FBT POLICY: Governmental Golden Goose

An open statement to Prime Minister Kevin Rudd and Chris Bowen over the latest breathtaking round of Australian automotive industry mis-management - why and how betrayal of the national interest is ill-advised in the lead-up to the Federal election.

Dear Mr Rudd and Mr Bowen,

Policy should be enacted in the national interest – not in the selective interest of re-electing KRudd. You’re both clearly engaged in the latter; it’s a betrayal of the national interest, not to mention the positions you occupy, and the trust placed in you by the people.

Your decision to eliminate the 20 per cent FBT concession on new car purchases, in the absence of any industry consultation, has had two immediate effects.

First, you have effectively terminated the jobs of 300 good people (voters) employed in the salary packaging car finance sector. You gave this industry and these people no time whatsoever to prepare for the dramatic change you’ve foisted upon them, there was no consultation, no process, and no time for industry adaptation. The effect of your policy on the fly, to these people, is akin to what happened in Dresden, mid-February, 1945. Well done. Breathtaking.

Make no mistake, you have directly betrayed no less than 300 people, by terminating their jobs. You’ve the Labour Party. That’s inconceivable. Most of these people went to work as usual on July 16, and now have no means of getting by – paying the mortgage, feeding the family, etc. These are considerations you in particular, Mr Rudd, would have difficulty empathizing with, given your particular domestic situation. (Not to mention your generally self-obsessed, narcissistic demeanour.) It’s the tip of the iceberg – as many as 10 times more people could lose their jobs.

Second, together you have choked off demand for new cars, which has fallen to the lowest level in 20 years as a direct consequence of your breathtakingly arrogant abolition of the FBT concessions. Three-point-four billion dollars in lost economic activity in the first year. It’s self-evidently ridiculous to pump hundreds of millions in taxpayers’ money into the supply side of the local car industry, to support an industry that’s clearly on the road to oblivion, and at the same time hasten its demise by shooting demand in the head. Ridiculous. It’s like pumping steroids into the horse and morphine into the jockey.

Recent suggestions that you would offer a $3000 rebate only to government employees who purchase only a locally made car is an outrageous use of policy as PR. It’s like trying to use No More Gaps to span Bass Strait. You’ve got $3k in Spak Filler against $14,000 in FBT liability – that’s just not enough. Nobody in their right mind would tick that box – which is also insulting to the private sector. Mr Rudd, Kev, it doesn’t matter how liberally you apply the rebate as icing sugar to the dog turd of this FBT policy. You’re never gunna get a birthday cake. It’s that simple.

Mr Rudd, your own party got rid of you the first time for enacting exactly the same kinds of ill-conceived, hare-brained, zero-consultation, on-the-fly policies. Frankly, your style of governance would be more suited to a political system like, say, Syria’s, or Iran’s. I hope the electorate sees you for the loose canon you are, in the lead-up to the Federal election. Certainly the finance sector has you bookmarked.

Recent reports suggest you’re close to signing off an additional $200 million in taxpayer support for Holden. It’s undignified when a Prime Minister and a Federal Treasurer act as monkeys while General Motors grinds the organ. Undignified, unethical, immoral and unsustainable. This misuse of the public purse has to stop. Holden’s manufacturing is already dead – and it’s way past time to remove the Government life support. Holden had more than 7000 manufacturing workers in 2004. After July’s massive job cuts – 500 people, thank you very much – and fire-sale prices on showroom floors, the manufacturing workforce today is just 1700. The writing is well on the wall.

Despite its marketing messages, Holden is about as authentically Australian as McDonald’s. This company has cried wolf once too often, and it’s engaged in a process of public-purse extortion, pure and simple, using the jobs as leverage. Only, the leverage has shrunk beyond the point of insignificance. It’s anorexic. And you guys in politics are still caving in to Holden’s ‘jobs’ rhetoric. You’re giving GM our money in the complete absence of checks and balances – and cloaking it in secrecy under the guise of being ‘commercially in confidence’. It’s a fraudulent use of public funds, and no way to comport yourselves if the national interest still matters.

Instead of spending $200 million on Holden, you blokes need to draw a line in the sand. No more support. Offer each of Holden’s 1700 manufacturing workers $50,000 today to re-train and relocate if necessary. This would represent more than a $100 million saving and at the same time be a far more socially equitable arrangement. As well as a lifeline for the 1700 jobs that will surely be lost by 2016 – no matter how much protection money you see fit to pay.

Your decision (and John Howard’s decision before you) to tip billions into local car making has allowed GM Holden and Ford to luxuriate through a process of making, in quantifiable terms, the worst cars on sale in Australia – in terms of reliability, safety, and emissions technology you name it. They’re the worst. That’s not opinion. It’s a fact. Quality is independently verified by ratings agency ACNeilsen via industry-funded confidential research. Safety, go to recalls.gov.au and see how many fire-risk recalls the Holden Cruze has had – that car just screams ‘half-baked design’. Emissions? Ford had to drop the V8 because it couldn’t devote the funds to cleaning up its tailpipe emissions, and other local engines are likewise filthy. GM and Ford have both well and truly stopped listening to customers, and today this pair produces over-priced cars here that, increasingly, nobody wants, at a significantly lower quality than cheaper, imported cars. And the Federal Government facilitates this process by underwriting it.

Your solution to failing is to keep handing GM Holden more money. Einstein’s definition of insanity was to do the same thing, over and over, and yet to expect a different result. I dunno about you, but I’m kinda with Einstein on this. Your support of Holden is insane. Clinically.

The VF Commodore in particular is a joke. It’s too big. Its fundamentals are out-dated. Dinosaur-specifications. It’s a CO2-belching dog with fleas – and your ongoing support effectively confers upon it the Prime Ministerial imprimatur. It’s a VE Commodore with slightly different hair and makeup. Its sales will continue to tank. That’s guaranteed. The Holden Cruze is a hastily adapted Daewoo with the singular design distinction of being more likely to catch fire than just about any other car on Australian roads. People don’t buy these vehicles because they are over-priced and inferior. Hardly anyone buys a second Holden Cruze…

These lifelines to the local car industry need to stop. The $200 million slated for Holden could surely be put to better use elsewhere in the community. Voltaire said people are guilty of the good they fail to – ergo, you are guilty of the good use to which those considerable funds could alternatively be put.

In short, kindly get your damn acts together and start treating with due respect the lofty positions you occupy on the Australian landscape. Reinstate the FBT concession. Do it now. Let’s go back to business as usual there. You effectively doubled the Treasury’s FBT revenue after the Henry tax review in 2010 when the statutory rates went from either 7 per cent or 11 to 20 per cent. It begs a fairly obvious question: when is enough enough? And – here’s a thought - why not try actually doing your jobs for a change? How refreshing that would be. You work for the Australian people, and your ‘policy as PR’ behavior in the lead-up to the election is a betrayal of both the national interest and the electorate. Not all voters are as thick as you apparently assume.