Recently the Federal Government rejected a request for a one off $25 million cash injection into Coca Cola Amatil’s (CCA) SPC Ardmona.
Their justifications for refusing to provide this money seemed plausible enough – Prime Minister Abbott wants to send a very clear message to big business: It is not the government’s responsibility to inject cash into operations owned by wealthy multinationals. Management at Holden witnessed this first hand when their request for investment was similarly rejected in December last year.
Mr Abbott also has faith in SPC Ardmona. He believes that this is a business that can withstand tough economic conditions and still be successful. That the quality of Australian produce is such that consumers will continue to support it into the future.
He then went on to pretty much blame the workers for earning too much and having too generous sick and leave entitlements. Because, you know, factory workers from SPC & A always top out the BRW rich list each year.
But let’s not go there.
You see, I think the Abbott government got this one wrong. Very, very wrong.
CCA were not asking for a handout. They were asking for a $25 million grant from both the Federal and the Victorian Coalition governments, totalling $50 million. With which they were then going to further invest $90 million to transform the Shepparton cannery into a modern and innovative operation, ensuring years of production.
For years now we have heard that the only way Australian manufacturing is going to survive the 21st century is to innovate, evolve and to work smarter. It seems to me that was what SPC Ardmona were pledging to do.
SPC Ardmona are operating in extremely tough conditions.
Walk into your local grocery store and the shelves are lined with cheap imports. Half the time I have to almost take out a search party just to find Australian tinned produce. When I do find it, I can either buy SPC Baked Beans for $1.90 or an imported home brand for 77 cents.
As well as being committed to buying Australian made, I actually much prefer the taste of SPC, so am willing to pay the extra money for them.
But not everyone can afford to do so.
I don’t want the day to come where I don’t have the option of buying Australian tinned goods. I cannot believe that in the country we live in, with our enviable agricultural industry, that it is even a possibility.
The other thing I don’t think Mr Abbott fully considered is the devastating impact a possible closure of SPC will have on the Goulburn Valley.
I drove through Shepparton over Christmas. Everywhere you look, the town is trying it’s hardest to drum up support for SPC Ardmona. Posters everywhere encourage consumers to buy SPC goods. You can take your kids to SPC KidsWorld. The SPC Ardmona building is easily one of the biggest in town. It is as if the town’s spirit is somehow intertwined with the iconic company.
Approximately 700 workers are directly employed by the cannery. Thousands more work in the businesses and farms which service the food processor.
It is estimated that if SPC Ardmona were to close, the unemployment rate for the region would soar to 12 per cent. Farmers would be forced to pull out their orchards and leave the land.
I have worked in a regional Victorian town with a high unemployment rate. It is not pretty. Everybody suffers. People have little disposable income to spend on local businesses. Homeowners see the value of their homes fall. Landlords receive less rent. The demand for aid from welfare agencies is enormous. For a town like Shepparton, with no other major employer, the future is looking grim.
I am not an economist. Hell, I don’t even manage the household budget. But surely a one off $25 million investment is worth far less than years of unemployment benefits and the other associated costs that come with high levels of poverty.
Perhaps Mr Abbott needs to take a walk through Shepparton, take a look at the SPC Ardmona cannery and imagine it shut.
Maybe then he might reconsider his decision.
Do you think the refusal to support SPC Ardmona was justified?
Top Comments
The money has to come from somewhere, with an "opportunity cost" elsewhere. The question is, what is being foregone to pay for it?
There is also the issue of moral hazard. Rewarding people for poor behaviour or in this case performance encourages others to do the same.
Yes, because of course SPC can really control the high dollar and the glut of cheap imports by Woolies and Coles, cant they.
It would be nice if the government could save every struggling business but in reality they have limited funds and need to prioritise where they spend their money. Businesses are responsible for their own survival. The government's role is to regulate industry. If a business is struggling it's up to the business to do something about it. The government is already "struggling" to pay for critically important services.
Like the PPL at 5.5 billion.