The wheels started to fall off a long time ago

When I was a lad’’, confided an old-timer many years ago to your humble essayist, ‘‘we used to like American cars and European women. But the young people these days’’ – he shook his head – ‘‘they like European cars and American women.’’

When I was a lad’’, confided an old-timer many years ago to your humble essayist, ‘‘we used to like American cars and European women. But the young people these days’’ – he shook his head – ‘‘they like European cars and American women.’’

How things have changed. The old-timer is not with us any more ... and now they like Japanese cars too.

This week came the tumultuous news that Holden would depart these shores. Hard on the heels of Ford’s decision to call it quits, it is a crushing blow for Australia’s manufacturing base. The knock-on effects will be legion, the job losses tragic.

There seems little sense, though, in throwing good money after bad. Taxpayer leg-ups have scaled ludicrous heights. The handouts are well documented – Holden alone scoring $2.2 billion in 12 years in deals with both major parties, besides the tariffs. What is less understood is how the car makers have been dissembling on the balance sheet front – essentially loading up their losses in the high-tax domain which is Australia while sending billions overseas to tax-friendly jurisdictions.

They do it with loans, they do it with royalty payments on intellectual property. To put it simply, they have had the paw out for subsidies while sending profits overseas.

A few data points from our investigation of their accounts last year:

Royalty payments from Holden and Toyota to their overseas parents in 2011 – Ford did not disclose its payments – came to $221 million, almost spot-on the $222 million the two received in government grants.

Between the three, sales were $14 billion and related party transactions $7.2 billion. For every dollar of sales booked by Australia’s car industry in 2011, 50¢ in costs were generated by overseas companies related to Holden, Ford and Toyota.

The other telling aspect of these accounts was the overall cost of sales. Other industries typically show a gross margin of 50 per cent. By contrast, the car makers have 90 per cent of their total sales eaten up by cost of sales. Combined, their costs were $13.15 billion.

Yes, it is true that manufacturing costs are too high in this country. It is also true that most countries prop up their car makers – and indeed that the banks here are propped up too. Yet the sheer scale of the subsidy is uneconomic.

What a dramatic week it has been, topped off by the ACCC bust on Colgate, Unilever and Woolies for their allegedly illicit detergent-fixing cartel.

Who could have known that we have been paying too much for our Cold Power, our Radiant and our Omo?

Just quietly, they should take a long, hard look at toothbrushes too. Forking out five bucks-plus for a toothbrush is tantamount to highway robbery.

Then there was insurer QBE with its latest instalment of write-downs. Loath to crow, but we have a neat angle on QBE for Monday.

And it is not just the car makers with their arms outstretched for alms. The debate over taxpayer assistance raged about Qantas too. The Mangy Old Roo was only doing a share buy-back last year – now it’s out of capital. We consulted the Business Council of Australia. The BCA – or the Chief Executives Union – is the only union where shareholders pay the membership fees, and it usually has an opinion on everything.

What did it think of corporate welfare for manufacturers and airlines? Deathly silence!

Although the government is doing the right thing spurning the advances of big business for largesse, our national carrier does have a valid point on the Qantas Sale Act. The foreign shareholding threshold should be abandoned. Bring in the level playing field.

Still on the subject of favours, there was dear old ASIC as well. The watchdog was in desperate denial this week, passionately repudiating any suggestion it doled out special treatment to the Big End of Town. For those who missed it, based entirely on internal emails – irrefutable proof – we had one story demonstrating how the financial services lobby got the regulator to do it favours on fee disclosure. Helping it hide fees, in short.

The well-intentioned toilers at the sleepy old pooch, the good men and women who try to do their work in the public service, have been failed by the leadership. The Senate inquiry into the performance of ASIC, slated for early next year, cannot come soon enough.

It is the public which needs to be protected, not the trillion-dollar funds management business.

As if there needed to be any more evidence of favours for those who least need them, we put this question to the watchdog: ‘‘There is no reference in IFSA’s [the lobby group] application for relief of payment of the application fee. Was a fee paid by IFSA?’’

There was no response. In other words, it seems they got their big favour and they didn’t even have to pay a fee – as is prescribed in the regulator’s own guidelines. It was the cherry on top of the triple fudge chocolate royale sundae.

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