Federal politics: full coverageAbbott warns of more economic shocks to comeIan Porter: No fair go for Australia in ‘laissez faire’ agenda
What will the economy look like without the three big car manufacturers and suppliers? Pretty much the same as it does now.
Twenty years ago, manufacturing provided one in every seven Australian jobs, about 13.5 per cent. Today it’s 8 per cent.
Two industries have filled the gap: professional, scientific and technical services, whose share of employment has climbed from 5.5 per cent to 7.7 per cent; and healthcare and social assistance, whose share has risen from 10 per cent to 12 per cent. Australia has become more of a brain-work economy and more of a service economy, and the transition isn’t new.
The loss of the further 50,000 jobs tied up in car manufacture is not going to change things much more. Manufacturing employs 934,000 people in total.
Steve Bracks, the former Victorian premier who chaired the Bracks automotive review for the Rudd government, believes some of the component manufacturers will stay. Futuris Automotive sells seats, trims and upholstery worldwide. Air International exports air-conditioning systems.
Each month, about 350,000 people leave their jobs and 350,000 gain them. A loss of an extra 50,000 over several years as the car manufacturing industry closes would scarcely make a dent, especially if – as is likely – many of the sacked workers move to other jobs.
But total jobs growth has stalled. The number of people in work is slipping at the rate of 600 a month. Tony Abbott’s promise to “produce 1 million new jobs in five years” is one he won’t keep.
In Parliament on Tuesday, Treasurer Joe Hockey talked tough, saying “now is the time to fix the budget”. But with jobs growth dead and the collapse of car manufacturing making things a little worse, there is a limit to how much it is wise to cut back in his first budget.
Another previously legislated measure will depress the economy in July. The Medicare levy will climb from 1.5 per cent of most salaries to 2 per cent to fund the disability insurance scheme.
Budgetary pressures are likely to put on hold another move Hockey could otherwise make to salvage something positive out of the exit of Ford, Holden and Toyota.
He could axe tariffs on imported cars. After all, there will soon be no local industry left to protect. This would bring down the landed price of each car by 5 per cent. He could also abolish the so-called luxury car tax, now at 33 per cent, the rationale of which was also partly to protect the local industry.
But it would cost him money he does not have. If he did scrap tariffs, he would have to replace them with something else. As far as revenue raisers go, tariffs on imported cars are pretty efficient, right up there with the goods and services tax. Hockey would not want to replace them with something worse.
The impending departure of the big three has given him another opportunity though. About the middle of last year, his predecessor, Labor’s Chris Bowen, announced a plan to raise $1.8 billion by properly taxing cars provided to workers as part of salary packages. Abbott and Hockey opposed it, arguing that concessional treatment was needed to ensure cars continued to be made in Australia. It isn’t now.
This story Administrator ready to work first appeared on Nanjing Night Net.