Back to the old car subsidy merry go round

Cartoon: by Bill Leak

American taxpayers will be pleased that they are not the only ones propping up General Motors with subsidies.  Last year the Gillard government, (that’s the one two back from the present) offered $275 million of our money to keep them in production.

This is a fairly regular event for Australian governments, resulting in promises to stay in production for a few more years then requests for more.

Now the company is threatening to shut shop unless the new Abbott government sticks to that commitment: 

... Mr Macfarlane insisted today the federal Coalition government was doing "all we can" for Holden and plans to visit its plant in Adelaide at the beginning of next month amid reports it could close after Christmas. 

But Victoria and South Australia are deeply concerned that the closure of Holden would potentially imperil both governments at next year’s general elections. 

Victorian Premier Denis Napthine yesterday failed to endorse the federal Coalition's election strategy on the car industry, instead backing a united approach to the sector's future at a state, federal and industry level. … 

… There has been a long-running debate in the Coalition about the incentives, with many arguing the subsidies should be cut or abolished altogether. 

Mr Macfarlane said there were bigger issues facing the sector than the Coalition's policy of removing $500 million in car industry funding. 

"I know money is important but ... we've put a lot of money into that industry," Mr Macfarlane told ABC Radio. 

"If everyone wants to be flexible, I'll be flexible (but) I haven't got a pocket full of money.

The South Australian Labor premier, Jay Weatherill seems to have an odd view of partnerships claiming that Holden need to know whether they have a commonwealth partner and a state one.  This must be one of those collectivist models where the company gets what it can out of selling its product and government’s part of the deal is supplying the rest off the backs of taxpayers.

In the real world partners expect a dividend, not a bill.