Should the Australian Government provide money to car manufacturers to prevent them from moving their operations overseas? Discuss, drawing on contemporary debates about this issue in the news media.
Car manufacturing in Australia was one of the strongest sector in the Australian economy. Within the past few months and ongoing weeks, there are several news being published that the Australian car manufacturing sector has become so small that that each car company is relying on the survival of the other. In relation to the debates and media news, this essay demonstrates, as to whether the Government should provide funds to car manufactures to prevent them operating overseas.
The news has been all over the place that the three main car manufacturers, Toyota, Holden and Ford are expected to shut down their operations in Australia in the coming Years. The local content of the Australian made cars is in decline. According to figures supplied by the car makers, 30% of the parts to make Holden Cruise was sourced locally and 50% was Commodore. To survive beyond current models, car manufactures were going to be forced to rely more on foreign parts to keep the costs down. Due to low sales and low cost sales, the three manufactures are shutting down to recover from the massive financial losses and start making a profit. The data illustrates that the three factories have lost more than 1.5 billion dollars on their local manufacturing operations over the past decade, despite receiving more than twice that in the taxpayer over the same period. Therefore, who’s to blame for this deteriorating times for the car manufactures? The government is the major association with the car manufacturing industry. The creation of low import tariffs and signed Free Trade Agreements gave cheap foreign cars upper hand. Nevertheless, the unions demanded better wages and conditions for their workers, which the car manufacturing industry is unable to provide. All of these...
Cited: courier mail News)
Consequently, to prevent car manufactures moving overseas, government has to implement strong strategies and ways in such abrupt state. Government funding is a reasonable measure to keep the car industry running in Australia. Hence, the news has been doing rounds that both the Federal and State government are willing to invest money and have decided to pay the companies a substantial amount in government funding to keep manufacturing in Australia. Therefore, the government has to make sure that they get decent returns form their investment. Traffic and Fringe Benefit tax should also be decreased to a rate to which the manufactures can cope with. The other method of saving car operations moving overseas, government should cut off tariffs, to lower the costs of the manufactures.
In the face of various economic uncertainties concerning the moving of car manufactures, the Australian government has to implement systematic reforms to boost and upgrade the car industry. Toyota, Holden and Ford has been operating in Australia over a number of years and has encountered a good relation with its customers. A sudden movement or shutdown of the car manufactures has left both the customers and workers in an apprehensive distress. The future is uncertain, thus the government is the only source of aid to not only the Car manufactures but Australia as well.
Please join StudyMode to read the full document