Robbing DFAT to Subsidise Cars Australians do not Want

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Dick Woolcott

NOTES ON THE NEWS: Richo – aka Graham Richardson, former Labor numbers man – certainly got his figures right last week. On Tuesday, he traded in the Ford Falcon he had been driving for the past three years and bought a Japanese-made Lexus.

Two days later, Ford announced it was ending motor manufacturing in Victoria, with the closure in 2016 of its plants in Melbourne and Geelong, bringing to an end the production of the taxi drivers’ friend, the Ford Falcon, Australia’s fastest depreciating vehicle.

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The Ford Falcon

Had Richardson been getting rid of his Falcon this week, his trade-in value would probably have been thousands less, but he was only doing what most Australians do, which is to buy imported cars, mostly from Japan, South Korea and Germany. Jac Nasser, former worldwide boss of Ford, and now chairman of BHP-Billiton, rightly predicted just a few weeks ago that our car industry was unsustainable.

What has this got to do with international affairs? Quite a bit, actually. Already the blame game is in full cry, with the politicians leading the charge. First the high dollar, which, incidentally, has fallen 8 per cent in the last few weeks, as the markets have woken up to a fact that has been known for months – that China’s growth is slowing. But neither the Falcon nor the SUV Maverick have ever had an export market worthy of the name, and the heavily subsidised Falcons have often been cheaper to buy than comparable imports.

What about the carbon tax, Tony Abbott’s perpetual cry? Not really. And if Ford thought that would make a difference, they might have held off an announcement until after September, and a possible change of government.

Bad management by Ford Australia? Easy to say, but it wanted to make the successful Ford Focus in Melbourne, but HQ in Dearborn, Michigan, decided on Thailand, where it can be successfully produced at one quarter of the cost, with a more malleable labor force, much closer to Asian markets.

This is really the heart of the matter. The Australian motor industry is uncompetitive in the Asian century, and politicians from both main parties have wasted a great deal of taxpayers’ money in propping it up. Australian productivity is not good enough, and the unionised work force has been overpaid. Neither side of politics seems prepared to admit this, but to continue to pour hundreds of millions of dollars into overseas companies in the hope they can defy gravity is unrealistic.

This leads me to the Budget, and its impact on international affairs. Reading the Budget forecasts, many of them made on false assumptions, made me decide any comment was futile. Many others have made that point.

But last week it emerged that another feature of the Australia in the Asian Century white paper has taken a direct hit – the aspiration that DFAT would get a little extra money to spend on its invaluable work in the region. This shows that although Julia Gillard may have talked up the importance of Asia in our future, the efforts of the foreign minister, Senator Bob Carr, and Kevin Rudd and Stephen Smith before him, have failed to deliver.

Australia has only 26 posts in Asia, below broken Britain, recession-hit France, Germany, India, Indonesia, South Korea and, of course, China and Japan. The Budget contained no new funding for new Asian missions proposed in the white paper.

This is at a time when the demands on our Asian embassies are increasing. When I was in Jakarta last month, the staff at our embassy had to cope with three ministerial visits, an important ASEAN meeting in Bali, two substantial trade missions, a mining conference, and other calls, in addition to normal duties. And, as more people travel to Asian countries, the calls on the consular staff is increasing, as Australians get into trouble of one sort or another.

The forward estimates were not encouraging either. An analysis by The Australian newspaper – now arguable the only journal to take international affairs seriously – shows that at the end of the Budget forecast period in 2016-17,  DFAT’s slice of government spending is expected to fall to 0.31 per cent, down by one third since the final years of the Howard government.

As chief reporter Tom Dusevic commented, “this falls well short of the ambitious rhetoric on Australia’s opportunities in the Asian century”.

Or, as Richard Woolcott, former head of DFAT and current AIIA NSW member put it in a speech at the University of Melbourne this week: “The fact is that we are not doing as well with our Asian engagement as the regular rhetoric and diet of “spin” emerging from Ministerial offices would have the public believe”.

Dick’s speech, Indonesia and Australia in the Asian Century, is well-worth reading.  In that speech, Dick provides a fascinating reminiscence:

“I recall when I was posted in Moscow I was travelling by train on the Siberian railway between Omsk and Kharborovsk, I was listening to two Russian workers talking about the future of the Soviet Union.  One said “Yuri, we are building a new communist society”.  His more cynical and realistic companion replied ‘Yes, Ivan.  But only in our media’.  This remark 50 years ago has a resonance for me in Australia today.”

For Dick, that resonance exists in the spin that has surrounded the Asian century white paper since its publication. But it also applies to the false rhetoric that both government and opposition have served up about the motor industry, creating false expectations, false hopes, and, for Ford workers, despair. Think of the hundreds of millions of dollars that could have been applied to more deserving causes.

Colin Chapman is the President of the AIIA (NSW).

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