Bert Kelly 3

  1. Why farmers resent tariff protection for motor makers,” The Australian Financial Review, December 4, 1970, p. 3. Excerpt: “I have found myself getting surprisingly interested in the subject. It won’t be long before I am a self-confessed expert.”
  2. Has Santa socked it to car makers?,” The Australian Financial Review, December 24, 1971, p. 3. The AFR version is garbled. A better version, which we used, was reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 79-81, as “Motor Cars (1),” under the date 31 December 1971. Excerpt: “The reason why governments should be blamed is that by encouraging the establishment of too many car factories, they caused the hot-house growth of the industry without apparently worrying about the inevitable increase in the price of cars or the effect of blocking the channels of trade with countries who buy our products, such as wool.”
  3. Car components tariff protection under fire,” The Australian Financial Review, March 3, 1972, p. 5. Excerpt: “The whole object of the Government’s plans seems to be to provide a comfortable feather bed for the Australian component manufacturers. These are not doing badly as it is. The bottom third averaged in 1969-70 a return on funds of 11 per cent and the top third averaged 23 per cent. It is worth noting that on February 23 the biggest component manufacturer of them all, Repco, announced a 13.2 per cent increase in profit showing a profit of $4.337 million for the half year, and a 44 per cent increase in sales of original equipment. This will enable the usual 16 per cent dividend to be comfortably continued.”
  4. Why carry a $300m car subsidy?,” The Australian Financial Review, March 10, 1972, p. 3.
  5. Tariff feather beds for the foreign giants,” The Australian Financial Review, June 16, 1972, p. 3. Excerpt: “The group with the biggest overseas control (87.8 per cent) is the automobile industry.”
  6. … then I had a flash of inspiration,” The Australian Financial Review, January 31, 1975, p. 3. Excerpt: “Suddenly the answer came to me as a flash of inspiration and I yelled out to Mavis, ‘I know what we’ll do, we’ll have a Customs house at the South Australian border and put a high tariff on imported cars coming in into that State.'”
  7. Fire in their guts and wind in ours,” The Australian Financial Review, February 7, 1975, p. 3. Excerpt: “We would have more people engaged in the car industry and cheaper cars if we only had one manufacturer, with the lower duty imports to keep that company honest. With one producer we would get economies of scale: we won’t with three.” And: “The unions, and indeed the Minister for Labour, have been very critical of the soullessness of the production line they are now so angry to see slowing down.” And: “the Japanese buy our iron ore and coal, ship it to Japan, make it up into cars, pay wages very close to Australia’s, ship the cars back to Australia, hump them over a 45 per cent tariff wall and still undersell us. So we have to impose import quotas. We can’t really be good at making cars!”
  8. Auto industry is in a straitjacket,” Country Life, April 14-20, 1976, p. 36. Excerpt: “Our previous 95 pc tariff plan has forced the car industry into a straitjacket which has made it impossible for us to produce cars economically.” And: “the tariff induced costs for a car retailing at $5000 works out at about $1400 a car.” And: “to economically press motor body panels an efficient factory would have to have a capacity of about 600,000 units a year. In 1973 Australia pressed 425,000 units but instead of doing it in one factory we did it in five. Again, the minimum throughput to produce cheap engines is about 350,000 a year. In 1973 we made 300,000 engines but instead of making them in one plant, which would have been sensible, we used four. No wonder cars cost so much! The result of this uneconomic proliferation of car plants can be measured by the number of cars that an employees makes in a year. In Australia the average figure is 5.9 cars an employee while the figure for Nissan in Japan is 37.2 and Toyota 41.5.”
  9. Why Govt didn’t throttle car industry,” The Australian Financial Review, June 18, 1976, p. 4; and “Gear change troubles in attitudes to car industry,” The Australian Financial Review, June 25, 1976, p. 4. Excerpt: “But just to show people that Eccles does not dominate me entirely, I am going to defend at least one part of the Government’s decision, and I hope that the Government doesn’t find itself embarrassed by being defended by so modest a member.” And: “Australian Governments are hopeless at being necessarily nasty.”
  10. Government can take credit for our car industry mess,” Country Life, July 27, 1977, p. 48. Excerpt: “The key to the problem is that the Government, way back in the early 1960s, encouraged firms to enter the industry by handing around lavish protection so now we have too many manufacturers of cars and car components.” And: “Every time a sector of the industry gets into trouble it goes weeping to the Government and the Government puts another band-aid over the sore. The result is that changes are not taking place, so the industry is still in a mess, so these import quotas are necessary, so the burden of the industry on the necks of the exporters is undiminished.”
  11. Car makers want the 4wd driven deeper into the tariff bog,” Country Life, September 14, 1977, p. 44.
  12. The writing is on the tariff wall,” The Australian Financial Review, August 18, 1978, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 85-87, as “Motor Cars (4).” Excerpt: “The only way the Government could maintain employment in the car industry would be to pass a law compelling people to buy a certain number of cars a year. Without such compulsion, the demand for cars would continue to shrink, so production would become even more uneconomic, so protection would have to be even higher, so demand (and employment) would continue to fall.”
  13. Unbuckling the hobbles on the motor industry,” 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).” Excerpt: “Eccles is unattractive at any time but when he is saying ‘I told you so’, he is unbearable.”
  14. Protections that nobody needs,” The Bulletin, January 20, 1981, p. 107. Excerpt: “the government has made a proper mess of everything; they have forced consumers to pay a frighteningly high price for cars and have diminished employment in the industry as well.” And: “Eccles has suggested, in his nasty, sneering, sarcastic way, that the only way the government can successfully create employment in the car industry is to take its courage in its hand and to rescind the law of supply and demand and to pass another law to force people to buy a new car, say, every other year. I think he was only trying to be funny in his arid way, but Fred got very upset because he is fearful that the government might take the suggestion seriously. He thinks that the only reason they have not done so is that the idea has not crossed their muddled minds!”
  15. Enough to drive you to drink,” The Bulletin, March 24, 1981, p. 107. It quotes this: “When the cost of protecting an industry exceeds the cost of employing everybody in it, from managing directors to production workers, clearly something has gone wrong. This is what has happened in the Australian motor vehicle industry. It now costs the community something in the order of $15,000 a year to keep each of the 65,000 workers in the industry in a job. The hard fact is that Australia could save money if everybody now in the industry was given a pension equal to their present wage and the industry closed down.
  16. The feather bed becomes crowded,” The Bulletin, March 31, 1981, p. 123. Excerpt: “Lest you think I am allowing my prejudices to influence my logic, let me give a specific example of the way government intervention has mucked up the car industry. In the early 1960s, when the protection needed by the car industry was comparatively low, GM-H had an annual production run of 160,000 EH Holdens so they could produce quite cheaply. Then along came the good old government, dripping its milk of love and affection all over the place, and we now have an average production run of 23,000 units and we have to subsidise the industry at a rate of $1000 million a year with employment falling continually.”
  17. Read in full Bert Kelly’s three-part series on the car industry for its entertainment and educational value: (1) “A charabanc called protection,” The Bulletin, August 25, 1981, p. 104; (2) “Taken for a ride – to nowhere,” The Bulletin, September 1, 1981, p. 147; and (3) “Down hill, in circles, all the way,” The Bulletin, September 8, 1981, p. 114. These three were republished in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 200-08.
  18. Agricultural Development and Tariffs,” transcript of speech delivered at the 6th Annual Northern Development Seminar in Katherine, October 29, 1981. Excerpt: “The next thing is with cars. This is still a lively subject, and we are now subsidising the car industry at the rate of around about 1000 million a year (that’s the extra cost everybody pays to buy cars). But you don’t worry about that; you have got plenty of money in Northern Australia. However, that’s what it’s costing the consumer of cars, 1000 million dollars (not my figures — I can’t work these things out — but the IAC’s figures). And the employment in the car industry falls every year. Now we are doing it, we say, to protect the car industry, protect employment, but the employment falls every year, and it falls because the demand for cars falls as the price rises. This is a shock for all (not for the politicians of Queensland, New South Wales and Western Australia, who breathe the pure air) but for the rest of us, who know that the way to dampen the demand for a product is to increase the price. We’ve increased the price of cars by at least $1,000 to $2,000 a year, and we wonder why the demand for cars has fallen. And it is worthwhile to remember that we have twice as many people engaged in servicing cars and selling cars than there is in making cars and car components, so we have destroyed not only the employment in the industry for people who make cars by making them dearer, but we have also destroyed the employment of the people who service cars, because there are less cars being sold. So that’s the kind of position we are in now.”
  19. Why politicians don’t like the truth,” The Bulletin, January 19, 1982, p. 104. Excerpt: “To continue the present extravagant protection for cars is obviously foolish because it discourages the industry from changing and so encourages it to destroy itself from within. It encourages us to have five manufacturers of cars when we only have a market big enough for two or, at the most, three. Everyone knows this but not everyone has the guts to say it.”
  20. A tottering monument to intervention,” The Bulletin, June 19, 1984, p. 136. Excerpt: “I have taken a morbid and brooding interest in the car industry for many years. Since this column was born, in 1969, I have written 33 articles concentrating on cars and there have been many passing references in other articles. I also made 18 speeches in federal parliament about cars.”
  21. Don’t ask the Govt. to drive industry,” Stock and Land, May 2, 1985, p. 18. Excerpt: “The quickest way to measure the magnitude of our car mess is to point out that, until 1962, Australians were making more cars than were the Japanese. … Then the Government started to help the industry!” And: “The Government unveiled its first car plans in 1965 and since then it has altered them significantly 24 times, so it is not surprising that the industry is confused.”
  22. Bounties or Tariffs, Someone Pays,” IPA Review, Vol. 45 No. 4, 1992, p. 12. Excerpt: “My reason for writing this piece is to hammer home the fact that too few people realise that the burden of protecting the car industry, be it $1.4 billion or whatever it is, is borne by exporters if tariffs are used, or by taxpayers if bounties are used.”
  23. Government car plans going nowhere,” The Australian Financial Review, June 11, 1992, p. 15. Excerpt: “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.” And: “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.”