It is the last day of car manufacturing in Australia today, with the final Holden cars to be manufactured at the soon to be shut Elizabeth plant in SA, as reported in the Courier-Mail. It is awful that thousands of people have lost their jobs, but the industry was never viable without the very high tariffs we once had (see chart below), which cost Australian consumers thousands of dollars on every car imported. High tariffs had been replaced by direct industry assistance from taxpayers but, even though it had amounted to in the order of $10,000 per annum per job protected, it was insufficient to save the industry.
There was no legitimate economic case for protecting the car industry, and national defence arguments were spurious. Could we seriously expect a plant once producing Commodores to be rapidly converted to one producing modern fighter jets such as the Joint Strike Fighter? Alas, over the years automotive workers have been given false hope by government policies that had promised to transform and reinvigorate the car industry. Given the small scale of Australia’s domestic car market, which was too small to provide a base level of demand to domestic manufacturers that could support the large capital investments they needed to make, as well as our relatively high labour costs, the shut down of the Australian car industry was always inevitable.
Queenslanders are almost unambiguously better off from the reductions in car industry protection over the last few decades, given most of us benefit from cheaper cars and very few of us would be adversely affected by the plant closures down south.
My previous comments on the car industry include: