A Modest Farmer [Bert Kelly], The Australian Financial Review, February 16, 1979, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 87-89, as “Motor Cars (5).”

Eccles is unattractive at any time but when he is saying “I told you so,” he is unbearable.

He has been like that ever since GM-H announced its plan to build a big factory to make four-cylinder engines for export as well as for here.

Even I, in a desperate endeavour to curry favour with the good and great and so get myself posted to Mongolia so that I could find a use for my striped pants, commended this GM-H conception of a world car.

Now the whole idea is out in the open and the Government has to make up its muddled mind what to do.

It must find this desperately difficult because it knows that all its past decisions as to how the car industry should be structured have turned out to be wrong.

With this track record it is not surprising that the Government finds this new responsibility rather daunting.

The Government’s record of massive and disastrous interference in the car industry began in 1965 when it conceived its 95 per cent car component plan.

This forced the industry into a straitjacket, making it use components that were too dear because the throughput of parts was not enough to enable production to be economic.

Since then the Government has altered its plans many times, each time telling the industry sternly that this was going to be the last alteration and from then on the rules would remain unaltered.

Then a few months later there would be yet another amendment, accompanied by another lecture.

The various government car component plans forced the car industry to wear hobbles so that it could never be efficient.

Eccles, in his “I told you so” mood, showed me an article he had written in 1966, pointing out that the plan would make it impossible for us to produce cheap cars.

And he has often compared our performance with that of the industry in Sweden.

There the car companies are allowed to buy their components in the best market, so that the parts that make up a Volvo come mainly from outside Sweden.

And imported cars are allowed to compete freely with the Swedish cars and indeed over half the cars sold in Sweden are imported.

But because the Swedish car industry has not been made to wear hobbles as in Australia, the Volvo company exports about 75 per cent of the cars they make, with about a third of those going to the USA and Canada.

Sweden has an efficient car industry, we have not.

But of course giving an industry this kind of freedom and the incentive to do well what comes naturally is foreign to our Australian philosophy of leaning on the Government, so we make our industry wear hobbles in the mistaken belief that we are creating employment.

But it has not worked out like that.

We have had to build ever higher the protective wall around our car industry and we now need import quotas as well as a 45 per cent tariff to protect our cars.

We have to subsidise each employee at the rate of $4,000 a man a year but employment does not rise because cars are too dear to buy.

People even began buying light commercial vehicles instead of cars because these were not hobbled with component plans and so were cheaper.

Ford’s solution to this was to try to force the light commercials into plan hobbles also, so that all vehicles would be in the same glorious mess together.

The people in the bush didn’t think much of that solution.

Now GM-H have really put the cat among the pigeons.

The Government may at last have to face up to the mess it has made of the industry.

But perhaps it may back away yet again from the unpopular decision of unbuckling the industry’s hobbles.

If so, the problem will remain and will have to be solved at a later date, when the mess is even worse.

The sad and simple truth is that the Government’s policies have made cars too dear to buy so the problem will get steadily worse until it is tackled.

Fred says that the Government ought to admit simply and honestly that it has made a mess of things and is now prepared to scrap its silly plans and let the industry sort itself out.

So I had to explain to Fred that Governments can never bring themselves to admit that they have made mistakes, though they are always eager to tell us the mistakes made by their opponents.

But even Eccles has been known to admit that he is not altogether perfect.

I wish the Government would do likewise.

If it does, it should start with the car industry.