Car Industry in Australia: Government Support of Holden
Money Multiplier Mechanism
October 27, 2022Business Confidence in Singapore Analysis
October 27, 2022Car Industry in Australia: Government Support of Holden
| Assignment 1 Due Date: | Tuesday April 8th, 2013 |
| Length: | 2000 words |
| Value: | 25 marks |
| Topic: | The Car Industry in Australia
On 11 December 2013, the iconic Australian automobile manufacturer, Holden, announced that it would stop production of Holden vehicles in Australia by 2017. For many years prior to this decision Holden was the recipient of financial support from the government. In recent years Holden’s sales figures and profitability in the Australian market has also been negatively impacted. What prompted the Australian government to offer support to Holden in the first place? From an economic and social perspective was this support justifiable? In this essay you are required to analyse the effect of the government protection offered to Holden on the Australian automobile industry and Australian economy. You will need to assess the impact of government protection of Holden on Australian consumers, taxpayers, international competitors and any other stakeholders that you consider to be important. What has prompted Holden to cease production of Holden cars in Australia? You may wish to consider factors such as market preferences, production and other operating costs, size of the market and the regulatory environment such as labour laws. Would this decision have been made earlier if Holden was not the recipient of government protection? Assessment Criteria Your answer needs to be structured as an academic essay which means that it must have a formal introduction, a logical and coherent essay body that shows evidence of research and analysis without being overly descriptive, and a brief conclusion. You will need to demonstrate evidence of research by citing peer reviewed sources in a well formatted reference list. You are required to use Harvard Date style in text citations for your essay. The text matching software, URKUND, will be utilised to check all submitted assignments for plagiarism. There is a Productivity Commission report on the automotive industry which provides a useful starting point for this assignment; Australia’s Automotive Manufacturing Industry |
Conlon intro and origins
In Australia, Federation assisted to accelerate growth and development of the manufacturing industry. The removal of customs barriers between states and the introduction of tariffs on imported goods collectively enabled industry to grow sharply increasing its employee base from 190,000 328,000 within 10 years from 1903 (ABSa, 2014). By the time World War II erupted the manufacturing industry within Australia had sufficiently established itself, with Government support, and was well positioned to meet the demands required of a war-time era, even after having sustained the impact of the 1930’s depression. Post World War II, the Australian Government exercised greater influence in the economy, and developed policies that targeted macroeconomic issues such as full employment, economic growth and development.
What prompted the Australian government to offer support to Holden in the first place?
The Australian Government first started providing assistance to the motor vehicle industry during the first world to spur growth in the local industrial sector while preserving foreign exchange relationships (Capling, 1992).
The first step involved the outright ban of imported car bodies by the Hughes Government.
Immediately after the war quantitative restrictions were lifted and exchanged for a two-fold increase on the import tariffs of car bodies and panels, together with the introduction of import duties on assembled chassis.
As a result the barriers to market entry were significantly reduced, and through the tariff structure local market production was given a competitive advantage to foreign rivals given its ability to produce substitute products at a lower cost of supply. As such, this provided an incentive for foreign industry players to invest locally to spur further growth in the Australian economy.
