Tony Abbott declares an end to ‘corporate welfare’

http://www.theguardian.com/world/2013/dec/18/tony-abbott-declares-an-end-to-corporate-welfare

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Tony Abbott has declared an end to “corporate welfare”, saying his government is loth to give any more handouts to business and offering just $60m to boost overall investment conditions in Victoria and South Australia as they cope with Holden’s decision to close.

Abbott announced a “$100m fund” for the two states, where 2,900 jobs will be lost when the carmaker shuts in 2017 – $60m from the commonwealth, $12m from Victoria and a possibility that South Australia and Holden itself would also make contributions.

According to the prime minister, the money could be used for “promoting the industries of the future, it may be feasibilities studies, it may be investment in research and development ... it may over time involve significant new infrastructure spending”.

But he said “we don’t want to see corporate welfare … we don’t believe in corporate welfare”.

“This government will be very loth to consider requests for subsidies, we will be very loth to do for businesses in trouble the sorts of things they should be doing for themselves,” he warned.

He did not entirely rule out that some of the money could be granted to individual businesses, but said “they will have to make a very strong case and they will have to be able to demonstrate why … there is no prospect of them getting money from normal private sector sources to fund something” because “we are not here to sort of build a field of dreams”.

But a press release announcing the fund states that it would provide “grants to existing and new businesses that establish or expand manufacturing operations in South Australia or Victoria” and “support for existing component manufacturers in Victoria and South Australia to adjust their business output or business model to non-automotive and overseas customers, or who commence or expand export activity”.

The final design of the fund will be decided in the middle of next year after economic reviews in each state.

Labor attacked the announcement as “woefully inadequate”.

“It shows a prime minister who continues to treat workers and businesses in the automotive sector with absolute contempt … the Abbott government is ripping $500 million out of auto-assistance but returning just $60 million – only 12 per cent – in assistance for thousands of workers who will lose their jobs. This is in addition to treasurer Joe Hockey saving $215 million in assistance Labor pledged Holden in March this year,” opposition leader Bill Shorten said.

Shorten said the fund “goes nowhere near meeting the needs of 3,000 Holden workers and their families. It contains no plans whatsoever for the parts manufacturers who rely on Holden – nothing about any plans for the 200,000 workers indirectly employed by the automotive industry who will be affected by this decision.”

Greens leader Christine Milne said the fund amounted to “a band-aid on a massive wound in the Victorian and South Australian economies”.

“Mr Abbott is offering limited dollars with one hand while slashing billions with the other, and hoping workers in Victoria and South Australia won’t notice – but they will,” Milne said.

South Australian premier Jay Weatherill said the federal response was "pathetic".

"When you consider the nature of the task … the idea that [$60m] would be sufficient … is frankly, laughable," Weatherill said.

He also attacked the government for failing to fast-track infrastructure projects and for delaying any funding until mid-next year.

And he said Abbott "should have taken this opportunity to reassure the workers' families he had their interests at heart".

"His prepared statement and almost all of his media conference completely ignored them … they should read clearly into his remarks he does not understand the enormity of the task ahead for South Australia and for those workers … there should have been empathy with them," Weatherill said.

"They have made savings out of the closure of Holden and stuck it in their pocket," Weatherill said, insisting he would "campaign every day" until the federal government made a realistic funding offer to help his state.

Victoria's Liberal premier, Denis Napthine, welcomed Abbott's announcement but said he expected the industry reviews to lead to further "significant" funding promises from the commonwealth.

"The $100m is a good first step. It is a first step only," he said. 

The government said the $100m package was more generous than the government assistance offered when other car makers closed. When Ford announced in May that it would stop production in October 2016 the federal and Victorian governments offered a $76m package, and when Mitsubishi announced its closure in 2008 the federal and South Australian governments offered $50m.

Abbott conceded it would be difficult for some older workers to retrain or move, but said for others the shift from Holden to other work could be a “liberation”.

"Some of them will find it difficult but many will probably be liberated to pursue new opportunities and to get on with their lives," he said.

Shorten replied “the car workers had good lives … until the Abbott government was elected”.

The prime minister was also downbeat about the prospect of government assistance to SPC Ardmona, Australia’s last fruit packaging and canning company, which is pleading with the Coalition to retain a $25m grant offered by the former Labor government so it can stay open. The money was promised from a clean technology programme the Coalition has pledged to scrap because it was funded by the carbon tax.

Abbott said the industry minister, Ian Macfarlane, was in “ongoing discussions with SPC” but said he wanted to make the same point about SPC as he had about Qantas – “you have to get your house in order … government support cannot substitute for strong management and … that starts with getting your costs down … you have to take responsibility for what you do rather than say it is all too hard and the government has to fix it. The government’s role is not to prop up private business,” he said.

About 2,900 Holden workers will lose their jobs in 2017 – 1,600 from the manufacturing plant in South Australia and 1,300 in Victoria. A further 45,000 workers in components makers and associated industries could be affected.

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