Corporate Welfare No Longer

No Taxpayers' Oil for Squeaky Wheels

There are few things more risible and contemptible than corporate welfare.  The idea of the government using taxpayers to subsidise businesses is obnoxious on a number of counts, not the least of which is that the many are made to pay in order to make a few anointed ones wealthy. The bottom line always is that if a business cannot compete and win market favour by virtue of the quality and price of its goods and services, it deserves to go out of business.  It is far better that it does.  Subsidised businesses are always relatively inefficient businesses.  To the extent they are subsidised, consumer/taxpayers are being overcharged in one form or another. 

We in New Zealand are very familiar with corporate welfare.  Older citizens here grew up with the nostrum that farmers were the backbone of the New Zealand economy.  The taxpayer, we were told, had to help the farmer make a dollar (or pound, as it was in those days) otherwise all of us would be sold into penury.  Before long taxpayers worked out that even if it were true that farmers were the backbone of the NZ economy, it was also true that taxpayers were the flesh and sinew of the farmer and that the whole sham was a massive, national Ponzi scheme.
  We only got paid out if more and more taxpayers' money was extracted from them, put in at the top of the funnel, to ensure that a bit trickled back out the spout at the bottom.  Meanwhile, the farmer was guaranteed a cosseted and protected and (relatively) wealthy lifestyle. 

Eventually it was all stripped away under the historic reforms conducted by Messrs Douglas and Prebble.  Now, after a difficult period of adjustment,  farmers are more prosperous than ever, and their industry is sustainable because it is efficient, out-competing even those farming industries overseas which remain cosseted and protected by taxpayers' funds (as in the United States, for example).

Australia has never rejected corporate welfare as a modus operandi.  It has remained far too wedded to queering the pitch and underarm bowling as national treasures.  It is thus extremely gratifying to see the current Prime Minister, Tony Abbott turning his back on some of the more egregious forms of corporate welfare.  The latest case is denying millions to taxpayers' funds to Coca-Cola Amatil ("CCA") which, for reasons that escape all but the morally obtuse, believes that it is entitled to government support of its wholly owned subsidiary, SPC Ardmona.  What's a mere $25million dollars amongst friends, after all?

Prime Minister Tony Abbott hardened his stance on government assistance to business, rejecting SPC Ardmona's request for a $25 million co-investment in the fruit processor and calling on the company to renegotiate conditions in its ''extraordinary'' enterprise agreement with workers.

It seems that SPC Ardmona is uncompetitive and the reasons lie in its far too expensive workforce.  For years it has gone alone to get along with militant unions, paying up in response to union stand over tactics.   Now it wants the Australian government to sanction this corporate folly and cowardice by making the Australian taxpayer subsidise it.  The Prime Minister has replied to the request with a firm negative.  First there was Ford, then there was Holden (General Motors) and now APC Ardmona (Coca-Cola Amatil).  Great to see.

Below is a brief corporate history of SPC Ardmona.



In 2005, Coca-Cola Amatil bought APC Ardmona.  It would have gone over it with a fine tooth comb before purchase.  Labour contracts would been carefully scrutinised. They would have known all about the potential risks and downside.  Meanwhile, Coca-Cola Amitil enjoys a $A9 billion stock market capitalisation. $25m is chump change.  Its CEO, Terry Davis makes an argument for the government's contribution, saying that CCA would invest more.  On that basis, every Aussie corporate could set up its annual investment budget and trot off to Canberra asking for the government to contribute one third of the budget, because the respective companies are all going to invest more than the requested government contribution.  That's what you call a solid business case--at least in CCA land.  As they say in Darwin, "Puhleeeeze, mate"

Corporate welfare always smacks of self-serving corruption.  And so Prime Minister Abbott pushed right back:

Mr Abbott said Coca-Cola Amatil had posted a half-year profit of $216 million to June 2013, and had signalled its willingness to invest $161 million in its manufacturing operations, and there was ''no way'' the government wanted to see workers take a pay cut.  ''It is very important that they complete the renegotiation they have embarked upon. It is very important they complete the negotiation of the enterprise bargaining agreement … there are wet allowances, there are loadings, there are extensive provisions to cash out sick leave, there are extremely generous redundancy provisions,'' he said.

''The decision that came from the cabinet today sets an important marker. This is a government that will make sure that the restructure that some Australian businesses need … is led by business.''  He said Coca-Cola Amatil ''truly has the resources to ensure that SPC Ardmona is in a strong position to restructure'', challenging company chairman David Gonski to not let SPC workers down.

Corporate welfare--flaky, self-serving, and deceptive.