The Holden mess gets worse. John Menadue

Dec 13, 2013

Yesterday I posted a blog ‘Taunting Holden to Leave’.

Let me add to the continuing story of this major stuff-up.

The Abbott Government, through Industry Minister Macfarlane asked the Productivity Commission to advise on assistance to the car industry. He asked for a report by March next year. On Monday this week, Minister Macfarlane was asked if he supported Holden remaining in Australia. He replied ‘Absolutely! Are we doing something about it? Absolutely!’ But this attempt by the Minister for due process and proper consideration was saboutaged by Joe Hockey. Holden was put to the sword by the Abbott Government long before the Productivity Commission could report.

In acting ahead of the Productivity Commission report, Joe Hockey bullied, taunted and threatened Holden. Leaks poured out from ministers to make Holden’s position almost intolerable. The leaking was supported by Rupert Murdoch’s Wall Street Journal that said that General Motors had already decided to stop manufacturing in Australia. With all this hectoring, Holden decided that it had had enough and would exit manufacturing in Australia. If Holden was looking for an exit strategy the Abbott Government gave it one. It is hard to recall such a mess in decision-making.

Another important factor is that the Abbott Government decided to retain the Fringe Benefit Tax salary packaging rorts for executive cars. The Labor Government said it would abolish these rorts and save $1.8 billion over four years. But the Abbott Government decided to reverse this decision. That $1.8b is almost the same amount as the cost of additional assistance that Joe Hockey said the car industry needed – $2 billion over four years.

Furthermore, the Fringe Benefit rort had been used in executive salary packaging to buy almost exclusively foreign-made cars, whereas the $2 billion in industry assistance that was necessary would go directly to help Australian manufacturing of cars. So the Abbott Government was prepared to turn a blind eye to tax avoidance over executive cars. But it refused very nearly the same amount over four years to keep companies such as Holden manufacturing. In Australia. The Abbott Government decided that it would give preference to the tax avoidance industry rather than the auto manufacturing industry.

What a disgrace. What a shambles.

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