It has been quite remarkable to see Joe Hockey daring and taunting Holden to close. He apparently chose to take advantage of Tony Abbott’s absence in South Africa to show off his “dry” credentials and burnish his leadership aspirations. Having lost the argument over Graincorp, Joe Hockey talked tough on Holden. He dared Holden to either put up or shut up. He then escalated the rhetoric against Holden by shouting in parliament ‘There is a hell of a lot of industries in Australia that would love to get the assistance that the motor vehicle industry is getting’.
In fact there are a lot of industries that do get a level of assistance and protection that far exceeds the $500 million p.a. which Joe Hockey tells us the motor industry receives.
Who are some of these beneficiaries of this corporate welfare?
My first exhibit is the $7 billion p.a. taxpayer subsidy to the private health insurance industry. That corporate welfare alone is about 14 times more p.a. than goes to the motor vehicle industry. PHI has operating costs about three times higher than Medicare. Through gap insurance PHI has facilitated the largest increase in specialist fees in 25 years. PHI weakens Medicare’s ability to control costs. It favours the wealthy. It offers look-alike policies with very little real choice. It churns money rather than making things. Yet companies like BUPA, Medibank Pte and others attract a $7b pa subsidy
Through restricted competition and political lobbying power our chemists impose excessive prices of over $1b per annum.
Taxpayer provide a $30 billion p.a. subsidy to the superannuation sector.
And there is a lot more in such areas as subsidies to fund negative gearing and capital gains discounts. (See my blog of November 29).
By contrast the motor vehicle industry does provide substantial benefits to the Australian economy and community. It is at the core of our manufacturing industry.
The motor vehicle industry is far more important to our future than the industries that receive the enormous subsidies that I mentioned. We have got the issue seriously out of proportion.
Why is it that our corporate economists have an ideological set against the manufacturing sector but ignore the enormous corporate welfare that goes to the rent seekers in our services sector?