The car industry: the political economy of managed decline

8 Dec 2013

Labor Prime Minister Kevin Rudd began his term of office in 2007 with the catch cry that he didn't want to be a Prime Minister of a country that didn't make things anymore. In the final throes of his reign he stressed: "I'm at my heart of hearts an Australian economic nationalist who believes that we need manufacturing for the future". Despite the rhetoric, he left office with the manufacturing sector accounting for a substantially smaller percentage of gross value added than when he entered. The car industry – a key component of manufacturing output and employment – has struggled to adapt to structural economic change and the high exchange rate. The Labor government, like its predecessors was unable to develop an industry that could survive without continuing and significant monetary injections. For many commentators, Labor’s approach has been ineffective and costly. However, if we characterise Labor's automotive industry policies as a continuation of a longer-term 'strategy' of managed decline, then the policies can be seen as a rational political response to the economic crisis of manufacturing in Australia, rather than a complete failure.

Tom Conley is Senior Lecturer in Political Economy, Griffith University and blogs at Big P Political Economy

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