OPINION
comparative advantage When Holden closed its doors at its Elizabeth car factory near Adelaide in 2017, it marked the end of almost a century of car making in Australia Above: Though there was a fondness for Australian-made utes, their quality never held up to foreign imports
Trevor Whittington – CEO WAFarmers
Each country will increase its overall wealth by exporting the good for which it has a comparative advantage.
30 TradeFarmMachinery.com.au
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n its final death throes the car industry shamelessly put its hands out for $3 billion dollars to save 50,000 skilled and semi-skilled jobs across Holden, Ford and Toyota but the PM at the time, Tony Abbott, had heard it all before. Abbotts’s emphatic ‘no’ marked an end to billions of dollars in taxpayer handouts and billions more in high tariffs to keep better made and better designed imported vehicles out of the reach of Australian farmers and ordinary consumers. In response, the unions howled that the government was throwing these workers onto the scrapheap and they would struggle to find jobs to feed their families. But for too long the manufacturing unions had been crying wolf while sitting back enjoying the world’s longest lunch, eating out on the fat of the land while, in turn, forcing farmers to pay a government-imposed premium to own a second-rate Australian-made farm vehicle. Why did it take so long for Australia to wake up to that fact that we were terrible at making Holden utes or Chamberlain tractors and our efforts were far better focused on what we were actually good at? One only had to reach back to the teachings of David Ricardo, who developed the classical theory of comparative advantage, to learn about sticking to your strengths. He demonstrated that if two countries capable of producing two commodities engage in the free market, then each country will increase its overall wealth by exporting the product for which it has a comparative advantage while importing the other product. For instance, if country A is good at producing lambs and country J is good at producing cars, then both get to be richer by specialising in their area of expertise. But if country A tries to make both sheep and cars and country J attempts to grow rice and make cars then both end up eating less lamb and rice and driving worse cars. Why Australia and Japan, not to mention every other country, took so long to give up their protective tariffs and follow Ricardo’s advice is beyond me. Today, we look around and marvel at the creativity and efficiency of the Japanese in designing and building cars and utes and we wonder why we suffered for so many years buying and driving poorly-made two-wheel drive petrol Holden, Ford and Valiant utes.
Sure, we thought at the time that they looked good and were fun to hot up but if there was ever an argument for free trade, global competition and less government intervention in markets then it has to be the story of the Japanese designing utes for the Australian, UK and American farm markets. In fact, the writing was on the wall as far back as the 1950s when the Snowy Hydro Company imported the Toyota FJ25 in 1959, when it was clear that the Land Rovers, Willys and Austin Champs were not up to the job. Then, when the first HiLuxes arrived in 1968, there was a cheap and reliable alternative to the Ford XT, Valiant VF and Holden HK and it was starting to get harder and harder to dismiss Japanese cars. By 1978, the third generation of Japanese utes arrived, offering four-wheel drive and diesel engines while Holden was sticking to their knitting and on its seventh generation had only just introduced its first tray backs, while congratulating themselves on the launch of the recent launch of the good looking but useless HZ ute. Even the Australian army had joined the dots and started buying Toyota HJ47s until being told to stop by an Australian defence establishment that was still busy looking to the old country for the protection of the dominions. But today, from Nottinghamshire to North Dakota to New South Wales, our farm boys and girls aspire to own a modern twin cab ute that grew out of the Japanese designs of the 1960s. Not bad for a country with no cowboy or big tractor farming culture. And as for those 50,000 workers that have missed out of the $3 billion dollars to keep the Australian car industry on life support, well they have gone on to find work in other sectors of Australia’s booming economy. In fact, some may well have found their way into agriculture to help plug our growing labour shortage or maybe even work in our growing globally competitive unprotected farm machinery manufacturing sector. So next time you hear calls from a union, an ABC commentator or government minister that we should be subsidising the manufacturing of a product then you tell them that Australian farmers have done their bit supporting the inefficient and unimaginative and they should get back in their nice, big, reliable imported vehicle and go and eat someone else’s lunch.
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3/06/2021 12:19:42 PM
