How Scott Morrison’s government forced Holden out of Australia by dropping subsidies

As Scott Morrison raged against Holden being left to ‘wither’ and die, he must have forgotten one important detail.

The iconic car maker’s fate was actually sealed by the Coalition while he was Minister for Immigration and Border Protection, a government still in power which he now leads.

The shock announcement from General Motors, of which the prime minister was given just three minutes notice, was labelled a ‘p**s-poor effort’.

But 50,000 Australian workers could use that phrase to to describe the machinations of their own government that put them out of a job.

The Holden car brand will be no more, with General Motors opting to dump the name synonymous with Australian motoring by 2021. Pictured is the last Holden Commodore at the Elizabeth plant in Adelaide, October 2017

In December 2013 Holden, Toyota and Ford announced they would shut down their Australian factories after they were denied taxpayer subsidies, and the last cars rolled off Holden’s production line in 2017.  

Holden had asked for up to $265million on top of the $275million in subsidies it was already given, which would have saved tens of thousands of jobs.

Instead, Australia decided to spend $80billion on 12 new submarines built by a French company which won’t hit the water until 2034. 

This plan is believed by political commentators to be in part an attempt by the government to be seen by blue collar voters to be doing something to make up for the massive loss of car industry jobs.

The submarines were supposed to be built in Adelaide, home to several marginal Liberal Party electorates, to provide jobs for former auto workers.

But since the deal was done in 2016, Naval Group, owned by the French Government, has reduced the amount of work that would be done in Australia from 90 per cent to less than half.  

Senior lecturer in politics at Griffith University Dr Paul Williams said the government appeared to have tried to make a splash to make up for the job losses.

Not only did it want to avoid losing votes in Adelaide, the rest of the country needed to see it was doing something.

‘Australia is increasingly seen as just a farm, a quarry, and a playground as it loses its manufacturing,’ he told Daily Mail Australia.

‘So [the submarine scheme] resonates with blue collar workers who are worried about globalisation and complain that we don’t make things anymore.

‘But I don’t think the government will be rewarded for it because those workers feel creating manufacturing jobs are what they are “meant” to do.’  

Mr Williams said the Coalition would not get electoral ‘bang for its buck’ in South Australia because the state didn’t have a big enough impact on elections. 

Australia is paying $80 billion to build 12 new submarines, which won't even hit the water until 2034, through a French company

Australia is paying $80 billion to build 12 new submarines, which won’t even hit the water until 2034, through a French company

Since 2007, Australian governments from both sides of politics have been planning the replacement of six Collins class submarines mainly built during the 1990s (pictured is MHAS Sheean, a Collins class submarine based at Garden Island south of Perth)

Since 2007, Australian governments from both sides of politics have been planning the replacement of six Collins class submarines mainly built during the 1990s (pictured is MHAS Sheean, a Collins class submarine based at Garden Island south of Perth)

The government touted the project as creating 15,000 Australian jobs, but the figure could end up being 7,000 or lower. 

The cost also blew out from $50billion to $80billion and was pushed back by more than nine months. 

The project has become such a debacle that a report by the Australian National Audit Office last week slammed the decision to not just buy off-the-shelf subs from Japan.

Meanwhile, a third of the workers made redundant by the car industry’s demise were still unemployed years later and most of the rest only working part time. 

In contrast to the submarine deal, Holden was from 2012 being paid about $275million by the Labor Government to stick around until at least 2022, but with rising costs and falling sales asked for almost double that.

Australia earns half a billion dollars a year from the luxury car tax and could have financed the subsidies from this alone.

But Tony Abbott won the 2013 election and was determined to slash car industry subsidies by $500million.

The new government announced a Productivity Commission review, but its rhetoric in early December showed this was just a formality.

‘There’s not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time,’ Mr Abbott said.

GM will not just axe the Holden name but also stop selling cars in Australia, the American auto giant's international operations senior vice president Julian Blissett announced on Monday. He is pictured right with Holden's interim chairman Kristian Aquilina

GM will not just axe the Holden name but also stop selling cars in Australia, the American auto giant’s international operations senior vice president Julian Blissett announced on Monday. He is pictured right with Holden’s interim chairman Kristian Aquilina

Treasurer Joe Hockey then upped the ante in parliament, issuing an ultimatum to the Australian icon: ‘Either you’re here or you’re not.’

Holden didn’t even wait for the review, which gave the expected recommendation, and the next day announced it would shut down manufacturing by 2017.  

About 600 sales and engineering staff were kept on to sell Holdens manufactured overseas, but the writing was on the wall.

They will soon join the tens of thousands of other jobs discarded as the Holden brand disappears and GM stops selling cars in Australia. 

The damage to Australia’s economy from the sudden car industry collapse was immense, both directly and from job losses.

Holden, the maker of popular models including the Kingswood and Torana, was for many decades Australia's most popular car brand, Pictured is a 1968 Holden Premier outside the Elizabeth plant in October 2017, as local production ended

Holden, the maker of popular models including the Kingswood and Torana, was for many decades Australia’s most popular car brand, Pictured is a 1968 Holden Premier outside the Elizabeth plant in October 2017, as local production ended

General Motors announced it is dumping the Holden name by next year. Pictured: Holden employees leave work at the end of their shift at the Holden plant in Elizabeth in 2013 after 400 jobs were cut

General Motors announced it is dumping the Holden name by next year. Pictured: Holden employees leave work at the end of their shift at the Holden plant in Elizabeth in 2013 after 400 jobs were cut 

Holden received $1.8 billion in subsidies between 2000 and 2012, but claims that allowed it to spend $32.7 billion into the economy.

Research by commissioned the Federal Chamber of Automotive Industries also claimed Australia got back $21.5 billion for every $500 million in subsidies.

Despite this, the Australian car industry was in terminal decline because it couldn’t compete with cheaper overseas manufacturing – which was why it needed subsidies to keep going.

Thailand, now nicknamed the ‘Detroit of Asia’, pays car factory workers $6 an hour – $12,500 a year compared to $69,000 for Australians.

Though Australia has free trade agreements with many countries in Asia, they use various workarounds to hike up the price of imported cars to help their local brands.

Australian exports were therefore long reliant on the Middle East, the only significant market without its own car industry.

Then export sales went into freefall, from 160,000 in 2008 down to 87,000 in 2012 – only 10,000 of which were Holdens.

Domestic sales weren’t any better: Local manufacturers sold 160,000 cars out of 1.1 million sales in 2008, and by 2012 it was 138,000 – just 12 per cent of the market.  

The axing of the Holden nameplate will end a motoring tradition that began in November 1948 when the first 48-215 rolled off the production line at the Fisherman's Bend factory in Melbourne. Pictured is then Labor prime minister Ben Chifley with the first-ever model

The axing of the Holden nameplate will end a motoring tradition that began in November 1948 when the first 48-215 rolled off the production line at the Fisherman’s Bend factory in Melbourne. Pictured is then Labor prime minister Ben Chifley with the first-ever model

Peter Brock's 1978 A9X Torana on the Gold Coast in 2009. Similar versio ns are worth bucket loads today and are likely to be worth even more with the demise of the Holden brand

Peter Brock’s 1978 A9X Torana on the Gold Coast in 2009. Similar versio ns are worth bucket loads today and are likely to be worth even more with the demise of the Holden brand

Faced with cars that were $2,000 more expensive to build than anywhere else and Australia being a small, declining market, it made no sense for GM to stay.

Former ACCC chairman Graeme Samuel said essentially bribing car manufacturers to stay was increasingly a waste of money.

‘What we’ve seen today is the inexorable, inevitable consequence of the globalisation of the economy. I think, unfortunately, [money used for subsidies] has been wasted,’ he told Business Insider in 2013.

‘It was a fruitless task that was always going to lead to a dead end… instead of turning around and saying, ‘let’s face the inevitable’ and using the funds to assist Australian workers to retrain and reskill.’

Most other experts believe that though Holden and the other car makers were doomed to fail, another round of subsidies would have bought enough time to transition much of the workforce. 

Timeline of Holden in Australia

1856 – Holden begins as a South Australian saddlery business.

1917 – Holden manufactures vehicle bodies.

1931 – General Motors buys Holden Motor Body Builders.

1948 – The FX, the first Australian-designed car, is released.

1951 – Holden’s first ute goes on sale.

1958 – South Australian manufacturing plant opens at Elizabeth, though it does not assemble its first full car until 1965.

1968 – Kingswood and Monaro enter the market.

1969 – Holden makes its first V8 engine.

1971 – Holden launches the HQ model. Considered by some to be the best Holden ever.

1978 – Commodore replaces Kingswood.

1990 – Holden’s last Australian boss, John Bagshaw, quits.

2003 – Holden opens $400 million V6 engine plant at Port Melbourne, exports to Korea, China and Mexico begin. Toyota takes Holden’s position as top-selling car brand.

2009 – Parent company, General Motors, files for bankruptcy in the US but survives.

2013 – Prime minister Tony Abbott says the government will reduce support for automotive manufacturers despite appeals for help.

2013 – Holden decides to end manufacturing in Australia by 2017. The Holden Commodore is to become a fully-imported car.

2017 – The company rolls its last car off the assembly line on October 20, ending more than 50 years of car production on the Elizabeth site.

2019 – GM announces it will discontinue its Commodore and Astra models in 2020.

2020 – General Motors announces the retirement of the Holden brand in Australia and New Zealand.

 Source: AAP

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