Beyond the argument on whether we should be providing assistance to foreign companies, there is a bigger question of whether the federal government should be involved in these bailouts at all.
Left without the external help, these challenged smelters would almost certainly be closed. (Alcoa recently confirmed that with the permanent shutdown of its West Australian Kwinana alumina refinery.)
A turbocharged Australian dollar and high costs consigned Australia’s auto manufacturing to its doom in 2013.
The facilities, while critical domestically, are not competitive globally, and that should be reasonable grounds for letting them close. Sometimes it’s better for governments to exercise a bit of tough love, which is exactly what happened in 2013, when the Abbott government refused to keep propping up the Australian car manufacturing industry.
A turbocharged Australian dollar and high costs consigned the carmakers to their doom. In the case of the smelters, sky-high power prices pose an existential threat to extremely energy-intensive facilities.
A failure in government energy policy is the biggest reason for that situation, and while there are measures afoot to ensure our large LNG producers put enough supply aside for the domestic market, the decades-long ideological battle over renewable energy has further hindered the creation of a comprehensive and viable road map.
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So it’s no surprise that BlueScope, the company leading a consortium to buy Whyalla, is now citing issues with the cost of gas in its negotiations with the government.
BlueScope chief executive Mark Vassella told a Press Club briefing on Wednesday that the government needed to force a reduction in gas prices to prevent factories closing down. “Australian manufacturing is at a dangerous crossroad,” he said.
Meanwhile, the federal government seems to be over a barrel because the closure of sites such as Glencore’s Mount Isa copper refinery threatens to undermine Australia’s push into global supply chains of critical minerals, a key part of Labor’s signature “Future Made in Australia” industry policy.
That’s fertile ground for wealthy companies, with financially challenged Australian refineries, to tug at the pockets of taxpayers as required.
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