The existential climate challenge is Australia’s opportunity to reverse the policy settings that hollowed out manufacturing.
Already a subscriber?In his speech on a Future Made in Australia, Prime Minister Anthony Albanese asked us to be “willing to break with old orthodoxies” and “pull new levers to advance the national interest”.by past and present Productivity Commission heads that he will not be able to do so without some fierce resistance from those whose attachment to old orthodoxies dies hard.
Nor is the commission averse to subsidies, provided they suit its doctrine of comparative advantage, which privileges the export of unprocessed raw materials over more complex, value-adding activities. Its annual Trade and Assistance Review regularly draws attention to what remains of the support for manufacturing while omitting any reference to fossil fuel subsidies.
After starting at level pegging early last century, Australian living standards surged ahead of Argentina’s thanks to a crude but effective strategy of infant industry development behind protective tariffs. The 1929 Brigden Report noted that “the maximum income per head for Australia would probably be obtained by reducing it to one large sheep-run with the necessary subsidiary and sheltered industries”.
Instead of telling us why the future cannot be made in Australia, perhaps the critics could more profitably turn their minds to how it can., as the “resource curse” of a stronger dollar rendered much of the new manufacturing uncompetitive. Rather than emulating the Norwegians, who took a stake in their North Sea oil and gas assets, imposed a 76 per cent resource rent tax and created the world’s largest sovereign wealth fund, we followed the British model.
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