Why not bailing out SPC is the correct decision

The Shepparton Preserving Company (SPC) is in tragic decline requesting funding by the Australian federal government, this is serious but we need to look further into their request for funding.

The role of a federal government is to create the conditions for business to prosper, this does not include bailing out private enterprise with tax payer funds due to poor management decisions, industrial relations policy or competition. There are laws to prevent dumping, anti-competitive practices, price collusion and cartel activity - all to protect the consumer and the organisation. In my view, the federal government looks after the macro economy, of course, micro economic reforms are required too.

The federal government certainly doesn't have to bail out multi-national companies requiring restructuring when the parent company is Coca Cola Amatil. They are, after all, the largest producers of non-alcoholic beverages in the Asia Pacific region; they have some pretty good alcoholic brands as well.

We are in a precarious position, the manufacturing base of this country is in serious decline, yet when I download and read the 2012 Coca Cola Amatil annual report, I see a net profit after tax of $558.4 million. I also see that Coca Cola Holdings owns 29.27% of the company with other significant shareholders including HSBC, JP Morgan, National Nominees, Citicorp, AMP and UBS. What is wrong with going to the market to secure more capital? Or, what is wrong with using internal revenue to restructure?

This is a commercial enterprise and should not be seeking government life support payments. Shareholder dividends are important to any business, the 6.7% full year dividend increase in 2012 took the total dividend increase to 13.3% That is, $243.9 million spent on dividends at 32 cents per share franked to 75% - ok, that's fair. But what is with the special unfranked dividend of 3.5 cents per share totaling $26.7 million?

There it is, the funding SPC requires that can be funded internally. We don't even need to head to the directors and chief executive's remuneration report to seek further savings. As Australians, we could support the company by purchasing their products, the company can maintain dividends at current rates and reinvest the special dividend - not the taxpayer footing the bill.