Holden first in era of tough decisions
The Holden decision to cease Australian manufacturing is not the end of this moment of complexity and adjustment for our economy, writes Jonathan Green.
In the finest traditions of the village levelled in the broader strategic interest, it may be necessary to destroy Adelaide to save the economy.
That is if you accept the argument that letting the local General Motors franchise (if we stop calling it Holden this business might lose some of its emotional clutter) go to the wall would be destructive to the South Australian, Victorian and wider Australian economies.
We shall see.
Alternative views are available - the full play of opinion finding accommodation within the confines of the Coalition party room among other places - with the only certainty being that this is a debate for our times.
There is a strong body of opinion that sees the continual subsidy of underperforming industry as no answer to the fundamental issues that bedevil it, never mind the purely economically liberal case that any sort of subsidy is an unhelpful economic distortion.
But in the end the Holden issue was a debate framed not economically, but against the traditional values of our politics, with the government and Holden squaring off in a tense stalemate this week, a stalemate aimed more than anything else at shifting blame for the final decision: the government, keen that Holden should make the call before it, in turn was forced to decide whether or not to extend its multi-hundred million dollar program of support.
The government was spared that awkwardness, no doubt in some part relieved to see the death of an iconic local brand within that period where blame might not unreasonably be sheeted home to its predecessor; a pretty flimsy pretence given the long-run issues at play, but a politically potent one in the circumstances.
But the end of Holden is not the end of this moment of complexity and adjustment for our economy, and - hopefully - our politics.
For all of us, the era of tough decisions is only just beginning; a moment in the country's history where the alarming possibility exists that multiple choices will need to be made, guided not by the traditional evaluating metric of political necessity, but by the national interest.
In the beginning the decisions could be viewed as isolated instances - tricky, but part of no discernible trend.
Holden might have been one had Detroit not done the heavy lifting.
Keeping GrainCorp in predominantly local hands was another, and too easy to see as an isolated moment divorced from a broader economic context. Put it in that wider context, the GrainCorp question shifts from one of allowing the incursion of controlling foreign capital to wondering how it could be that a monopoly agricultural infrastructure business serving a pretty robust sector of the rural economy should be in such desperate investment-starved straits in the first place.
Qantas too, another imminent decision point and another business hampered by a lack of cash and constrained by where it might source that money. But also a business that chronically underperforms, and is apparently burdened by all sorts of structural impositions.
The issues are complex, but go in combination to the future progress of the Australian economy, an economy famously in transition from the happy largesse of a resources boom to one still finding its feet and future path while burdened - as it now seems - by the conditions and expectations of fast fading better times.
It is a moment that presents no end of potential for political paradox, as it has in the moment we have just seen pass, in which a tough decision on industry protection was demanded … a decision that may have had short term negative impacts, but held the potential for structural choices that may have produced long term gain.
In the terms of politics such a moment places a government in an invidious and challenging position. In terms of nation building and mature strategic thinking, it places a government at a moment of opportunity.
And perhaps that is where we are with Holden, facing an opportunity for reframing - confronting the possibility that our economy might do better than sandbag underperforming sectors with shovels of public money.
As it will need to if you follow the reasoning of people like Ross Garnaut who argue compellingly that we face nothing short of a slow process of decay and decline unless we act quickly to restructure, revise and rethink.
As he argues:
There has to be a clear perception across the community that what is being done is fair ... A democratic polity will never support a government that, for example, is systematically entrenching privilege for high-income parts of the community and asking for sacrifice from the rest of the community ... That's where we are now heading - with the continuation of the great Australian complacency we're heading towards the entrenchment of business as usual, with big economic problems down the track.
A process of re-imagination is required, and no part will be more critical than the portion devoted to a reconsideration of our political priorities, and what constitutes victory in our political contests. In the best of all worlds it would have been possible to have a discussion on the future of Holden that maturely contemplated the possibility of closure and set that moment into a broader view that answered the question "if not car manufacturing then what?".
As it is, the moment was milked under the normal terms of political advantage. Holden has gone and the question is still hanging.
It's a case that shows, starkly, just how far we are from setting a public and political mood that will carry us through the necessary near future of adjustment and change.
Take the value of the Australian dollar, an issue isolated by everyone from Garnaut to General Motors in Detroit as perhaps the most fundamental impediment to future Australian prosperity and growth.
And yet the public discussion on the issue is lost in a dumb Aussie triumphalism that crows when the dollar is strong, and uses the language of defeat when it goes down, or "slips", "plunges" and "falls".
Yet a plunging dollar is just what we need. Just as an end to motor vehicle subsidy might be just the tough medicine we need on a path to greater healing.
The tough calls are just beginning.
Jonathan Green is the presenter of Sunday Extra on Radio National and a former editor of The Drum. He is the author of The Year My Politics Broke. View his full profile here.
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