ago.
      On a national level I cannot agree with you. The Federal and State governments are elected to govern and governing includes forward planning. Even when in Opposition, the current Government had 6 years in which to do some forward thinking as they well knew their attitude to 'uneconomic' manufacture. By the same token, Shorten and his mob should stop playing at Politics…

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  27. Dianna Arthur

    Environmentalist

    As the Abbott administration has not made any alternative proposals for technological advancement, nor appears likely to in the near future, I have to agree with author Phillip Toner:

    "What is going on here is almost certainly a quite conscious move to dismantle the whole post-war reconstruction view of the state and its active role in industry policy - it’s clearly a repudiation of that world view. In effect what we’re going to end up with in terms of our export base is regressing to a 19th century model of unprocessed agricultural and mineral resources."

    To which I would add service industry.

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    1. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Dianna Arthur

      Diana despite the abundance of opinions above I have to agree with this statement. There are no actual suggestions, just differences of opinion about problems and reference to solutions to those problems, and lots of blame/n/ideology. But what are we going to actually do in the twenty first century. I suppose we'll see lots of recriminations when the shit starts hitting the fan and climate change seriously dents our traditional economy. The next El Nino will be a starter. I just don't see a plan emerging. As I said the other day, let's all get buried by a mountain of coal in the mean-time, and pretend.

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    2. Jane Middlemist

      citizen

      In reply to Alice Kelly

      Alice and Dianna that is my biggest worry among all the lesser ones.
      No sign of a plan, just destruction of enterprises that may have been salvageable or at least more slowly wound down while other sources of income are built up. Destruction of businesses for the future - like the Clean Energy Finance Corporation, on such flimsy pretexts that make no sense whatever unless you believe in this govt the way some fundamentalists believe in God. TA = Old King Coal. And last century thinking. Damn, it's depressing…

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    3. Dianna Arthur

      Environmentalist

      In reply to Jane Middlemist

      Alice & Jane

      TA & Co would claim the market place can solve all these problems, considering it was unregulated market profiteering which got us into this mess, they should be the ones to clean it up - but that would require admitting they got it wrong... anathema to these small thinkers.

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    4. Jason Begg
      Jason Begg is a Friend of The Conversation.

      Perpetually Baffled Lawnmower Man

      In reply to Alice Kelly

      Hi Alice - I've found myself coming back to this article by Philip Toner a number of times today and weighing up the various comments. What I've concluded so far is similar to what you express with regards to climate change & the next El Nino. I suspect Australia’s near-future economy is bound for even greater calamity and upheaval and the land of Oz is woefully underprepared for that as well. It will probably make the loss of the auto-industry look like a piddle in the Pacific.

      Does Australia…

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    5. Jane Middlemist

      citizen

      In reply to Jason Begg

      If only LNP slogans were edible.
      We could have "stop the boats" for dinner and "end the waste" for afters. Next morning I would serve up a nice breakfast of "age of entitlement" and "age of personal responsibility". Then for lunch munch on this 'Axe the neo-con-men' (and the token woman).
      YUM. And nourishing as well. (I use counting down until the next election - in place of sheep - quite soporific… )

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  28. Andrew Kewley
    Andrew Kewley is a Friend of The Conversation.

    Student

    The loss of the car industry is mostly due to overseas factors. Australia, no matter how many government handouts are given, cannot compete.

    In terms of quality of life vs resources required, cars are probably one of the most wasteful things we currently build.

    Perhaps the closing down of the industry will have positives in reconsidering the role that the car has in our cities.

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    1. Andrew Kewley
      Andrew Kewley is a Friend of The Conversation.

      Student

      In reply to Jane Middlemist

      I don't quite know what you mean by that.

      I mean as a society we are already addicted to the car and we have been planning our cities badly for many years, when considering other forms of transport (particularly walking and cycling).

      But that doesn't mean it is too late to start adopting international best-practise and transform our cities.

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  29. Phillip Toner

    Adjunct Professor, UTS Business School at University of Technology, Sydney

    Dividing industry output by number of cars produced may be inappropriate since the output of the industry is comprised of more than that- spare parts, technology receipts etc. The data is from table 23 in Dept of Industry Key Automotive Statistics 2011. The PC in its Interim Report estimated value added for the sector at around $12bn based on the way it calculates the effective level of assistance. The difference is that output includes intermediate purchases from other industries outside MV, such as engineering and computer consulting ($800m pa) and advertising firms etc making whilst value added is, to put it simply, wages and a return on capita invested.

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  30. Phillip Toner

    Adjunct Professor, UTS Business School at University of Technology, Sydney

    Another source of data on auto industry output is the 2010 Australian Input Output Tables (5209.0.55.001 Australian National Accounts: Input-Output Tables - 2009-10) Table 5 records the value of Australian Production at $19bn.

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    1. Garry Baker

      researcher

      In reply to Henriette Vanechop

      What can we learn from them ? ""

      Plenty, because they were tough people groomed in a 3rd world environment (as much of Great Britain was back in those days).

      First though, we have to return to a 3rd world status. More or less reflecting the words of Lee Kuan Yew in the 1970s, that Australia risked becoming the “white trash of Asia”.

      With the LNP form of country management and it's predisposed stance of selling as much of Australia as it can to foreign interests,, then it's not hard to see our future. 3

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  31. David Briggs

    logged in via Facebook

    A nonsense article that is out of touch with the economic realities of contemporary Australia. Your first sentence betrays you. "I have argued before and it's generally well accepted". Such argumentative tricks that attempt to establish validity of dodgy arguments about the technological engine that is our failing car industry are totally bogus.
    Consumers have voted. Get with the program. Australia doesn't need a car industry to be a great and prosperous country. What we are witnessing is the logical consequence of the evolution of economies, in both relative and absolute terms.
    There are emerging countries better placed to produce cars. All this hand wringing is pathetic and annoying.

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  32. Bob Bingham

    logged in via Facebook

    Australia's problem is that it is a mineral exporting nation and its great natural wealth means that it has a high standard of living and a high value currency.This is not a good background for an international manufacturing industry. The next problem is that car companies are consolidating their production into very large production units and shutting the small plants. It is made worse in Australia in that Ford and GM produce the same car and these 3.5 litre cars are out of date. Subsidies and politicians are not going to save the industry. Dig the coal and be gratefull.r

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  33. Mulyadi Robin

    Researcher

    As much as this news is pretty devastating, I am an optimist, and I like to take the glass half full perspective on this.

    For way too long, I believe, we have sheltered these industries, time and time again.

    Would it be too presumptuous that given the Australian spirit, and the creativity abound among Australian businesses, that this would be too much for the Australian economy, or our long-term innovativeness to bear?

    I beg to differ.

    I truly believe that instead of the final nail in…

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    1. Jane Middlemist

      citizen

      In reply to Mulyadi Robin

      Mr Robin: you posted: "I am an optimist, and I like to take the glass half full perspective on this".
      What do you think of the post by David Arthur about the 10th one down from the top of this page? He is also an optimist and a practical person as well.

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    2. John Lyons

      Professional Engineer

      In reply to Mulyadi Robin

      Mulyadi, our main problem is cost competitiveness. It doesn't matter whether we are assembling cars, developing new drugs or inventing financial instruments, compared to the cheapest people doing the same job overseas, we are over paid. Right now our employers, or if we are self employed, our customers, are trying to find a way to employ these cheap people rather than us.
      Free trade agreements and big ships have done it for manufactured goods and modern telecommunications (NBN etc) is going to do it for many service jobs.
      Yes, we will become cost effective, but our standard of living will take a big hit to achieve it. We are going to have to match, or undercut the cheap people. The glass is half empty, so drink up while we can.

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    3. Mulyadi Robin

      Researcher

      In reply to John Lyons

      Hi John

      We need to become cost effective, and unfortunately I do believe that standard of living must unfortunately be subject to a reality check.

      As much as I appreciate the fact that everyone deserves to be able to enjoy a great standard of living, in some occupation standards, there just need to be a reality check.

      We have gained a lot from being in FTAs, and in being able to import (imagine how much we have to pay for clothes otherwise!), and it does take two to tango. I'm sure that…

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    4. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to Mulyadi Robin

      Hi Mulyadi. As you would know, there have been two competing Australian 'foundation myths'. One is that Australia was founded on the bloody beaches of Gallipoli, this myth has come in and out of fashion but John Howard and other conservative governments like to promote it. It is in fact a fairly recent invention. The more enduring foundation myth, one that many young people will not know, is that what is called the 'Harvester Judgement' is a founding document for Australia. Although generally criticized…

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    5. Mulyadi Robin

      Researcher

      In reply to Jeff Payne

      Hi Jeff

      Great point that you've raised.

      I'd rather pay $25 for a shirt that is manufactured in Australia too; but only because my circumstances dictates, and allow me to do so. However, there are a number of goods that I just simply cannot justify purchasing unless they are cheap as chips - because unfortunately my wallet is perhaps not as well-lined as yours. Further, does the majority of Australians think so?

      I fully agree with you regarding egalitarianism, and just distribution of wealth…

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    6. Jeff Payne

      PhD in Political Science and Masters in Public Policy

      In reply to Mulyadi Robin

      Mulyadi, thanks for your response. Firstly, although not important to our discussion, I am and have been near destitute my whole life I’m afraid. No need to go into details here but not everyone has luck in this world. I’m not privileged, I’m not some kind of chardonnay socialist, indeed, I’m not a ‘socialist’ at all but an advocate of social democracy.

      Do I think the 1% will be convinced? Do I care? If the one percent had their way we would be living like they do in Calcutta. The 99%, indeed…

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