Magazine of Socialist Action in Australia

Manufacturing subsidies haven’t worked

Reading Time: 2 minutes

South-eastern Australia faces recession as Toyota and Alcoa become the latest manufacturers to announce their closure. Billions of dollars of taxpayer funded subsidies over years have totally failed to secure both the direct and supporting jobs in the manufacturing industry.

An estimated $20 billion was handed over to the car manufacturers in the last 12 years by federal governments. Alcoa received $40 million in federal funds just two years ago. Despite these subsidies tens of thousands of jobs will now be lost.

Crisis levels of unemployment amongst young people are set to be heightened. Worst hit will be manufacturing areas like northern Adelaide and north-western Melbourne where the youth unemployment figures already stand at 19.7% and 14.8% respectively.

Cold indifference from Tony Abbott and his treasurer Joe Hockey coupled with their attempt to leverage the situation to drive down wages rightfully enrages many. But simply because the Liberals oppose subsidies to big business doesn’t mean that workers and their trade unions should support or argue for them.

In fact constant subsidies have been exploited by manufacturing bosses to create a perpetual fear for the industry and cajole their workers into accepting a long, slow retreat on wages and conditions.

Bosses have only succeeded in reducing wages and conditions in manufacturing because the current union leaders don’t have an alternative political and economic outlook to offer their members. This is what we need to change.

Subsidies are fundamentally flawed because once the bosses have the money it is in their control. They can spend it how they wish or take it and run as several have done. Rather than giving public money to private profiteers hoping they will maintain jobs we need to look at real solutions to the problems.

A far better option would be to bring companies that threaten closure into public ownership. In this way it would be possible to control how it was run and guarantee jobs into the future.

Public ownership could remove the profit motive from the heart of production. Under capitalism private corporations produce goods not because they are useful or necessary, but rather to make the biggest profit possible. In many cases manufacturing in Australia isn’t unprofitable – it’s just not as profitable as it could be elsewhere.

To maximise profits manufacturing companies have successfully engineered a world-wide race to the bottom in wages and conditions between workers in different countries. Weak trade unionism, low wages, a lack of democratic rights and repressive governments are the most important factors in making countries like China and South Korea more profitable options for bosses. Workers must meet this international effort with an international coordination of their own.

Solidarity between workers in different countries needs to be coupled with the development of an alternative plan of production worked out by the labour movement itself.

If there isn’t a strong enough demand for particular goods, like cars, then production should be converted to produce things that are in need. For example there are currently seven new tram and light rail networks planned or under construction in Australia which will require rolling stock that could be built locally. Precedent for this exists, as Holden produced tram cars in the 1920s.

These steps can be taken now, but they can only be successful in the long term as part of a democratic socialist vision for society. The alternative plan of production would include the public ownership and democratic control of the major sectors of the economy including manufacturing, banking, mining and transport alongside integrated democratic planning of the economy to meet human and environmental needs.

By Kirk Leonard


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