The end of an era is nearly upon us. Australia will no longer be home to automotive production after October of this year. It’s a sad time as we bid farewell to the local production that has given us some incredible cars, some even lucky enough to cross borders and make their way to America.
But, one Australian economics commentator, Jason Murphy, doesn’t believe it should be all sad and full of sorrow, arguing the process has been underway for 30 years. In an effort to drive down consumer prices of goods, Australian governments have continuously opened its borders to free trade and flooded markets with cheaper goods.
At its peak, Australia produced almost half a million cars in 1974, but never recovered to reach those levels again. Governments slowly enacted a plan to phase out subsidies for local automakers, something Murphy calls a “managed declined.”
Instead of letting the whole industry implode at once, something many felt was inevitable, subsidies became fewer and fewer over the years. Finally, in 2014, the government pulled the life support altogether. Ford, Holden and Toyota all announced production would end by the year 2017.
“Making things is officially over. [Australia] is now a country whose economy is about doing things and helping people,” said Murphy.
“It was a bit like rearranging deck chairs on the Titanic,” said Tom Conley, a lecturer in political economy at Griffith University in Queensland.
While the end of production is expected to slash the Australian GDP by as much as two percent, and lead to hundreds of thousands of lost jobs, Conley described a “but” situation.
The blow is softened by Australia’s unique advantage of having an abundance of natural resources while also being relatively close to China. As many other economies suffered from the ravages of the great financial crisis, Australia, riding the once-in-a-generation mining boom, saw its living standards soar as China’s economic development took off in the last decade. That all helped make the decline of the manufacturing industry “economically palatable,” said Conley.