Ben Chifley at the launch of the first Holden, the 48-215, in 1948.
Just a month short of 65 years after Ben Chifley declared open the mass production of Australia-made cars, Tony Abbott could become the prime minister who declares it closed.
It has been an article of political faith over more than six decades that motor vehicle production is an industry that Australia has to have. Australian taxpayers have paid a hefty price to keep the industry alive.
The first big, tough political and economic decision facing the Abbott government is to decide whether to switch off the life-support system on which the shrunken and sickly remnant of the car industry struggles. Joe Hockey has put up his hand to be the federal Treasurer who signs the death certificate.
Hockey has made it clear he is not prepared to cop what he believes has been the successful tactic of the car producers for a long time – to hold a gun to the head of successive governments and say give us more assistance or we will close down the industry.
The government has ordered a Productivity Commission inquiry into the economic prospects for the industry, to be completed by the middle of next year.
The response from GM is that if it has to wait that long for the substantial assistance package it needs – and to which the previous government was committed – it won’t stick around.
Labor’s Kim Carr, who knows GM executives well from his long association with the industry, says this is no bluff.
He says Abbott must override Hockey and act immediately to save the industry and tens of thousands of jobs.
The issue now threatens to become a crisis within the newly elected government. It is going to be a critical, early test of the economic and philosophical credentials of the Abbott government and of the key relationships within the government, especially between Abbott and Hockey.
Hockey’s position, which he has made very clear to anyone with whom he has discussed the issue, is that if the motor vehicle industry cannot survive without further large dollops of taxpayers’ funds then it should be closed.
For Hockey, this is a totem issue on which the liberal, free-market philosophy of the modern Liberal Party leaves no room for compromise.
Industry Minister Ian Macfarlane takes a different, more pragmatic view. He says if governments want a car manufacturing industry, they have to pay for it.
Abbott’s big test
For Abbott, it is a big early test of what sort of Prime Minister he will be.
The free-market Liberals want Abbott to use this issue to show he is one of them, to use the decision on the future of the car industry to affirm that the Abbott government will take up the liberalising economic reform agenda with gusto.
A decision to say “enough, no more” to GM would be as clear a signal as it would be possible for the new government to send.
But key senior Liberals argue there will be a heavy political price to be paid for putting policy purity over political pragmatism.
Abbott’s first two months in office have been low key and low profile. But he now faces a big decision with big implications and a tough choice between backing his Treasurer or backing GM.
The Australian Financial Review