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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Holden: The car maker's Australian exit is a good thing

Sunday, December 15, 2013

Thank goodness Holden is finally leaving Australia. The pain is over and no longer will ordinary Australian taxpayers and small business people have to pay to keep Holden going.

Yes, unions are crying ''What about the poor workers!'' Poor workers? These are privileged workers.

The base rate for Holden production workers is about $80,000 a year. Add to that overtime and bonuses and Holden workers' pay is well over $100,000. That compares with Australians working on modern awards whose base pay is in the $40,000 a year range.

But here's the sting that's hurt average Australians for a long time. Over the past 12 years, Holden has received $2.2 billion in taxpayers' money. This means that taxpayers have been paying about $48,000 a year per Holden worker.

Effectively every butcher, baker, coffee shop worker and hairdresser has been paying taxes that are paid directly to Holden workers. Yet unions scream about ''social justice and equality''. Where's the social justice in this? It's struggling workers paying to keep the well-off Holden workers well off.

Unions have claimed for years that the car industry is necessary for innovation in a modern economy. Where's the evidence? If Holden had been truly innovative it'd be making money. It would be contributing taxes to reduce government debt rather than creating more debt.

Imagine if the local butcher were losing money and went to the government asking for a $100,000 taxpayer gift. The butcher would claim the locals needed their meat. Government would reply with a swift ''no'' to the subsidy. And so it should.

Supposedly the purpose of giving Holden taxpayers money over the years was that Holden would eventually be globally competitive. But this has never happened.

It seems Holden's been incapable of being truly innovative. Innovation doesn't just mean making better products. It means making better products at better comparative prices to competitors.

It's not hard to see why Holden has failed. Holden's management has given control of how they run their production to their unions.

Typically Holden's union agreements have prevented the use of robotics or outsourcing without union approval. Casuals are not allowed. Any contractors have to come from a union-approved list. Changes to production require union approval.

Changes to shift arrangements involve bureaucratic union processes. Union delegates are given 12 months' leave for union training.

Holden has ''consultative'' committees required to create processes to maintain established labour levels, assess requests for part-time employment, manage supplementary labour for weekend work and much more.

With these huge restrictions on Holden's managers it's no wonder that they produced so few cars per worker. And it gets worse.

Production line safety representatives have 10 days paid leave to attend union organised training. Union delegates also have 10 days paid leave for union training.

It's no wonder the unions are angry about Holden closing. Car unions charge about $800 a year in fees to Holden workers who are effectively forced to join the union.

With 2900 jobs going, that's potentially $2.3 million in lost annual revenue to those unions. It looks like there'll be forced redundancies among union officials. Who knows what their payouts will be?

At least the Holden production workers can't complain. They still enjoy risk-free jobs until 2017. There aren't many other workers in Australia who can be sure their job will last for the next three years.

And when Holden does close, the average production worker stands to receive a redundancy package of between $300,000 to $500,000.

Hopefully there are lessons in the Holden saga. Ordinary Australians cannot afford to prop up businesses that cannot make money.

(First published in the Sydney Morning Herald, December 2013)

Anonymous commented on 23-Dec-2013 01:23 PM
This article is just full of blantant mistruths. I work at holden and I have never made $80000 a year even doing shift work and working weekends . As for the figures you quoted for separation packages is totally laughable
gary commented on 23-Dec-2013 02:04 PM
I have worked at holden for 15 years and after reading your article i have never read so many mistruths . I work shift work and in the past overtime and i have NEVER earned anywhere near $80000 per year and as for $300000 to $500000 payouts that maybe for executives but for the likes of myself i will be lucky to get 10% of what you quoted .If i had been entitled to such a payout dont u think we would have all scrambled to leave last christmas during the VSP process.No one at holden is guaranteed 3 to 4 yrs work as we have already been told by holden .Maybe you should check your facts before writing such rubbish or dont you care to offend fellow australians or maybe the facts wont sell your articles
Anonymous commented on 31-Dec-2013 11:48 AM
Thanks for your comments. The facts in my article are based on research of Holden's EBA and interviews with people who work at Holden. I don't know where you fit into the scheme of things at Holden but we stand by our analysis.

The pay rates however are not the real problem if Hodlen was able to achieve high productivity. But they haven't and can't because of the EBA which effectively transfers control of the plants to the unions by default. And now the crunch has come. By insisting on having control of the plant Holdens unions have killed the capacity of Holden to function. But I don't blame the unions. Its pretty irresponsible management that has allowed this situation to occur. They are responsbile. You are just caught in the middle. Good luck as you move onto something better.
Holden should stay commented on 11-Dec-2014 01:26 AM
Holden should stay and adapt. giving up will get Holden nowhere.
giving up before the fight even starts, what chance does Holden have if it has no faith in surviving.

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