The economic cost of Holden, Ford and Toyota ending local manufacturing will be $29 billion and 200,000 jobs, predicts a new report.
Commissioned by the Australian Workplace Innovation and Social Research Centre and conducted by the National Institute of Economic and Industry Research (NIER), the report also forecasts that it could cost the economy 2 per cent of national GDP by the end of 2017.
Victorian employment will be hit hardest, with 98,480 job losses meaning employment growth rates will be halved from the expected 1.4 per cent to 0.7 per cent by 2018.
In New South Wales 32,491 jobs will be lost indirectly from the manufacturing closure, with Queensland close behind at 30,090, ahead of South Australia at 23,903 and Western Australia at 11,275.
The report forecasts as its “‘control’ solution projection” that by December 2017 mining investment will take a huge fall from today’s $90 billion to just $5.5 billion, and the exchange rate returning to 80 cents to the US dollar.
It nominates that by then a recovery in the share of local vehicle production could have been “relatively modest”, perhaps increasing to “mid-2000” levels of 100,000 units per year.
The report sets out another scenario where if the exchange rate returned to 65 cents or below and stays at around this level over the 2017 to 2024 period, that “the loss in national gross product would be in the vicinity of $44 billion while the decline in national employment would be 270,000.”
The ripple effect from local manufacturing closures is also expected to be felt throughout other industries, the report claims, with “additional production losses … expected from what has been assessed here due to the undermining of the economics of complex manufacturing in Australia."
“The motor vehicle industry is the main conduit for the introduction into Australia of advanced technology and the training of labour in the necessary skills," the report adds.
“The ending of this conduit will increase the costs for other complex manufacturing industries do doubt leading to other plant closures”.