Loading Australia got plenty from Holden/GM and the other carmakers in return for the billions in assistance over the years, including capital investments that tally many times the amount taxpayers contributed. And more valuable again were the benefits in terms of employment, both in-house and in the parts industry, award wages, continuing technological development on the production lines and in many other aspects of the industry. To imply that Australia got nothing out of its support for the car industry is just plain wrong. It demonstrates a complete lack of understanding of the importance of manufacturing and of the concept of value add, where a manufacturer can take a $2 piece of steel and make a $50 component. Critics continually carp about the taxpayer subsidies, conveniently ignoring those larger but less-visible subsidies given to the mining and banking sectors.

Australia got a great return on its automotive investment. Under the last car plan, up to $300 million in assistance was available each year to car and parts makers, who employed around 50,000 tier one and tier two workers just a few years ago. This assistance also supported the jobs of many other workers in tier three operations. Then prime minister Tony Abbott and his treasurer, Joe Hockey, were quick to identify the car industry assistance as an easy budget cut during their “debt and deficit disaster". Loading Replay Replay video Play video Play video What they failed to realise was that those workers, earning average industrial wages, were contributing around $1.3 billion a year in income tax each year. By closing the car industry, Mr Abbott and Mr Hockey actually cost the budget around $1 billion in annual revenue, because very few of the displaced workers actually found 40-hour, award-wage jobs after they left the automotive industry. It’s true the market had moved against the local carmakers, thanks in part to a blind adherence to “free trade” policies and the abolition of tariffs. But, while the American companies, Ford and GM, couldn’t get it right, that doesn’t mean it couldn’t be done.

Market leader Toyota found a successful formula, exporting more than 50,000 Camry cars each year to the Middle East. Holden itself was more successful with engines, earning billions with exports to Korea, Europe and the US. Loading The second lesson to be learnt from the closure of Holden is that a country cannot build an economic plan on the assumption that foreign capital will always be there to carry the day. Holden was 100 per cent owned by GM and, when things turned down, the US giant just turned its back. And not for the first time. Australia was powerless to do anything about it. It turns out that the country’s biggest export earner, the mining industry, is also foreign owned, and this highlights another trap in relying on foreign capital.

Most Australians do not understand that the mining industry, particularly the successful iron ore and coal mines, are mostly foreign owned. Loading Politicians are proud to talk about our fabulous mining industry, with all its jobs and all its revenues, but the reality is a little less rosy than they would have you believe. Mining does, indeed, generate a mountain of money, around $136 billion in revenues each year, but it only employs 100,000 people. Worse, Australia’s largest mines are 86 per cent foreign-owned. Apart from state-levied royalties, Australia gets almost nothing from mining, with most of the profits and dividends flowing overseas. Even BHP is 76 per cent foreign owned.

It’s not likely that BHP and Rio Tinto are going to close up shop while they have access to some of the richest ore deposits on the planet, but what does Australia get out of it? We don’t even add value to the raw materials and export steel. By relying so heavily on imported capital Australia has placed itself in a vulnerable situation. It neither reaps most of the benefits from foreign-funded operations, nor does it have any control over the deployment of capital when a downturn happens, as evidenced by the Holden closure. In the absence of any cogent industry policy, designed to create and sustain jobs in the cities where the unemployment and underemployment is found, Australia is in danger of becoming a mendicant state unable to implement long-term plans designed for the benefit of its own population. At the moment, this country appears to be a haven for foreign capital, a free-for-all where overseas money men make our decisions for us. Ian Porter is a former business editor of The Age.