Wednesday, January 21, 2015

Imperialism’s Closure of Car Industry In SA - 13,000 Job Loss. Is Selling Government Assets The Solution?

On his return from summer holidays, SA Premier Jay Weatherill had no choice but to be  interviewed on ABC local radio about a media focus on a recent Decision by Supreme Court Justice Malcolm Blue.

Blue’s Decision followed a state government sale of 407 hectares of industrial land at Gillman in the outer north western suburbs of Adelaide to developer Adelaide Capital Partners.

 Justice Blue found that the sale was “...made in disregard of prudent commercial principles”.  The judicial review was sought by another corporation, Integrated Waste Services. The Decision implied that the government should have put the sale of the land out to competitive tender. Another big corporation, French based Veolia, was also upset by the government awarding the purchase of the land without a competitive tender process.

The media stories, championed also by ‘the opposition’ Liberal Party,  insisted that governments should facilitate ‘fair competition’ between capitalists when a government  asset was up for sale by having a transparent tender process. Provided this was done, a ‘fair price’ would be obtained by the government for the asset sale.

Premier Defends Sale of Public Asset

The Premier defended the government’s decision to sell the 407 hectare site to Adelaide Capital Partners for two reasons.

Firstly he said that the sale price of $30 per square metre resulted in $100 million for the 407 hectare site, a much higher price than anticipated by government organisation Renewal SA. Therefore the taxpayer got a good deal.

Secondly, he said that the new owners of the land, Adelaide Capital Partners, intended to develop the site to create jobs. His relevant Minister at the time of sale, Tom Koutsontonis, said the sale would create 6,000 or so jobs.

Jay Weatherill in the radio interview then added the line designed to silence opposition to the sale. He said that SA would be losing up to 13,000 jobs with the closure of General Motor’s Holden plant at Elizabeth and subsequent closures of companies reliant on that plant for their operations. Without naming the companies, he said that Veolia and Integrated Waste Services only wanted the land to expand their waste dumps at adjacent suburb Wingfield whereas Adelaide Capital Partners actually wanted to create jobs for South Australians.

Who Really Benefits From The Land Sale?

At the time of the land sale over a year ago, the Adelaide Capital Partners chairperson, Stephen Gerlach, announced that the newly purchased ‘industrial hub’ would be called “Lipson Estate”. This sounded promising with readers imagining an actual industrial complex where goods of use value to the people of South Australia and beyond would be made.

 Or perhaps some were imagining that “Lipson Estate” meant the provision of affordable housing for young families, the elderly and disadvantaged?

After all, the last proposed development for the Gillman area was the Multi Function Polis (MFP), a joint venture between the federal Labor Government of the Hawke- Keating era and Japanese capital. The MFP promised housing for 100,000 residents in a state of the art village setting. (The proposal was dumped by the Liberal governments at state and federal levels in the mid 1990s.)

However, things started to come adrift in the readers’ imaginations.

The MFP was a joint government – private capital venture, but has not the Weatherill state government just ruled out a joint venture this time round by SELLING the government’s asset and any direct control of what may be developed on the 407 hectare site?

Ownership of what now happens at the site is in the hands of private capital in the form of Adelaide Capital Partners.

So what do they actually have in mind? What is their motivation?

At the time of the sale Gerlach added that the company saw the site as the “ideal gateway for the world’s major resource companies to establish and support the global scale projects that will underpin the SA economy over coming decades”.

Adelaide Capital Partners is made up of a group of companies which started in South Australia.

They are – Gerlach Asset Development Pty Ltd, a specialist property and financial services group.

-        Resource Co, an environmental resource recovery group.

-        McMahon group, specialising in asbestos removal.

-        Ahrens group, a fourth generation family owned construction and steel fabrication business.

Their Directors and CEOs may have a genuine interest in stemming the tide of economic decline in South Australia as global capital  continually remoulds (or in many cases demoulds) local economies in pursuit of the global bottom line. Their allegiance to South Australia may, in Weatherill’s defence and thinking, be much stronger than the likes of French based multinational Veolia who missed out on snapping up the land for its own ends.

However the impelling motive of Adelaide Capital Partners will be to make profit by providing a mosaic of warehousing and distribution companies to service resource based companies with operations in SA.

Foremost in their minds will be the expansion of Olympic Dam by BHP Billiton and perhaps the logistics associated with food and beverage and defence related industries in the northern suburbs and Port Adelaide.

The Directors of the company are well-placed to profit from this type of activity. Chairperson Stephen Gerlach, who started off as a lawyer and then senior Partner in business law firm Finlaysons, has held high positions in SANTOS, Futuris (now Elders) and Southcorp (wine industry).

Andrew Gerlach, the CEO, has a career in investment markets, including four years in the USA at an Industrial Park now owned by a US Pension Fund. The Industrial Park secured as clients some big multinational corporations including FEDEX (notoriously anti – union), Toshiba, Kumho Tyres and Staples. Andrew Gerlach also sits on the Industrial Committee of Property Council (SA). The Property Council (SA) came out in support of the government sale to Adelaide Capital Partners. No surprise there!

The likes of BHP Billiton and other users of the newly acquired Gillman site will endeavour to squeeze the lowest possible lease cost arrangement with Adelaide Capital Partners or the latters’ warehousing tenants at the site.

There will be a scramble for a share of profits.

One thing is certain. The SA Government will not be the landlord at Gillman. The landlord has been privatised in the form of Adelaide Capital Partners.

If the company’s plans succeed, private profits will flow to them. Bigger developers will circle and the land itself may end up being owned by much bigger ‘fish in the sea’ with government as onlooker, licking its wounds over the sale of a future lucrative asset for a mere $100 million!

What  About The Workers?

It is pretty clear that most of the jobs at the Gillman site will be in construction initially and longer term in warehousing and transport. The latter two areas are not labour intensive and both are renowned for sham contracting arrangements and/or extensive use of labour hire.

Now that the deal is done by the state government, the least it can do is work with trade union members and their representatives to ensure that the site not only provides 6,000 jobs, but decent, well paying, secure jobs to cushion some of the blow of the destruction to Gillman’s north of the car and car component industry in Adelaide’s northern suburbs.

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