The Guardian November 8, 2000


Workers lose out to corporate welfare

by Peter Mac

Electrical whitegoods manufacturer Email last week confirmed that it had 
applied for  and received  a massive "industry assistance" grant from 
the South Australian Government even though it would have moved its 
operations there anyway.

The South Australian Government offered the grant, thought to be worth $2 
million of taxpayers' money, as an enticement to the giant company to 
relocate to its "Chef" products manufacturing plant from the Melbourne 
suburb of Brunswick to its plant at Dudley Park in Adelaide.

However, Email boss Trevor Carrol has now stated that the decision would 
have been made to relocate to South Australia anyway.

"This was a decision made on economics of manufacturing and consolidation 
of total production into one factory. It was certainly not based on 
incentives", he declared.

Defence company BAE systems has also confirmed that it is receiving a 
grant, even though it would have made the decision to relocate to 
Salisbury, SA, even without the grant.

BAE Chief executive Peter Antiss declared with evident satisfaction that 
"we have taken what was a business decision and then sought the support of 
the government to create the best environment for that decision." (Read: 
"we just worked out where we could make the biggest profit and then took 
whatever the government was offering.")

The SA Government's policy of rewarding companies for locating to their 
state is similar to policies now prevalent in all states.

The policy has the effect of inciting a "dutch auction", in which states 
compete with each other to offer the greatest incentive to the relocating 
company.

The policy has little to do with protecting jobs by supporting financially 
troubled companies. Both Email and BAE are highly profitable enterprises, 
and the government does not apply a "means test" to the companies.

Governments at all levels apply a double standard in rejecting tariff 
protection but offering lavish handouts to wealthy companies in the form of 
"industry assistance".

The companies are obviously reaping a huge reward from these assistance 
schemes, the total cost of which has now blown out to more than $6 billion 
per annum.

But who benefits from the practice of "industry assistance", other than the 
companies themselves?

Not the workers at the old plant. Such moves are almost always accompanied 
by job losses at the new plant. Email's decision will result in the overall 
loss of 180 jobs.

Not the taxpayer, either. Although Email agreed to repay $25,000 to the 
Victorian Government (part of an enticement previously received by the 
company), the combined value of grants made to Email and BAE Systems 
probably amount to several millions of dollars.

And there's another rub. The public's money is being spent in huge amounts, 
but the public can't find out how much.

Adelaide economist John Spoehr commented that the receipt of public moneys 
by companies that were clearly not in need of assistance demonstrated the 
need for the implementation of "industry assistance" to be open to public 
scrutiny.

Mr Spoehr questioned whether any of the states were actually improving 
their overall economic position as a result of the schemes, and stated that 
the bidding wars between the states were clearly not in the national 
interest when they led to an overall reduction in jobs.

He commented: "It is time for the states to get together and for the 
Commonwealth to forge a national code of conduct around industrial location 
and relocation and for some basic principles to be agreed upon."

It is also time that the interests of workers were considered.

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