JOHN MENADUE. We are paying an enormous price to keep Christopher Pyne in Parliament

Jan 23, 2019

The Coalition Government ended our car manufacturing industry which had an Effective Rate of Protection of 8%. It employed 200,000 people. We are told by the Government that the void in SA will be filled by building the new French submarines in Adelaide. The won’t. There will be only about 2000 new jobs in SA and the Effective Rate of Protection for the submarines will be 300%

Our economy and defence would be far better  off  if we had kept our car manufacturing industry,imported new submarines ‘off the shelf’ and maintained them in SA

Who said that conservatives are good economic managers and are the best to keep us safe?

The 300% effective rate of protection for the submarine build is the highest rate of protection ever in Australia. And for that rate of protection, there will be less than 2,000 people employed. Even in the days of high protection with Tom Playford and Jack McEwen, we never saw a rate of protection like this.

When the Abbott Government pushed our automobile manufacturing industry out the door the effective rate of protection was 8%. Yes 8% and employing 200,000 people.

Apart from the massive level of protection and the $50b plus  budgetary cost,  the Coalition has yet to adequately explain how our security will be improved by building these conventional submarines to operate against Chinese nuclear submarines in the South China Sea. Even the US has reservations about our inserting twelve conventional submarines in the South China Sea. Projecting ourselves into that area against China is likely to make us less secure.

Comparing the motor vehicle industry and the proposed new naval shipbuilding in SA,  see Jon Stanford in ‘JON STANFORD. Business welfare under the Coalition: two case studies (1)’ and ‘JON STANFORD. Business welfare under the Coalition: two case studies (2)’, said

‘Car manufacturing, the imminent loss of which may cost an estimated 200,000 jobs, has an effective rate of assistance (ERA) of less than 8%. The proposed submarine acquisition will require an ERA in excess of 300%. In return, according to the Defence Minister, the project will create “1,100 jobs in the shipbuilding process, potentially 750 jobs in the supply chain”. As a payoff for such a high ERA this is a very damp squib … The Australian Submarine Corporation in Adelaide has been consolidating three air warfare destroyers (AWDs) for the last ten years. They have been plagued with cost and delivery overruns. Finance Minister Mathias Cormann has noted that “these ships are costing $3 billion a ship when equivalent ships from other parts of the world would have cost us $1 billion a ship”. Not only is the cost of the ships unacceptable, but they are already years late in delivery, leading to significant additional costs for the RAN.’

Neither the Business Council of Australia, the Australian Financial Review or News Corporation in their political partisanship have raised a word of query or criticism of the 300% submarine protection and the unacceptable delays that are in prospect for the French submarines.  This is despite their persistent arguments about free markets and open competition. In fact, their arguments are invariably about protecting business and capital rather than getting the market to work effectively. Just imagine if a Labor Government had acted so foolishly!

The 300% protection is so outrageous and scandalous it must surely be reviewed. It just cannot be sustained. It is a boondoggle .

Quite predictably The Adelaide Advertiser has also not examined this issue in any serious fashion.

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