Congratulations, dear reader. We – and I mean all taxpayers here – have now become “strategic co-investors” in the production of Holden’s next generation of motor vehicles, which will go into production in the second half of this decade.
It’s so exciting. Together we will chip in $275 million (that’s $215 from the Federal Government plus another $60 million from the Victorian and South Australian governments) or just over one-fifth of the investment Holden needs to build the vehicles and keep its Australian manufacturing operations alive.
What will we get in return for this, besides a very warm and fuzzy feeling?
Well, I’m not so sure. You’ll be very surprised to hear that yesterday’s press announcement was heavy on picture opportunities but a little light on the conditions of the handouts. Sorry, I keep getting that wrong – strategic co-investments is the right term.
There’s no commitment that Holden will guarantee a certain amount of jobs.
There is no commitment towards radical productivity improvements.
There was no commitment towards the development of energy efficient cars – hybrids, electric vehicles or a new technology.
Despite that fact we are all co-investors, I doubt there will be a special 20% co-investors discount on Holden cars.
I’m not even sure we all get showbags. Or even a sticker.
If we as taxpayers really must step in to help subsidise the car industry – and I think there would be thousands of small businesses who would question that – then surely governments must ensure we get terrific value for money.
Holden has said it will retain its engineering and design capabilities and improve local supplier access to global supply chains.
But apparently the nitty-gritty of any deal will be commercial in confidence.
It’s been clear for at least the last decade that the Australian sector has been making the wrong sorts of cars for a dwindling market – large, petrol-hungry family cars that no longer enjoy the demand they once did.
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But has the Government managed to use its cash to encourage the car sector to transform itself? The answer appears to be “no”.
At least Kevin Rudd made a stab at pushing the industry towards a different place with the Green Car Innovation fund, which focused grants on energy efficiency. The latest handouts to Holden (and earlier this year to Ford) appear to have no other purpose than to try to keep the status quo in place.
We know SMEs are sick of money being poured into these large companies. But I reckon the fact that these latest handouts have been made with no or few transparent strings attached is even more infuriating.
When a small business goes for a government grant, there is a long and complex application process, a large number of conditions and obligations and stringent reporting requirements. And that’s exactly the way it should be when you’re playing with taxpayer money.
While Holden is clearly much more politically important than any one start-up, the lack of transparency and conditions placed on Holden deserves scrutiny.