Whyalla rescue package better spent in redeploying workers, says think tank

The $2.4bn rescue package provided to the troubled Whyalla steelworks would be better spent assisting its 1100 workers to transition to new jobs, new research claims.

Anthony Albanese and South Australian Premier Peter Malinauskas during a visit to the Whyalla steelworks. Picture: David Mariuz / NewsWire

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The $2.4bn rescue package provided to the troubled Whyalla steelworks would be better spent assisting its 1100 workers to transition to new jobs rather than doling out taxpayer support to tie them to an otherwise “dying” business, new research claims.

Matt Nolan and Lachlan Vass, researchers at the e61 Institute, an independent think tank, have argued against the Albanese and Malinauskas governments’ decision to dish out of billions in industry aid for the ailing steel manufacturer at a cost of approximately $2.2m per worker.

“Keeping workers at dying firms stops them from transitioning to more productive jobs and may even hurt them in the process,” Mr Nolan and Mr Vass wrote on Friday, pointing to the longstanding effects of job loss following the collapse of Australia’s automotive industry.

The pair argued that by repeatedly bailing out “failing firms” governments were disincentivising workers from finding new and more efficient jobs, and instead staying employed at unproductive businesses.

More productive businesses in search of additional workers were also prevented from accessing staff they needed, they said.

Instead, the pair argued the bailout – which amounts to $800,000 per affected downstream worker – would be better spent on employment services and other mechanisms to assist businesses and prospective employees in quickly matching.

“By focusing on propping up failing businesses in the short-term, policymakers are failing to plan for the future needs of the workers at those very same businesses,” the pair added.

Previously released research authored by e61 found workers who found permanent re­employment within one year see their wages fully recover after four years, while those who are hired within five years return to their previous income trajectory in a decade.

Alongside the federal and state support, the Albanese government is also considering purchasing an equity stake in the Whyalla steelworks, likely through one of its off-budget investment vehicles such as the National Reconstruction Fund.

Last week, Labor also flagged that it would introduce new mandates requiring governments and businesses to increase purchases of Australian steel products, complementing its recent round of protectionist policies designed to spur a revitalisation in domestic manufacturing.

The move comes amid growing concern Australia could be used as a dumping ground for cheap Chinese steel, threatening to further squeeze the margins of domestic producers.

Despite the risks identified in the e61 research, political polling suggests the governments’ intervention is widely popular.

Released on Friday, a YouGov survey found 62 per cent of Australians backed the steelworks deal. And 60 per cent backed the option of public ownership of the Whyalla steelworks, including 61 per cent of people who intend to vote either Liberal or National

“That [shows] Australians see this as an important issue of ­national sovereignty and therefore a government responsibility,” YouGov director Paul Simon said.