What’s Old is New Again

Protectionism is back:

Toyota will receive $35 million from the Federal Government in return for building a new hybrid car in Victoria from 2010.

The headline: “Toyota hybrid gets $35m aid”.  I wasn’t aware Toyota was in such dire straits as to require aid… Come on people, dig deep and give generously – there are starving corporations out there.

The $35 million comes from the $500 million green car innovation fund that Mr Rudd promised before the election.

That’s a relief – for a moment, I was worried it came from my taxes.

I guess Rudd considers this good politics.  He manages to suck up to unions, greenies and the Japanese in one go.

UPDATE:  With Victorian state government kicking some cash in too, they’re actually getting $70m.

UPDATE 2:  A lot more from Andrew Bolt.

UPDATE 3:  Seems Rudd is again ignoring a Productivity Commission report:

That report said the economy would be almost $600million a year better off if Labor proceeded with the former government’s plan to halve tariffs and get rid of car industry assistance, and that Rudd’s proudly touted $500million “green car fund” was essentially an expensive waste of time.

And it’s all the tip of the iceberg, I’m afraid:

Industry Minister Kim Carr (could we be about to have a Carr car plan?) leaves next week for talks with Ford chief executive Allan Mulally and GM chairman Rick Wagner about their possible Australian investments, with incentives from the green car fund.

28 thoughts on “What’s Old is New Again

  1. what happened to cutting back on spending? wouldn’t a cheaper and more effective means be to offer a discounted rego on hybrids?

  2. HE can’t offer discounted registration, that is a state issue. Even tax breaks would be better than a subsidy.

  3. I’m beginning to think this Labor government is going to be more like Whitlam Labor than Hawke/Keating, contrary to what I was expecting based on their rhetoric.

    If we go into a serious economic downturn and they continue this pork barreling nonsense, they might end up being a one term government as well. Even the dickhead Liberals will start to sound sensible in comparison.

    Incidentally, subsidies are a much better option than tax breaks as they are a visible cost to the budget. It helps ensure they remain embarrassing and are ultimately removed.

  4. just for the record, Toyota made profits of $14bn in 2007.

    glad to see my taxes subsidising one of the richest corporations on the planet.

  5. in return for building a new hybrid car in Victoria from 2010.

    Just in time for the next election.

    contrary to what I was expecting based on their rhetoric.

    I hope you didn’t pin too much hope on their rhetoric.

  6. Yeah SL – that’s almost Kevin’s angle on it. This was Little Kev on The 7:30 Report:

    KEVIN RUDD: … It is not a production subsidy, it’s about starting up a new business and that’s what we set as an ambition last year. We are proud of the fact that we’ve been able to realise that ambition.

  7. The key perpetrator is Kim Carr, a seriously left leftie. If he had his way we’d all be taxed at 100% of our income and living on government handouts.

    I hear he’s now gone to see Ford in Detroit to see if he can give away some more of our money. Unlike Toyota they’re trading at a loss, so our donation might help them lose money a bit longer.

  8. An open letter to Senator Kim Carr:

    I wish to build an entire carbon friendly city. The cheque is in the mail? Thanks.

    Carr (and probably Bowen) need to be kept away from Cabinet and Minesterial positions if Rudd wants to keep the Governemnt solvent.

  9. Todays papers point out that Toyota were planning to produce the hybrid car anyway, before any subsidy was announced.

    From Toyota’s perspective, I can’t blame them. They realised it was in their interest to produce the car, and then having realised we live in a social democracy, they can at least try to put their hand out and talk about the “social benefits” of a hybrid car.

    If only we didn’t have an economy where the looters run rampant, then the producers wouldn’t waste their time trying to win influence in political circles and build support from the moochers and the looters. They would instead go about their business as they ought to – to maximise profits.

    I wonder what GM and Ford in America are thinking right now as other Aussie politicians visit them ?

  10. An innovative company like Tata might build a diesel-water injected turbo hybrid with a ridiculously low cost per unit and a voluntary green fund for CO2 abatement and reforestation. Let’s hope they do.

    Cut taxes and tariffs and let companies innovate and compete to be the richest and most altruistic firms. Taking $70 mln of corporate welfare isn’t very altruistic!

  11. In the last week, I’ve seen the SA state government announce that it’s giving AAMI stadium $100 million dollars to upgrade, and the entertainment centre $30 million dollars to build a new 2500 seat venue (which is highly unfair to the two existing 2000 seat venues we already have).
    The $70 million dollars given to Toyota is the third incident this week where an obsence amount of tax payer’s money is been used by governments that have absolutely no business being involved in these projects.
    It’s hard enough convincing people government shouldn’t fund education or health. But in our society there’s popular support for tax payer funded car manufacture grants and stadium building!

    I recently had a LTE published highlighting the fact that the media have not addressed the bigger picture issue ie: what areas are appropriate for government expenditure. Governments can basically spend our money in any way imaginable.

  12. It’s funny, isn’t it? As classical liberals, we’ll often be accused of being “pro-corporate,” when we are in fact pro-free-market. It seems that many corporations benefit from the lack of a free market and, more often than not, it is a left-wing government that obliges.

    If it’s not subsidies, then it’s lucrative government contracts. Rudd’s wife makes a living out of this sort of thing – should we be surprised that Little Kev thinks this is how business works?

  13. We’ve been saddled with these private-public partnerships for over a decade now, as if this is part of some liberal free market agenda.

    The process we call privatisation is usually the selling off of a government-run entity, but always subjecting it to tonnes of restrictive regulations. (especially transport, telecoms, energy).

    And of course, when failures occur, we capitalists are supposed to accept the blame and free markets are supposed to have failed us ?!

  14. It seems that many corporations benefit from the lack of a free market and, more often than not, it is a left-wing government that obliges.

    I doubt if that’s true. Left wing governments have tended to adopt a ‘plague on all your houses’ mentality and avoid picking winners, relying on high taxes and regulation.

    Right wing governments, both Liberal and Labor, have tended to believe the cogs of the market work better with a bit of taxpayer funded grease. They differ as to which cog gets it (car companies or ethanol producers, for example), but not in the general assumption.

    There is a Republican caucus in the US that argues against grease of any kind, and wins occasionally, but I don’t think there’s anything comparable in Australia.

  15. “Right wing governments, both Liberal and Labor…”

    You mean, “Left wing governments, both Liberal and Labor,” don’t you?

  16. Perhaps he meant right wing based on the original definition: right wing translates into conservative and anyone who opposes the status quo is left wing. So libertarians would currently be left wing in Australia.


    This definition is actually much more consistent than the doublespeak definitions used elsewhere.

  17. No, Right wing. They believe in the market but think they can make it work better by playing favourites.

    I don’t classify free marketeers as left or right wing. In any case, we never get any governments of that kind.

  18. This is just horrible isn’t it. You’d think that Toyota employees were starving with flies crawling all of them and those swollen bellies full of nothing that the kids get after African civil wars and marxist takeovers.

    These people are just astonishingly stupid. Giving our money to giant, foreign corporations. It doesn’t get more perverse than this. Face it Rudd is an empty suit. He’s dangerous. I don’t know what it is I dislike about him the most. But his ignorance is one contender.

  19. “I’m beginning to think this Labor government is going to be more like Whitlam Labor than Hawke/Keating, contrary to what I was expecting based on their rhetoric.”

    Its really the triumph of the Prodeo set isn’t it? The latte-leftist triumphing over the leftists whose constituency were the workers. We can have disputes about old-time non-Marxist union guys about labour economics. But a lot of these people were at least loyal to their constituency and to the country. Maybe Martin Ferguson is the last of that crowd left. The rest of them seem to be the smug set if would sooner wear womans clothes than get their hands dirty doing any physical work.

    Now its just a bunch of Prodeo life-long bludging wankers running things. If they saw a working-class person they’d probably be thrown into fits of vomiting.

  20. In macroeconomics courses at American universities, some devote a considerable amount of time to the case studies of American southern states in the 1980’s subsidizing Detroit auto manufacturers to locate manufacturing facilities in their state. The conclusion: The auto manufacturers would have located new plants in the southern states anyway, so the subsidies actually became counter-productive to the intended goal of increasing employment.

  21. To be fair, I’m not sure of the point of some of these comments about comparing the subsidy with giving hunger aid to starving children, when its intent is clearly encouragement of innovation into environmentally friendly products. It’s not really bailout or assistance for the sake of assistance – it actually has an arguably (and before you crucify me, I don’t agree with it) legitimate purpose.

  22. Winston, don’t start with that science fraud!

    Where’s the proof?

    I need to see the proof!

    Fuel guzzling cars ARE green!

    Trees love CO2.

  23. I’m a little concerned at the anti-foreign company theme running through this discussion.

    Just as a big company is simply a small company that became successful, a foreign company is merely one that went overseas.

    I would love my company to be so successful that it became big and was operating in other countries. But it wouldn’t suddenly be transformed from warm and cuddly to nasty and rapacious.

    If Rudd et al were handing out $70 million to an Australian company, it would be no less obnoxious. Think about the ethanol industry – subsidised to the hilt.

    It’s immaterial whether they are filthy locals or filthy foreigners. Corporate welfare is indefensible.

  24. I didn’t notice that…but it isn’t desireable.

    Although effective rates of protection will increase dramatically if globalised firms can literaly pick whichever Governments will subsidise them. The possible trade distortions and welfare losses domestically and globally are quite large.

  25. The commentary here is a bit unfair to Whitlam, who whatever other faults he had was the only PM with the balls to sharply slash tariffs (25% in one hit). He might have been fond of other forms of welfare but he had no time for business welfare.

    Birdy is also being unfair to the Prodeos too, whose posters are as horrified with this waste of public money as you lot. Worse than the $35m itself is the encouragement it gives to other corporate panhandlers – they’ll be queuing at Rudd’s door now.

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