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Thread: "Job Cuts"

  1. #61

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    Quote Originally Posted by Falcon Freak
    I can't. I am a supporter of the Australian manufacturing industry in general and specifically the local automotive manufacturing industry. It annoys me IMMENSLY that this country of ours is moving away from secondary industries to primary industries. All the economic powers of this world have strong manufacturing industries. Yet our country wants to turn itself into one big open cut mine. What do people think, that our natural resources are endless? Look at what happened to Nauru - they mined and exported all of there phospherous and are now bankrupt! Article about Nauru's economic plight

    FF
    I actually agree with you on this one. Immensely!

  2. #62

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    Hi guys, great discussion. But as any true economist knows, economic theory does not translate perfectly into the 'real world'.

    So tariff reduction is an extremely dangerous game for the following reasons:

    It assumes that the market is 'perfect', that the tariff reduction is passed directly onto consumers. In fact, it could just make the importers more profitable and stronger without any consumer benefit.

    It also assumes a level playing field amongst trading countries. This is ridiculous, most automotive countries in our region have tariffs in the 40-60% mark, therefore they can dump there offerings here, but we can't economically export there.

    Tariff reduction does also not take into account the economic benefit local manufacturing has on the revenue system. According to Access Economics (a few years ago) a car manufacturer the size of Toyota Australia pumps $250 million every year into the tax system (payroll tax, income tax of employees, company tax, GST etc). Remember this money builds roads, pays for social security etc. A vehicle importer the size of Mazda puts in around $7 million. So letís give some help to the locals.

    Anyway, I really hope we can all stand behind our great aussie car makers and continue supporting their products. P.S. Mitsubishi - make a 380 wagon!

  3. #63
    Killbilly
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    FF you can and will keep your cool on the forum mate...Just a friendly warning.

  4. #64
    dave_au's Avatar
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    Finally a good debate!

    Quote Originally Posted by Crazed
    But as any true economist knows, economic theory does not translate perfectly into the 'real world'.
    And that exactly why raising tariffs wont work either. With what I posted above, you can see that the real world, job losses continued at their current rate despite the heavy raise of tariffs in the automotive industry during the 80s.

    It assumes that the market is 'perfect', that the tariff reduction is passed directly onto consumers. In fact, it could just make the importers more profitable and stronger without any consumer benefit.
    And by not having this competiton, this would allow the local manufacturers to produce crap and charge the earth for it. A great example of extreme protectionism is - communism! Look at just how well each communist or socialist closed market economy have suceeded in recent years, with the exception of China, which introduced "capitalist trade zones".

    It also assumes a level playing field amongst trading countries. This is ridiculous, most automotive countries in our region have tariffs in the 40-60% mark, therefore they can dump there offerings here, but we can't economically export there.
    This is why the World Trade Organisation and ASEAN exist - Australia's trade foreign policy is on a bi-lateral and multi-lateral front - Australia has negotiated with all of the countries in our region, and if I recall correctly it was Australia who pushed automotive trade tariff reductions for the ASEAN nations, and IIRC, all ASEAN countries will have the same automotive tariffs by 2020.

    Thinking back to a few years ago at uni now, but I recall a deal was struck in good faith that Australia would lower it's economic tariffs first to allow some of the developing nations in our region (eg Thailand before we gained a FTA with them) to begin development of an automotive industry, eg Proton, Honda and Toyota opening factories in Thailand etc.

    On first glance, this policy does sound like a hinderance, afterall, it may appear that you are giving some countries an advantage. But then, consider all the iron ore or steel we would be selling to them, all the technical expertise etc. You can't sit here and judge one industries microeconomics, you need to look how other industries might find an advantage.

    Tariff reduction does also not take into account the economic benefit local manufacturing has on the revenue system. According to Access Economics (a few years ago) a car manufacturer the size of Toyota Australia pumps $250 million every year into the tax system (payroll tax, income tax of employees, company tax, GST etc).
    There is no doubt whatsoever that profitable local industry pumps more money into the tax system than importers, however, Toyota, Holden and any other major exporter would not be where they are today without exports, and the importance of free trade for exports is paramount. In fact Toyota is the largest automotive exporter - and a profitable one - who knows if they would be injecting so much money into the revenue cycle had they not been exporting.

    However, the same cannot always be said for automotive manufacturers when they are making a loss. MMAL would not have paid any corporate income tax for quite a while now, and I imagine the SA government would be giving concessional rates for payroll and stamp duty considering the amount of SA taxpayer's money is already invested in MMAL.

    Likewise, there are millions of dollars being spent by the four locals to enchance competitiveness due to international competition.
    Anyway, I really hope we can all stand behind our great aussie car makers and continue supporting their products. P.S. Mitsubishi - make a 380 wagon!
    You and me both!

    In all honesty, you probably could find a few uni professors here and there who do believe in protectionism, isolationalism and the like, my own personal belief is that their in the minority, and the free market approach is the most sound. Still I'm sure there have been many fierce debates across many unis and in most halls of government.

    Quote Originally Posted by Falcon Freak
    It annoys me IMMENSELY that this country of ours is moving away from secondary industries to primary industries.
    I will actually agree with you there, that's why it's important to work now to get our secondary industries that efficient on the global scale. No matter what you do, you will eventually have to face international market forces. Singapore and Taiwan did it with their tech industries in the space of 10 years, South Korea is doing in 20 years what it took the Japanese 40 years and the Germans 60 years to pioneer. Protection isn't the answer. Efficiency is IMHO.

  5. #65

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    Quote Originally Posted by dave_au
    In all honesty, you probably could find a few uni professors here and there who do believe in protectionism, isolationalism and the like, my own personal belief is that their in the minority, and the free market approach is the most sound. Still I'm sure there have been many fierce debates across many unis and in most halls of government.
    They are called Labor voters. A species that is slowly becoming extinct (Federally anyway)

  6. #66
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    Quote Originally Posted by tasman
    They are called Labor voters. A species that is slowly becoming extinct (Federally anyway)
    well ill vote democrats then

  7. #67

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    Quote Originally Posted by adz89
    well ill vote democrats then
    Mmmmm. Natasha

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