by a Modest Member of Parliament [Bert Kelly],
The Australian Financial Review, July 26, 1974, p. 3.

Although Eccles has fled to his ivory tower to escape the heat and dust of the tariff battlefield, he still takes a morbid interest in what is going on in the outside world.

Someone has sent him a copy of the Industries Assistance Commission (IAC) report on Passenger Cars and evidently he is studying it with true academic detachment and every now and again he is kind enough to send me little notes, telling me to pay attention to page so and so. Then he pulls down the shades again and goes back to contemplating his navel.

He begged me to pay particular attention to Chapter 7 which sets out the way the industry has been protected in the past.

This assistance has been in three forms: by tariffs, by the various component plans and by research and development grants and export development assistance.

The report says that the subsidy equivalent of the tariff assistance was about $200m for 1972-73 and $18m was the revenue foregone for the component plans for that year. And about $10m was spent by the taxpayer for development assistance.

That totals up to $228m a year. Yet people squeal about the dairy subsidy of $28m.

But Eccles wouldn’t have minded so much if the assistance which the industry received had done good. Instead it has done great harm by encouraging an unwise and inefficient fragmentation of the industry.

I quote from the report:

… The Commission then proceeded to investigate why scale economies are not sufficiently exploited by the Australian industry. The unmistakable conclusion was that the structure of the industry precluded such exploitation.

Of the four manufacturers and three assemblers in Australia, only two achieve production volumes which are in any way comparable with those of even smaller producers in USA and Japan.

Among the more important components and processes, the Australian market supports about four times as many stamping and engine manufacturing plants, twice as many transmission and axle plants, and twice as many vehicle assembly plants as would be compatible with an efficient industry structure.

Besides the fragmentation referred to, the component plans have been so complicated, altered so often and been so liable to secret administrative decisions that they have confused the industry and certainly hidden from the public the amount and direction of the assistance given.

The report states that the industry received between May, 1964, and June, 1973, assistance totalling $1,500 million and that, during this period, the wages paid amounted to $2,400 million.

This surely must be the most expensive way of creating employment. If wheat farmers were subsidised in this fashion we would have a lot more wheat farmers.

The reaction to the AIC report has been belly-aching for years about the soul destroying monotony of working on the car assembly lines, and one gathered the impression that they didn’t like the work. But as soon as the suggestion is made that there may be fewer employed in this fashion, they burst into tears.

And they, among others, have been complaining about the evils of overseas capital, how these wicked people have been getting too generous treatment and have been abusing their position.

Yet as soon as action is suggested that will give overseas capital a touch of the whip to make them act more in Australia’s interest, their detractors start sobbing. It’s all rather hard to understand.

Fred isn’t pleased with the car industry but for a more mundane reason. He recently bought a new car and was rather staggered at the cost of the extras. So he advertised a cow for sale, as follows:

Basic cost of cow … $200
Two-tone extra … $45
Extra stomach … $75
Product storage compartment … $60
4 spigots at $10 each … $40
Genuine cowhide upholstery … $125
Dual horns … $15
Automatic fly swatter … $35
Built-in exhaust system … $5
Total cost: $600.

I wish I could get him to take a more lofty outlook on life.