Tony Abbott losing control as Holden future keeps on hanging in the balance
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Version 0 of 1. The prime minister, Tony Abbott, is thinking and acting like an opposition leader over the dicey future of the Australian car industry. After the ABC reported that unnamed senior Abbott ministers were saying GM Holden had already made a decision to stop manufacturing in Australia from 2016, Abbott said in a radio interview on Friday: "I do wish Holden would clarify their intentions because at the moment they've got everyone on tenterhooks." Now, it's unusual for a prime minister to publicly admit he doesn't know what's going on. But there is a broader point. Abbott has established an inquiry into the future of the Australian car industry which is due to deliver interim findings by 20 December, with a final report due by March 2014. Does Abbott want the verdict from Holden before the government inquiry reaches any conclusions? Abbott also said he wanted Holden to stay but he warned there was no extra money. But the government requires legislation to meet its election pledge to cut $500m from industry funding by 2015, which has not yet been done. It has yet to clarify what will happen to funding after 2015. Meanwhile, Holden’s managing director, Mike Devereux, has yet to give evidence in person to the Productivity Commission inquiry, that is due to happen in Melbourne on Tuesday. The aims of the inquiry include recommending long-term industry assistance and other policy setting for the car industry. Perhaps Abbott could firstly clarify the government's intentions towards the car industry? It's true the chances of Holden keeping its Australian manufacturing operations open are shrinking. Furthermore, there are legitimate questions over whether it makes economic sense for Australian taxpayers to continue supporting the car industry, even if there are 45,000 direct employees. Local output has slumped in the face of the consumer switch to smaller, more fuel-efficient cars, while the strong Australian dollar has made car exports more expensive and imports cheaper. But the government of the day is supposed to weigh the evidence and make a decision. If these unnamed senior ministers know something that voters and Holden workers don't, then perhaps they should let everyone in on it. But the scenario is not yet black and white, even though it looks dire. On Monday the Industry Minister, Ian Macfarlane, was trying to drum up government and industry support but faced pushback from the likes of the treasurer, Joe Hockey, and the finance minister, Mathias Cormann. No surprise, then, that the ABC can report on Thursday that senior ministers believe Holden has "decided to pull out of Australia as early as 2016". But it’s different from this bald statement, although still dire for the industry's 45,000 direct employees. The first point is that Holden does not make the decision to stop manufacturing locally – its US parent General Motors does. It's unclear whether the GM board has made a final decision, but industry insiders say the board has noted the lack of a clear position from the Abbott government. The government has even flagged that it might not make a final decision on its response to the commission until the middle of 2014. The Holden management, led by Devereux, is trying to put together a package that is acceptable to the Abbott government and the GM board back in Detroit. But the dries within the government are seen to be winning the internal argument – perhaps in a kind of counterattack after getting rolled on the GrainCorp decision by the Nationals and agrarian socialists such as the Liberal senator Bill Heffernan. Macfarlane is said to be batting on, trying to salvage something but not getting much support from wets in the governments ranks. And Abbott? More attention has been paid to Abbott's view of social issues than his stance on economics. Dry Liberals suspect Abbott still harbours economic beliefs that hark back to the Democratic Labor Party and B. A. Santamaria – not quite 10 acres and a goat for every family, but a belief in some government intervention and in home-grown industries. The final point is that while Holden is very important to Australia, it is not very important to General Motors. Sure, the GM management and board are car nuts and they are aware of the place of the Holden lineage in Australia. But stopping manufacturing here would not be that big a deal in terms of the GM business. Indeed, Holden and Australia were barely mentioned in GM's most recent quarterly results. Ditto for the company's detailed filings with the US Securities and Exchange Commission, or in analysts' briefings by GM executives. In contrast, there was much discussion about how GM was faring in eastern Russia and Venezuela. Our editors' picks for the day's top news and commentary delivered to your inbox each morning. |