I hate to say this, but a $12 million Modern Manufacturing Initiative grant to help carbon fibre wheel manufacturer Carbon Revolution build its first Mega production line just announced has shown the absurdity, and the needless cost of federal government grant schemes.
I hate to say this because I am a great fan of Carbon Revolution, and a shareholder to boot.
But the government’s election campaign orgy of daily grant announcements – that is gifts of taxpayer cash to individual businesses – has now reached the absurd level.
The grant, while welcome to the company (and shareholders), breaks the cardinal rule cautioning governments thinking of giving some companies cash, and others none.
It does not pass the most basic of tests – that is, will the grant induce extra investment by a company than it would otherwise undertake, or does it not?
This grant does not even pretend to induce more investment.
In February Carbon Revolution CEO Jake Dingle said in February that construction was well advanced and it would inaugurate its Mega-line wheel manufacturing line at its Geelong factory this calendar year.
Dingle said: “We anticipate the first wheels off the Mega-line to be produced in the second half of CY22.”
That is the Mega-line would have been built irrespective of any grant.
Carbon Revolution tellingly in its announcement today made no claim that the grant would increase the scope of its plans, or even that it would speed up work.
The company said: “The grant contributes to the remaining scope of Phase 1 Mega-line project which is expected to increase the company’s capacity by 75,000 wheels to 155,000 wheels per annum.”
Then again, Carbon Revolution’s share price rose 23.3 per cent on the announcement to 66 cents…so roll on the gravy train.
(Apologies to more cash strapped companies who could have actually made better use of $12 million in taxpayer cash).
This story was originally published by @AuManufacturing. You can subscribe to the @AuManufacturing newsletter here.
