Snouts in the trough at Alcoa

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Apparently the Federal government (with the help of the Victorian government) is looking at handing over $42m to Alcoa. This is to ‘save’ 600 jobs. That is $70,000 taxpayer dollars per job. Presumably with no long term guarantee.

$70,000 per job. Wow, that is a lot of cash for a job when the relevant worker would probably find a new job within a couple of months anyway. So here is the thought experiment that the governments should do:

Go to each of the 600 workers with the following deal. They can keep their current job at their current pay. Or they can leave their current job, with the same redundancy payout that they would receive if Alcoa closed, PLUS an extra $70,000 from the government.

I wonder how many of the workers would take the offer and leave their jobs? I suspect quite a few. For those close to retirement, it is a no brainer. For those under 40 years of age, getting a new job would be relatively quick and probably only a couple of weeks judging by the SMH article linked above.  So taking the money would be sensible. For those in their 40s and 50s, the trade off is a little harder. But I reckon many would take the money and go – particularly if the alternative is no job security past a year or two at Alcoa anyway.

Unfortunately, this policy is just the standard ‘snouts in the trough’ handouts that are bleeding the Australian taxpayer for $9.8b per year. See here. Meanwhile we have labour shortages in WA and parts of Qld. Oh, well, anyone know if the Alcoa plant is in a marginal seat?

Finally, the story was broken in the AFR, but as it is behind a paywall, here is the Business Spectator link (before it goes behind a paywall).

6 Responses to "Snouts in the trough at Alcoa"
  1. “For those under 40 years of age, getting a new job would be relatively quick and probably only a couple of weeks.”

    I used to belive this too … but I don’t think it is a true statement …

    Any comments are welcomed.

  2. A bit more detail is required here. It may come as a surprise but the aluminium processing industry is actually a supply chain which includes the raw materials for aluminium and energy so there are a lot more jobs and cash flows at stake, not just the process workers in the smelter.

    The aluminium industry is doing it tough now but if global customers stop buying our minerals and the $AUD falls by a large amount it will likely be our major export again. Keep in mind it is one of the few ways we can store the energy from brown coal. Sounds funny but if you can’t sell anything else it is a big deal.

    Please compare this with the creation of so called “green” jobs which require >>100% subsidy and will never in our wildest dreams become an export industry.

  3. Rick,

    I agree with you on thee statement of the “green” jobs that can’t be an export industry.

    In my personal opinion, it is living in a “Panglossian” world …. Furthermore, even the biggest polluter hasn’t ratified the Kyoto Protocal. There is no conclusive scientific evidence. Do you think the creation of “green” ideas from Australia would save the planet? (my definition of “green” here is the environmental policies)

    Even … let say someone come out with a breakthrough “green” ideas, he/she still has to go trhough a formidable political process challenging the largest polluters in the planet. Is this a realistic proposition or a dreamy act? (capitalized by certain politican agenda)

  4. You are right Stephen (definitely and unambiguously right) but, adopting an unreasonable political economy view, if you were Gillard and seeking reelection what would you do? Embark on a program of rigorous economic reform when your opposition is unashamedly populist? Part of the reason for the disgusting economic policies in Australia today is the lack of sensible policies on the conservative side of politics.

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