Contrary to appearances, the economy is not
falling apart nor has the Abbott government taken leave of its senses.
The
threat to the economy from Holden's decision to cease making cars has
been greatly exaggerated by those with axes to grind - the opposition,
the motor vehicle union and other industry apologists, plus the
overexcited media.
The greatest threat comes not from what
happens to the car industry - nor from Qantas' plan to lay off 1000
workers - but from the risk that all the talk of job losses could leave
people in industries far removed from the troubled sector with an
exaggerated impression of their chances of losing their own jobs,
prompting them to become more cautious in their spending and housing
decisions.
There is no denying the Abbott government is off
to a rocky start, with its backing and filling over the Gonski
education reforms, its ruminations over continued Australian ownership
of Qantas, and its refusal to permit the foreign takeover of GrainCorp
casting doubt over Tony Abbott's election-night claim that Australia is
now ''open for business''.
What we have had from Abbott is
clunkiness. It's been hard to detect the hand of a government that knows
what it is doing and where it is heading, let alone one that can
articulate its destination and reasons for wanting to take us there.
But
its most controversial decision so far - to decline to keep paying the
protection money demanded to defer General Motors' departure from
production in Australia - offers hope that this is a government with the
courage to give genuine leadership, to make the unpopular decisions
needed to secure our economic future.
If we want the
economy to return to a healthier rate of growth, with rising job
opportunities, the answer is for our businesses to find new and better
ways to make profits, not for them to become ever more reliant on
government subsidies.
It is for us to face up to, and adapt
to, a rapidly changing world economy, not use taxpayers' money to try
to prevent change, eventually turning our economy into an industrial
museum.
If we want the federal budget to be returned to
balance without huge hikes in taxation, part of the answer is to stop
providing welfare to industries as well as people.
It is
understandable for older Australians to be sentimental about the end of
car making by our first car maker - even though most of us stopped
buying locally made Holdens many moons ago, just as most of us have
stopped using Qantas to fly overseas.
How much tax are you prepared to
pay for sentimental reasons?
It is also understandable for
older Australians to worry about the decline of manufacturing. If we
stop making things, where will the jobs come from?
Employment
in manufacturing has been falling since the early 1970s, during which
time the workforce has doubled. Manufacturing now accounts for only
about 8 per cent of total employment.
Do you really believe
the remaining 92 per cent of us have phoney, inconsequential jobs? The
big jobs growth has been in education, health, community and business
services. Where will the jobs come from? That's where. The same thing is
happening in all the rich countries.
The prospect is for
the rate of unemployment to keep creeping up next year until the effect
of record low interest rates causes spending on consumption, home
building and business investment to recover and take the place of the
now-declining investment in new mines.
What happens in
car-making will have a negligible effect on what happens to unemployment
everywhere except Adelaide. For a start, few jobs will be lost until
the plants close in 2016 and 2017.
It's planned that 2900
jobs will go from Holden, with a greater flow-on to the parts-makers.
But car and component manufacturing account for only about 0.4 per cent
of total employment.
Even the end of local car-making
wouldn't mean the end of cars. Saul Eslake of Bank of America Merrill
Lynch reminds us there are five times as many people employed in the
wholesaling, retailing and maintenance of cars as are employed building
them.
Car-making ended in Sydney in the 1980s. Steel-making
ended in Newcastle in 1999. Since then, both cities have not only
survived, but prospered.
