Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

Fifteen, as my friend next to me advises me.

Mr Mitchell interjecting—

From that statement by the member for Chisholm—and we also hear the member for McEwen interjecting over there—we know, as sure as night follows day, that if they were to come back into power they would reintroduce that carbon tax and continue to put Australian industries at a competitive disadvantage.

A responsible government needs to deal with the harsh and sometimes painful economic realities of the world. If we do not deal with those economic realities and instead—as the opposition does—deal simply in populist sentimentalities just to make ourselves feel virtuous for a short period of time, all we do is postpone that problem and make it worse and more painful to deal with down the track. One of the first harsh economic realities is that government subsidies, time after time, have been shown not to work. In fact, we have seen throughout our economic history that government subsidies often harm the very industries that they are meant to support. Adam Smith knew this back in the 1700s, when he wrote The Wealth of Nations:

… the bounty to the white-herring fishery is a tonnage bounty; and is proportioned to the burden of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty

That could well describe the multinational companies that are set up to manufacture cars here in Australia. They are not set up to produce cars that are fit for the market but to take the bounty from government.

Let's just go through some of the actual bounties that have been paid to these multinational car companies. The Productivity Commission has estimated that the automotive industry between 1997 and 2012—so we are talking about a 15-year period—received $30 billion in government support. Some $30 billion worth of subsidies flowed to that industry. During that time, it worked out, there were about five million vehicles produced, so that equated to a $5,748 subsidy of government support for every vehicle produced. In August 2008 the Productivity Commission chair, Gary Banks, warned that with the current levels of assistance or subsidies every single job saved in the car industry came at a cost of—wait for it—$300,000. Every job supposedly saved cost the economy and the taxpayer $300,000.

We have also seen the recent examples of Labor's failure, rolling out more subsidies to the car industry. We saw the Labor government hand out $34 million to Ford, $25 million to Toyota and $215 million to Holden. What did the previous Prime Minister say after handing out all this cash? She said:

This is exactly the type of investment we identified at the Future Jobs Forum and the PM's Manufacturing taskforce to help shore up the future of our manufacturing sector.

It's smart, it's competitive and best of all it will secure jobs, not only in Victoria but also across the nation.

We know it was dumb, we know it did not save jobs and we know it simply added to the debt burden that this government has to deal with. In fact, Paul Kelly, the Australian's editor at large, described this massive government subsidy scheme as 'one of the most epic failures in public subsidy in Australia's national history'.

Even despite all this industry assistance, this $30 billion worth of taxpayers' funds, unfortunately these car companies could not turn a profit. We saw Holden announce their worst loss ever before they announced they would close down—$553.8 million just for one calendar year, in 2013. That took their total losses to over $1 billion over the last eight years. We saw Ford announce its worst ever loss, $267 million—a $1.1 billion combined loss over the last eight years. These companies made it very clear that no more government support could have saved the car industry.

I know this is going to come as a surprise to members of the opposition, but there is simply no magic pudding. You cannot spend the money more than once, and a subsidy has to come from somewhere. When you subsidise one industry, all that you are doing is raising taxes on more efficient industries that are out there doing a job, creating employment and creating wealth for this country. The money has to come from somewhere and all you do when you raise subsidies to give to one industry is punish other industries, and that is exactly what we have seen. It comes at a net loss to the economy, a net loss to employment, and it reduces our total standard of living.

Look at some of the factors in the global car industry that caused the car industry in Australia to close down. In China there are now 240 million vehicles on their roads and they expect that to increase by 20 million vehicles every single year. Today there are something like one billion cars and trucks on the planet, and by 2050 that is expected to grow to 2.5 billion. So on the surface this is potentially a chance for Australia to export something to those markets, but what has happened is that, because of this increasing demand, we have seen so many countries in Asia develop their car industries. In fact, a recent Wall Street Journal article says there are 170 different car manufacturers in China today. The problem they have is that the global capacity of these new factories coming online to meet the demand is close to 100 million cars, but the demand at the moment is only something like 60 million cars. So there is close to a 40 million overcapacity in the industry.

It is unfortunate. We hate to see the car industry close. But what it will allow, as we have seen over the last decade, is for cars to become more affordable to Australians—cars of higher quality, with more comfort, better technology and accessories, better fuel performance and less pollution. They are safer and more reliable. As just one quick example, in 1960 it took 60 weeks of average male earnings for someone to buy a new Ford Falcon. Last year that same Ford Falcon—a far superior car—took just 30 weeks earnings. So yes, it is sad that the car industry is closing in Australia, but we cannot continue to throw subsidies to the industry, because those subsidies actually harm every other industry in the country and harm consumers. We are right to give $155 million in assistance to the former workers, but I commend this bill to the House. (Time expired)

See this speech in context