Bert Kelly, “Government car plans going nowhere,” The Australian Financial Review, June 11, 1992, p. 15.

I was recently criticised in the media because they thought my suspicion of government intervention in commercial matters had an ideological basis.

I replied that farmers were too busy to worry about ideology, but we had learned the hard way that governments usually made a mess of business matters because they were more interested in being popular than right.

I once asked a farmer how he regarded the decisions that the Government was making in his industry. He replied: “Surely, you know by now, Bert, that the Government couldn’t run a booze-up in a brewery!”

You have only to see the mess governments are making in the business affairs of WA, SA and Victoria to see what he had in his mind. I will now spell out the mess that governments have made of our car industry.

There are many reasons for the mess. We have imported a union culture from Britain, where they are still fighting the class war, and our union leaders seem to hate capitalists who make money and stand ready to strike if they get a chance.

We have a management culture reared on the tariff tit, so managers have been trained to give in to union demands, expecting to get a tariff hand-out if they do. But these handicaps are minor alongside the government-imposed handicaps.

The first of these was the Government’s insistence that our car manufacturers use components made in Australia or pay high duties on imported components, so putting our car makers in a strait-jacket.

This is different from the Swedes: their car makers can buy their components wherever they are cheapest and import them duty-free, so they make their cars cheaply. The Volvo car is only 60 per cent Swedish but it is cheap, so the company exports 77 per cent of the cars it makes.

Indeed, Volvo used to sell more cars in the United States than in Sweden, just because it was not made to wear strait-jackets like Australian car makers.

Back in 1966, I warned of the damage we were doing to our car makers by making them wear this component strait-jacket. Indeed, I went so far as to say that our policy would almost inevitably mean that both Leyland and Volkswagen would be forced to leave Australia, because they did not make enough cars to enable them to buy cheap components.

But the component people had their way because they had a friend on high. The head of Repco, the biggest component manufacturer, was also the chairman of the committee that was raising money for McEwen House, the Country Party headquarters in Canberra.

Ten years later, we had another car tariff debate.

Leyland and Volkswagen had gone, of course, but our Government was anxiously holding the door open for two Japanese companies to replace them. Note that Fraser was our Prime Minister and Anthony was our Trade Minister. These are the chaps who are now eager to tell us how to run the country.

Under their guidance, we had five car makers again as we had in 1966, so no doubt they were really pleased with themselves. But either they did not know, or were too hungry for votes not to realise, that Australia could not support five efficient car makers.

We then had a market for about 500,000 cars a year. If this market is divided between the five car makers and you excluded all car imports, you get an annual throughput of 100,000 cars — far too small a number to justify the installation of efficient labour-saving equipment such as the Japanese use.

The result of this government guidance is that our car makers could not make cheap cars, because they had to use labour instead of labour-saving machinery

A car employee in Australia made, in 1976, 5.9 cars a year while a Japanese working for Nissan made 37.2 cars a year and a Toyota employee, 40.5.

This is not just because the Japanese work harder or better; it is mainly because they are using better equipment than our car makers can afford to install, because we have too many car makers.

Our cars got dearer, so the demand for cars fell.

Everyone in the industry knew this would happen; even the Government had heard of the law of supply and demand. But it wanted to be popular at any price, so it kept the duties high but gave the industry stern lectures after each tariff hand-out and told them they had to try harder.

The industry kept the heat on the Government, which could feel an election coming on. So GMH inserted an expensive advertisement in all the papers saying that 200,000 people would lose their jobs unless the Government gave it more help.

As there were then only 65,000 people making cars and components, it was hard to take the matter seriously. Probably the Fraser Government had not read the IAC report, in which it was all spelt out.

Then the Labor Government won the election and Senator Button became the minister who mattered. He seemed to have read all the reports and he knew that the root cause of the industry’s problems was that we had too many car plants. So he warned us that at least two would disappear.

To make sure that this would happen, he formulated his Button Car Plan. He spelt out how the tariff duties would gradually but certainly come down, so that everyone knew where they stood and what was going to happen in the future.

Then I suppose he felt he had to be seen to be doing something, so he climbed in the back seat to give the industry the guidance he thought it needed. He said, too, that he was not going to give in to any anguished cries for help as the Fraser Government had done. He had his Button plan all buttoned up.

What giant strides forward has the industry taken under the Button plan? In 1976, we had five car plants but we knew that we should reduce these to three so that we could produce cars cheaply. Well, now we have seven.

In October, Nissan will go away and I am told that another will be gone by 1996. We can be said to be creeping up on our problem.

We now have 50,450 people making 271,220 cars a year; each person makes 5.376 cars a year compared to the 5.9 he made in 1976.

So we can hardly claim that the industry is surging ahead under the Button plan. Indeed, we are doing just about as badly as in Mr Fraser’s time.

Worse is yet to come.

Senator Button has imposed a $12,000 duty on second-hand imported Japanese cars which are guaranteed to be of high quality and to have access to spare parts if these are required, which is more than we can get from most of our car yards.

Governments of all kinds seem to hate us being able to buy cheap cars.

There are 265,000 people servicing cars and car tyres. If you really wanted to increase employment, you could remove all the car tariffs and so make cars cheaper. They could call this the Kelly plan.

I said at the beginning that the Government could not run a booze-up in a brewery. See what I mean?

(in order of appearance on Economics.org.au)
  1. Bert Kelly on his journalism
  2. Move for a body of Modest Members
  3. Modest Members Association
  4. Bert Kelly's Maiden Parliamentary Speech
  5. Government Intervention
  6. 1976 Monday Conference transcript featuring Bert Kelly
  7. Bert Kelly, Hayek and Mencken on the virtues of farmers
  8. Sound economics calls for quiet from government
  9. Petrol for Farmers
  10. Some Sacred Cows
  11. Experiences in Parliament
  12. Spending your Money
  13. Is Taxmania a politician fetish?
  14. How Bert Kelly repays a free feed
  15. Modest column #898
  16. Chicken-hearted feathered friends strange bedfellows on a feather bed?
  17. Who needs literary licence?
  18. A touch of Fred's anarchy
  19. Helping the farmers help themselves
  20. Standing on the shoulders of the downtrodden
  21. Supply and Demand
  22. Bert Kelly responds to claims he is arrogant and uncredentialed
  23. Politics: it's a very confusing business
  24. The best featherbeds run on rails
  25. Bert Kelly on Disaster Relief
  26. Bert Kelly Wants to Secede
  27. Blinded by their tears
  28. Anti-freedom pro-tobacco industry lobby harmed Australia
  29. Under Labor, is working hard foolish?
  30. An Idiot's Guide to Interventionism
  31. Is free healthcare worthless?
  32. Can government kiss it better?
  33. Bert Kelly Destroys the Side Benefits Argument for Government
  34. Bert Kelly gets his head around big-headed bird-brained politics
  35. First Modest Member (Bert Kelly) AFR Column
  36. Second Modest Member (Bert Kelly) AFR Column
  37. Third Modest Member (Bert Kelly) AFR Column
  38. Fourth Modest Member (Bert Kelly) AFR Column
  39. Fifth Modest Member (Bert Kelly) AFR Column
  40. Sixth Modest Member (Bert Kelly) AFR Column
  41. Bert Kelly on the 2011 Budget and Australia's Pathetic Journalists and Politicians
  42. Bert Kelly, Bastard or Simple Sod?
  43. Liberal Backbencher Hits Govt. Over Import Restrictions
  44. Bert Kelly feels a dam coming on at each election
  45. Bert Kelly Enters Parliament
  46. Why take in one another's washing?
  47. Bert Kelly breaks the law, disrespects government and enjoys it
  48. Gillard's galley-powered waterskiing
  49. State Premiers are always asking for more taxing powers
  50. Can price control really work?
  51. Should we put up with socialism?
  52. We're quick to get sick of socialism
  53. Time the protection racket ended
  54. Can't pull the wool over Farmer Fred
  55. People not Politics
  56. Bert Kelly admits he should have had less faith in politicians
  57. The inspirational incentivising Dear Leader Gough Whitlam
  58. Labor: a girl who couldn't say no
  59. Why leading businessmen carry black briefcases
  60. Ludwig von Mises on page 3 of AFR
  61. Bert Kelly's empowering feminism
  62. Mavis wants the Modest Member to dedicate his book to her
  63. What if the whole country is swindled?
  64. Moss Cass: "Flood plains are for floods"
  65. A worm's eye view
  66. Eccles returns to haunt us
  67. How to grip a politician's ear
  68. It's hard to digest this economic cake
  69. Time to Butcher "Aussie Beef"
  70. Cold water on government-instigated irrigation schemes
  71. Hooray for Ord River Dam!
  72. Tariffs paid by exporters
  73. The problem of principles v popularity
  74. If you support State Quotas, where will your logic take you?
  75. Against guidance by government
  76. A socialist in Liberal clothing
  77. Never ask the government to help
  78. Don't listen to economists!
  79. Whitlam's July 1973 25% tariff cut
  80. Bert Kelly on Import Quotas
  81. Good directions when government backseat driving, like reversing down wrong side of road
  82. Barriers to imports are barriers to exports
  83. Bert Kelly reviews The War Diaries of Weary Dunlop
  84. Bert Kelly reviews We Were There
  85. Tariffs get the fork-tongue treatment
  86. Bert Kelly reduces government to its absurdities
  87. Politician sacrifices his ... honesty
  88. It's all a matter of principle
  89. Bert Kelly Destroys the Infant Industry Argument
  90. Bert Kelly Untangles Tariff Torment
  91. Bert Kelly resorts to prayer
  92. Eccles keeps our nose hard down on the tariff grindstone
  93. "Don't you believe in protecting us against imports from cheap labour countries?"
  94. Even if lucky, we needn't be stupid
  95. Great "freedom of choice" mystery
  96. Small government's growth problem
  97. I like my kind acts to get a mention in the press
  98. A Modest Member rakes the embers
  99. Tariffs Introduced
  100. More About Tariffs
  101. Sacred cow kicker into print
  102. Bert Kelly's 1984 two-article quote-collection on Aboriginal policies
  103. Modest Member must not give up
  104. Traditional Wheat Farming is Our Birthright and Heritage and Must be Protected!
  105. Tariff-cut nonsense lives on
  106. Bert Kelly brilliantly defends "theoretical academics"
  107. The high cost of protection
  108. Generosity creates problems
  109. The Society of Modest Members
  110. John Hyde's illogical, soft, complicated, unfocussed and unsuccessful attempt to communicate why he defends markets
  111. Modesty ablaze
  112. Case for ministers staying home
  113. The unusual self-evident simplicity of the Modest Members Society
  114. Animal lib the new scourge of the bush
  115. The Association for the Prevention of Cruelty to Krill
  116. modest members society
  117. Repeal economic laws, force people to buy new cars and enforce tariffs against overseas tennis players
  118. Thoughts on how to kill dinosaurs
  119. Let's try the chill winds
  120. Taking the Right's road
  121. Bert Kelly: "I did not try often or hard enough"
  122. Bert Kelly "lacked ... guts and wisdom"
  123. A look at life without tariffs
  124. The Gospel according to Bert
  125. Tiny note on Bert Kelly's column in The Bulletin in 1985
  126. Why costs can't be guaranteed
  127. Hitting out with a halo
  128. Paying farmers not to grow crops will save on subsidies, revenge tariffs, etc
  129. "The Modest Farmer joins us" | "How The Modest Farmer came to be"
  130. Bert Kelly Destroys the Freeloading Justifies Government Argument
  131. Industrial Relations Club shovellers
  132. From Shann to Stone
  133. Government Intervention
    vs
    Government Interference
  134. A sojourn in the real world
  135. The tariff wind swings
  136. Bigger Cake = Bigger Slices
  137. Bert Kelly on the Political Process
  138. A charabanc called protection
  139. Taken for a ride - to nowhere
  140. Down hill, in circles, all the way
  141. Relationships with the Liberal Party
  142. Tariffs = High Prices + World War
  143. Bert Kelly's Family History
  144. Bert Kelly's Pre-Parliament Life
  145. What the MP could say to the Bishop
  146. Why Bert Kelly was not even more publicly outspoken
  147. WEATHER IS USUALLY UNUSUAL
  148. How to stand aside when it's time to be counted
  149. How the Modest Member went back to being a Modest Farmer
  150. My pearls of wisdom were dull beyond belief
  151. Bert Kelly on Political Football
  152. Undigested morsels in Fraser spew
  153. Bert Kelly on LSD
  154. Bert Kelly reflects on the Australian car industry in 1992
  155. Bert Kelly wants reprinted Shann's Economic History of Australia
  156. If tariffs are opposed here then why not there?
  157. The emperor has no textiles, clothing and footwear sense
  158. Ross Gittins Wins Bert Kelly Award
  159. Interesting 1964 Bert Kelly speech: he says he is not a free trader and that he supports protection!
  160. This is the wall the Right built
  161. Tariff Protection in Australia (1970)
  162. Has Santa socked it to car makers?
  163. Is the Budget a cargo cult?
  164. Will we end up subsidising one another?
  165. Keeping the bucket of worms alive
  166. Can we get off the stomach-churning head-spinning tariff merry-go-round?
  167. Do we want our money to fly?
  168. Can a bear be sure of a feed?
  169. How to impress your MP -
    ambush him
  170. The time for being nice to our MPs has gone ...
  171. Don't feel sorry for him -
    hang on to his ear
  172. Trade wars can easily end up on a battlefield
  173. Tariffs Create Unemployment
  174. Bert Kelly recommends Ayn Rand
  175. Bert Kelly on Alf Rattigan's Industry Assistance: The Inside Story
  176. Bert Kelly's Satirical Prophecy: Minister for Meteorology (tick) and High Protectionist Policies to Result in War Yet Again (?)
  177. Bert Kelly in 1972 on Foreign Ownership of Australian Farmland and Warren Truss, Barnaby Joyce and Bill Heffernan in 2012
  178. Bert Kelly baits Welfare State Tiger
  179. Why does Govt wear two faces?
  180. Parliament a place for pragmatists
  181. Of Sugar Wells and Think-Tanks
  182. Bert Kelly: "I must take some of the blame"
  183. Bert Kelly on dumping duties
  184. The Govt's helping hand often hurts
  185. Unbuckling the hobbles on the motor industry
  186. A Modest Farmer looks at the Problems of Structural Change
  187. Government Fails Spectacularly
  188. Know your proper place if you want the quiet life
  189. Bert Kelly on political speech writers
  190. Having your cake and eating it
  191. Perish the thawed!
  192. Hooray for Northern Development!
  193. The silly image of our MPs
  194. Bert Kelly Question Time highlights
  195. Modest Farmer sees his ideas take hold
  196. Should facts stand in the way of a good story?
  197. Fondling one another's glass haloes
  198. What is the sense in making the effort to look after yourself?
  199. Fred's Feeling: Counterpatriotic country contrarian
  200. Handouts for big boys only
  201. Mavis trying to buy a hand loom
  202. Bad news for bearers of bad news
  203. Is it time to get aboard the tariff band-waggon?
  204. Why farmers resent tariff protection for motor makers
  205. A sordid use of scare tactics
  206. Goods vs services
  207. Tariffs are hilariously counterproductive
  208. Bert Kelly on decentralisation
  209. Inflation breeds moral decay
  210. Who envies equality?
  211. Growth – malignant or benign?
  212. Government wiser than Magna Carta
  213. Bert Kelly on looking to politicians for moral leadership
  214. Max Newton: Maverick in Exile
  215. Whitlam & co on the Dismissal
  216. 25% Tariff Cut
  217. Bert Kelly on pensions
  218. Mr Clunies-Ross of the Cocos Islands should rule Australia
  219. They get the wind up when it changes
  220. Why the Big Green Lie survives
  221. Ross McLean in 1982: "Malcolm! Why don't we try good government? It might be popular."
  222. Bert Kelly on the importance of exchange rate movements
  223. Bert Kelly shows how to attack
  224. Bert Kelly vs Bert Kelly vs Bert Kelly
  225. Industrial relations dinosaur, Bruce, chews his cud
  226. Hooray for "firmly entrenched"!
  227. Respect your dinosaurs
  228. What if something is "deeply ingrained" yet harmful?
  229. A case for ministerial inertia
  230. Why politicians don't like the truth
  231. Our great open spaces
  232. Ominous dark clouds are gathering
  233. Better to be popular than right
  234. Crying in the wilderness
  235. Ivory tower needs thumping
  236. Bert Kelly asks, "How can you believe in free enterprise and government intervention at the same time?"
  237. Politicians get undeserved praise, why not undeserved blame too?
  238. Feet in a bucket of champagne
  239. Rural Problems
  240. Health cover needs a $30 excess clause
  241. Unholy state of taxation
  242. Boring economics worth a smile
  243. The Libido for the Miserable
  244. Agricultural Development and Tariffs
  245. Fred's too poor to have principles
  246. Eccles Law of the constant wage share
  247. "He whom the gods would destroy ..."
  248. Tariffs: when to wean infant BHP?
  249. Keep any government as far as possible from farming
  250. The Playford charade is out of date
  251. Bert Kelly: the odd man out who's now in
  252. Dries must resist giving up struggle as going gets tough
  253. How a well meaning Government can be so stupid
  254. The icing on the economic cake
  255. Sir Roderick Carnegie's foreword to Bert Kelly's Economics Made Easy
  256. The Vale of Popularity and the Protection Procession
  257. Politics 101: Pay Lip Service to Capitalism and Shoot the Messenger
  258. Bert Kelly makes politicians eat their own words on tariffs, then says, "We cannot be blamed for treating the statements of our statesmen with cynical contempt"
  259. Bert Kelly on Free Enterprise
  260. Cartoons of protected industry, the welfare teat and the nanny state
  261. Bert Kelly on the theory of constant shares and the Fabian Society
  262. Bert Kelly vs Doug Anthony
  263. You're lucky if you escape being helped by government
  264. Bert Kelly on Small Farmers
  265. Bert Kelly on Apathy
  266. Bert Kelly in 1967 on "problems of government and things like that"
  267. The last "Dave's Diary"
  268. Bert Kelly vs The Australian on tariffs in 1977
  269. Bounties or Tariffs, Someone Pays
  270. Geriatric companies without a minder
  271. A free marketeer wary of free trade
  272. Nixon's puzzling profession of faith
  273. "Ford ... seems to spend more time bending its knees than its back"
  274. Clyde Cameron's weak ways with wise words
  275. Why flaunt what others flout?
  276. Bert Kelly yearns for Tim Flannery's powers of prediction
  277. Looking after yourself is silly
  278. Bert Kelly masterpiece on drought, fire, flood and other natural disaster relief schemes
  279. Government can take credit for our car industry mess
  280. Car makers want the 4wd driven deeper into tariff bog
  281. Why our MP is no longer prone to a good sob story
  282. Auto industry is in a straitjacket
  283. Bert Kelly on market predictions
  284. Why should dryland farmers subsidise irrigation farmers?
  285. How much should government decrease incentive for independence from government?
  286. Clarkson crowned Deputy Government Whip
  287. Bert Kelly to blame for soaring government healthcare costs
  288. 1959 return of Dave's Diary
  289. Bert Kelly in 1966 on developing northern Australia
  290. Successful government intervention can [sic] occur
  291. Vernon Report upholds Clarkson
  292. Quiet Man Makes An Impact
  293. Should it be compulsory to buy footwear and clothing?
  294. To save Australian clothing industry women must all wear same uniform
  295. Don't confuse plucking heart strings with plucking harp strings
  296. Speech only for public
  297. Catchy Tariff Circus Extravaganza
  298. Bert Kelly in 1985 on cars yet again
  299. Hurrah for the Gang of Five
  300. Thoughts on a verse about Balfour
  301. Bert Kelly pep talk to politicians
  302. Government intervention = Agony postponed but death brought nearer
  303. Recipe for disaster: Freeze!
  304. Recipe for government intervention: Gather winners and scatter losers
  305. Recipe for industry destruction: Blanket market signals
  306. Mavis writes!
  307. Bert Kelly's empiricism is not kneejerk reaction kind
  308. The $2,000 song of the shirt worker
  309. Subsiding only small farmers means subsiding the big banks
  310. Difficult to be fast on your feet when you've got your ear to the ground
  311. It would surprise people to see how sensible MPs behave if they think they are not being watched
  312. Bert Kelly on "this land of limitless resources" and "great open spaces"
  313. Growing bananas at the South Pole
  314. Car components tariff protection under fire
  315. Why carry a $300m car subsidy?
  316. Tariff feather beds for the foreign giants
  317. Bert Kelly says end compulsory voting to stop donkey vote
  318. Perhaps being smart and insured isn't all luck
  319. You gets your tariff, you pays a price
  320. More funds to train Olympians?
  321. Fire in their guts and wind in ours
  322. Should free universal healthcare include pets?
  323. Sound advice from a modest farmer
  324. A tottering monument to intervention
  325. Cunning meets wisdom
  326. Competition, Aussie-style: Who's the bigger parasite?
  327. Australians are proud patriotic parasites, says Bert Kelly
  328. Taxpayer-funded sport is cheating
  329. Being loved by all is not always a good thing
  330. Welfare State Destroys Society
  331. 1980 Bert Kelly feather bed series
  332. The White Mice Marketing Board
  333. Government intervention and advice can be harmful, even when right, even for those it tries to help
  334. One small step on the compulsory voting landmine
  335. The free & compulsory education sacred cows have no clothes
  336. Holding a loaded wallet to an economist's head
  337. Political No Man's Land
  338. Only blind greed demands both equality and prosperity
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