Sunday, 9 August 2015

What happens when the Australian government does not get overly involved in industry? Holden.

Whenever I report on the research I conducted into Australian telecommunications during the period 2005-2013, I often refer to the over-bearing extent of government control and how this has stifled Australian industry. This brings numerous calls from anonymous commentators about how the market had failed and therefore government intervention was necessary.

In telecommunications, the simple fact is that government has never given the market a chance to function. Now I don't mean that a free market will ensure towns like Longreach in Queensland's central west  get the NBN (now nbn) tomorrow. What I mean is that federal politicians use telecommunications policy as a way of garnering votes.

Of course, politicians need to garner votes. Utopian views of the world are at best naive or at worst unconstructive. But there is some merit to contemporary (if we consider the views of Adam Smith as contemporary)  ideas about striking a balance between government and business.

So tonight while researching my family history (my great-grandfather was a foreman with General  Motors-Holden in Sydney after the Second World War) , I stumbled upon this ripper of a quote from the National Archives:
Although Cabinet identified two major drawbacks to the Holden proposal – a limited range of vehicles and uncertainty in the plan – the low requirement for government assistance made it attractive. The major drawback of Ford’s plan was the requirement for a high level of assistance.
Holden's prominence during Australia's "golden age" of manufacturing was brought about by a company that did not need government assistance. Meanwhile, the founder of mass production (Ford) wanted more from government. I was astounded.

It is bizarre how difficult it can be to make comment, even when based on empirical research, without being on the receiving end of well-meaning criticism that smacks of ideology. I am sure others could make the same claim of me.

But I wonder if one could compare a series of important Australian industries and their ongoing success in relation to the amount of government "assistance" that was provided? Of course, how we measure success would be an important exercise. And, no doubt, where government subsidies reigned supreme only the foolhardiest of industries would be hamstrung.

Yet if you were to think immediately of four things that come to mind when thinking about Australia: football, meat pies, kangaroos and Holden cars, none of these things come from government.

So I find it rather, let's say - unexpected  - that Australians today (at least those I am exposed to whenever I write about telecommunications) think that government intervention in the market is a thing to be encouraged. I can think of three recent examples that suggest otherwise:
  1. Kevin Rudd's "green car" initiative. They were going anyway and now they are gone.
  2. The "Home Insulation Scheme". Need I say more.
  3. Anything the Coalition ever said, especially the bits about citizens pulling their weight. 
If we look at the scorecard, then in telecommunications at least, the government is having a shocker. But what shocks me most is that Australians think that our governments were ever any good at industry policy. Am I just getting old? I was only five at the time but I knew Whitlam was having a shocker.

And I think, when it comes to telecommunications, that most modern day "believers" don't remember how bad it was to have to deal with Telecom Australia. Seriously, it was like asking your ex-girlfriend to give you back your records. If this doesn't make sense, then you never had anything at all to do with Telecom Australia, or, in its previous form and (as its contractors used to refer to it), "pig's meat and gravy" (PMG). It is like asking for a well-deserved pay-rise from a tight-arsed boss.

Either that or you don't know what I mean by records.

What else can I say to convince the ideologues? Probably nothing, But what happens when the Australian government does not get overly involved in industry? Holden.

Keep that in mind the next time you think that the Australian Government has all the answers about our industrial future. I believe that the average Australian holds the key. Only they have never been allowed to use it.

It's time Australia's Government let go of its penal colony attitude and gave up its hold on industry. If you think not, then please show me evidence to the contrary.

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