Illustration: Ron Tandberg.

Illustration: Ron Tandberg.

The question that needs to be answered after the government effectively forced General Motors to abandon car manufacturing in Australia is a simple one: why did Treasurer Joe Hockey do it?

We all know Hockey professes great concern about the ''budget emergency''. And he has already prepared us for bad news when the midyear economic and fiscal outlook is released next Tuesday. It is also apparent he is drawing up an austerity budget that would make EU officials proud, even though Australia has perhaps the soundest balance sheet in the Group of 20, when measuring debt against gross domestic product.

So, the assistance to the car industry - approximately $600 million a year - would be an obvious target for someone who wants to balance the books, no matter that the savings won't eventuate until after 2017. Right?

But was this the real reason he cut down GM Holden - and possibly the whole local car industry - in such a cavalier fashion during question time on Tuesday?

After all, there are plenty of other spending targets that should have attracted his attention before car industry assistance. Negative gearing, for one. This rort for the rich costs about $5 billion a year in forgone tax receipts and, unlike the car industry, it adds nothing to the value of economic output, only bank balance sheets. It just enables wealthy people with jobs to become wealthier.

So why did Treasurer Hockey not decide to bring down negative gearing instead of the car industry? It would have reaped far larger budgetary gains, and delivered them sooner. Could it be that Australia is seeing a return to the blind prejudice of the Howard years, where any decision taken is viewed through ideological and/or political lenses? Remember the blind rage with which Howard chased down and destroyed student unions on university campuses? These were not political organisations in the sense that they were a key foundation for the Labor Party, they were hounded simply because the word ''union'' made it sound as if they were.

But the car industry is in a different category to student unions. Faced with a choice between the car industry and negative gearing, Hockey chose the car industry, even though it would save less money and the budgetary benefits would be years delayed.

One interpretation is that his decision appears to have been designed purely to weaken the Labor Party by putting out of work many thousands of people who can be assumed to support the Labor Party. It doesn't matter that the Coalition will win fewer votes in the affected areas. It would never win those seats anyway.

But unemployed people haven't got the money to join a union, and that means there will be many thousands fewer union members, and many millions fewer dollars flowing into the union movement and available to fund political action.

Members of the Coalition remember only too well the last time there was an intervention in public policy funded by union cash. The rallying of public opinion against WorkChoices is a public policy defeat that still haunts them.

And, while the car industry is a gross example of this kind of undermining of union interests, it is not the only one. Why is it that the first thing every conservative government, state or federal, does when it comes to power is to sack thousands of public servants?

Given a choice between delivering some real social benefits by cutting out negative gearing and damaging the Labor Party, Hockey failed the national interest test with unnerving insouciance.

Ian Porter is a manufacturing analyst and a former business editor of The Age.