SYDNEY Feb 13 Australian Prime Minister Tony
Abbott's tough stance against bailing out struggling industries
has caused a rare public split inside his conservative
government, which may suffer as a result of the divisive policy.
Japanese automaker Toyota Motor Corp's announcement
this week that it would stop manufacturing in Australia by 2017
has heightened concerns over political fallout from the hard
line position, which the opposition Labor Party blames for
thousands of job losses.
On one side, those lost manufacturing jobs have deepened the
acrimony between the government and the powerful trade unions,
who accuse Abbott of being more concerned with conservative
fiscal orthodoxy than protecting Australian jobs.
On the other, the concentration of decision making in the
hands of a few key ministers has some feeling left out as Abbott
embarks on structural changes that one insider compared in their
breadth to those under then British Prime Minister Margaret
Thatcher in the 1980s.
"Those very close to Abbott will say 'no, it's fantastic and
it's cohesive and he's a consensus manager', but there are other
very loud members in the background who are not as happy as any
attempt to portray them," a person close to the government told
Reuters on condition of anonymity in order to speak openly.
END OF THE ROAD
Toyota's withdrawal marks the end of the road for a
once-vibrant Australian auto production base - General Motors
and Ford have already said they're moving out - and
will mean the loss of thousands of direct and indirect jobs as
high costs and a strong currency squeeze manufacturing.
All of which could test Abbott's conservative government,
which is seeking to manage a slowdown in Australia's $1.5
trillion economy as a decade-long mining investment boom slows.
Abbott and Treasurer Joe Hockey have chosen to take a stand
over the issue, arguing for fiscal discipline in the face of
disagreement from senior ministers including Immigration
Minister Scott Morrison and Barnaby Joyce, deputy leader of the
Nationals Party, Abbott's coalition partner.
It's not just the big auto manufacturers, however, that are
struggling. Fruit cannery SPC Ardmona's request for
A$25 million ($22.6 million) in federal aid was also rejected
last month, prompting a rare public rebuke for
Abbott from coalition MP Sharman Stone.
Other potential flashpoints include support for a push by
business to reduce operating costs through cutting so-called
penalty rates for working odd hours, and broad changes to what
the government describes as an unsustainable social welfare
David Oliver, national secretary of the Australian Council
of Trade Unions, says the government's position is aimed at
blunting the unions' political power, but it will ultimately
"I'd say there are now a lot of Toyota workers, (GM) Holden
workers and SPC workers who would have voted for this
government, probably based on the promises that they were out
there providing jobs," he said. "They'd have to be scratching
their heads now."
Toyota's exit had been widely predicted because of the blow
to the parts supply base from GM and Ford, though initial fears
that it could trigger a recession in the affected states may
have been overblown.
Australia's car industry includes about 150 companies - from
components to tooling, design and engineering - with more than
45,000 people employed directly in making cars and parts,
according to government data.
The impact of the decision not to fight to keep auto
manufacturing, however, goes well beyond those directly
connected to the industry, says Rick Kuhn, an adjunct professor
of political science at the Australian National University.
"Blue collar workers tend to be Labor voters, but I think
the fallout will be more widespread," he said. "The crucial
determinant of its impact will be whether or not it intersects
with a broader slowdown in the Australian economy."
"Mining is slowing down," he added. "If that slowdown
continues and intersects with layoffs in manufacturing, then I
think the government is going to face a very difficult situation
in the medium-term."
Both major political parties have for two decades pursued
policies of economic liberalisation to make Australia's economy
more competitive in a global market, says Peter Reith, a senior
minister under former PM John Howard.
That doesn't, however, mean voters are necessarily on-side
with the changes they have made.
"The advocates of protectionism have been a minority in
Australia for 20 years," Reith said. "That's at the political
level. The population is a bit more uncertain about the policies
than the policymakers."
Still, he says there will not be any fallout if the
government is able to move quickly to right a shaky budgetary
ship and return a semblance of economic stability.
"The fact is that the Australian public, overall, what they
really want is what we'd describe as mainstream and effective
economic management," he said. "And, provided the Abbott
government is sort of largely on that pathway, I don't see
dangers ahead for them politically. To the contrary, really."
That could be tested in places like the district of Murray
in Victoria, where Stone is still fighting to keep SPC Ardmona,
and the jobs it provides, alive.
Earlier this month, she sent shockwaves through the
political establishment by publicly accusing Abbott and Hockey
of lying when they said that overly generous conditions for
workers were the cause of the company's economic woes.
She says the government has been blind to the nuances that
have contributed to SPC Ardmona's financial struggles in recent
years, such as the dumping of cheap foreign goods on the market,
and worries the human factor has been taken out of the equation.
"You can imagine in my electorate there's 8.5 percent
unemployment, we don't have a whole set of alternative job
vacancies for these people and it's not easy for people to shift
to other places," she said. "It doesn't bear thinking about what
the consequences would be if we saw SPCA having to close."
Already nearby electorates have begun shifting to political
independents, a move she says she would have considered herself
in the previous government, when independents held the balance
"People are very, very distressed. They're very upset," she