Does Australia care about having a car industry? Nah

Use this to embed video

The simple reason Australia won’t have a car industry after 2017 is that we don’t buy locally made cars. Maybe you do, but if so you’re a bit of a curiosity.

About 90 per cent of cars bought here are imported: all the cheap ones, all the expensive ones, and most of the ones in between – more than 60 different brands, a world record. Australian-made cars are neither cheap enough for their quality nor good enough to be the price they are.

The blame for this state of affairs, and for the collapse of this industry, is no one’s and everyone’s. The workers should have taken a pay cut; the union should have let them; the Government should have had an 'industry policy' (read: subsidies); the managers should have made better cars; the designers should have designed smaller cars, and bigger ones, in tune with what the market wants; above all, we should have bought more Australian-made cars.

We don’t buy enough Australian tinned fruit either.

The reason industry protection exists anywhere in the world is because most consumers don’t really care whether there is a local industry or not – they just want to buy a good, safe product at a low price. That’s why every country with a car industry except Australia finds some way to keep imported cars out or to make them very expensive.

The end of the Australian car industry will make absolutely no difference to consumers except perhaps to make all cars cheaper because the remaining tariff (average 3.5 per cent) should come off, although it might be left on as a straight tax to raise money.

It should also mean lower Government spending because the subsidies won’t be needed any more, although the cash might have to be redirected to retraining displaced car workers, propping up other industries and conducting Royal Commissions.

It will relieve the unions of having to give up Hard Won Gains and will thus stem the insidious encroachment of market-based pricing of labour.

And it will mean that about 0.21 per cent of the workforce (25,000 souls) will have to get another job, or increase the unemployment rate from 5.8 to 6 per cent if none of them does.

Is their sacrifice worth it for cheaper cars, lower Government spending and the defense of Hard Won terms and conditions?

Wrong question. The right question is whether consumers, politicians and unions officials care whether or not any Australians are employed making cars.

Answer: not really, when you get down to it.

Connect with Alan Kohler on Google+