Along with its planned abandonment of carbon market pricing, the Coalition's impending destruction of the Australian car industry by calculated public stalling of decisions on government assistance is shaping up as its most disastrous high-visibility policy blunder. This is Australia's version of US Tea Party budget brinkmanship
Consider the policy inconsistencies. The Abbott Government proposes to throw billions at an overgenerous planned maternal leave scheme that nobody really wanted, and billions more at generous discretionary handouts to industries that cut carbon pollution, in the vain hope of reaching a 5 per cent reduction that will be too low to help slow global warming anyway. It proposes to build submarines in Australia at vast expense compared to off-the-shelf imported submarines. The decision to exclude the Chinese market leader Huawei — the cheapest world supplier of equipment — from any involvement in Australian telecommunications will cost taxpayers billions.
None of these policies has anything to do with responding to market forces. Yet finance ministers Hockey and Cormann, heartened by a steady drumbeat of support from influential economics commentators like the Australian Financial Review's Alan Mitchell, are ready to sacrifice Australia's car industry on the altar of an economic theory which abhors the relatively paltry $500 million per annum assistance paid to this industry under Labor. This industry — but none other — is to be wilfully abandoned as a victim of rigid free-market economic ideologies.
It does not make sense, in economic, social or national security terms.
The hapless Minister for Industry, Ian Macfarlane, is struggling to keep General Motors and Toyota manufacturing in Australia on uncommitted temporary government assistance through 2014. Later that year the Productivity Commission will issue its report; its entirely predictable advice will be to kill the industry by ending assistance.
Abbott will then face the same tough political decision as PM that he is avoiding now. But perhaps he hopes that Holden and Toyota will save him the odium, by doing meanwhile what Ford has already done — announcing the shutdown of manufacturing in Australia. He could then say it was not his decision, it was market forces.
MacFarlane's other senior Cabinet colleagues — Pyne, Johnston, Truss, Joyce — all have portfolio or electorate interest in a viable Australian motor vehicle manufacturing industry. Their silence is puzzling.
There are sound national interest policy arguments for continuing to assist GM Holden and Toyota car manufacturing in Australia, and announcing this decision without waiting for the