“Corporate Welfare” – for whose benefit?
In the last week of January this year, motor cycle manufacturer Harley Davidson announced it would be closing its New Castalloy wheel rim factory at North Plympton in Adelaide's western suburbs in 2019 with the loss of about 160 directly employed jobs and an unknown number of jobs associated with services related to the plant.
The SA Labor Government provided a financial "rescue package” in 2013 to keep the plant going. The SA Government Manufacturing Minister said that the company was "competitive and profitable". Harley Davidson, the US parent company, is "restructuring" globally, building a new modern plant in Kansas City to continue to make profits as sales of its cycles in the US are at a six year low.
The Minister said that "The company has told us there is nothing more the State Government could have done in terms of help or support."
This type of story of government financial assistance to large corporations, often foreign-owned, without any Government control in decision-making, has been repeated many times in South Australia by both Labor and Liberal Governments. The car industry has benefited most from government "corporate welfare" financial assistance. However, in nearly every case, the corporations decide if their government propped-up production operations remain open or not. When they close there are the usual statements from governments that they will do all they can to assist workers find another job.
However what kind of jobs are the sacked workers being offered? Perhaps work for one of the many traffic management companies who sprung up as governments sold off or outsourced road works to the private sector. Or perhaps a job on a tax-payer funded government road or rail infrastructure project such as the large road projects on Adelaide main roads at the moment.
The problem with these project jobs is that the actual roadwork construction is outsourced to huge construction companies like Leighton CPB, McConnell Dowell, Fulton Hogan or Laing O'Rourke. These companies use labour hire contractors to employ the workers and according to the CFMEU's State Secretary, Adam Cartledge, they are all casual jobs on the lowest rate possible under the minimum safety net awards.
Given that these big roadworks corporations are awarded the road contracts by a state Labor Government, it shows how far to the neo-liberal view of the world Labor will go to please the big end of town under the guise of creating jobs for workers.
Corporate Welfare And The Environment
Parliamentary election times are times when the government of the day will splash money around to win enough votes to get re-elected. In SA there is an election in mid-March this year and despite the failure of the corporate welfare approach of the Labor Government towards New Castalloy, mentioned above, the ALP shows no signs of dropping this neo-liberal corporate welfare approach.
On Friday 2 February 2018, SA Labor Government Treasurer Tom Koutsantonis announced an $11 million grant to environmental vandal Beach Energy in order to stop the corporation from setting up its headquarters in another Australian state. The Minister said this was a "major coup" for South Australia. Beach Energy changed its name from Beach Petroleum in 2009 and describes itself as an oil and gas exploration and production company. It could be argued that this is not as bad for the environment as a coal-fired power station company, but it is not far off it.
Beach Energy is heavily into Coal Seam Gas exploration and production in the South East of South Australia. This is some of the best agricultural land in the state and Coal Seam Gas exploration is widely opposed by a coalition of "greenies", wine and vineyard industry workers, grain farmers and dairy farmers.
“Lock The Gate” signs are visible throughout the South East.
This is an example of "corporate welfare" not only being a short-sighted economic strategy but also a strategy with dire consequences for the environment.
What is the solution? What should an even mildly progressive political party with hopes of winning the coming SA state election do with its money regarding industry and jobs in the state?
A good start would be that it only provide financial assistance to any corporation if it has control of decision-making on any proposals for "downsizing", contracting out, or even worse, closures.