No minister would be the best plan

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Australian Financial Review 14th February, 2014

Given that successive Coalition and Labor industry ministers have spent the past 30 years doing basically just one thing, deciding how much money to give to car companies, Toyota's demise means there's now no need for an industry minister.

Since the federal election, Labor's spokesman on industry, Kim Carr, has spent more than half his time talking about the car industry, at least as measured by the number of press releases he's issued. Given that car workers comprise just 3 per cent of the number of people employed in manufacturing in Australia, that's an awful lot of attention bestowed upon them by Carr.

The federal Industry Minister, Ian Macfarlane, has spent only slightly less time talking about cars than his opposition counterpart.

Ministers for industry should instead have been called ministers for the car industry. Or to be even more accurate, they should have been called ministers for the unionised employees of the car industry.

The problem with having an "industry minister" is that like all ministers, industry ministers want to do things - and the easiest thing for them to do is give out money. In an ideal world, there wouldn't be an industry minister.

All firms and all sectors of the economy should be treated equally. Car manufacturing is worth about $5.5 billion to the Australian economy. Hairdressing and beauty services are worth about $4 billion, but hairdressers and beauticians do not get their own minister.

The industry minister could be replaced in cabinet by something Australia has never had before - a "minister for consumers and taxpayers".

This minister could go into the media and explain that an end to automotive subsidies and the abolition of tariffs would reduce the cost of a new car by up to $2000. They would point out that last year more than a million new cars were bought in Australia.

They would also say that scrapping the customs duty on imported second-hand cars would reduce their cost by $12,000.

GOVERNMENT PLAN ‘OXYMORON'

This minister could do other things as well. They could talk about how families prefer their food to be cheaper and that when government regulators stop competition between retailers, food prices go up. This minister could likewise talk about how families like discount vouchers for their petrol.

Another reason not to have an industry minister is that then the government wouldn't be expected to have an "industry plan". (Of course an industry plan from the government is a oxymoron anyway.)

After Toyota announced it was closing, the opposition demanded a "jobs plan" from the government.

In the letters page of this newspaper on Wednesday, a law academic from the University of New South Wales called for a plan B to ensure the country's manufacturing capacity after the car makers leave. And they've been demands for things like a "research plan" to deal with the potential loss of $700 million the car industry spends annually on research and development.

Thirty years ago this year John Button as industry minister started work on this "Button Plan" to help the car industry cope with a reduction in tariff protection. The plan worked for a little while, but it came at a huge cost to consumers and taxpayers. And, as we've seen this week, Button's plan failed, as all government plans do.

It should be obvious the country does not need a research plan to make up for the automotive industry R&D that could be lost. Spending money on research and development for locally built cars is like spending money to make a better typewriter. It's an interesting exercise, but commercially futile.

There is not much of a market for typewriters - or locally built cars.

After all the experience the world has had since 1917 of governments' economic plans, it might be thought that some lessons have been learned. Apparently not.

Economic plans are as popular now as they've ever been, and they're just as unsuccessful as they've ever been - as the workers at Ford, Holden and now Toyota have discovered.

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