Labor is driving Australia along an unnecessarily difficult path by pushing the Productivity Commission to one-side, by ignoring Ken Henry’s advice to allow the forces of competitive advantage to work in the economy to address structural adjustments associated with the commodities boom, in evaluating the case for continuing protection of the car and textiles, clothing and footwear industries and by seeking to impose an ‘industry policy’ generally. Moreover, this is not only the stance of a few leftist maddies like Kim Carr and Anthony Albanese – it is mainstream Rudd.
The inquiry into continuing protection of the automobile industry has bypassed the Productivity Commission and been handed to protectionist ex Labor Premier Steve Bracks – he has previously opposed tariff cuts andd supports a sustainable car industry so the results of this inquiry are already obvious. The man expected to be appointed by Senator Carr to head the Government’s review of protection for the textile, footwear and clothing industry is Roy Green who has argued against Dr Henry’s prescription, proposing instead that government should support innovation to assist industries retain competitiveness. Left-wing economists will support these moves partly in the hope that they can get their hands on lucrative board appointments and consulting contracts.
It is a mistake to attribute the efforts to articulate interventionist industry policies simply to left-wing ministers such as Kim Carr and Anthony Albanese. Rudd is quoted as saying:
‘If I become the next Prime Minister of Australia I don’t want to be Prime Minister of a country which doesn’t make things any more,” Rudd said in the lead-up to last year’s election. He argued throughout the campaign that the mining boom would not last and that more needed to be done to support other sectors.’
‘Industry Minister Kim Carr is channeling his leader when he argues that national strength requires that an advanced economy needs manufacturing.
“The Government has definite plans to reinvigorate Australian industry to prepare us for a future beyond the mining boom,” says Carr.
The reviews Carr has announced into the motor industry and innovation, along with the one he is due to announce into textiles, are all designed to identify the most effective method for government to support manufacturing industry.
The idea that government can shape industrial destiny is expressed by many other members of the Government.
The new parliamentary secretary for defence procurement, Greg Combet, last week outlined how prime contractors for defence equipment would have to detail opportunities for Australian industry in their tender documents. “This will help Australian industry get a fairer go for high-value acquisitions. This is about us using the leverage available through procurement contracts to secure the right for Australian companies to bid into the global supply chains of the large primes.”
Minister for Energy and Resources Martin Ferguson has foreshadowed support for companies investing in gas and coal liquids projects to reduce Australia’s dependence on imported oil, and possibly also for exploration.
“These industries are going to become more attractive because of need. But I might also say that is an absolute priority to the Government to secure our economic future.”
He said it was not acceptable that Australia’s dependence upon imported oil should rise from 20 to 80% of our requirements.
Trade Minister Simon Crean has commissioned a review of trade policy with a goal of revitalising trade facilitation programs, particularly for elaborately transformed manufactures, services and small business sectors.
Infrastructure Minister Anthony Albanese has asked the newly formed authority, Infrastructure Australia, to come up with a priority list of infrastructure projects for public and private investment.
The common thread is that active government intervention in industry policy can produce superior outcomes for the economy.
Albanese harks back to Ben Chifley’s Snowy Mountains Hydro Scheme and Gough Whitlam’s Department of Urban and Regional Development, while John Button’s industry plans are seen by many within Labor as delivering a manufacturing revival as happened during the Hawke government’. (my bold)
Note that Labor has also foolishly committed to involving the trade unions in assessing the case for (among other things) continued protection. This provides a forum for the economically illiterate supporters of protection to voice their views.
What will the left-wing cheerleaders for Rudd and the leftist blogs say about these inanities – I’ll bet nothing at all. It shows their prejudice and hypocrisy that, while they loudly support the empty symbolism of Rudd (Kyoto and meaningless apologies to aboriginal people), they do nothing to criticise Rudd when he acts to destroy the basis for Australia’s recent prosperity.
The long-term implications of this bunch of peanuts trying to outguess markets and to impose their own vision on an economy that is performing so well by transforming itself is worrying. (79)