The Australian automotive industry has been important to Australia’s economy for numerous decades. Unfortunately, due to factors regarding the cost of manufacturing in Australia, including the higher wages and benefits of Australian workers, the 3 main manufacturers, Holden, Ford and Toyota, have all announced they will be moving their manufacturing overseas. This move comes on the back of a motion put forward to the government to continue providing financial assistance to prevent them doing so.
Toyota, Holden and Ford have all announced their respective companies’ closure of all manufacturing plants in Australia by the end of 2017. Holden’s Chief Executive, Mike Devereux announced Holden’s plans to cease manufacturing in Australia with this statement in a press conference;
‘Today we’re announcing that Holden will cease manufacturing in Australia by the end of 2017. This will mean the eventual closure of our Elizabeth plant, as well as our Victorian engine plant, our engineering centre, and our proving grounds down at Lang Lang.’(Herald Sun 2013)
Many Australians believe that subsidising the car industry is a huge waste of taxpayers’ money, as, if the industry were required by society; it would be able to sustain itself. With the Government intervening, they are only further promoting dependency on the tax payers to fund bad decisions of the industry’s executives. This is in line with the theory of Classical Liberalism, especially the ideas of Hayek.
Hayek argued the role of the Government in sustaining business, and the effects of intervention to a society. ‘Classical liberalism is a political persuasion that is extremely suspicious of government intervention across the board.’ (Klein & Stern, 2006, p10). His beliefs were that the less state involvement, the greater protection of individual rights. Hayek especially focused on the role businesses play on society.
The classical liberalism model depicted business as an individual responsibility, and not a responsibility of the government, and therefore any intervention by the Government was hindering the rights of society, the right to have sustainable businesses built on demand. Further, any assistance was prolonging the inevitable demise of the business, and preventing stronger businesses succeeding. This may have been relevant in the past, but in times where we now fully understand the importance of jobs, and the effects unemployment has on society, greater precautions are required to ensure job safety for workers.
The reconfiguration of the companies to overseas destinations has huge consequences for Australia’s economy. The obvious loss of jobs is devastating for thousands of workers, many of whom have worked with the respective company for multiple decades. Martin Van Roy, a Holden employee for 24 years stated on the day he was informed of the company’s decision, ‘I’m very passionate about the Holden brand and where it’s going, so today is a sad day’ (Fewster 2013).
As Joshua Dowling...