Grattan Institute report says car industry subsidies can make job woes worse

[BHDOGS]

http://www.adelaidenow.com.au/news/s...-1226768196217

CAR industry subsidies could be offering false hope to workers and even exacerbating the associated problems, a major report says.

Without industry support, jobs would dry up and there could be "significant economic and social effects on the local community", according to the Grattan Institute's Balancing budgets: tough choices we need to make.

But, it adds, there is little evidence that support from government will help and they could be stopping people moving to areas with better job prospects.

"Ironically, governments that continue to prop up struggling industries can exacerbate this problem," the report states.

"By providing hope that a region will continue to offer the same jobs as in the past, governments encourage people to put off the hard decision of moving.

"In practice, when substantial industries close, most workers rapidly find alternative employment - although it is often at a lower wage precisely because the new job is in an unsubsidised industry."

The new Government says it will reduce subsidies to Holden but help the industry through other policies such as getting rid of the carbon tax.

It has also established a Productivity Commission inquiry into support for the industry, which has a public hearing in Adelaide next week.

The Grattan Institute report examined 20 reforms to fix the budget, including increasing the GST to cover health, education, fresh food, and other areas.

Institute chief John Daley said the Government had to make "tough choices" to ensure "Australia's long-term prosperity".

The other GST change on the agenda is to reduce the threshold that it applies to on overseas purchases.

That shift will be high on the agenda on Wednesday when Treasurer Joe Hockey meets with state treasurers, including Jay Weatherill, for the first Standing Council on Federal Financial Relations under the new Government.

Parliamentary secretary to the treasurer Steven Ciobo said it was up to the states to argue for a lower threshold.

"It's the state governments that actually reach the agreement and put in place the framework around what the threshold should be and how much revenue should flow back to the states," he said.

Opposition Leader Bill Shorten said it was a "very tough issue" and questioned whether it would cost more to collect the tax than would be raised by it.

Premier and Treasurer Jay Weatherill said the Government was showing its true colours after the election.

"We've got Mr Hockey talking about revisiting the whole GST base, taxing food, taxing health, taxing education," he said.

"None of these things were mentioned in the federal election campaign."

[GASWAGON]

Well GM got gazillions of USD in 08/09 after so so closely closing the doors.....Can't see why the same won't happen to Holden if GM have anything to do with it?

At least Ford had the guts to pull out instead of relying on taxpayers money to pay the workers which realistically are just over paid 'un skilled' workers doing the same simple repetative work day in day out..

I really cannot see how 1700 workers all losing their jobs at once are going to find other work in the same region as the GMH factory in Adelaide all at the same time?

It maybe smarter for some to pull the pin early and move on to another area/industry before 'the mob' does the same in a few years time?

I really can see two or three new Detroit like areas in only a few more years?

[Bossxr8]

Originally Posted by EF_6

Well GM got gazillions of USD in 08/09 after so so closely closing the doors.....Can't see why the same won't happen to Holden if GM have anything to do with it?

At least Ford had the guts to pull out instead of relying on taxpayers money to pay the workers which realistically are just over paid 'un skilled' workers doing the same simple repetative work day in day out..

I really cannot see how 1700 workers all losing their jobs at once are going to find other work in the same region as the GMH factory in Adelaide all at the same time?

It maybe smarter for some to pull the pin early and move on to another area/industry before 'the mob' does the same in a few years time?

I really can see two or three new Detroit like areas in only a few more years?

Don't you just love uneducated assumption makers who have zero clue when they call people in jobs they know nothing about "un-skilled". I'll bet I have received more job training than you will ever receive in your life time. But then again, what would I know, i'm "unskilled".

If anything auto workers are some of the most highly trained non-university educated jobs you will find. We are not robots told to pick this up, put it here and off you go. The high level of continual training would really surprise a lot of people.

But I agree with you in regards to the difficulties that will be faced with hundreds if not a few thousand workers left without jobs if Holden pulls the pin. It will be a huge problem and that is why the SA government must be crapping themselves at the moment because it will be a massive blow for Adelaide when the pin is pulled.

[zipping]

You know the industry is gone when even left wing think tanks are saying support is futile

[PepeLePew]

And in how few posts does this start to mimic the other, close to terminal/lock, thread? PLEASE restrict comment to the posted article and leave subjective comment and union vs non-union chat out of this thread. The mulberry bush has been extremely friction burnt already.

[Crazy Dazz]

Oh yes, because having a job is far worse than not having one…
Because if you don’t have a job, you will be forced to abandon your house, pack up your family, and move to China where the jobs are.
Economic Rationalism at its finest!

[tweeked]

I cant wait till the day comes that we get an Indian Economist to replace these out of touch, over educated with nonsense, professional academic waste of timers.

Bet you would hear something different from them the day they get told that they have become uncompetitive compared to an import, and they should move on to something they are competitive at.