Australian Commentary (10)

Staying away from Subsidies

It’s good that the Federal government has refused to hand over $25 million of taxpayers’ money to SPC, which has a fruit and vegetable cannery based at Shepparton in Victoria.

Why am I rejoicing? Economic reality is finally setting in, after a debate that has included flights of fantasy. Even the local Coalition member, Sharman Stone, couldn’t (or wouldn’t) come down on the side of the government. Yes, her position was a difficult one, not wanting to see her local people possibly lose their jobs.

But government “support” for industry always means taking money from the productive people in the community, and giving it to the unproductive. What is that? Injustice, theft, and plain madness.

What government would want to do that? Well, lots of governments do, especially if they are utterly ignorant and insensitive to the basic issues of profit and loss that govern industries. And if industries around the world ran their financial affairs the way some governments do, they would be out of business very quickly.

The Prime Minister indicated that

This is a government that will make sure that the restructuring that some Australian businesses need, some Australian sectors need, is led by business, as it should be. And we will set the parameters. We will ensure that the climate is as good as it possibly can (be) for those businesses to do what is necessary, to restructure, to survive, to employ.[1]

Business can be very tough, I understand that. It’s especially tough in Australia competing against imported food-stuffs, produced in places around the world that don’t have Australia’s wage costs and conditions of employment. We don’t have tariffs: thank God we don’t.

It’s also tough if management is casual about costs, and fails to make every effort to ensure the company maximises the potential for profits, annually.

And there’s another thing to say about that. People like to work in businesses that are well run, where they aren’t seeing lots of wasted time and money. They say to themselves, “My effort is worth it, and management knows what it’s doing.”

Companies that are doing well, can afford to pay their employees well, and well-paid employees tend to stick around. It becomes a self-perpetuating profit and business opportunity for the long-term. Employees and employers know that they need each other, and that it’s important to get along with each other. That’s business-that’s life.

And it’s no accident that industries that are struggling today, are frequently dominated by unions. If they’ve succeeded in strong-arming the management of a company, it only becomes a matter of time before that business is no longer competitive, and out the gate.

Judith Sloan points out that

For a mid-level production worker [at SPC], the current base rate of pay is $26.15 per hour before allowances and overtime. This compares with the award rate of pay of $19.07 per hour. This is a pay gap of more than 37 per cent.

According to the agreement, a union representative must be in attendance at a new employee’s induction and the company must encourage workers to join the union. Let’s face it, SPC Ardmona is a union shop.[2]

Does that mean that unionism is wrong? Not at all, but the realistic union member will understand that intimidation has a very short-term success story. This is why Holden is in such serious trouble: its management was a bunch of cowards.

Now, the management at SPC will have to successfully run their business, or quit. It puts them and their employees under pressure, and there is nothing wrong with that.

I guess there would be some reading this, who would be saying, “That Andrew McColl’s a hard man. What about some sympathy and care for working people?”

Well, I believe in care and sympathy for working people. And the thing that working people want, is a job with a secure future. But when employees price themselves out of a job, they destroy their employment future.

And there’s more. Minimum wage laws actually reduce employment, pushing more people onto the dole.

Why? Because they make it too expensive to hire staff. If I have to pay $25/hour for staff in my coffee-shop because the law requires me to, but I can only afford $22/hour, I’ll say “Forget it.” But when someone says to me, “I’ll work for you for $20/hour,” I’ll say, “You’ve got a job!”

The Bible warns us that “…even the compassion of the wicked are cruel” (Prov.12:10). Those people who purport to be on the side of workers, demanding that employers pay unrealistic salaries that only drive a company into bankruptcy, are working to destroy the jobs of those they claim to be assisting. Employers can offer work, when the price of labour drops sufficiently to make it profitable to do so. They don’t give their money away unprofitably, and neither should they be expected to.

Conclusion:                                                                                                                              

Modern Australians must be wise enough to reject the foolish economic notions that have plagued us for decades, indicating there is always cash in the government’s back-pack. There isn’t. Government money comes from the taxpayer’s back pocket, and nowhere else. SPC having to face the challenges of the free-market without government assistance, painful as it may be, is best for the company, its employees and us.


[1]  ‘Abbott Government Rejects Aid Package for SPC Ardmona,’ “The Australian,” 30/1/2014.

[2] Judith Sloan, “SPC Nothing Short of Union Shop,” ‘The Australian,’ 3/2/2014.