An open letter to the Prime Minister of Australia
Hon Kevin Rudd MP
Prime Minister
Parliament House
CANBERRA ACT 2600
Dear Prime Minister
I read with interest today your Government’s $3.4 billion proposal to bail out the Australian car industry. No doubt your Government is concerned about the welfare of the unionized employees at these plants, and in related parts industries.
While some may argue that the payment is corporate welfare, your decision follows the billions spent previously by the Howard Government, and before that under Keating and Hawke on the industry as well, so it certainly is not without precedent.
However, my concern as a taxpayer extends to the Government handing over money to these companies for nothing in return. Mitsubishi received significant contributions from both State and Federal Governments, and yet still closed their Australian manufacturing plant, and I take from the current round of funding that there is little or no guarantee that Ford, Holden (General Motors) or Toyota won’t do the same thing.
My suggestion to you Prime Minister is that instead of handing over this money without condition, that the Australian Government would be better placed acquiring one of these companies instead. Not the Australian concerns, but the American holding companies.
The market capitalisation as of close of business Friday for General Motors was $2.8 billion USD, and Ford $4.87 billion. General Motors would be the more appealing acquisition of the two, due to the lower acquisition cost, its historic relationship with Australia (producing the first locally made car) and the fact that it actually makes a half decent local product, unlike Ford over the last 20-30 years.
As taxpayers it is not unreasonable to expect something in return for the investment of our money. Despite being of the right, the American Government has taken stakes in banks as part of the financial bailout. For an Australian Government of the left to take a similar step in the car industry would not be difficult by comparison.
I look forward to your consideration of this idea, and hopefully one day seeing the Australian flag fly over the automotive plants of General Motors in Michigan.
Yours sincerely
Duncan Riley
CEO Nichenet Pty Ltd, Editor The Inquisitr.
Duncan thats a stroke of genius, why subsidise GM when you can buy it lock, stock and barrel!
I'll co-sign!
So who covers the cost of the losses they will incur for the foreseeable future? The AU government? GM lost 4.2b USD FYQ1 and the next 18 months aren't looking good for new car purchase volume. Seems the purchase of the assets is the easiest financially … it's keeping up with the losses that causes problems.
Awesome stuff, mate.
Duncan, what a wonderful idea, please print it out and send via snail mail to the PM, Cabinet, the opposition and main stream media. They pay more attention to communication with stamps as it is tracked and can bite them on the backside in the future.
Sadly the detail of the “$6.2 Billion” is a typical government shell game.
The next Federal election must be held on or before 16 April 2011.
The key measure of the $6.2bn is the new scheme:
“A better-targeted, greener, $3.4 billion assistance program, the Automotive Transformation Scheme (ATS), running from 2011 to 2020;”
So that's if the Labor Party wins the next election.
If we discount that $3.4 billion by the current 10 year bond rate (to cover 2011 to 2020) then discount it again by the current 3 year bond rate before it starts, we get down to between $2.2b and $2.3b in today's dollars (that's not necessarily the best practice but it makes the point).
If you check the ALP web page for the A new car plan for a greener future you'll see the other measures, but they're mostly small potatoes.
Lastly do we want the Australian government owning GM? Have they run any government owned businesses well? Surely the future fund will consider the investment,
US car manufacturers carry a lot of unfunded pension liabilities and have been complaining they cannot compete by manufacturing cars in the USA. Toyota on the other hand has 13 plants in the USA and another being build in Mississippi.
Porsche used that poor sentiment in the investment community to fleece hedge funds of about $40 Billion see http://www.wealthesteem.org/porsche-fleece-hedg…
They should have been making hybrid cars a long time ago and now to come to us with there hands out is a smack in the face!
Analysts have declared GM worthless – clients and shareholders advised to get out, target price $0. http://ftalphaville.ft.com/blog/2008/11/10/1803…
I almost didn't read this for fear of another outline of econ101 that would only depress me about this decision further. Instead I did read it and I'm glad I did. Brilliant. 🙂
FYI – if you do send it via snail mail to one or multiple departments, it will cost $250 of tax payer money to process it. That's the stat APS quote for the cost of replying to each and every letter sent to a government department.
If it takes $250 to reply to a letter, do you really want them to own and already uncompetitive car company. 😉
Why not just invest in Tesla motors, bring them to Australia and let the old oily car industry collapse? Then set up funds to look after Australian un-employed for 6 months till they find another job. Surely this would be cheaper and better?
Love the letter, although as pointed out above the US$20+ billion in current obligations + ongoing losses would make it VERY expensive.
The other item that only just occurred to me is…. if they bail out the Oz arms of 2 US companies rapidly heading for bankruptcy, they'll just take the money and run. Difficult situation no doubt.
I watched 'Who Killed the Electric Car' recently & was stunned that GM had a fully viable electric city car + infrastructure in some parts of California 10yrs ago… only to destroy it for no obvious reason…. other than stupidity. When I say 'destroy' it, they literally destroyed every one of the vehicles they built at the end of the lease even though hundreds were offering to continue leasing or buy the cars.
http://www.whokilledtheelectriccar.com/
How interesting to find so many similarities between Australia and the U.S., most interesting reading you have to offer here. Thanks so much for the insight.
Many thanks,
Betsy Buchanan
Ford, GM and Chrysler have asked Congress for $25 Bn bailout overnight. GM could run out of cash in weeks.
http://news.bbc.co.uk/2/hi/business/7736301.stm
Despite being of the right, the American Government has taken stakes in banks as part of the financial bailout. For an Australian Government of the left to take a similar step in the car industry would not be difficult by comparison
GM lose too much last year. That bail out is nothing but extra money to pay for their dept.
GM lose too much last year. That bail out is nothing but extra money to pay for their dept.
GM lose too much last year. That bail out is nothing but extra money to pay for their dept.
When I think of Pixie it conjures a particular image.
A subservient jester wearing only a pink ribbon and a g-string while mopping the floors of the whitehouse.
You want my stock exchange. Yes master.
You want my media outlets. Yes master.
You want my telecommunications network. Yes master. Let’s call it NBN.
You want my military. Yes master.
Yes master.
Yes master.
Yes master.
May I have my bananas now?
Get rid of this abomination and shoot his horse to ensure he doesn’t ride back into town.
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