tag:theconversation.com,2011:/uk/topics/industry-policy-1298/articlesIndustry policy – The Conversation2023-09-12T23:46:24Ztag:theconversation.com,2011:article/2133512023-09-12T23:46:24Z2023-09-12T23:46:24ZWe urgently need $100bn for renewable energy. But call it statecraft, not ‘industry policy’<figure><img src="https://images.theconversation.com/files/547695/original/file-20230912-15-5xvujr.jpg?ixlib=rb-1.1.0&rect=134%2C251%2C4912%2C3479&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/albany-wind-farm-one-most-spectacular-1442448629">Shutterstock</a></span></figcaption></figure><p>This week, a diverse group of organisations called on the Australian federal government to establish a A$100 billion, ten-year policy package to <a href="https://www.theguardian.com/environment/2023/sep/11/investors-and-unions-press-labor-to-invest-100bn-to-compete-in-global-green-economy">turbocharge Australia’s green energy transition</a>. </p>
<p>Proposed by groups including the Australian Council of Trade Unions, Australian Conservation Foundation, Climate Energy Finance, Rewiring Australia and the Smart Energy Council, the Australian Renewable Industry Package (ARIP) would dwarf the government’s existing commitments.</p>
<p>Its proponents <a href="https://www.afr.com/politics/federal/labor-pushed-to-create-100b-australian-inflation-reduction-act-20230907-p5e2y7">claim that by 2035</a>, the package would generate at least $300 billion annual clean export revenue and 700,000 much needed jobs, mainly in rural and regional Australia.</p>
<p>So will Australian policymakers from across the political spectrum heed this call and agree to spend big on Australia’s green energy industry capabilities?</p>
<p>If we want policymakers to unify and to act, we have to use language that widely resonates. This, we argue, must be the language of green energy statecraft, not industry policy. </p>
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<h2>A response to the US</h2>
<p>The ARIP is explicitly framed as a response to the United States’ impactful Inflation Reduction Act (IRA). The act, <a href="https://www.cleanenergycouncil.org.au/advocacy-initiatives/inflation-reduction-act">passed in August 2022</a>, is Washington’s response to its pressing geostrategic, economic, energy and environmental security challenges.</p>
<p>The IRA contains <a href="https://www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf">US$370 billion worth of incentives</a> for clean tech and is estimated to spur <a href="https://www.goldmansachs.com/intelligence/pages/the-us-is-poised-for-an-energy-revolution.html">US$2.9 trillion</a> of cumulative investment opportunity by 2032.</p>
<p>This comprehensive suite of policy supports has put Australian efforts to shame. As a result, the IRA is now drawing much needed <a href="https://www.deloitte.com/au/en/about/press-room/beware-ira-eating-australia-renewable-hydrogen-lunch-240223.html">green energy investment away from Australia</a>. Given the support on offer, it is no surprise US manufacturing spending has <a href="https://fred.stlouisfed.org/series/TLMFGCONS">nearly doubled</a> in the last 12 months, while Australia remains <a href="https://www.bca.com.au/australia_s_investment_drought">stuck in the investment slow lane</a>.</p>
<p>Even more worrying for Australia is the fact the US is not the only rapid mover in the green energy space. A number of middle powers more similar to us in capacity – such as <a href="https://www.energymonitor.ai/policy/canadas-ira-response-an-80bn-clean-energy-plan/">Canada</a> and <a href="https://japannews.yomiuri.co.jp/politics/politics-government/20230513-109457/">Japan</a> – have also announced hugely ambitious green energy investment packages that leave Australia lagging. </p>
<p>There is no question Australia needs the ARIP, and needs it urgently.</p>
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Read more:
<a href="https://theconversation.com/we-need-a-national-renewables-approach-or-some-states-like-nsw-will-miss-out-121192">We need a national renewables approach, or some states – like NSW – will miss out</a>
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<h2>Industry policy – Australia’s dirtiest word</h2>
<p>In arguing for a new big renewables push, <a href="https://grattan.edu.au/wp-content/uploads/2022/07/Next-industrial-revolution-Grattan-report.pdf">some proponents</a> have couched it in the language of a “new industry policy”. But this language is problematic for two main reasons. </p>
<p>First, this language in Australia is highly politicised and divisive. Since the 1980s, “industry policy” has arguably become one of the <a href="https://link.springer.com/chapter/10.1057%20/9781137028303_14">most misused and abused terms</a> in our nation’s political discourse.</p>
<p>To even utter the words “industry policy” is often enough to spark fierce ideological objection, or to cause people’s eyes to glaze over with disinterest, disillusionment or both. In this sense, the term has become the ultimate thought blocker and conversation stopper.</p>
<p>Unfortunately, such reactions make it almost impossible to have a sensible national debate about what effective industry policy actually looks like. For its many detractors “industry policy” means <a href="http://www.eastasiaforum.org/2017/07/29/australia-must-leapfrog-the-partisan-divide-for-the-future-of-freer-trade-and-prosperity/">protectionism and picking winners</a>, and should therefore be avoided at all costs. </p>
<p>This unsophisticated view ignores the fact that in countries that have historically practised highly effective and strategic industry policy – including our northeast Asian neighbours of Japan, South Korea and Taiwan – “protectionism” and “picking winners” was far from the norm. </p>
<p>Indeed, because of the goal orientation of East Asian policymakers, <a href="https://www.cornellpress.cornell.edu/book/9781501703102/developmental-mindset/">who wanted to catch up</a> with developed countries extremely quickly, industry policy was a highly disciplined affair tied to stringent performance incentives.</p>
<p>In this context, East Asian governments did not pick winners. Rather, winning firms self-selected by opting into government support programs, and by then outperforming competitors to keep earning that support.</p>
<p>By contrast, in Australia “industry policy” has become a highly politicised and partisan affair. For this reason, calls for industry policy often fall on deaf ears, and do more to divide policymakers and business leaders than unite them.</p>
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Read more:
<a href="https://theconversation.com/industrial-policy-is-back-on-the-agenda-and-its-never-been-needed-more-than-it-is-now-119120">Industrial policy is back on the agenda -- and it's never been needed more than it is now</a>
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<h2>Towards ‘statecraft’, not industry policy</h2>
<p>But there is another, even more compelling reason for advocates of the renewables package to avoid the language of “industry policy”. The term doesn’t adequately capture the kinds of policies our competitors – both rivals and partners – are <a href="https://global.oup.com/academic/product/developmental-environmentalism-9780192897794">now enacting in the green energy space</a>, or the kind of response we require.</p>
<p>Instead, Australia needs to embrace “<a href="https://asiasociety.org/australia/become-renewable-energy-superpower-australia-must-match-its-strategic-vision-new-green-energy">green energy statecraft</a>”. </p>
<p>Such statecraft <a href="https://www.themandarin.com.au/229483-australias-national-security-mandates-a-new-type-of-green-energy-statecraft/">involves bold government initiatives</a> to build, grow and dominate the high-technology markets essential to the green transition, and to <a href="https://www.tandfonline.com/doi/abs/10.1080/09692290.2019.1655084">fend off or outflank rival powers</a>, be they economic, geo-strategic or both.</p>
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<p>Green energy statecraft is different from plain old energy policy, or even “industry policy”. Its focus is squarely on building new industries with the intention of ensuring success in hyper-competitive global markets and, simultaneously, bolstering national security.</p>
<p>We argue that in recent years, the most significant obstacle to Australia’s success in the green energy arena has been the prevailing policymaking mindset: viewing the green energy shift principally as an energy and climate policy challenge, rather than statecraft.</p>
<p>With national security motivations at play, governments that practice green energy statecraft create bold visions for new industries like green hydrogen, green steel and bioenergy. They set clear production, export and, most importantly, technology-upgrading targets. They also mobilise all available financial incentives and policy instruments to ensure these targets are met.</p>
<p>To become a green energy superpower, Australia needs to <a href="https://asiasociety.org/australia/become-renewable-energy-superpower-australia-must-match-its-strategic-vision-new-green-energy">match our strategic vision</a> with a new green energy statecraft. </p>
<p>Language matters. If we want policymakers to act, and if we want our calls to unite rather than divide, we need to choose our words very carefully.</p><img src="https://counter.theconversation.com/content/213351/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Thurbon receives funding from the Australian Research Council, The Australian Department of Defence, and The Academy of Korean Studies. She has previously received funding from the Korea Foundation, the Academy of the Social Sciences in Australia, and The Asia Society. She sits on the Research Board of the Jubilee Australia Research Centre and is an elected member of the Executive Council of the Society for the Advancement of Socioeconomics. </span></em></p><p class="fine-print"><em><span>Alexander M. Hynd receives funding from the Academy of Korean Studies.</span></em></p><p class="fine-print"><em><span>Hao Tan receives funding from the Australia Research Council (ARC) Discovery Project 2019-2023. He previously received fundings from the Academy of the Social Sciences in Australia, from Enova Community Energy Ltd, and funding from the Confucius Institute Headquarters under the "Understanding China Fellowship" in 2017.</span></em></p>The federal government has been challenged to provide $100 billion over the next ten years to boost the renewables sector. But will policymakers respond to the challenge?Elizabeth Thurbon, Professor in International Relations / International Political Economy, UNSW SydneyAlexander M. Hynd, PhD candidate, UNSW SydneyHao Tan, Associate Professor, Newcastle Business School, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2039092023-04-18T04:02:55Z2023-04-18T04:02:55ZMade in Australia? The electric vehicle revolution gives us a chance to revive an industry<p>Electric vehicle sales are surging. Australian sales doubled in 2022 to <a href="https://www.theguardian.com/environment/2023/feb/07/number-of-electric-vehicles-on-australian-roads-soars-as-demand-exceeds-supply">3.8%</a> of all new vehicle purchases, and were <a href="https://www.theaustralian.com.au/special-reports/electric-vehicles/australias-interest-in-evs-set-to-skyrocket-in-2023/news-story/0d93e96000e84790915df2fb94d556ea">up 780%</a> in the first two months of 2023 compared to a year ago. </p>
<p>In the United States, Europe and China, the market share of electric vehicles is <a href="https://www.businesstimes.com.sg/international/global-enterprise/global-electric-vehicle-sales-109-2021-half-sold-china-canalys">much higher</a>, helped by greater government support. As industry journal Automotive News <a href="https://www.autonews.com/lead-generation/ev-revolution-has-begun-are-you-ready">put it</a>:</p>
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<p>The electric vehicle revolution isn’t coming – it’s already here.</p>
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<p>And the revolution is accelerating. US moves to adopt strict new vehicle emissions standards could <a href="https://thedriven.io/2023/04/11/us-move-on-vehicle-emissions-standards-could-super-charge-transition-to-evs/">drive up electric vehicle sales tenfold</a>. Old carmaking plants have already been revived. </p>
<p>There are bound to be flow-on effects in Australia, where the government is about to <a href="https://www.theguardian.com/environment/2023/apr/16/australias-coming-national-electric-vehicle-strategy-will-be-quite-ambitious-experts-say">release a national electric vehicle strategy</a> and new vehicle emission standards.</p>
<p>The rise of electric vehicles creates significant job opportunities, especially for nations with car-making experience – like Australia. A <a href="https://australiainstitute.org.au/report/rebuilding-vehicle-manufacturing-in-australia/">2022 report</a> by the Australia Institute’s Carmichael Centre identified it as a “once in a lifetime opportunity” to resurrect Australia’s car industry in an “environmentally and socially transformative way”.</p>
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<h2>But what’s left of vehicle manufacturing?</h2>
<p>More than <a href="https://www.theguardian.com/environment/2022/feb/08/electric-cars-touted-to-recharge-australian-manufacturing-sector">34,000 Australians</a> still work in the industry, making parts for global companies. Sections of the car factories – the last <a href="https://www.tandfonline.com/doi/abs/10.1080/00049182.2017.1402452">closed in 2017</a> – remain intact. “All the bones are there,” <a href="https://www.theguardian.com/australia-news/2021/feb/28/all-the-bones-are-there-could-a-new-electric-vehicle-be-built-in-australia">said</a> a former site operations manager at Holden’s Elizabeth plant in 2021. </p>
<p>Toyota’s former plant in Altona, Victoria, even houses a “<a href="https://www.torquetoyota.com.au/2021/12/13/toyota-opens-state-of-the-art-product-centre-at-altona/">Centre of Excellence</a>” where products for the local market are planned, designed and engineered. </p>
<p>If the industry is to be revived, however, political and business leaders need to act quickly and decisively. Developers have bought the old Ford sites in <a href="https://www.afr.com/property/commercial/qualitas-and-pelligra-rev-up-60ha-ford-broadmeadows-site-20210324-p57dgi">Broadmeadows</a> and <a href="https://www.goauto.com.au/news/ford/ford-sells-historic-factory-sites-to-pelligra-group/2019-05-17/78739.html">Geelong</a> in Victoria, along with Holden’s <a href="https://gigcity.com.au/locations/lionsgate-business-park">Elizabeth</a> plant in South Australia. They have plans for a mixed-use future with some industry – but no specific plans for a return to making cars. </p>
<p>Other challenges include finding enough workers in a <a href="https://doi.org/10.1787/e60c2d1c-en">tight post-COVID labour market</a> and upgrading the skills of former car workers, plus a large number of brands limiting domestic market share of any model. </p>
<p>The fragmented market issue could be overcome if the industry had an export focus, particularly for valuable vehicle parts. </p>
<p>As for labour costs, plenty of electric vehicles – or their parts – are being made in other high-wage markets. And, as a high-wage industry, it has traditionally faced few problems recruiting workers. </p>
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Read more:
<a href="https://theconversation.com/the-embarrassingly-easy-tax-free-way-for-australia-to-cut-the-cost-of-electric-cars-171919">The embarrassingly easy, tax-free way for Australia to cut the cost of electric cars</a>
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<h2>So what’s happening in the US?</h2>
<p>The US experience – where President Joe Biden has <a href="https://www.bloomberg.com/news/features/2021-10-22/the-ev-disruption-that-nobody-s-talking-about?leadSource=uverify%20wall">declared</a> half of all vehicles sold there must be emissions-free by 2030 – suggests opportunities exist to convert existing facilities. Many electric vehicles are made in factories that once made conventional vehicles, reviving parts of America’s “<a href="https://www.investopedia.com/terms/r/rust-belt.asp">Rustbelt</a>” in the process. </p>
<p>While Elon Musk proclaims Tesla’s <a href="https://www.tesla.com/en_AU/fremont-factory">flagship plant in Fremont</a>, California, to be the “<a href="https://www.wired.co.uk/article/tesla-factory-interview">factory of the future</a>”, it is actually a former General Motors plant. It was later operated jointly by GM and Toyota. From 1962 to 2009, Fremont made conventional cars. </p>
<p>In 2010, when Tesla took over the facility, it rehired many former workers. Since Tesla began production in June 2012, the same buildings have been used for a <a href="https://www.assemblymag.com/articles/96861-tesla-factory-is-most-productive-in-north-america">highly productive</a> assembly line.</p>
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Read more:
<a href="https://theconversation.com/boosting-ev-market-share-to-67-of-us-car-sales-is-a-huge-leap-but-automakers-can-meet-epas-tough-new-standards-203663">Boosting EV market share to 67% of US car sales is a huge leap – but automakers can meet EPA's tough new standards</a>
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<p>General Motors’ compact electric vehicle, the Chevrolet Bolt, is made at a Michigan factory where workers have built <a href="https://uaw.org/uaw-made-chevrolet-bolt-named-north-american-car-year/">15 different models</a> since the 1980s. They build cars with internal combustion engines alongside the Bolt, including the Chevrolet Sonic. “Everything is run down the same line, AV, EV, Sonic,” <a href="https://docs.house.gov/meetings/IF/IF17/20190620/109670/HHRG-116-IF17-20190620-SD007.pdf">explained</a> team leader Quentin Perea.</p>
<p>Japanese makers have also used existing facilities to shift into electric vehicles. Nissan’s ground-breaking Leaf is <a href="https://archive.nytimes.com/wheels.blogs.nytimes.com/2012/12/13/nissan-battery-plant-begins-operations-in-tennessee/">made in Smyrna, Tennessee</a>, at a plant that has operated since the early 1980s and still makes <a href="https://nissan-tennessee.com/en/about-nissan-smyrna">four conventionally powered SUVs</a>.</p>
<p>While not a full electric vehicle, Toyota’s best-selling RAV4 hybrid model is made <a href="https://www.courier-journal.com/story/money/companies/2019/03/13/toyota-announcement-georgetown-kentucky-assembly-plant/3150159002/">in Georgetown</a>, Kentucky. The factory has turned out petrol-fuelled cars since the 1980s. Its more than <a href="https://www.toyota.com/usa/operations/map/tmmk">9,000 workers now build both hybrid and conventional models</a>.</p>
<p>“Electric vehicles are great,” <a href="https://www.bloomberg.com/news/features/2021-10-22/the-ev-disruption-that-nobody-s-talking-about">said</a> Dan Turke, a 50-year-old employee in Warren, Michigan. “Somebody’s still got to build them.”</p>
<p>Some of these factories offer unlikely comeback stories. As NBC <a href="https://www.cnbc.com/2018/12/07/teslas-bout-with-uaw-union-may-have-ripple-effects-in-silicon-valley.html">reported</a>, the Fremont factory “was derided as one of the industry’s worst, with reports of drinking on the job, high absenteeism, low morale and even sabotaging of cars”. </p>
<p>The company’s factory in Lordstown, Ohio, also has a <a href="https://etd.ohiolink.edu/apexprod/rws_etd/send_file/send?accession=osu1243359975&disposition=inline">chequered past</a>. There was a famous strike against increased line speeds in 1972, and the factory faced closure on several occasions. Now it’s home to a landmark <a href="https://gmauthority.com/blog/gm/gm-facilities/ultium-cells-battery-plants-global/ultium-cells-usa-battery-plants/ultium-cells-lordstown-ohio-plant/">GM battery plant</a> – in partnership with LG Energy. </p>
<p>The US experience also highlights that governments need to spend big to attract investment in electric vehicles. In early 2022, new electric car maker Rivian – backed by Amazon – <a href="https://www.ajc.com/news/rivian-confirms-ev-factory-thousands-of-jobs-coming-to-georgia/CUH7ZNS5URGODNQG7CEUU2FCVY/">announced</a> it would build a US$5 billion plant, creating over 7,500 jobs. Georgia offered US$1.5 billion in subsidies to secure the facility. </p>
<p>Also in 2022, a <a href="https://www.savannahnow.com/story/business/2023/02/17/hyundai-ev-plant-bryan-county-ga-larger-than-montgomery-alabama/69915046007/">Hyundai electric vehicle plant</a> near Savannah, Georgia, received a government package worth <a href="https://apnews.com/article/technology-georgia-electric-vehicles-savannah-congress-3b44cdc012d3fcccf447f0d1b909584e">US$1.8 billion</a>. The package included free land, property tax breaks and income tax credits.</p>
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<p>US think tank Good Jobs First estimates state and local governments have in recent years provided <a href="https://www.ajc.com/news/hyundai-to-break-ground-on-massive-georgia-ev-plant/6OJAPIPU3NGHFBKY74MEY3DC6U/">US$13.8 billion</a> in incentives to land at least 51 electric vehicle and EV battery plants. </p>
<p>These moves reflect a <a href="https://ugapress.org/book/9780820358956/americas-other-automakers/">longer history</a> of subsidies to lure foreign car makers to the US. Supporters <a href="https://www.ajc.com/news/rivian-confirms-ev-factory-thousands-of-jobs-coming-to-georgia/CUH7ZNS5URGODNQG7CEUU2FCVY/">argue</a> the long-term payoff is worth it. Car industry jobs were high-paying, strategically important and boosted the wider economy. As one US business leader <a href="https://www.google.com.au/books/edition/America_s_Other_Automakers/6FgmEAAAQBAJ?hl=en&gbpv=1&dq=%22crown+jewel+in+economic+development%22+%22Steve+Sewell%22&pg=PA9&printsec=frontcover">said</a>, it’s the “crown jewel in economic development”.</p>
<h2>Australia must act decisively</h2>
<p>In Australia, reviving the car industry will take similar bold investment and risk-taking. Another recent Carmichael Centre report <a href="https://www.carmichaelcentre.org.au/taking_charge_of_an_electrified_future">concluded</a> Australia needs a “concerted, systematic industrial policy for EV manufacturing” to take advantage of the “enormous” and “exciting” opportunities.</p>
<p>Australia has crucial advantages, especially as vehicle makers <a href="https://www.georgia.org/competitive-advantages/casestudies/kia">place high value</a> on the availability of a workforce with industry experience. These workers are ageing, however, as are the buildings where they toiled. Time is of the essence.</p><img src="https://counter.theconversation.com/content/203909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Timothy Minchin receives funding from the Australian Research Council. </span></em></p>Soaring electric vehicle production is giving new life to old manufacturing plants that were all but written off in the United States. Australia is also in a position to revive its carmaking industry.Timothy Minchin, Professor of History, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2028342023-04-03T02:13:55Z2023-04-03T02:13:55Z3 ways to help the $15 billion National Reconstruction Fund revive manufacturing<p>Australia’s federal parliament has approved a A$15 billion <a href="https://www.industry.gov.au/news/national-reconstruction-fund-diversifying-and-transforming-australias-industry-and-economy">National Reconstruction Fund</a>, intended to reverse the nation’s dwindling manufacturing sector. It is the “<a href="https://www.alp.org.au/policies/national_reconstruction_fund">first step</a>” in Prime Minister Anthony Albanese’s election promise “to revive our ability to make world-class products”.</p>
<p>The fund will focus on investing in high-tech manufacturing. There are seven priority areas:</p>
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<li>clean energy</li>
<li>medical science</li>
<li>transport</li>
<li>value-added manufacturing in agriculture, forestry and fisheries</li>
<li>value-added manufacturing in mining</li>
<li>military equipment, and </li>
<li>“enabling capabilities”.</li>
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<p>The fund is expected to operate commercially and deliver a return on its investments. Its approach will be similar to the <a href="http://cefc.com.au/">Clean Energy Finance Corporation</a>, which over the past decade has provided more than $10 billion in grants and loans to low-emission energy projects. </p>
<p>Investments will be in the form of loans, equity and guarantees. It will be a co-investment model, meaning private investors will have to match funds provided. </p>
<p>It will start with $5 billion. The other $10 billion will provided in instalments over the rest of the decade. After 2030, investments are expected generate enough revenue to support new projects. These decisions will be made by a board that will be independent of the federal government. </p>
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<h2>Criticisms of the fund</h2>
<p>There is support for the fund from <a href="https://assets.nationbuilder.com/bca/pages/7167/attachments/original/1675919206/BCA_NRF_Investment_Mandate_final_submission.pdf?1675919206">employer groups</a> and <a href="https://www.awu.net.au/wp-content/uploads/2023/02/National-Reconstruction-Fund-submission-FINAL.pdf">trade unions</a>. But there are also criticisms. </p>
<p>More broadly, some economists argue government-supported investment schemes misallocate resources, give certain businesses an unfair advantage, and slow down innovation over time by investing too much in one area and starving other innovative ideas of resources. As <a href="https://www.economist.com/finance-and-economics/2017/01/19/industrial-policies-mean-cosseting-losers-as-well-as-picking-winners">The Economist</a> has put it, trying to “pick winners” can also mean investing in losers.</p>
<p>But government-backed investments do play a crucial role in providing financial support to commercialise new technology, for which attracting private investment is typically tough. </p>
<p>The federal opposition has <a href="https://www.innovationaus.com/coalition-opposing-govts-15b-industry-fund/">complained</a> the Albanese government should focus on more immediate challenges facing manufacturers, such as high energy prices and labour shortages. </p>
<p>Opposition frontbencher Paul Fletcher has <a href="https://www.paulfletcher.com.au/articles-by-paul/why-i-will-be-voting-against-the-national-reconstruction-fund">expressed concern</a> the fund will finance projects that “would not succeed in getting private sector finance – but which for political reasons the government wants to fund”. A factory in a marginal seat, for example.</p>
<p>There are precedents for such concerns. The Morrison government, of which Fletcher was a senior member, did such things with <a href="https://theconversation.com/the-car-park-rorts-story-is-scandalous-but-it-will-keep-happening-unless-we-close-grant-loopholes-164779">funding for car parks</a> and <a href="https://theconversation.com/the-sports-rorts-affair-shows-the-need-for-a-proper-federal-icac-with-teeth-122800">sporting facilities</a>.</p>
<p>But it is also the case that such pork barrelling didn’t happen with the Morrison government’s $1.3 billion Modern Manufacturing Initiative, which provided grants in roughly the same priority areas as the new fund. </p>
<p>Despite political and financial incentives to find fault with it, the Albanese government has endorsed the Modern Manufacturing Initiative’s expenditure. It has criticised only the way the Morrison government manipulated the <a href="https://www.afr.com/politics/federal/coalition-s-modern-manufacturing-grants-used-as-election-announcements-20220825-p5bcsl">timing of funding announcements</a>. </p>
<p>Nor has the Clean Energy Finance Corporation, established by the Gillard government in 2012, faced such criticisms. It is regarded as a success story across the political spectrum, from groups such as the <a href="https://www.acf.org.au/clean-energy-bank-must-not-fund-dirty-energy">Australian Conservation Foundation</a> to mining magnate <a href="https://www.acf.org.au/clean-energy-bank-must-not-fund-dirty-energy">Clive Palmer</a>.</p>
<p>The establishment of the <a href="https://theconversation.com/australias-national-anti-corruption-agency-arrives-will-it-stand-the-test-of-time-195560">National Anti-Corruption Commission</a> should further give confidence that Albanese, a longtime champion of making things in Australia, is sincere about “<a href="https://www.innovationaus.com/albo-promises-complete-transparency-on-15b-industry-fund/">complete transparency</a>” for the National Reconstruction Fund. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-national-anti-corruption-agency-arrives-will-it-stand-the-test-of-time-195560">Australia's national anti-corruption agency arrives. Will it stand the test of time?</a>
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<h2>3 ways to improve the fund</h2>
<p>To but to improve the fund’s chance of success, there are three things that can be done.</p>
<p>First, to achieve the transparency Albanese has promised, the fund should publicly share the reasoning behind its investment decisions, similar to how the Reserve Bank of Australia’s board publishes <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/">minutes of its monthly policy meetings</a>. Being open about decision-making will build public trust in the fund’s transparency and fairness.</p>
<p>Second, the National Reconstruction Fund’s investment board will need to clearly outline investment priorities while staying flexible, so projects that span multiple sectors or applications don’t fall between the cracks. Breakthrough ideas may not fit neatly into a single category. For instance, <a href="https://consult.industry.gov.au/national-reconstruction-fund/submission/view/246">synthetic biology technology</a> can be used in food manufacturing and plastic recycling. It doesn’t belong to just one priority area.</p>
<p>Third, supporting individual projects isn’t enough. Here’s where those “enabling capabilities” are crucial. Changing the trajectory of manufacturing in Australia requires a supportive ecosystem that aligns things like funding and policy priorities in education and training, research being done in universities, immigration settings, and natural advantages. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/to-become-an-innovation-nation-we-really-need-to-think-smaller-162168">To become an innovation nation, we really need to think smaller</a>
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<p>Projects won’t succeed without skilled workers, strong research backing, and easy access to suppliers and customers.</p>
<p>Australia’s renewable energy sector is an example of a supportive environment that can lead to success. Australia has plenty of sun and wind, a growing number of skilled workers in the renewable energy field, top research institutions, a knowledgeable investor base thanks to the Clean Energy Finance Corporation, and a growing number of people who care about eco-friendly energy solutions. </p>
<p>By setting clear goals, encouraging innovation, and making decisions transparent, the fund stands the best chance to achieve what it has been created to do.</p><img src="https://counter.theconversation.com/content/202834/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jarryd Daymond does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>To ensure the ‘complete transparency’ promised by Anthony Albanese, the new National Reconstruction Fund can learn from the Reserve Bank of Australia.Jarryd Daymond, Lecturer, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1869102022-07-14T20:02:02Z2022-07-14T20:02:02Z6 ways governments drive innovation – and how they can help post-pandemic resilience<figure><img src="https://images.theconversation.com/files/474044/original/file-20220714-13035-woslep.jpeg?ixlib=rb-1.1.0&rect=14%2C7%2C4905%2C3245&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/double-exposure-scientist-hand-holding-laboratory-300441812">Shutterstock</a></span></figcaption></figure><p>The COVID-19 pandemic has had an enormous impact on the global economy, with the total cost likely to exceed US$12.5 trillion dollars <a href="https://www.reuters.com/business/imf-sees-cost-covid-pandemic-rising-beyond-125-trillion-estimate-2022-01-20/">according to International Monetary Fund estimates</a>. </p>
<p>At the same time, the crisis has accelerated huge changes in the way we live and work, and the adoption and invention of new technologies. </p>
<p>Policymakers and leaders in <a href="https://theconversation.com/australias-future-depends-on-science-heres-what-our-next-government-needs-to-do-about-it-182756">science</a> and <a href="https://www.weforum.org/agenda/2022/03/8-technology-trends-innovative-leaders-post-pandemic/">industry</a> are pinning their hopes on further innovation to drive economic recovery. </p>
<p>It is a good plan, but stimulating innovation is not easy. I have studied <a href="https://ebooks.publish.csiro.au/content/building-innovation-hotspot">attempts to stimulate local innovation</a> around the world over the past century, and found six broad approaches, each with strengths and weaknesses.</p>
<h2>1. Place</h2>
<p>This is the development of specialised high-tech clusters or hubs (think the next Silicon Valley). There is <a href="https://hbr.org/1990/03/the-competitive-advantage-of-nations">good evidence</a> high-tech clusters are crucial for national competitiveness. </p>
<p>Industrial clusters (and cities more generally) are centres of innovation, productivity, skills development and new enterprise creation. Clusters aid both co-operation and competition between firms, build local supply chains, and can create regional brands such as watches from Geneva or suits from Savile Row.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/474046/original/file-20220714-9624-2l5kus.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Silicon Valley in California may be the world’s most successful high-tech cluster.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/cupertino-ca-usa-april-13-2017-651621193">Shutterstock</a></span>
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<p>Many governments have tried to create these clusters from scratch with public research institutions, creating science and technology parks, or providing financial and other incentives. Only a few of these attempts have succeeded. </p>
<p>Attempts to accelerate existing or emerging industry clusters have been more successful. Building new industry clusters is also incredibly costly, and can take decades to pay dividends.</p>
<h2>2. Culture</h2>
<p>This approach seeks to build an innovative, entrepreneurial environment through enhancing <a href="https://www.philonomist.com/en/article/rise-creative-class-richard-florida">lifestyle, culture, and public amenity</a>. It seeks to create a “people climate” where residents can experiment, build, share knowledge and form creative partnerships. This should also attract and retain the young, creative, educated wealth-builders of the future. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/474047/original/file-20220714-24644-kma6cs.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Attempts to revitalise inner-city areas can backfire, driving out the young and creative people they were meant to attract.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hackney-wick-stratford-london-england-10192015-333834479">Shutterstock</a></span>
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<p>Urban revitalisation projects worldwide have followed this approach. These projects repurpose downtown and inner-city areas into hip and trendy environments which encourage incidental interactions, casual conversations and group learning. </p>
<p>However, lifestyle enhancement doesn’t always lead to more innovation. It can lead to rapid gentrification, which displaces creative communities who can no longer afford the rising rents.</p>
<h2>3. Skills</h2>
<p>Another way to boost innovation is to <a href="https://www.oecd.org/sti/inno/skillsforinnovationandresearch.htm">increase the local level of valuable skills</a>. This can be done by attracting skilled migrants or training up the local population. </p>
<p>The problem with focusing on skills alone is that people are mobile. Skilled people will leave if they’re not provided with ongoing opportunities, or if the financial, lifestyle or creative rewards are higher elsewhere. </p>
<p>Global competition for highly educated or skilled people with experience in creating successful ventures or products is becoming fierce.</p>
<p>However, skills-led approaches to innovation can be powerful as part of the “<a href="https://www.emerald.com/insight/content/doi/10.1108/JSTPM-10-2018-0103/full/html">triple helix model</a>” which integrates research, government, and industry. Critically, skills development needs to be matched with local opportunity.</p>
<h2>4. Mission</h2>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=871&fit=crop&dpr=1 600w, https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=871&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=871&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1095&fit=crop&dpr=1 754w, https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1095&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/474048/original/file-20220714-16-hjh98j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1095&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">US president John F Kennedy announced the US moonshot in 1961, but the mission was carried on by his successors.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/nasacommons/9458165337/in/album-72157634969149583/">NASA</a></span>
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<p>The mission-based approach pools private and public funding and skills to tackle a mid- to long-term challenge. The most famous example is the US moonshot: the 1961 mission to send a person to the Moon and back by 1970.</p>
<p>NASA had funding for the moonshot over three presidencies. The mission succeeded, and in the process it developed several new technologies and products. </p>
<p>Since that time, “mission statements” have become common in business and government. Governments and NGOs use missions and targets to inspire action on a range of challenges, from <a href="https://www.un.org/en/climatechange/net-zero-coalition">net-zero commitments</a> and the UN’s <a href="https://sdgs.un.org/goals">Sustainable Development Goals</a> to developing vaccines for global pandemics in <a href="https://cepi.net/">under 100 days</a>. </p>
<p>However, missions can run into trouble through lack of ongoing funds, unclear goals, competing interests, and the generation of unintended consequences. Missions can also divert funding from curiosity-driven “blue sky” research, which has been responsible for some of the greatest scientific breakthroughs of all time.</p>
<h2>5. Finance</h2>
<p>One crucial element in boosting innovation is increased funding for research and development, universities and other research institutions, and <a href="https://www.wipo.int/wipo_magazine/en/2020/03/article_0002.html">commercialising new technologies</a>. However, the relationship between increased funds and increased innovation is complicated. </p>
<p>As countries become more advanced, spending on innovation can become less efficient. Once early gains have been achieved from adopting existing technologies, further advances can only come from the more expensive and riskier processes of creating and commercialising new technology. </p>
<p>This pays off for countries with large markets and existing levels of high productivity, but is harder for other countries. </p>
<p>The venture capital that enables many emerging companies to expand rapidly is highly geographically concentrated. Venture capital also tends to focus on a few sectors, including the information technology and pharmaceutical industries.</p>
<h2>6. Technology</h2>
<p>This approach uses government spending to provide purpose and funding for new and emerging technologies such as drones, AI, blockchain, and robotics.</p>
<p>When governments engage with innovative local companies early, building their capabilities and co-developing technology applications, it can be good for government and industry. Government gets more modern services, while industry has a strong client. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-future-depends-on-science-heres-what-our-next-government-needs-to-do-about-it-182756">Australia's future depends on science. Here's what our next government needs to do about it</a>
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<p>This approach has built some of the largest and most successful innovation hotspots in the world, including Silicon Valley. The downsides of this approach are that it can gamble with funds allocated for other government purposes, embarrass governments when things go wrong, and relies on government being able to rigorously assess new technologies. </p>
<h2>No magic bullet</h2>
<p>Success in building vibrant, innovative areas at a local level is crucial for boosting and growing the national economy. None of these six approaches alone will be a “magic bullet” for innovation and economic recovery.</p>
<p>So what will work? Paying close attention to local contexts, and balancing all of these approaches: mixing and matching for local circumstances, while focusing on national productivity, technology development, and future markets.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/chinas-innovation-machine-how-it-works-how-its-changing-and-why-it-matters-180615">China’s 'innovation machine': how it works, how it’s changing and why it matters</a>
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<img src="https://counter.theconversation.com/content/186910/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alicia (Lucy) Cameron does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There’s no one-size-fits-all approach to boosting innovation – but we can learn a lot from what has worked and failed in the past.Alicia (Lucy) Cameron, Senior Research Consultant, Data61Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1808842022-06-15T03:30:05Z2022-06-15T03:30:05Z‘I couldn’t see a future’: what ex-automotive workers told us about job loss, shutdowns, and communities on the edge<figure><img src="https://images.theconversation.com/files/457026/original/file-20220407-11-t6cnqf.jpg?ixlib=rb-1.1.0&rect=48%2C97%2C3546%2C2274&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Economies are forever changing and the loss of some industries or businesses is part of that transformation. But change often comes at great cost for workers, many of whom are already vulnerable.</p>
<p>The stories of retrenched workers give us important insights into the often complex effects of job loss. To find out more about these experiences, we interviewed 28 workers made redundant from the auto sector around South Australia and Victoria over the past five years, as part of a larger research project about disadvantaged communities.</p>
<p>Our <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">paper, published in the journal Regional Studies, Regional Science</a>, reveals how economic change interrupts careers and life plans, casting people into new worlds of precarious work and long, indefinite journeys in search of security.</p>
<p>The stories of these automotive workers are not unique; they reflect the experiences of many workers in Australia who have faced retrenchment and redundancy as industries and businesses have closed.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-the-departure-of-toyota-holden-and-ford-really-means-for-workers-23137">What the departure of Toyota, Holden and Ford really means for workers</a>
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<h2>Bad jobs are easy to find</h2>
<p>Since being retrenched, many of our interviewees have struggled to find a job that is secure, safe and pays a decent wage.</p>
<p>Bad jobs – with undesirable hours and low pay – are easy to find, and many are forced to take them. Many are also shocked by what they find at their new workplaces – poor safety standards, toxic cultures and boring or “disgusting” work. These included jobs as diverse as food processing, cleaning, warehousing, chicken killing and grout manufacturing. </p>
<p>As one worker who’d been made redundant three years before <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">told</a> us:</p>
<blockquote>
<p>I got a job as a prefabrication supervisor […] And that was absolutely horrible, horrible, horrible […] just the safety stuff, you know, like they talked a lot of safety, but there was never much action […] just a bullying culture.</p>
</blockquote>
<p>Another left a processing job with a food company after just two days, saying:</p>
<blockquote>
<p>I couldn’t do that job. It was absolutely disgusting. It was hot. They were arrogant towards you.</p>
</blockquote>
<p>Workers often left jobs quickly, or struggled through while looking for something else. The result was a high level of employment instability, as people cycled through multiple jobs searching for one they could tolerate long term.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two men working on automotive engineering." src="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Ex-automotive workers shared their experiences candidly.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>‘It really, really scarred me’</h2>
<p>Workers at the bottom of the labour market often experience demanding or demoralising recruitment processes for casual positions through labour hire agencies. These workers are made to feel feel they can’t afford to be choosy:</p>
<blockquote>
<p>So labour hire, I just pretty much I just said yes to everything. And that’s the way, that’s the work in labour hire. If you start saying no, then you go to the back of the list.</p>
</blockquote>
<p>Casual jobs often serve as a kind of probation, but there are no guarantees:</p>
<blockquote>
<p>I couldn’t see a future. Yeah. So I would just continue to look around […] because I couldn’t see them taking me any further than casual.</p>
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<p>One worker who had already experienced bad employers <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">described</a> the difficult choice she faced:</p>
<blockquote>
<p>I would like [to leave this job and look for something] permanent. But I really don’t want to go into another workplace like [company name], it really, really scarred me.</p>
</blockquote>
<p>Workers want their old lives back – even if that’s not the “real world” any more. As one <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">put it</a>:</p>
<blockquote>
<p>I just think there’s a lot of work out there that, there’s just bits and pieces, and it doesn’t really support someone to have a proper job or be able to afford a decent life […] I’ve probably had maybe six, seven, eight jobs since [the closures]. And none of them have been that good. And I mean, I’ve hated most of them.</p>
</blockquote>
<h2>A new world of precarious work</h2>
<p>In many established sectors, workers once enjoyed good working conditions – often over decades of employment in what they believed were “jobs for life”. Job loss thrust them into a new world of precarious work very different from what they’d known.</p>
<p>Many were downhearted about this new reality:</p>
<blockquote>
<p>It’s just very, very dodgy […] it’s sad, really sad to think that there’s, like, these places out there. And there’s so many of them and they’re operating the way they do and, and nobody’s really controlling any of it.</p>
</blockquote>
<p>Some never stopped longing for a job that made them feel the way their old job did:</p>
<blockquote>
<p>I just miss [my old firm], I miss their way of working. Building up you as a person, as a team.</p>
</blockquote>
<p>Even those who had adjusted to their new working lives admitted that you needed to be willing to do anything:</p>
<blockquote>
<p>[T]here is work out there […] Too many people are too choosy, that’s the problem […] I didn’t give a shit what sort of work I did […] There’s money in shit.</p>
</blockquote>
<h2>Better jobs – not just more jobs</h2>
<p>At the start of the pandemic, the nation’s leaders talked about “building back better”. </p>
<p>For those living on the margins of our workforce and those made redundant through processes beyond their control, “building back better” means finding ways to create better – not just more – jobs.</p>
<p>Australian workers want security, decent conditions and job satisfaction, not a choice between one “shit” workplace and another.</p>
<p>Most of all, they want work they can build their lives around. If we don’t listen to the voices of those living on the fringe, the problems we know all too well today will haunt our communities into the future.</p>
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Read more:
<a href="https://theconversation.com/australias-choice-pay-for-a-car-industry-or-live-with-the-consequences-8305">Australia's choice: pay for a car industry, or live with the consequences</a>
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<img src="https://counter.theconversation.com/content/180884/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This story is part of The Conversation's Breaking the Cycle series, which is about escaping cycles of disadvantage. It is supported by a philanthropic grant from the Paul Ramsay Foundation.</span></em></p><p class="fine-print"><em><span>Andrew Beer receives funding from Australian Research Council. </span></em></p>Our interviews with ex-automotive workers reveal how economic change interrupts lives, casting people into new worlds of precarious work and long, indefinite journeys in search of security.Helen Dinmore, Research Fellow, University of South AustraliaAndrew Beer, Executive Dean, UniSA Business, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1743412022-01-06T19:07:14Z2022-01-06T19:07:14ZVital Signs: Sydney to Newcastle fast rail makes sense. Making trains locally does not<figure><img src="https://images.theconversation.com/files/439600/original/file-20220106-13-353po3.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5499%2C3655&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Federal Opposition Leader Anthony Albanese <a href="https://anthonyalbanese.com.au/our-policies/sydney-to-hunter-fast-rail">this week announced</a> a commitment to funding high-speed rail between Sydney and Newcastle.</p>
<p>At speeds of more than 250km/h, this would cut the 150-minute journey from Sydney to Newcastle to just 45 minutes. Commuting between the two cities would be a lot more feasible.</p>
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<a href="https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=773&fit=crop&dpr=1 600w, https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=773&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=773&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=971&fit=crop&dpr=1 754w, https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=971&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/439624/original/file-20220106-21-19utua0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=971&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Proposed route for high-speed Melbourne to Brisbane rail.</span>
<span class="attribution"><a class="source" href="https://www.infrastructureaustralia.gov.au/map/corridor-preservation-east-coast-high-speed-rail">Infrastructure Australia</a></span>
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<p>The Sydney-Newcastle link would be a first step in a grand plan to link the Melbourne-Sydney-Brisbane corridor by high-speed rail.</p>
<p>Albanese also wants the trains to be built at home, <a href="https://anthonyalbanese.com.au/our-policies/sydney-to-hunter-fast-rail">saying</a> “we will look build as much of our fast and high-speed rail future in Australia as is possible”.</p>
<p>Of course, this idea has been around for a long time. Nobody has ever got the numbers to stack up before.</p>
<p>Federal infrastructure minister Paul Fletcher made the obvious but reasonable point that such a rail link would be very expensive. </p>
<p>“It is $200 to $300 billion on any credible estimate,” he <a href="https://newcastleweekly.com.au/coalition-pulls-brakes-on-labors-fast-rail-plans/">said in response</a> to Labor’s announcement. “It has to be paid for, and that means higher taxes”. </p>
<p>Or does it?</p>
<h2>Social cost-benefit analysis</h2>
<p>Traditional cost-benefit analysis is how governments tend to make decisions about big infrastructure projects like this. Figure out the costs (such as $300 billion) and then figure out the benefits. Adjust for timing differences and when money is spent and received, and then compare. </p>
<p>This generates an “internal rate of return” (IRR) on the money invested. It’s what private companies do all the time. One then compares that IRR to some reference or “hurdle” rate. For a private company that might be 12% or so. For governments it is typically lower.</p>
<p>An obvious question this raises is: what are the benefits?</p>
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<a href="https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/439623/original/file-20220106-27-vyofyv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An artist’s impression by Phil Belbin of the proposed VFT (Very Fast Train) in the 1980s.</span>
<span class="attribution"><span class="source">Comeng</span></span>
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<p>If all one is willing to count are things such as ticket fares, the numbers will almost never stack up. But that’s far too narrow a way to think about the financial benefits. </p>
<p>A Sydney-Newcastle high-speed rail link would cut down on travel times, help ease congestion in Sydney, ease housing affordability pressures in Sydney, improve property values along the corridor and in Newcastle, provide better access to education and jobs, and more.</p>
<p>The point is one has to think about the social value from government investments, not just the narrow commercial value. Alex Rosenberg, Rosalind Dixon and I provided a framework for this kind of “social return accounting” in a <a href="http://research.economics.unsw.edu.au/richardholden/assets/social-return-accounting.pdf">report</a> published in 2018.</p>
<h2>Newcastle might make sense, Brisbane might not</h2>
<p>I haven’t done the social cost-benefit analysis for this rail link, but the social return being greater than the cost is quite plausible.</p>
<p>The other thing to remember is that the return a government should require has fallen materially in recent years. The Australian government can borrow for 10 years at just 1.78%, as opposed to <a href="http://www.worldgovernmentbonds.com/bond-historical-data/australia/10-years/">well over 5%</a> before the financial crisis of 2008.</p>
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Read more:
<a href="https://theconversation.com/lets-get-moving-with-the-affordable-medium-speed-alternatives-to-the-old-dream-of-high-speed-rail-95854">Let's get moving with the affordable medium-speed alternatives to the old dream of high-speed rail</a>
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<p>I’m less sure about the Brisbane to Melbourne idea. The cost would be dramatically higher for obvious reasons, as well as the fact that the topography en route to Brisbane is especially challenging. </p>
<p>Nobody is going to commute from Sydney to Brisbane by rail, and the air routes between the three capitals are well serviced.</p>
<h2>Transport policy is not industry policy</h2>
<p>The decision about building a Sydney-Newcastle rail link is, and should be kept, completely separate from where the trains are made. Transport policy shouldn’t be hijacked for industry policy.</p>
<p>To be fair, Newcastle has a long and proud history of <a href="https://www.ugllimited.com/en/our-sectors/transport">manufacturing rolling stock</a>, at what was the Goninan factory at Broadmeadow – much of it for export. </p>
<p>But ask yourself how sustainable that industry looks in Australia, absent massive government support. Can it stand on its own?</p>
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Read more:
<a href="https://theconversation.com/look-beyond-a-silver-bullet-train-for-stimulus-136834">Look beyond a silver bullet train for stimulus</a>
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<p>It’s also true there have been some recent high-profile procurement disasters buying overseas trains. </p>
<p>Sydney’s light-rail project has run massively late and over budget, with Spanish company Acciona getting an extra A$600 million due to the project being more difficult than expected. </p>
<p>Then <a href="https://www.smh.com.au/national/nsw/transport-minister-expects-spanish-manufacturer-to-pay-for-cracked-trams-20211110-p597tq.html">cracks were found</a> in all 12 trams for the city’s inner-west line, putting them out of service for 18 months.</p>
<p>These are terrible bungles due to the government agreeing to poorly written contracts with sophisticated counterparties. When contracts don’t specify contingencies there is the possibility of what economists call the “<a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1530-9134.2009.00236.x">hold-up problem</a>”. </p>
<p>But these problems could have occurred with a local maker too.</p>
<h2>The Tinbergen Rule</h2>
<p>An enduring lesson from economics is the Tinbergen Rule – named after <a href="https://www.nobelprize.org/prizes/economic-sciences/1969/tinbergen/facts/">Jan Tinbergen</a>, winner of the first Nobel prize for economics. </p>
<p>This rule says for each policy challenge one requires an independent policy instrument. This can be <a href="https://theconversation.com/vital-signs-evergrande-may-survive-but-for-its-executives-expect-a-fate-worse-than-debt-168930">widely applied</a>. But here the lesson is particularly clear.</p>
<p>Addressing housing affordability is a good idea, and a Sydney-Newcastle link could help with that. But if Labor want a jobs policy it should develop one. </p>
<p>The more TAFE places Labor has already announced is a reasonable start. </p>
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Read more:
<a href="https://theconversation.com/vital-signs-we-need-to-make-things-in-australia-but-not-like-in-the-past-148084">Vital Signs: we need to make things in Australia, but not like in the past</a>
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<p>Reviving 1970s-style industry policy – something that has almost never worked – is not a good move. Governments are lousy at picking winners. The public invariably ends up paying more for less, and the jobs are typically transient.</p>
<p>But aside from this conflation of policy goals, Albanese deserves credit for being bold about the future of high-speed rail in Australia. </p>
<p><iframe id="H9PVD" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/H9PVD/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/174341/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is President of the Academy of the Social Sciences in Australia.</span></em></p>Anthony Albanese’s plan for high-speed rail between Sydney and Newcastle could well be worth the cost, so long as he doesn’t muddy it with 1970s-style industry policy.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1480842020-10-15T19:08:12Z2020-10-15T19:08:12ZVital Signs: we need to make things in Australia, but not like in the past<figure><img src="https://images.theconversation.com/files/363583/original/file-20201015-17-y99w26.jpg?ixlib=rb-1.1.0&rect=735%2C1178%2C4093%2C2531&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Much of the focus of Opposition Leader <a href="https://theconversation.com/albanese-promises-20-billion-plan-to-modernise-electricity-grid-and-6-2-billion-for-childcare-147764">Anthony Albanese’s budget reply speech</a> was around Labor’s proposal to expand childcare subsidies – a policy with some flaws but which moves in the right direction. </p>
<p>Labor’s plan to modernise the electricity grid by setting up a “Rewiring the Nation Corporation” with A$20 billion in government support was also met with general approval.</p>
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Read more:
<a href="https://theconversation.com/albanese-promises-20-billion-plan-to-modernise-electricity-grid-and-6-2-billion-for-childcare-147764">Albanese promises $20 billion plan to modernise electricity grid, and $6.2 billion for childcare</a>
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<p>What got less attention was the third pillar of Labor’s budget strategy – a big push toward more local manufacturing jobs.</p>
<p>Albanese wasn’t shy <a href="https://anthonyalbanese.com.au/anthony-albanese-speech-budget-in-reply-parliament-house-canberra-thursday-8-october-2020">about what he meant</a>. He lamented the loss of Australia’s car-making industry:</p>
<blockquote>
<p>Australians will never forget that it was this government that drove Holden, Ford and other car makers out of Australia, taking tens of thousands of jobs in auto manufacturing, servicing and the supply chain with them.</p>
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<p>He then announced Labor would create a “National Rail Manufacturing Plan” to expand Australia’s boutique train-building industry:</p>
<blockquote>
<p>We will provide leadership to the states and work with industry to identify and optimise the opportunities to build trains here in Australia – for freight and for public transport.</p>
</blockquote>
<p>The economics of pillars 1 and 2 make sense. Pillar 3 involves trying to turn back the clock on the irrepressible, tectonic forces of globalisation and automation to pretend we should make things here we shouldn’t.</p>
<h2>Understanding comparative advantage</h2>
<p>Countries benefit from trade rather than seeking to produce everything they need locally. This is due to the idea of “comparative advantage”, originated by David Ricardo in his 1817 book <a href="http://www.gutenberg.org/ebooks/33310">On the Principles of Political Economy and Taxation</a>.</p>
<p>One country (call it country A) might be more efficient than another (country B) in absolute terms at producing, for example, T-shirts and wine. It is tempting to think, then, that country A should produce both T-shirts and wine.</p>
<p>But what if country B is really inefficient at producing T-shirts but reasonable at producing wine? If country A specialises in producing T-shirts and country B specialises in producing wine, they can trade and both be better off.</p>
<p>Why? Because country A produces T-shirts much more efficiently than country B, and country B is only a little less efficient at producing wine. Overall, both economies get more efficient, raising living standards.</p>
<h2>Making cars and trains in Australia</h2>
<p>Does Australia have any comparative advantage at producing cars or trains?</p>
<p>With cars the evidence speaks for itself. Local manufacturing only survived for decades because of huge government subsidies. Without them Australian-made cars couldn’t compete.</p>
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Read more:
<a href="https://theconversation.com/holdens-dead-end-shows-government-policy-should-have-taken-a-different-road-132080">Holden's dead end shows government policy should have taken a different road</a>
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<p>Only part of that was to do with labour costs – and we should be rightly proud of our comparatively high wages and good working conditions. Germany – home of BMW, Mercedes Benz and Volkswagen – also has high wages and conditions. </p>
<p>What about trains? Some trains are made in Australia – by <a href="https://www.downergroup.com/rail">Downer EDI</a> and Canadian multinational <a href="https://www.bombardier.com/en/home.html">Bombardier</a>. That’s good for a few thousand jobs. But the market is domestic, with the customers being state governments who buy with an eye on local jobs. </p>
<p>There’s not a lot to suggest it can become an export industry, competing for example with Japan, which has been making bullet trains <a href="https://worldwiderails.com/the-iconic-0-series-shinkansen/">since the early 1960s</a>. Or France, whose train builders have sold hydrogen trains to Germany and high-speed freight trains to Italy.</p>
<p>With these competitors having such an edge, and the well-known phenomenon of “learning-by-doing”, are we really going to catch up?</p>
<p>There are many other sectors in which Australian producers are internationally competitive, such as agriculture, services and areas of high-tech manufacturing.
Building on and expanding <a href="https://acola.org.au/wp/PDF/SAF01/SAF01%20full%20lo%20res.pdf">comparative advantage</a> in these areas makes a lot more sense.</p>
<h2>The case for strategic manufacturing</h2>
<p>That said, the COVID-19 pandemic has taught us how fragile certain parts of our economy are. The same logic of comparative advantage that has done so much to improve living standards has also made us vulnerable in some areas.</p>
<p>Having little or no manufacturing capacity in personal protective equipment or pharmaceuticals like insulin, EpiPens and antibiotics is potentially very dangerous. Importing <a href="https://defense.info/wp-content/uploads/2020/02/Australias-Medical-Supply-Chain.pdf">more than 90% of our pharmaceuticals</a> puts us in a vulnerable position if a state actor that controls important parts of the global supply chain decides to cut supply. This is what economists call the “hold-up problem”.</p>
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Read more:
<a href="https://theconversation.com/medical-supply-chains-are-fragile-in-the-best-of-times-and-covid-19-will-test-their-strength-133688">Medical supply chains are fragile in the best of times and COVID-19 will test their strength</a>
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<p>So it makes sense for Australia to have more presence in strategic manufacturing like pharmaceuticals and personal protective equipment, even if producing these goods locally is not as efficient as buying them from overseas.</p>
<h2>From just-in-time to just-in-case</h2>
<p>The pandemic has taught us that we have, as a nation, moved a little too far towards the efficiencies of “just-in-time” supply chains. We need to move back somewhat, but certainly not completely, in the direction of “just-in-case” – to a little less efficiency but a little more insurance.</p>
<p>That should involve a push for strategic manufacturing. We should at all times be looking to build on and expand our comparative advantage. </p>
<p>But trying to go “Back to the Future” and build an Australian De Lorean makes no sense.</p><img src="https://counter.theconversation.com/content/148084/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There’s a strong case for more strategic local manufacturing. There’s little case for making cars and trains in Australia.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1320802020-02-19T04:19:30Z2020-02-19T04:19:30ZHolden’s dead end shows government policy should have taken a different road<p>The only surprise about the termination of the Holden brand in Australia was that it caused such surprise. </p>
<p>This was the final nail in an already empty coffin, given local assembly manufacturing ended more than two years ago.</p>
<p>In 2017, when Holden stopped making cars in Australia but committed to keeping the brand with local engineering and design facilities, I <a href="https://www.smh.com.au/opinion/the-truth-about-the-holden-shutdown-in-australia-20171010-gyxogj.html">wondered</a> how long it could last.</p>
<p>We now know. </p>
<p>There was in reality no commercial justification for a US-based global corporate to continue to invest in switching imported cars to right-hand drive for <a href="https://www.goauto.com.au/news/general-news/sales/vfacts-mercedes-outsells-holden/2019-12-04/80977.html">3%</a> of 1% of the world’s car market. Holden’s dominant local market share was well and truly <a href="https://www.caradvice.com.au/827303/holden-by-the-numbers-the-highs-and-lows-since-1948/">a thing of the past</a>, no matter what was being rebadged under its name.</p>
<p>The huge nostalgia for the loss of an iconic Australian brand is perfectly understandable. But the naiveté shown by successive governments in dealing with the owners of this brand is not. Particularly when this has meant accepting commitments supposedly made in good faith in return for billions of dollars of taxpayers’ money.</p>
<p>Let’s remind ourselves of the three factors that doomed Australian car assembly. </p>
<h2>Tariff protection</h2>
<p>The first factor was removing tariff protection. Domestic car manufacturing flourished behind high tariff walls for more than half a century, but like many other areas of manufacturing it was not keeping up with the rest of the world. </p>
<p>It was hoped removing tariffs in the 1980s and exposing the industry to international competition would transform it for the better.</p>
<p>Alongside tariff reform were “industry plans” to manage the transition, in particular focusing on export markets where economies of scale could be achieved. At the same time, workers were given training and financial support to move from companies that couldn’t survive this harsher environment to those that could.</p>
<p>Such success was patchy but, with substantial government subsidies and a number of manufacturers withdrawing from the local market, the Australian car industry continued to be viable. However, as the local makers introduced new models on a drip-feed of investment from their global parents, they lost market share to imports. This could not be offset by increased exports as the same global parents limited Australia’s role in overseas growth markets.</p>
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Read more:
<a href="https://theconversation.com/vale-holden-how-americas-general-motors-sold-us-the-australian-dream-131915">Vale Holden: how America's General Motors sold us the Australian dream</a>
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<h2>Rise of the dollar</h2>
<p>The second factor affecting domestic car manufacturing, and indeed Australian manufacturing more widely, was the rise in the value of the Australian dollar associated with the mining boom beginning <a href="https://www.abc.net.au/radionational/programs/rearvision/the-mining-boom-that-changed-australia/7319586">in the early 2000s</a>. </p>
<p>Local manufacturers found it more difficult, if not impossible, to compete with imports. By 2016 the number of jobs in manufacturing had fallen <a href="https://www.theguardian.com/australia-news/2017/oct/23/census-2016-manufacturing-jobs-in-australia-drop-24-in-six-years">to less than 684,000</a>, down from more than 903,000 in 2011 (and a peak of 1.35 million in the early 1970s). The “<a href="https://www.smh.com.au/opinion/death-of-manufacturing-nothing-to-whine-about-20140415-zquwd.html">death of manufacturing</a>” became a popular headline.</p>
<p>Some manufacturing has subsequently revived but not in the same form as in the past. Large mass-production facilities were increasingly superseded by small to medium manufacturers pursuing “smart specialisation” in global markets and value chains. This worldwide trend included many companies in Australia’s high-calibre auto-components sector, but less so the car-assembly industry.</p>
<h2>Flawed business model</h2>
<p>This brings us to the third and decisive factor in the decline of car manufacturing in Australia: a flawed business model. </p>
<p>An industry designed for success in a protected domestic market had to <a href="https://www.abc.net.au/radionational/programs/ockhamsrazor/how-australia-got-left-behind-in-manufacturing-and-innovation/6163528">innovate and scale up radically</a> in an intensely competitive global market once protection was removed. This simply didn’t happen. </p>
<p>In retrospect, we can sympathise with governments not wishing to pull the plug on a major industry employing many thousands of workers. Not many countries can sustain an integrated car manufacturing industry. Most don’t even try. </p>
<p>Those that succeed do so because they can control their own destiny, including investing in future technologies, skills and market development. The only part of the Australian car industry that could control its own destiny was the auto components sector, which was world-competitive. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">Why Australians fell out of love with Holdens</a>
</strong>
</em>
</p>
<hr>
<p>Which brings us to the inevitable counterfactual. What if, instead of directing public support to global car giants that had no intention of transforming local assembly, governments had focused on accelerating the growth of the auto components sector?</p>
<p>The problem in Australia has not been the use of public funds to support manufacturing, but rather to prioritise what might have worked in the past over what we know will be required in the future. Such as electric vehicles. </p>
<p>It is worth taking the opportunity to reflect on the fact this observation applies as much to other challenges – such as climate change – as it does to the car industry.</p><img src="https://counter.theconversation.com/content/132080/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roy Green has received research funding from ARC, Department of Industry and OECD for a range of projects relevant to manufacturing. </span></em></p>The fate of Australia’s car industry shows the danger of prioritising what worked in the past over what will work in the futureRoy Green, Emeritus Professor & UTS innovation adviser, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/402542015-04-16T05:39:39Z2015-04-16T05:39:39ZWhy a national science strategy is good for Australia<figure><img src="https://images.theconversation.com/files/78166/original/image-20150416-23314-1pfb4w2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia has a long history of world class science, but a national science strategy will help boost engagement with industry.</span> <span class="attribution"><span class="source">Steve Dorman/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>This week saw the <a href="http://www.theaustralian.com.au/higher-education/canberra-set-to-pursue-national-science-strategy/story-e6frgcjx-1227303855780?login=1">welcome news</a> that the federal government has committed to pursuing a national science strategy. </p>
<p>Following a meeting on Monday with the <a href="http://www.chiefscientist.gov.au/2014/11/commonwealth-science-council/">Commonwealth Science Council</a>, of which I am a member, the Minister for Industry and Science, Ian Macfarlane, has indicated he will consult with the science sector to agree on a number of research priorities that will help direct funding.</p>
<p>This is good news not only for scientists and research institutions, but also for the nation as a whole, and especially for the interaction between science and industry.</p>
<p>Australia has some amazing strengths in science. The Australian Research Council’s Excellence in Research for Australia (<a href="http://www.arc.gov.au/era/">ERA</a>) report <a href="http://www.arc.gov.au/era/era_2012/outcomes_2012.htm">shows us</a> that our research in physics, astronomy, agriculture – to pick a few – is at the forefront of world activities in terms of citations and academic impact. Our best research is indeed internationally leading.</p>
<p>But this paints an incomplete picture. Australia also <a href="http://dx.doi.org/10.1787/888932891359">ranks 29th of the 30</a> OECD countries on the proportion of large businesses and small to medium enterprises (SMEs) collaborating with higher education and public research institutions on innovation. </p>
<p>The reality is that our science workforce is strongly mismatched with our industry base. So, in truth, while this result is disappointing, it is not surprising.</p>
<p>One stark example is medical research. Our medical research is outstanding. We have a large medical research workforce and it is an area that captures the public interest. This is starkly evident when we <a href="https://www.science.org.au/sites/default/files/user-content/2014-15federalbudgetinitialanalysis.pdf">look at the money</a>: the National Health and Medical Research Council (NHMRC) budget for 2015-2016 is A$858 million, whereas the ARC is A$795 million. </p>
<p>Considering that the ARC budget covers all non-medical research, from the social sciences and humanities to maths and engineering, this seems out of balance.</p>
<h2>Connections to industry</h2>
<p>This question of balance becomes even more stark when we take a step back and look at the broader picture – at the industry base. Australia’s industry is largely SME-based. But SMEs often have trouble taking discoveries from medical science and translating them into new commercial products.</p>
<p>We are not a home to Big Pharma, as in the UK and the US. And the pathways to bringing new drugs to market is more challenging here as a result. This is also an expensive game that is harder for a smaller player such as Australia to take a major share in.</p>
<p>My time working at the University of Southampton’s Optoelectronics Research Centre shaped my view on how research concentrations can work with industry. It was rare to have a week where a company, big or small, was not in the lab talking about possible projects, stimulating new fundamental research directions and initiating new applied projects. </p>
<p>Working in this kind of ecosystem drives researcher mobility. Its spin offs provide new career pathways for PhD graduates, who then place research projects back in the university, and so on. </p>
<p>This is the kind of ecosystem we need to strive to create in Australia. But it is much harder to do if we try to artificially construct it on top of our research capabilities without thought to the industry base.</p>
<h2>Reaching out to SMEs</h2>
<p>We do have significant numbers of SMEs that work in areas including component manufacturing, food processing and engineering services. Some are under enormous stress in current conditions, such as those supplying the almost extinct Australian automotive industry. </p>
<p>These are the companies that need a real leg up to allow them to benefit from working with researchers. The challenges are real and significant. It is not always easy for a researcher to identify how they can contribute to a small company working to short-term challenges and time horizons. The language gap is much larger than with the largest companies, which have the luxury of having staff with a background in research.</p>
<p>But it can be done. A tangible example is the South Australian Government’s <a href="https://www.adelaide.edu.au/ipas/pcp/">Photonics Catalyst Scheme</a>. This co-funds small projects posed by local SMEs that can be tackled by the state’s photonics researchers. </p>
<p>This scheme has generated a long list of partners in a short time since it was established two years ago. It works because regular opportunities are created to bring the industry face-to-face with the researchers. This fosters opportunities for relationships to be formed, and for the industry to gain an understanding of the intellectual and infrastructure capacities within our universities.</p>
<p>Australia’s research capacity has largely grown organically, bottom-up, from curiosity-driven research lead at our universities. It is here, unlike the US, where most of our research capacity resides. </p>
<p>The ARC was established in 1988 to <a href="http://trove.nla.gov.au/work/12392499?selectedversion=NBD5200477">direct support</a> to “fields that have the capacity to contribute to the national industry capacity”. However, we have not had the courage as a nation to really focus our investment in science and research before now. Previous sets of national priorities for research have been broadly framed and all encompassing.</p>
<h2>Priorities</h2>
<p>The confirmation this week that the Commonwealth Science Council endorsed nine new National Research Priorities is a great step forward. These priorities are: </p>
<ul>
<li>Food</li>
<li>Soil and water</li>
<li>Transport</li>
<li>Cybersecurity</li>
<li>Energy</li>
<li>Resources</li>
<li>Manufacturing</li>
<li>Environmental change and health. </li>
</ul>
<p>Expert working groups have articulated key challenges Australian research could focus on in each of these areas to create knowledge and generate solutions that will be of particular importance to everybody. </p>
<p>Investigator-driven research would not on its own cover these needs, so this is a great step forward. It’s clear that this is not an applied research agenda – the idea is to encourage fundamental research inspired by these priorities as much as to facilitate stronger partnerships between research and industry.</p>
<p>This raises the questions of how we can now use these priorities to shift our research base towards the challenges our nation faces and the opportunities we can seize. Funding clearly drives behaviour, and the extent to which these priorities drive funding opportunities will determine outcomes to some extent. </p>
<p>The other critical element is recognition and rewards. Our current university system idolises high impact papers and citations. While this is a great way of telling us what other academics think of our work, it is necessary but not sufficient for driving outcomes from that work. </p>
<p>I have also observed that research inspired by meaningful practical challenges attracts more women to areas that are typically male-dominated, such as physics and engineering.</p>
<h2>Getting research out of the lab</h2>
<p>The Australian Academy of Technological Sciences and Engineering (<a href="https://www.atse.org.au/">ATSE</a>) has recently been working with the other learned academies to propose a second dimension to the research metrics space: that of research engagement with end-users of that research. </p>
<p>The report on this work is due to be released shortly. We need our universities to be be able to recognise and reward research concentrations that are both high quality and strongly engaged. This is the <a href="http://en.wikipedia.org/wiki/Pasteur%27s_quadrant">Pasteur’s Quadrant</a> of research evaluation. </p>
<p>The 2014 paper <a href="https://education.gov.au/news/discussion-paper-boosting-commercial-returns-research-released">Boosting the Commercial Returns from Research</a> proposed that the ARC and NHMRC should recognise industry experience. This is an excellent principle. </p>
<p>But we need to go further by creating promotion pathways and fellowships that prioritise industry experience. At the University of South Australia we have recently implemented a promotion pathway to full professor that rewards outstanding attainment in working with industry. Such pathways can open up paths for researchers to develop research careers in which they spend time both in universities and in industry. </p>
<p>Anything that can encourage researchers to work with industry, or that encourages entrepreneurship, will start us on the journey of evolving our research base into one that supports Australia’s future economic prosperity and quality of life.</p><img src="https://counter.theconversation.com/content/40254/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tanya Monro is Deputy Vice Chancellor, Reserach & Innovation at The University of South Australia, and ARC Georgina Sweet Laureate Fellow and Adjunct Professor of Physics at The University of Adelaide. She receives funding from the ARC. She is Vice President of ATSE and a Fellow of AAS. She is a member of the Commonwealth Science Council.</span></em></p>The government’s announcement of a national science strategy is good for Australia, particularly for promoting engagement between science and industry.Tanya Monro, Deputy Vice Chancellor Research & Innovation, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/323682014-10-16T19:32:21Z2014-10-16T19:32:21ZEntrepreneurs can help bring new thinking to manufacturing<figure><img src="https://images.theconversation.com/files/61578/original/9y5kj773-1413242850.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new culture is required for Australian manufacturing to be reinvented.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>With major employers heading offshore and employment numbers decimated, what will emerge from the ashes of Australia’s manufacturing industry? And what role should manufacturing play in the federal government’s competitiveness agenda? In this <a href="https://theconversation.com/uk/topics/reinventing-manufacturing">Reinventing Manufacturing</a> series, we look at the case for retaining the industry, and how it can transform itself into a high performance, advanced and productive sector.</em></p>
<hr>
<p>If international comparisons are anything to go by, Australia has more than its fair share of entrepreneurs. The Global Entrepreneurship and Development <a href="http://www.thegedi.org/global-entrepreneurship-and-development-index/">Index</a>, ranks Australia second behind only the US. Similarly, the <a href="http://www.gemconsortium.org/">Global Entrepreneurship Monitor</a> positions Australia as a place that supports and nurtures entrepreneurship. </p>
<p>But a closer look at these indices and rankings reveals these “animal spirits” that drive innovation and economic growth are not evenly distributed across all industries. This appears particularly so in the manufacturing sector, which has the second lowest rate of business start-ups in Australia. </p>
<p>Essential to the development of advanced manufacturing is the development and diffusion of new technology. Yet, Australia ranks poorly when it comes to technology-based entrepreneurship. New-to-market product innovation and advanced manufacturing do not appear strong either. </p>
<p>These signs indicate a major challenge if Australian manufacturing is to reinvent itself – the creation of an industry culture that encourages and supports entrepreneurial activity.</p>
<h2>Animal spirits</h2>
<p>This will require cultivating a new breed of manufacturing businesses that have a bias towards innovating and improving continuously, and a willingness to take risks and explore new market opportunities. </p>
<p>This is not simply about what firms do, and requires a shift in the way the industry as a whole operates. It will inevitably require some tolerance for failure, and finding ways in which businesses can learn from failed attempts at innovating to continue to improve and succeed. It requires a different approach from equity markets to funding for the development of new technologies and business ideas.</p>
<h2>A new approach to value</h2>
<p>Perhaps most significantly it will require a different mindset to how value is perceived and created, which is essential to the development of new business models.</p>
<p>Traditionally, manufacturing firms have pursued value creation through transforming raw materials into something that customers are willing to pay for. This approach is limiting in that it focuses on the exchange transaction and the related (often short-term) financial returns, tends to neglect what happens to value after the transaction (e.g. during the use of the product), and disregards non-customer stakeholders. </p>
<p>If we want to build a strong Australian entrepreneurial manufacturing sector with firms able to create new, innovative business models, we need to overcome these limitations and develop an extended, more entrepreneurial approach to value creation. </p>
<p>Value is much more than financial returns and every stakeholder can see value in a different way. It is important to be aware of these different perceptions of value and consider that firms and products can both create and destroy value affecting many stakeholders, not just customers.</p>
<p>Value should be perceived as co-created within the networks of stakeholders and considered over a longer period of time rather than enclosed in a product during production with focus on short-term financial gains. </p>
<p>For example, value of a phone is co-created over time with the network of providers who determine where the phone can be used and how much it costs to use it, application developers who determine many of the phone’s functions, and users themselves who apply the phone for different purposes and in different contexts. </p>
<p>Users’ knowledge, experience and imagination are particularly important sources of innovation. For example, Lego has been able to develop successful products like <a href="http://www.wired.co.uk/magazine/archive/2013/10/features/building-success">Lego Friends</a>, designed to appeal to girls, by actively engaging users in product co-creation. </p>
<h2>Changing the approach value</h2>
<p>In order to shift to the new, extended approach to value, businesses can start with pursuing profits FOR a purpose instead of pursuing profits AS a purpose.</p>
<p>The preliminary results in a study of manufacturing businesses using the extended approach to value in the USA, Europe and New Zealand that we are conducting reveal that firms see their profits as a tool to create a greater overall value. Managers of these firms recognise that doing so contributes significantly not only to a strong ability to innovate but also to high employee loyalty and overall economic success. </p>
<p>Industry as a whole can support the shift to the extended approach to value in several ways. It needs to find better access to patient capital that does not expect high, short-term, financial returns. It also needs to enhance collaboration and knowledge exchange between different sectors. Great inventions and opportunities often come from non-experts. For example, the first optical device that allowed seeing single-cell organisms was invented and built by a linen merchant. Organisations such as <a href="http://www.energy.unimelb.edu.au/carlton-connect-initiative">Carlton Connect</a> and other collaborative university/industry hubs can help in this process. </p>
<p>Finally, governments can help in the shift by providing funding for building multi-sector partnerships where success is defined and measured by the extent to which particular problems are solved and needs satisfied rather than by short-term financial outcomes. </p>
<p>Failing to adopt an extended approach to value is likely to erode firms’ capacity to create new, innovative business models, and will mean Australian manufacturers will inevitably be stuck in catch-up mode instead of becoming entrepreneurial, global leaders in value creation.</p><img src="https://counter.theconversation.com/content/32368/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Krzysztof Dembek receives funding from Safe Work Australia, AFAANZ.</span></em></p>With major employers heading offshore and employment numbers decimated, what will emerge from the ashes of Australia’s manufacturing industry? And what role should manufacturing play in the federal government’s…Krzysztof Dembek, Research Fellow, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/323742014-10-16T00:27:16Z2014-10-16T00:27:16ZGovernment can be the risk buffer in Australia’s strive to innovate<figure><img src="https://images.theconversation.com/files/61758/original/zkfcpr9q-1413337988.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Building an innovation ecosystem can take years of government nurturing.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Our lives are surrounded by the ideas and creations of thousands of people. The magic of flight, or computers, or vaccines, inventions and innovations we take for granted, have advanced from one idea to another in a steady stream of interlinked technological evolution.</p>
<p>The story of nanotechnology begins, for example, with the invention of the printing press. Steven Johnson reminds us in <a href="http://online.wsj.com/articles/book-review-how-we-got-to-now-by-steven-johnson-1412032700">“How We Got to Now”</a> that printing created demand for spectacles. Demand for spectacle lenses then led to experimentation with microscopes.</p>
<p>Lenses would not have developed without the co-evolution of our understanding of chemistry and the discovery of the unique quantum mechanical properties of silicon dioxide.</p>
<p>Innovation theorists often emphasise co-evolution because while certain developments may appear in retrospect to be failures, or old technology, they are in fact building blocks to further innovation.</p>
<p>Innovation is the one element enabling Australian manufacturing companies to stay competitive in a globalised economy.</p>
<p>Bluescope Steel is transforming from a traditional steel manufacturer into a designer and producer of state of the art corrosion-resistant products, as well as next generation roofing panels that will produce solar power. A former traditional textiles manufacturer, Textor Technologies, is now supplying state of the art water-absorbent fabrics globally to the baby nappies industry.</p>
<p>So what will it take to have more of this kind of success, especially in the context of the looming automotive exit and the end of the resources boom? What can we learn from others’ success – and from our own?</p>
<h2>Building an innovation ecosystem</h2>
<p>The federal government’s <a href="http://www.dpmc.gov.au/publications/Industry_Innovation_and_Competitiveness_Agenda/docs/industry_innovation_competitiveness_agenda.pdf">Industry Innovation and Competitiveness Agenda</a> should help build stronger links between research and business outcomes. </p>
<p>Innovation is said to require what researchers have been calling an “innovation ecosystem” in order to survive. This applies both at a national and a company level – and is not simply a list of good policies or institutional structures, where the more we implement, the more innovation we obtain.</p>
<p>An innovation system has to be coherent to be effective. Many researchers have observed that with, say, four out of the five elements of an effective system, a nation does not achieve 80% of the benefit, but, often, none.</p>
<p><a href="http://www.utas.edu.au/australian-innovation-research-centre/people/people/professor-jonathan-west">Jonathan West</a>, the Harvard Professor and now repatriated Tasmanian, studied the systems of successful nations. He emphasises the importance of mobilising substantial investment resources and devoting these to inherently risky undertakings, in preference to other potential investments.</p>
<p>West uses the stellar example of the development of Taiwan’s semi-conductor industry from the 1970s - which involved significant government-funded venture capital, dedicated science and industrial parks, tax and R&D incentives and so on.</p>
<p>It was only after 15 years of Taiwanese government absorption of risk and government input of resources that the first private capital entered the industry.</p>
<p>The UK and US experiences – both quite different but both involving significant investments by government in de-risking new ventures – are instructive for Australia.</p>
<p>In the US, the Obama Administration has developed a national A<a href="http://www.manufacturing.gov/amp.html">dvanced Manufacturing Partnership</a> between what are the three legs of the innovation tripod: government, academia and the private sector. Research priorities are given life, in evolutionary terms, by the close cooperation of a strong advanced manufacturing sector, and by commitment of resources by government.</p>
<p>Commercialisation in collaborative centres in the UK also brings nascent technological advances into being: in the production of cell therapy products, in new processes for offshore renewable energy, in satellite technology, in the manufacture of new transport infrastructure and traffic management technology, in clean energy systems, and in medicines.</p>
<h2>Serendipity matters</h2>
<p>It is the co-evolution of ideas – the serendipity of research developing alongside its application – that matters here. New ideas often result from applications that were not intended by the original innovator.</p>
<p>This week’s announced <a href="https://theconversation.com/industry-growth-centres-to-link-business-and-science-32965">“Industry Growth Centres”</a> across five broad sectors will need to focus national resources on where we can win rather than a scattergun approach. We need to undertake a brutal assessment of all of our research capabilities - which institutes are producing what the world wants and needs - and we need the allocation of our ARC grants scrutinised by industry leaders.</p>
<p>We need to look at whether our investment settings encourage venture capital, and if our tax base is globally competitive.</p>
<p>It is in the nation’s interest to build an innovation ecosystem that is rigorously and continually reviewed for effectiveness – so that our globally-relevant research capabilities can come to life.</p><img src="https://counter.theconversation.com/content/32374/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Pollaers is currently Chair of the Australian Advanced Manufacturing Council.</span></em></p>Our lives are surrounded by the ideas and creations of thousands of people. The magic of flight, or computers, or vaccines, inventions and innovations we take for granted, have advanced from one idea to…John Pollaers OAM, Fellow, Faculty of Business and Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/329432014-10-15T00:48:51Z2014-10-15T00:48:51ZNew industry policy welcome, but reform process is just beginning<p>The Abbott government’s <a href="http://www.dpmc.gov.au/publications/Industry_Innovation_and_Competitiveness_Agenda/docs/industry_innovation_competitiveness_agenda.pdf">Industry Innovation and Competitiveness Agenda</a> is an economic policy statement likely to define its term in government. </p>
<p>The Agenda has four planks in the government’s efforts to boost innovation and competitiveness, including reforms that:</p>
<ul>
<li>lower the costs of doing business</li>
<li>enhance the skill base of the Australian economy</li>
<li>invest in major economic infrastructure, and </li>
<li>re-orient industry policy away from protecting declining firms and industries toward policies that promote innovation and entrepreneurship.</li>
</ul>
<p>The Agenda can in part be read as a narrative intended to make sense of the government’s economic reforms to date, but also as an attempt to lay the groundwork for economic reforms in its second term in office.</p>
<p>It seeks to frame the plethora of different policy reforms that have emerged over the last 12 months as a coherent and well thought through economic strategy. Indeed, much of what is included in the Agenda is current policy – or initiatives that are announced but not yet implemented. No doubt government will face criticism that it has relaunched and repackaged much of what it has previously promised, but not managed to deliver in full. </p>
<h2>A break with the past</h2>
<p>In some respects, the Agenda resonates with the broad directions for industry policy proposed by the Rudd Government prior to the last election. It is seeking to grapple to the same policy dilemmas - slow productivity growth, disruptive technologies, and the need to rework business regulation to meet the new policy environment post the global financial crisis. </p>
<p>Beyond that, however, the comparison fades. The most important difference centres on the extent to which government uses market-based competition to drive competition and innovation. The intention to roll back business regulation and reduce the corporate tax burden and other costs associated with doing business are central elements of the plan. This rollback extends across the board, from streamlining product and other regulatory standards through to simplifying the process for bringing a new start-up to life and hiring new employees.</p>
<p>Among the many new initiatives included in the Agenda are some long-overdue reforms, as well as some promising policy innovation. </p>
<p>Among the overdue reforms is the proposal to align taxation arrangements to favour the use of employee share-ownership schemes (ESOPs). While not widely practiced in Australia, ESOPs have become <a href="http://www.employeeownership.com.au/wp-content/uploads/2013/04/ESOP-Survey-Report.pdf">more common</a> over the last decade or so. International <a href="http://www.nceo.org/articles/studies-employee-ownership-corporate-performance">research</a> has demonstrated such schemes can enhance productivity and employee engagement and willingness to embrace workplace change. They contribute to what are commonly identified as <a href="https://theconversation.com/the-secret-to-unlocking-productivity-in-manufacturing-32369">“high performance work practices”</a>. </p>
<p>The proposal to enhance investment in STEM subjects - science, technology, engineering and maths - in secondary schooling and vocational education and training is also overdue. More contentious, however, will be initiatives in this area which seek to give industry more influence over school curricula, the planned trial of <a href="http://www.ptechnyc.org/domain/31">P-TECHs</a>, and the introduction of associate degrees that bridge training in secondary school and the VET sector.</p>
<h2>Going for growth</h2>
<p>Perhaps the core initiative, and the one that represents a significant shift from current industry policy settings, is the announcement to fund five “growth centres”. Modelled on <a href="http://www.sba.gov/about-sba/sba_initiatives/clusters_initiative">similar initiatives</a> in the US, <a href="https://www.catapult.org.uk/">UK</a> and <a href="http://www.nce-rce.gc.ca/Programs-Programmes/BLNCE-RCEE/Index_eng.asp">Canada</a>, A$188.5 million will be spent to establish growth centres in five high potential industries for government support - food and agribusiness; mining equipment, technology and services; oil, gas and energy resources; medical technologies and pharmaceuticals; and advanced manufacturing. </p>
<p>Just how these growth centres will operate, or how different they will be from previous initiatives to create <a href="https://theconversation.com/labors-innovation-plan-provides-hope-for-australian-manufacturing-12302">innovation precincts</a>, is not yet clear. Significantly, however, this initiative recognises the importance of government working collaboratively with industry to locate areas of competitive strength. </p>
<p>They explicitly recognise that, alongside competition and well-functioning markets, innovation and competitiveness requires a degree of coordination and collective action among firms, government and other industry stakeholders to be able to develop a healthy industry level “ecosystem”. Markets alone will not create a sustainable competitive advantage for small and large firms.</p>
<h2>Measuring success</h2>
<p>Whatever form they take, growth centres will, in the end, need to meet two key tests to be successful – an economic and a political one. </p>
<p>The economic test will be whether they can truly spawn new industries and opportunities for job growth – particularly where the aim is to redirect government support away from failing industries towards firms that demonstrate potential to innovate and shift into advanced, value-added manufacturing. This is a major policy shift, and one that is also long overdue. </p>
<p>The growth centres will have just four years to develop into self-funding bodies which can drive a major transformation in Australian industry. This may be asking a great deal of them over a relatively short period of time. Arguably, the government’s investment in this initiative will need to be reviewed and a longer-term financial commitment from both government and industry will be critical. Done well, this approach should also find bi-partisan support and yield a meaningful policy framework to support the re-invention of Australian manufacturing. </p>
<p>The political test will be whether the growth centres provide enough institutional support for business to manage a period that will be marked by ongoing turbulence and disruption in many industries. Kick-starting growth may prove to be more challenging and take more time than can be anticipated. </p>
<p>In the meantime, disruption will surely generate demands for protection and subsidies to avoid job losses or underwrite the costs of weathering economic restructuring that will surely follow. The reform process enables government to bring everyone along on what may be a rough ride with many losers as well as winners. </p>
<p>This new policy agenda can also be read as a statement of future intentions - the economic policy ambitions for a second Abbott term. </p>
<p>The Agenda points to several coming reviews, including an audit of Commonwealth business regulation, the taxation white paper, financial system reforms, energy sector reforms, the long-awaited Productivity Commission review of Fair Work legislation, a review of regulation of crowd-sourced equity funds, and plans to privatise “mature” assets. </p>
<p>The past tells us that many of them, such as industrial relations reform, privatisation of public assets, and tax reform, make for a necessarily ambitious, but politically fraught, agenda.</p><img src="https://counter.theconversation.com/content/32943/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Centre for Workplace Leadership receives funding from the Commonwealth Government.</span></em></p>The Abbott government’s Industry Innovation and Competitiveness Agenda is an economic policy statement likely to define its term in government. The Agenda has four planks in the government’s efforts to…Peter Gahan, Professor of Management + Director, Centre for Workplace Leadership, Faculty of Business and Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/329552014-10-14T05:48:02Z2014-10-14T05:48:02ZCompetitiveness agenda lays path for industry-led innovation: experts react<p>The federal government has released its <a href="http://industry.gov.au/industry/Pages/Industry-Growth-Centres.aspx#content">National Industry Investment and Competitiveness Agenda</a>, committing around A$400 million towards “industry growth centres”, new tax incentives for employee share schemes, and a push for science, technology, engineering and maths (STEM) education.</p>
<p>The government has chosen to focus on five sectors for its growth centres: oil and gas, mining technology, medical technology and pharmaceuticals, food and agribusiness and advanced manufacturing, where it says Australia has a “natural advantage” it can build on.</p>
<p>Each of the five industry-led centres will receive funding of up to A$3.5 million per year, and be required to establish a plan to become self-sustaining after four years. Grants of up to A$1 million will also be on offer for the commercialisation of ideas.</p>
<p>The government said it would also reform the tax treatment of employee share schemes to support start-up companies, beginning with reversing the changes made in 2009 to the taxing point for options. There will also be new concessional tax treatment of options or shares issued by unlisted start-ups with turnover of $50 million or less.</p>
<p>The 457 visa program will also be reformed, with the process of sponsorship, nomination and visa applications for “low risk” applicants streamlined, English language requirements made more flexible, and the sponsorship approval period increased from 12 to 18 months for start-up businesses.</p>
<p>As part of its ongoing deregulatory agenda, the government will adopt a new principle that if a system, service or product has been approved under a trusted international standard or risk assessment, then Australian regulators would not impose any additional requirements for approval.</p>
<p>The government will also introduce a new “Premium Investor Visa” offering a faster 12 month pathway to permanent residency, for those meeting a A$15 million investment threshold.</p>
<p>A symbolic A$12 million of funding will be provided for programs designed to improve the focus on STEM subjects in primary and secondary schools. </p>
<p>The government will also establish a “Commonwealth Science Council”, chaired by the prime minister, to advise the government on areas of national strength, current and future capability and on ways to improve connections between government, research organisations, universities and business.</p>
<p>The government will host a series of roundtable sessions in coming months to consult with business and the research sector on the policy.</p>
<p>A panel of experts responds below.</p>
<hr>
<p><strong>Joanna Howe, Lecturer in Law at University of Adelaide</strong></p>
<p>Today’s announcement by the government of a number of changes to the subclass 457 visa program represents a missed opportunity to properly reform Australia’s approach to temporary skilled migration. There is genuine public concern that temporary migrant workers are being used in areas where no skill shortage exists, thereby displacing job opportunities for Australian workers. This point was recognised by the recent independent review into the subclass 457 visa program, with the final report identifying that two core questions of the program, namely “proving that the position cannot be filled by a local worker and determining the skilled occupations that are used for the programme” are “not well served by the current policy approaches and can be improved by adopting a more robust evidence- based approach”. Yet, the government has sidestepped both these issues in the reform package announced today and ignored the report’s recommendations for a ministerial advisory council to provide expert advice on the composition of the occupational shortage list used by employers to access temporary migrant labour.</p>
<p>The decision to streamline the application process for low risk applicants is a positive one, as is the proposal to increase the sponsorship approval period for start up companies. Yet, ironically, a reform that would offer far more efficiency gains and was recommended by the independent review, but has not been adopted by the government, is the abolition of employer-conducted labour market testing. This would greatly aid employers and the Department of Immigration but the government seems unwilling to tackle this reform because it would be difficult to get through the Senate. Yet, the weight of scholarly evidence and indeed, the OECD’s recommendations on this point, suggest that independent labour market testing is a far better alternative.</p>
<p>A concerning development is the government’s proposal to weaken the English language requirement. This is currently a minimum of five across the four competencies (reading, writing, speaking and listening). The main function of the English language proficiency requirement is to ensure a 457 visa holder will not be exploited. If temporary migrant workers have lesser language skills, this could leave them <a href="https://theconversation.com/457-visa-reformers-should-remember-our-shady-skilled-migration-history-27717">vulnerable to potential health and safety risks</a> in the workplace. </p>
<p>Another concerning reform is the proposal to freeze the Temporary Skill Migration Income Threshold (TSMIT) at its current level and to review the role of the TSMIT in two year’s time. Like a strong English language requirement, the TSMIT has a key role in protecting the integrity of the program overall. It was introduced following the Deegan Review into the 457 visa to act as a salary floor ensuring a visa holder’s wage was sufficient to maintain a reasonable standard of living given the lack of access to welfare and tax benefits available to local workers.</p>
<hr>
<p>*<em>Ian Maxwell, Adjunct Professor at RMIT
*</em></p>
<p>The concept of promoting STEM skills in schools addresses the continuing slide in the quality of high school graduates in these areas – as I have heard anecdotally from friends that teach these subjects at university. In fact, in Australia we have far too many university graduates in science and engineering and the result is that (a) there is downwards pressure on graduate salaries (further reducing the quality of people entering these degrees) and (b) there is an increase in the number of people that have science and engineering degrees that go onto to work in unrelated areas. My personal preference would be to promote special purpose high schools with a focus on science and engineering where we can put our limited resources into a fewer number of highly skilled and motivated students.</p>
<p>The idea that we in Australia accept international standards and risk assessments for certain product approvals is a great one. For too long, especially in the more mature industries, we have seen oligarchies in Australia exploit standards organisations in order to keep out foreign competition. This has had two unwanted consequences; firstly, it has put upward pressure on relative prices for Australia customers (due to less competition), and, secondly, it has acted as a disincentive for Australian producers to expand their focus overseas. The question is whether this new principal only for newly emerging standards, or if this brush will also be run over existing standards.</p>
<p>The government says it will provide A$188.5 million to fund “Industry Growth Centres” in five key sectors. There are very few details so it is hard to comment on this one other than to say that this represents a (mean) expenditure of $37 million for each of the so-called growth sectors and it would be pretty silly to expect any significant national economic outcomes from such low levels of expenditure. </p>
<hr>
<p>*<em>Jim Minifie, Productivity Growth Program Director at Grattan Institute
*</em></p>
<p>For a refreshing change, the Industry and Competitiveness Agenda is a readable document that clearly sets out what the government has done and aims to do in pursuit of four goals (business environment, labour force, infrastructure, industry policy).</p>
<p>While the “have done” list includes some questionable calls like ending carbon pricing and the “will do” list includes some questionable commitments like the paid parental leave scheme, the concrete new initiatives announced in the Agenda look broadly sensible and do not cost much. Three of the initiatives could turn out to be big contributors to startups, gains from trade, and skilled migration. The program offers substantial spending on apprenticeships, and several smaller funded programs. </p>
<p>Reforms to the Employee Share Scheme (ESS) taxation arrangements are overdue. Paying employees partly in shares or share options can be a great way for cash-strapped start-ups to reward employees while burning through a minimum of cash, but since 2009, Australian start-up employees could have to pay tax at issuance. Start-up employees have been in the absurd position of having to pay tax well before their shares can be sold for cash. While some start-ups have found ways around the restrictions, many say the rules sorely limited the value of share schemes in Australia. Shifting the point of taxation back will make make it much easier for start-ups to make attractive offers to their employees. </p>
<p>A tougher test on the creation of Australian standards is also welcome and overdue. Before a new Australia-specific standard can be set, regulators will need to show that there is a good reason to introduce one. Government will also apply the new test to existing Australian standards, not only new ones. Standards can be a two-edged sword: they can reduce the costs to buyers of assessing quality; but they can also be used to benefit firms whose products meet the standards by restricting competition. The reforms should also help Australian exporters achieve production scale by using a single certification for domestic and international markets.</p>
<p>Reforms for skilled migration are sensible as well, if relatively minor. Research overseas has shown that skilled migrants do not take jobs away from locals, but instead can boost their incomes. Skilled migrants can make locals more productive, start businesses that employ locals, or help local firms plug into international networks. Anecdotally, technology firms in some cases have had difficulty attracting top international talent. It’s less clear whether clearing the way for so-called significant and premium investors will add much value; in principle, reducing the barriers to equity capital inflow could be useful as investors can start new businesses where they live. Australia’s dividend imputation rules do probably bias foreign investment towards debt rather than equity, so there may be a broader case for to attract foreign equity including through investor visas. </p>
<p>STEM education in Australian schools has lagged, with enrolments falling in the 2000s, and many schools saying they are short of teachers with strong mathematics and science qualifications. While questions can be raised about whether the demand is there for tertiary STEM graduates, it’s much easier to make the case for stronger secondary STEM education, which creates options for students and builds foundation skills. </p>
<p>Finally, five Industry Growth Centres will get seed grants and will be able to apply for further funding. The model brings to mind the Innovation Precincts of the previous government. The focus areas (food/agribusiness; mining technology and services; oil, gas and energy; medical technology; and advanced manufacturing) are not a million miles from those suggested by the Business Council of Australia’s work with McKinsey. The logic for a subsidy is that firms can be reluctant to innovate where they expect others will capture benefits. </p>
<p>Australian universities do not score well on “translation” to industry. The logic for the sectors chosen seems to be that the payoff may be biggest in large or rapidly developing sectors. While a case can be made for action, the evidence base for the value of such programs is relatively weak. As long as the programs are built from the beginning with evaluation built in (and funded), they have some chance of paying off and will at least teach us about what doesn’t work. </p>
<hr>
<p><strong>John Rice, Associate Professor in Strategic Management at Griffith University</strong></p>
<p>The promise of $185 million to establish five new “Industry Growth Centres” (in the areas of food and agribusiness, mining equipment, technology and services, oil, gas and energy resources, medical technologies and pharmaceuticals; and advanced manufacturing sectors) can be seen as a re-packaging of funds that have previously supported the eleven “Industry Skills Councils”, albeit with a focus on innovation rather than skills and training quality. Handily, the acronym doesn’t change!</p>
<p>Notable sectoral absences among the newly established centres are the service industries in Australia – clearly not a good omen for those industries that have not been favoured by inclusion in the narrow mandates of the new centres. In terms of governance arrangements, the new centres are clearly industry driven, while the sidelined skills councils were, to a greater or less degree, tripartite in nature with a clear role for unions.</p>
<p>What is lacking is a clear policy framework for industry development that encompasses skills, investment and innovation. The previous Labor government created a bricolage of bodies in the skills and innovation area with overlapping responsibilities (that even insiders struggled to understand), extraordinary bureaucratic waste and scams that siphoned State VET funding.The current government has rationalised many of these bodies, but today’s announcements in VET and innovation replace the bricolage with an equally unacceptable patchwork.</p>
<p>The Minister also announced half a million dollars in funding to assess the development of P-TECH-like programs in Australia. These have been developed in the US and link private employers, educational providers and (generally) low socio-economic students. In Australia, private firms have accessed public funds previously to train their employees – and generally this has not gone well. </p>
<p><a href="http://www.theaustralian.com.au/higher-education/scrap-employer-incentives-new-report/story-e6frgcjx-1226111222799">Anecdotes of burger flippers being surreptitiously enrolled</a> in VET programs as a means of siphoning public funds haunted the sector a few years ago. It is important that P-TECH does not emerge as a similar scam.</p>
<p>Suspending my natural cynicism, however, linking employers and trainees is a good thing if it is accompanied by a sense of mutual obligation. It would be tragedy to invest heavily in narrow skills sets that become worthless if a multinational employer opts to leave Australia. As such, skills should be relevant and generic, and not focused too narrowly on the processes and systems used in specific firms.</p>
<hr>
<p>*<em>Rachel Wilson, Senior Lecturer at University of Sydney
*</em></p>
<p><a href="http://www.tandfonline.com/doi/pdf/10.1080/02188791.2014.924387">Research</a> has shown that educational attainment (reading, science and numeracy on PISA) and IMF measures of competitiveness are highly correlated. In Australia, however, we have <a href="http://eprints.qut.edu.au/73153/1/Continuing_decline_of_science_proof.pdf">declining participation</a> and <a href="http://www.acer.edu.au/documents/PISA-2012-Report.pdf">levels of attainment</a> in STEM education that threaten future economic competitiveness. Contrast this with the massive investment, strong participation and high levels attainment in STEM among our competing and neighbourhood economies, like <a href="http://www.acola.org.au/PDF/SAF02Consultants/Consultant%20Report%20-%20China.pdf">China</a>, or <a href="http://www.acola.org.au/PDF/SAF02Consultants/SAF02_STEM_%20FINAL.pdf">with others</a>, and the picture looks grim – we risk being left behind. Therefore this policy attention is very welcome and needed.</p>
<p>My concern is that it is still a very modest investment and is not targeted for the best bang for our buck. Provision of teaching resources is important but not as important as teacher professional development programs – particularly those focusing on teacher pedagogical content knowledge in STEM. There is evidence that those entering the teaching profession also have declining participation and attainment in science, math and technology; and current efforts to lift teacher quality are not focused on these areas. There is no requirement for teachers to have completed intermediate level maths or any science for HSC – and many do not.</p>
<p>The focus on a pilot program and Summer schools for students too, while admirable, will not have wide reach. Indeed there have been many such programs promoting students interest in STEM and innovation in schools over the past two decades, yet concurrently many students have dropped study in these fields and our attainment levels among 15-year olds are <a href="http://www.acer.edu.au/documents/PISA-2012-Report.pdf">declining</a>. More attention needs to be paid to teacher knowledge and pedagogy in STEM, in early childhood through to university, and on structural policy issues relating to how STEM is valued, or not, within educational curricula. In NSW the requirement for either maths or science at HSC was dropped in 2001 and <a href="http://www.afr.com/p/national/education/australia_maths_crisis_I3P1MZ7bcKJKqiyOSnGDVM">since then numbers have been in decline</a>. We cannot hope that programs to lift interest among students, so proliferate among education systems worldwide, will alone make a difference to our current position. Braver reform is needed.</p>
<hr><img src="https://counter.theconversation.com/content/32955/count.gif" alt="The Conversation" width="1" height="1" />
The federal government has released its National Industry Investment and Competitiveness Agenda, committing around A$400 million towards “industry growth centres”, new tax incentives for employee share…Charis Palmer, Deputy Editor/Chief of StaffAlexandra Hansen, Deputy Editor and Chief of Staff, The Conversation AUNZLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/259092014-04-28T20:29:34Z2014-04-28T20:29:34ZBig ticket items missing from ‘corporate welfare’ discussion<p>The fuss about corporate welfare, deemed “<a href="https://theconversation.com/means-testing-and-co-payments-part-of-fixing-the-budget-hockey-25878">unsustainable</a>” by Treasurer Joe Hockey, appears almost diversionary considering the relative size of industry assistance in overall government spending.</p>
<p>Industry assistance made up around 2.5% of government expenditure in 2011-12, the most recent data. At A$9.4 billion for outlays plus tax breaks it was tiny relative to GDP of $1.47 trillion for that year. Moreover, attention appears to be focused quite selectively on budget outlays, and is lacking toward the other side of the budget, the substantial tax breaks and tax avoidance opportunities which mainly benefit the big end of town. </p>
<p>If “corporate welfare” is taken to mean industry assistance, it is not a straightforward or transparent measure. Industry assistance is a combination of government expenditure, tax reductions and tariff protection, plus any regulatory measures, any or all of which may favour some activities over others. Such assistance may be granted according to the type of industry, or granted on an ad hoc basis to specific companies, often big ones. Industry assistance also varies counter-cyclically, increasing with the GFC and drought, offering a beneficial stabiliser effect on the economy.</p>
<h2>How big is industry assistance?</h2>
<p>Based on the most recent Productivity Commission <a href="http://www.pc.gov.au/annual-reports/trade-assistance/2011-12">report</a>, overall assistance to industry, including tariffs, is lower than it has ever been in real terms. </p>
<p>Tariff assistance has fallen tenfold over 40 years, from around 30% of industry output in 1970-71 to around 3% in 2011-12. In 2011-12 the Commission estimated industry assistance from tariffs to total $7.9 billion, less the cost of tariffs on imported inputs of $6.8 billion, amounting to a net $1.1 billion. </p>
<p>Total assistance from the government budget was estimated at $5.1 billion in expenditure plus $4.3 billion in tax concessions, for a total of $9.4 billion. This figure as a share of government expenditure is slightly lower but very similar to that of the previous five years. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=539&fit=crop&dpr=1 600w, https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=539&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=539&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=678&fit=crop&dpr=1 754w, https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=678&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/47137/original/m7gx8jn9-1398670266.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=678&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Excludes tariff assistance.</span>
</figcaption>
</figure>
<p>However assistance through government expenditure and tax concessions is not necessarily manifest in the government budget and details may be buried elsewhere. This was the case with a lot of the assistance to the insurance industry after the failure of HIH in 2001. Government budget figures are highly rubbery anyway, as with any forecast, let alone one so complex.</p>
<h2>What’s missing</h2>
<p>The impact on industries of items such as the fuel tax credit of $5 billion (over $2 billion of it in mining), the practice of accelerated depreciation for the mining industry, or negative gearing which favours residential property over other industries, should be considered. Tax avoidance by larger companies appears unaccounted for.</p>
<p>It is even more difficult to compare Australia’s industry assistance with that of other countries, but it is apparently low and tends to come from tariff regimes rather than taxes and subsidies. This is the case even in industries with a big share of support such as automotive, agriculture and energy. Other rich countries have extensive government ownership in many industries, which makes comparison more complex.</p>
<h2>Primary production is still winning</h2>
<p>Figures are generally small in relation to the size of industries, and in millions rather than billions. <a href="http://www.pc.gov.au/annual-reports/trade-assistance/2011-12">According to the Productivity Commission</a>, beneficiaries of more than $200 million in government expenditure in 2011-12 included sheep, beef cattle and grain farming ($213 million, decreased due to the end of drought), mining ($400 million, increased), metal and metal products ($220 million, increased) and motor vehicles and parts ($580 million, increased).</p>
<p>Tax concessions of more than $200 million in 2011-12 went to sheep, beef cattle and grain farming ($355), mining ($300 million), financial and insurance services ($845 million), property, professional and admin services ($418 million), and arts and recreation ($234 million). </p>
<p>Industry assistance also includes tariffs, which the Productivity Commission indicates amounted to a mere $1.1 billion overall, once the cost of tariffs on imported inputs is subtracted from the gains from output tariffs. The effect of tariffs is a net positive sum for manufactures and negative for services. Horticultural industries including bananas faced net protection worth $146 million in 2011-12.</p>
<p>While noting the small scale of assistance, the combined assistance measures appear to favour primary production and manufacturing over services. The service exceptions are electricity, gas, water and waste services, financial and insurance services, and arts and recreation.</p>
<h2>Remember the market failure test</h2>
<p>There is a case for industry subsidy or tax where there is market failure. Market failure occurs where the price and quantity of goods and services produced doesn’t adequately reflect the benefit to the economy or society of the activity, for instance in infrastructure and utilities, health, education and the arts. </p>
<p>Government assistance is also well recognised as promoting technological development where private industry is unlikely to do this on its own. Funding for research and development includes that for the CSIRO and the universities. Australia has amongst the lowest rate of government support for innovation of the richer group of countries and even lower <a href="http://melbourneinstitute.com/downloads/policy_briefs_series/pb2014n01.pdf">rates</a> of invention.</p>
<p>However addressing market failure appears not to be the reason for corporate welfare currently in many cases. Moreover some government assistance can be judged to be detrimental to society. This includes the highly subsidised logging in native forests in Australia, and tax breaks to resource intense energy producers where it encourages resource using and polluting activity. </p>
<p>A coherent industry policy calls for application of a set of criteria relating to the long-term path of development that is appropriate for Australia’s resources, human, physical and intellectual. But this tends to run up against short term political objectives time and again. In the scheme of things, “corporate welfare” appears a storm in a teacup.</p><img src="https://counter.theconversation.com/content/25909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Margaret McKenzie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The fuss about corporate welfare, deemed “unsustainable” by Treasurer Joe Hockey, appears almost diversionary considering the relative size of industry assistance in overall government spending. Industry…Margaret McKenzie, Lecturer, School of Accounting, Economics and Finance, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/230932014-02-13T03:28:03Z2014-02-13T03:28:03ZCar manufacturing numbers just don’t stack up<figure><img src="https://images.theconversation.com/files/41417/original/8vwxy47x-1392250932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Efficient manufacturing depends largely on scale, and Australia's car production numbers have fallen.</span> <span class="attribution"><span class="source">AAP/Adi Weda</span></span></figcaption></figure><p>Now that the final nail has been hammered in to the car industry’s coffin, what does it mean for the Australian economy? </p>
<p>As always, the data is a good place to start. </p>
<p>Efficient manufacturing depends largely on scale - production of cars in Australia has <a href="http://www.fcai.com.au/sales/monthly-production-volumes">fallen</a> from 324,118 in 2008 to 210,538 in 2013. That 2013 number represents less than 20% of the <a href="http://www.fcai.com.au/sales/-2013-new-vehicle-market">1,136,227 cars purchased</a> by Australians in that year. None of the top four selling cars in 2013 - in order: Toyota Corolla, Mazda, Toyota HiLux and Hyundai i30 - are made in Australia. </p>
<p>What about employment? In 2012, 51,931 workers were <a href="http://www.innovation.gov.au/industry/automotive/Statistics/Pages/default.aspx">employed</a> in the entire automotive industry, a decline from 77,776 in 2003. Only 11,053 of those in 2012 were directly employed in car manufacturing. The latter is about 1.2% of the <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Nov%202013?OpenDocument">total manufacturing workforce</a> of about 960,000. </p>
<p>In 2013, the monthly fluctuations, up or down, in full time persons employed in Australia averaged 5,600. That’s half the entire car manufacturing workforce. So a loss of car manufacturing employment would be a blip in terms of the national employment numbers.</p>
<p>At the same time profitability has been tanking. The <a href="http://www.innovation.gov.au/industry/automotive/Statistics/Pages/default.aspx">local manufacturing sector</a> made a trading loss of A$670 million in 2012, compared with a profit of $313 million in 2003. Despite declining employment, declining profitability and virtually zero productivity growth over 10 years, total wages and salaries paid by the industry have increased every year – by 2.8% in 2012 for example total government (read taxpayer) assistance to the car manufacturing industry was valued by the Productivity Commission at over A$1 billion in 2012, more than half of which was subsidies in the form of cash and special tax concessions, the remainder being the value of tariff assistance. The annual cash subsidies have been fairly steady over the past 10 years although the tariff assistance has declined. This rate of assistance is <a href="http://www.pc.gov.au/annual-reports/trade-assistance/2011-12/media-release">more than twice as high</a> as the average received by other manufacturing industries. </p>
<p>In short, this has for many years been a manufacturing industry in steady decline, losing sales and shedding jobs, making losses, yet receiving taxpayer assistance way in excess of other industries.</p>
<h2>Why is car manufacturing special?</h2>
<p>The idea that car manufacturing is unique and deserves special taxpayer aid because it is a laboratory for core skill development, or because it is part of a <a href="https://theconversation.com/losing-the-car-industry-means-we-risk-our-technology-23082">long supply chain</a> linking thousands of jobs, is highly exaggerated at best. The same arguments could be applied to just about any industry such as tourism, higher education or health. They all invest in skill formation and are linked to a long supply chain. </p>
<p>Another overblown <a href="https://theconversation.com/what-the-departure-of-toyota-holden-and-ford-really-means-for-workers-23137">claim</a> is that the car manufacturing regions in South Australia and Victoria would be crippled by the loss of jobs as the multiplier effects of lost spending by workers ripple through the local communities. Research suggests that ultimately up to 13,000 workers could lose jobs, directly and indirectly, from the <a href="http://www.adelaide.edu.au/wiser/docs/GMHNov2013ReportFinal.pdf">closure of a single GM plant</a> in Elizabeth in South Australia. However this looks like an absolute worst case scenario.</p>
<p>The recent industry announcements are not like the closure of Mitsubishi’s plant in Tonsley Park South Australia, where the decision was announced in February 2008 and the factory closed its doors the next month. The workers of Holden and Toyota have nearly four years to plan their futures. These workers have skill and experience. Some will find other full time jobs in manufacturing, some will change careers perhaps going into small business, some will work part-time and some will probably retire. And they will receive good redundancy pay. We can’t just assume that all of their labour and all of their spending will be completely lost.</p>
<h2>Where tax dollars go</h2>
<p>Jobs across the country will also be supported by the saving to taxpayers of the hundreds of millions of dollars that have been pumped into car manufacturing every year. Governments can spend the money on health, education, or paying off debt – yesterday’s spending that was unfunded – which in turn means lower taxes in the future. Whatever the government chooses to do with the saving, the spending returns to the economy, directly or indirectly, which supports jobs.</p>
<p>It’s always worth remembering that for every dollar we take from a taxpayer and try to give to another taxpayer, business or welfare recipient, we lose about 20 cents. This is the disincentive effect of taxes on labour participation. The more we take from taxpayers, the bigger these so-called deadweight losses.</p>
<p>The fact that taxpayers in other countries pay for jobs in their car manufacturing industries is not a good reason for us to do it. Their industries may be inherently more profitable than ours through larger scale, lower labour costs and a more competitive exchange rate. In any case, the reasons above for not subsidising car manufacturing apply to other countries. </p>
<p>The core issue in this debate is the role of the government in managing the changes that continually arise from new technologies and global competition – how much support to provide for the losers and in what form. This is not a new issue. </p>
<p>Iconic brands like Heinz, Speedo and Aerogard are no longer manufactured in Australia because we can buy them more cheaply when they are made overseas. Do any of today’s modern secretaries and PAs want to return to the typing pool? Or as Paul Keating famously said back in 2000: “Did we ever hurt anybody liberating them from the car assembly line?”</p><img src="https://counter.theconversation.com/content/23093/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ross Guest does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Now that the final nail has been hammered in to the car industry’s coffin, what does it mean for the Australian economy? As always, the data is a good place to start. Efficient manufacturing depends largely…Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231242014-02-13T01:38:51Z2014-02-13T01:38:51ZManaged decline to rapid demise: Abbott’s car industry gamble<figure><img src="https://images.theconversation.com/files/41408/original/zzy8wv2p-1392245972.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Tony Abbott is betting the rapid demise of Australia's automotive sector can be contained politically.</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p>For the past 30 years, Australian automotive industry policies can be characterised as managed decline. Beginning in the 1980s with the Button Plan, the aim of policy was to consolidate the industry and avoid the economic and political fallout that would accompany its rapid demise.</p>
<p>Managed decline was never the stated aim of automotive assistance. The goal was to create a smaller industry that could compete against imports and develop an export focus. Managed decline has been, however, an implicit part of automotive policies because the removal of protection and the continual downsizing of the industry progressively reduced the future costs of its demise.</p>
<p>Like a married couple trying to maintain a failing relationship, neither government nor industry could admit that there was no long-term future. Both parties were unwilling to embrace the sort of radical restructuring and interventionism that might have enabled the Australian industry to achieve scale by hooking into growing regional production structures. Instead, governments encouraged consolidation of the long-standing industry structure as a trade-off for more assistance, which, in turn, made production viable over the short-to-medium term.</p>
<p>The number of true believers in an automotive future waned as the industry declined. Increasingly, many Australians believed that the industry could survive only if governments committed ever more budgetary resources. In recent years, almost immediately after various governments had arranged new plans, the industry was soon demanding more assistance that took into account the new “unforeseen difficulties” the sector faced.</p>
<p>Managed decline can only go on for so long. Eventually the process of decline makes demise palatable and less destructive. While the Abbott government argues it is not responsible for the industry’s destruction, by refusing to engage with the industry on new funding arrangements, it has deemed that managed decline is no longer necessary.</p>
<p>In the short-term, the Abbott government has wagered that the political costs of moving from managed decline to rapid demise can be contained. Over the longer-term, it has gambled that other industries can cover the economic costs and that the manufacturing of cars has no wider benefits in terms of strategic capabilities or productivity.</p>
<p>The demise of the automotive industry and continuing decline of the wider manufacturing sector signals another victory for economic liberals who have long argued that governments should facilitate rather than fight the reallocation of economic resources from manufacturing to industries such as mining and gas in which Australia has a comparative advantage. It also signals the defeat of those interventionists who argue that Australia needs a strong manufacturing sector as an integral component of a wealthy and diverse economy.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The number of true believers in the automotive industry has waned with the industry’s decline.</span>
<span class="attribution"><span class="source">Joe Castro/AAP</span></span>
</figcaption>
</figure>
<h2>Managed decline in practice</h2>
<p>Since the sale of Chrysler’s plant to Mitsubishi in 1980, policymakers have slowly managed the decline of the automotive industry. The process began in earnest with the Button Plan of the Hawke Labor government, which aimed to reduce the number of models produced in Australia from thirteen to six and the number of car manufacturers from five to three. </p>
<p>During the Howard years, policy towards the automotive industry shifted towards political expediency and while the profit performance of the industry improved during the early 2000s, the industry went into a funk as the resources sector began to boom. The Howard government had no faith in industry policy but did not want to be the government that presided over the final demise of the industry.</p>
<p>The Rudd government re-badged its assistance to the industry as co-investment, but was unable to produce an automotive industry that could survive without continuing and significant monetary injections. In 2008, it announced “A New Car Plan for a Greener Future”. The initially positive mood generated by the prospective investment soon turned sour and it was not long before the industry was once again pleading for more assistance. Mitsubishi’s final closure in 2008 represented another stage in the process of managed decline. </p>
<p>While Rudd provided rhetorical support for the industry and his industry minister Kim Carr truly believed in its future, the global financial crisis limited the development of new forms of assistance that might have enabled the industry to restructure and survive over the longer term. For Labor the emphasis eventually became industry survival rather than development.</p>
<p>In February 2011, Labor cut the A$1.3 billion Green Car Fund, an integral part of the wider assistance package, to pay for flood reconstruction. With that cut, Labor revealed it had abandoned any real hope for an alternative green-focused future for the industry. In May 2013, Ford Australia confirmed it would end local vehicle production in October 2016.</p>
<p>The incoming Abbott government faced a choice between further assistance for Holden and Toyota and the components sector or maintaining the depleted assistance regime set up by the Rudd government. Failing to engage with Holden and Toyota to create a new plan was a gamble that significant sunk costs would mean a continuation of existing production schedules. The end result was Holden’s December announcement that it would cease production by 2017 and Toyota’s February announcement that it would too.</p>
<h2>The fallout?</h2>
<p>Losing a significant industry like the car industry at the same time as mining investment continues to decline will cause problems for the Australian economy and workers. The demise of the industry does not mean an end to budgetary outlays as the government will have to assist the large number of workers affected and provide funds to encourage alternative economic development.</p>
<p>Nevertheless, having the industry announce an end to production in the early stages of its term of office may restrict the electoral consequences for the Abbott government, as might holding an election before the end of manufacturing in 2017. However, if the economy goes into recession in 2015 because of declining Chinese demand and high household indebtedness, voters might see the “decision” to hasten the demise of the industry as an important component of economic policy indifference and incompetence. </p>
<p>Alternatively, it is possible that the long-running process of managed decline has instilled in the Australian population an acceptance that the demise of the industry was inevitable.</p><img src="https://counter.theconversation.com/content/23124/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Conley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For the past 30 years, Australian automotive industry policies can be characterised as managed decline. Beginning in the 1980s with the Button Plan, the aim of policy was to consolidate the industry and…Tom Conley, Senior Lecturer, School of Government and International Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231372014-02-12T19:33:51Z2014-02-12T19:33:51ZWhat the departure of Toyota, Holden and Ford really means for workers<figure><img src="https://images.theconversation.com/files/41355/original/xjyp9t69-1392201158.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The impact of job loss on car industry workers is multifaceted, and those arguing 'better jobs' will emerge could be fooling themselves.</span> <span class="attribution"><span class="source">Julian Smith/AAP</span></span></figcaption></figure><p>People change jobs constantly, and the jobs lost in car manufacturing closures are insignificant in the context of total job changes - no different to everyday job changes. So say some commentators opining on the end of car manufacturing in Australia. The problem is, they’re wrong.</p>
<p>In reality, car industry job losses will be concentrated in particular localities and particular occupations at particular times, creating concentrated pools of workers with similar skills and experiences vying against each other for the relatively narrow range of jobs that suit their skills and experiences. This creates a long job queue that will take a long time to disperse. </p>
<p>Only the most highly skilled and well-connected among the job losers will find work in jobs that use their existing skill complements. There’s often a loss of skill, a loss of income in the period between job loss and eventual reemployment, and lifetime income reduction as a consequence of starting again at the bottom rung in a new occupation. </p>
<p>A small number of workers will flourish and do better than in their previous job; this was the case with about 2% of clothing workers but perhaps 20% of Ansett workers, for example. The concentrated nature of these job losses demands intervention to minimise adverse social impacts.</p>
<p>Potentially, job losses include not only the workers who are directly affected in car and component manufacturing plants but also workers in all those firms that supply those plants, from accountants to engineering consultants to cleaners, not to mention the local stores, lunch bars and services that workers buy with their wages. </p>
<p>The numbers of businesses that rely on auto-related work is much larger now than it was in the 1980s after tariff cuts because in the 1980s restructuring for “lean” production outsourced non-core activities. Some submissions to the Productivity Commission last year put these employment “multipliers” at 4.4 in South Australia, suggesting that for every 1,000 car maker jobs lost, 4,400 other jobs will disappear. In Detroit, the automotive multiplier effect has been estimated at 3.6. Note that the Productivity Commission rejected the multiplier effects argument as a justification for industry assistance, but based that conclusion on the questionable authority of a staff research paper. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=550&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=550&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=550&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">With the departure of any major industry player comes the demise of support businesses, like this one at a former Ansett terminal.</span>
<span class="attribution"><span class="source">Julian Smith/AAP</span></span>
</figcaption>
</figure>
<h2>Which workers will be hardest hit?</h2>
<p>Workers who lose their jobs at a time of economic expansion fare much better than those who lose their jobs in a recession, when vacancies are scarce. The Mitsubishi and Ansett airlines workers, for example, fared better in the longer term than automotive workers who lost their jobs in the tariff-reduction related restructuring during the 1990-92 recession. </p>
<p>It would be helpful if policymakers tried to manage closure dates to avoid automotive job losses occurring at the same time as anticipated job losses in mining construction. At a minimum, the government needs to negotiate to ensure that Holden, Ford and Toyota close at different times. If Ford closed in 2016, Holden in 2017 and Toyota in 2018, the labour market would have longer to sift out with fewer casualties.</p>
<p>The employment prospects of automotive workers who are over 45 year of age are bleak regardless of their skills. Those with poor English language skills will also face considerable challenges. Policy interventions need to be sensitive to established social structures, and not assume that workers will be in position to find jobs outside an expected stereotypical range.</p>
<p>Retrenched workers that live in neighbourhoods with large numbers of unemployed workers – that is, in automotive sector feeder suburbs – will have poorer outcomes in the longer term. Younger workers without dependents or financial commitments are likely to relocate, but those with teenage children or a working spouse will face insurmountable barriers to relocation. Some marriages will end as the need to work wins out over family. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Abandoned factories are a byproduct of the demise of Australian manufacturing.</span>
<span class="attribution"><span class="source">Author</span></span>
</figcaption>
</figure>
<p>In previous large-scale retrenchments, housing prices have fallen in the most severely affected neighbourhoods as housing demand stalls. Those who relocate will realise a financial loss. In addition to the costs of relocation, moving to a location where jobs are more plentiful is likely to involve higher housing costs. Costs aside, people with strong community links are disinclined to relocate and will accept diminished occupational status instead. This outcome is a loss to the nation.</p>
<p>Those workers who are financially secure or who have a spouse in full-time work can usually afford to wait for an opportunity that maximises their use of skills and accords with their interests. Those in financial stress will have no option but to take any job that provides income. But careers have trajectories and the “any job” option is not the best option for sustaining a career. </p>
<p>Social security rules – on assets and savings - are going to penalise those former autoworkers that have saved and invested; while former colleagues who lived from week to week will qualify for full if meagre benefits. Free financial counselling for autoworkers before they finish work would help them know their position and negotiate with financial institutions regarding mortgages and loans.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=487&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=487&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=487&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some Ansett workers were able to find better jobs, but others did not fare as well.</span>
<span class="attribution"><span class="source">Dan Peled/AAP</span></span>
</figcaption>
</figure>
<h2>Facing up to harsh realities</h2>
<p>While policymakers like to imagine that workers in “transitional” labour markets are accustomed to and comfortable with job change, in fact there will be significant numbers of mostly loyal and long-serving workers for whom job loss is going to trigger a significant personal crisis, perhaps leading to suicide. </p>
<p>The circumstances of the retrenchment have a lasting impact on the outcomes of mass job losses. In a nutshell, those people who believe that they have been mistreated or singled out in some way have significantly poorer outcomes. Dramatic and unexpected shutdowns and lock-outs actively produce poorer outcomes, especially for people who took out a loan the week before the event. The longer the warning of impending closure, the more time people have to adjust to the idea and plan for new circumstances before they have to cope with the reality. </p>
<p>The people most at risk – as the case of Ansett airlines demonstrated – are those who view their workplace as a family and rely on workmates for social interaction. A second highly vulnerable group are employers in failing small firms who feel responsible for their workforce and carry the weight of failure. Sadly, loyalty and commitment puts workers at more risk. In the Ansett case, self-help groups of former workmates were useful. The establishment of automotive “men’s sheds” in affected suburbs would provide a venue for maintaining attachments and connecting to support services. </p>
<p>The adjustment has already started. The most able workers are going to be headhunted or will find better jobs quite quickly. If they are replaced, the replacement will be of a lower calibre. By the time of closure, remaining workers are likely to be less attractive to employers. </p>
<p>Some component manufacturers will be searching to reorient their businesses and develop export markets, but many others will be working out ways to transfer the wealth held in their business to their personal accounts and then exit for the least cost. As component suppliers exit, supply chains will be disrupted. But lots of small closures are better in labour market terms than three major events, so this process has its benefits. </p>
<p>People who lose their jobs unexpectedly are likely to take about six weeks to come to terms with their situation; during that time many will feel paralysed and unable to search for work effectively. Between six weeks and six months the more employable among the workforce will have found work, although often in less skilled jobs. Between six and twelve months the likelihood of finding work diminishes quickly, although percentages are boosted by the reemployment of affluent higher skilled workers who take longer to find and commence suitable work. After a year the chances of finding work are poor and people tend to leave the workforce, often permanently. In short, the employment impacts of unemployment get worse over time (this is called hysteresis), which is the reason why the metaphor of “recovery” from job loss, as though it was an illness, is usually misplaced. </p>
<h2>Is retraining a panacea?</h2>
<p>Retraining is a policy intervention with well documented benefits. But the options for retraining are not the same now as they were in the 1990s. The TAFE system is much diminished and those training for less skilled jobs would incur high costs unless there is ample assistance. People who have been out of the education system for a long time will need introductory preparatory courses before they can tackle skill retraining. </p>
<p>In the case of clothing workers, two years in retraining for low level vocational skills did not improve employment prospects but instead separated former workers from the labour market. The best retraining outcomes are achieved by workers who are able to turn a pre-existing hobby into a vocation (horse-training and scuba-diving, for example) and those who can upgrade existing skills at tertiary level. </p>
<p>Crucially, if retraining is to build on workers’ pre-existing skills, then it should not be targeted in “skills-in-demand” areas. Experience shows that taking groups of retrenched workers and training them all in the same occupation (security guard, forklift driver) puts them exactly where they started: competing with each other for a small number of jobs.</p>
<h2>Has anyone seen the ‘better jobs’?</h2>
<p>Some commentators have characterised the car industry closures as unleashing a round of creative destruction that will drive the growth of new industries and create new jobs. For that to be true, it is necessary to assume that existing investments in the car industry somehow inhibit the growth of other “better” opportunities. This is bunkum: if there were investment opportunities in these other sectors, the investments would have happened regardless of the automotive sector. In fact, spillover arguments would suggest such investments are now less likely without the critical mass of the automotive sector. </p>
<p>There is currently no obvious new job generator in the Australian economy except for domestic construction and infrastructure projects. This does not bode well for the future in Victoria and South Australia.</p><img src="https://counter.theconversation.com/content/23137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sally Weller's work on retrenchment outcomes in the clothing and airlines industries was funded by the Australian Research Council and the Victorian Government. In 2002 she contributed to the Howard government's redundancy policy and in 2004 she provided background material for the ACTU's test case on redundancy and termination. </span></em></p>People change jobs constantly, and the jobs lost in car manufacturing closures are insignificant in the context of total job changes - no different to everyday job changes. So say some commentators opining…Sally Weller, Australian Research Council Future Fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/225742014-01-31T03:02:12Z2014-01-31T03:02:12ZSPC Ardmona decision is fiscal policy disguised as industry policy<figure><img src="https://images.theconversation.com/files/40265/original/dm2g9k3s-1391132143.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Tony Abbott and Industry Minister Ian Macfarlane have drawn a line in the sand on industry assistance...or have they?</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p>Announcing the decision to refuse assistance to SPC Ardmona, Industry Minister Ian Macfarlane <a href="http://www.smh.com.au/federal-politics/political-news/spc-ardmona-pm-rejects-request-for-help-20140130-31pqn.html">said:</a> </p>
<blockquote>
<p>“I think it is a clear delineation of where this government believes we need to go with industry policy”. </p>
</blockquote>
<p>Coming so soon after the government’s decision not to extend assistance to Holden, it’s clear we now have a government seriously committed to a free market ideology, and which is taking a tough line on requests for industry assistance.</p>
<p>That simple interpretation, however, is belied by the prime minister’s <a href="http://news.smh.com.au/breaking-news-national/abbott-pledges-millions-for-cadbury-201308%2028-2sph9.html">promise</a> of a grant of A$16 million for the Cadbury factory in Hobart. Perhaps that can be written off as an election promise made on the run. Tony Abbott and Kevin Rudd were both making rash promises during the election campaign.</p>
<p>But beyond that, the Abbott government has deliberately made two costly concessions to industry requests for assistance. </p>
<h2>Picking winners</h2>
<p>One was its promise to retain a concession in fringe benefits tax arrangements, allowing an employer-provided car to be assessed at a very low rate for tax purposes, even if it is not used for work. The concession dates to 1986 when around 80% of cars sold in Australia were Australian-made. It was a form of assistance to the car industry. </p>
<p>Now almost 80% of cars sold in Australia are imports: most of the assistance therefore would be going to the Japanese and German car industries. The main Australian beneficiary of the concession, costing around A$450 million a year in forgone tax revenue, is the salary packaging industry, which having learnt that the previous government intended to scrap it, lobbied hard for its retention.</p>
<p>Another government concession to industry lobbying is its plan to <a href="http://www.propertyobserver.com.au/industry-news/coalition-water-down-burdensome-fofa-reforms/2014013067444?utm_source=po&utm_medium=aida&utm_campaign=latestnews">reverse</a> reforms to the financial advice industry, legislated by the previous government, which require financial advisers to disclose ongoing commissions and to act always in the best interests of clients. </p>
<p>Before these reforms were implemented <a href="http://www.ricewarner.com/images/newsroom/1374717972_Rpt%20The%20financial%20advice%20industry%20post%20FoFA%202013.pdf">actuaries</a> calculated that loose regulation of the industry was allowing consumers to be overcharged an average of A$900 each. Reversal of this reform will restore an easy income flow to the industry. </p>
<p>Both reforms are to be scrapped by the Abbott government, without any explanation why accountants helping clients to avoid tax or financial advisers living off commissions on sales are more worthy of assistance than people making cars or packaging fruit.</p>
<p>The A$25 million once-off assistance sought by SPC Ardmona is trivial compared with the ongoing cost of industry assistance, estimated by the <a href="http://www.pc.gov.au/annual-reports/trade-assistance/2011-12">Productivity Commission</a> to have cost A$10 billion in 2011-12. That’s around A$1000 a household.</p>
<p>This A$10 billion splits three ways: $5 billion in direct budgetary outlays, $4 billion in tax concessions (i.e. revenue forgone), and $1 billion in the cost of tariff protection. (This cost of tariff protection is a net cost. In round figures tariffs grant $8 billion in assistance to manufacturing, while costing $7 million to other industries).</p>
<p>In fact, the Productivity Commission in its regular assessments of the cost of industry assistance is conservative. It does not count budgetary and other support for the private health insurance industry. Nor does it count support for superannuation in the form of tax concessions and compulsory levies. </p>
<p>There are measurement problems in estimating how much of this support for health insurance and superannuation counts as industry subsidies and how much is personal benefit, but it’s clear that like all other industry subsidies they come at a cost and help direct our expenditure towards certain industries, the finance industry in the case of health insurance and superannuation, and away from other areas.</p>
<h2>Budget jitters</h2>
<p>Ardmona and Holden suffer the misfortune that their assistance was to be in the form of budgetary outlays, which, in the current fiscal environment, is where most attention is directed. Had Ardmona’s assistance been in the form of a tariff it would have been an unnoticeable A$5 or so on our household’s annual supermarket bill, and we would never have noticed it if it was in the form of a tax concession.</p>
<p>The notion that the Coalition government is holding out against industry assistance does not hold up. Its concerns seem to be more about reducing reported public expenditure than about winding back industry assistance. This expenditure emphasis puts manufacturing and related industries under the spotlight, but allows other industries, particularly those in the finance sector, to go on enjoying very generous and distorting subsidies. This is in spite of warnings from the <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2117753">Bank of International Settlements</a> that an over-sized finance sector can stifle economic growth.</p>
<p>When economists warn about the costs of “picking winners” in industry policy, they are reminding us that benefits for certain industries come at a cost to other industries and consumers. Perhaps if we weren’t so generous to the finance sector firms like Ardmona SPC wouldn’t have to beg for assistance.</p><img src="https://counter.theconversation.com/content/22574/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian McAuley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Announcing the decision to refuse assistance to SPC Ardmona, Industry Minister Ian Macfarlane said: “I think it is a clear delineation of where this government believes we need to go with industry policy…Ian McAuley, Lecturer, Public Sector Finance , University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/123032013-02-27T19:50:12Z2013-02-27T19:50:12ZPlanning for a blue-collar Australia: will Labor’s job package deliver?<figure><img src="https://images.theconversation.com/files/20641/original/vjmqqd4f-1361851412.jpg?ixlib=rb-1.1.0&rect=16%2C22%2C965%2C616&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Labor's jobs package provides its future direction for industry for the first time; but can it deliver, and more importantly, will it survive political opposition?</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p><em>Labor has finally delivered the detail of its much-awaited vision for shaping Australian industry beyond the mining boom.</em></p>
<p><em>But will it deliver? In a two part series, UWA Professor Tim Mazzarol examines the detail of the policy. Today, what can be done to help Australian industry missing on out participating on major projects.</em></p>
<hr>
<p>Last week’s <a href="http://www.pm.gov.au/press-office/gillard-governments-1-billion-jobs-plan">Plan for Australian Jobs</a> builds on some of the work undertaken last year by the <a href="http://theconversation.com/some-big-ideas-for-manufacturing-but-will-they-happen-8909">Prime Minister’s Manufacturing Task Force</a> and contains three core strategies of enhancing industry participation in major projects, boosting international competitiveness and growing the abilities of the nation’s small business sector.</p>
<p>The announcement was unfortunately crowded out by the media’s ongoing obsession with Kevin Rudd’s leadership ambitions and purported potential overthrow of yet another Labor Prime Minister. </p>
<p>Yet the plan seeks to address some very significant issues facing the future landscape of Australian industry, particularly our manufacturing sector and small firms.</p>
<p><strong>Industry participation</strong></p>
<p>The first of the core strategies is a set of measures designed to enhance Australian industry’s participation in major projects, such as the liquid natural gas (LNG) construction work taking place in Western Australia and the Northern Territory.</p>
<p>Among the most significant of resource projects fuelled by Australia’s mining boom have been the <a href="http://www.chevronaustralia.com/ourbusinesses/gorgon.aspx">Gorgon</a> and <a href="http://www.chevronaustralia.com/ourbusinesses/wheatstone.aspx">Wheatstone LNG</a> developments in WA.</p>
<p>Sadly, much of the work in the construction phase of these projects has gone offshore. (Discussions I have had with key industry representatives suggest as much as 80% of Gorgon was sent outside Australia.) This is despite the presence of an <a href="http://www.innovation.gov.au/industry/australianindustryparticipation/Pages/default.aspx">Australian Industry Participation</a> (AIP) National Framework, which has been in place since 2001.</p>
<p>An agreement between federal, state and territory governments, AIP seeks to build up the capacity of Australia’s local industry, help identify opportunities at an early stage, promote local industry capacity, and facilitate industry partnerships in such projects. </p>
<p>There are also related programs such as the <a href="http://www.ausindustry.gov.au/programs/import-export/epbs/Pages/default.aspx">Enhanced Project By-law Scheme</a> (EPBS) that enables major project leaders to access tariff duty concessions on eligible goods for major projects if they can demonstrate commitment to AIP and “full, fair and reasonable” opportunities for local firms.</p>
<p>There is also the <a href="http://www.innovation.gov.au/INDUSTRY/AUSTRALIANINDUSTRYPARTICIPATION/Pages/SupplierAccessToMajorProjects.aspx">Supplier Access to Major Projects</a> (SAMP) program that funds the state and territory based <a href="http://www.icn.org.au/">Industry Capability Network</a> (ICN).</p>
<p>Established in 1997, SAMP assists Australian firms to secure contracts that might otherwise have gone offshore. Established in 1995, the ICN has offices nation-wide and also offices in New Zealand. It administers the SAMP and the online portal <a href="http://gateway.icn.org.au/">ICN Gateway</a>.</p>
<p>There is also the <a href="http://www.innovation.gov.au/Industry/BuyAustralianatHomeandAbroad/Pages/AbouttheInitiative.aspx">Buy Australian at Home and Abroad initiative</a>, worth $58.4 million with federal funding and commitments from major mining and energy firms. </p>
<p>These firms also publicly express commitments to AIP and employ AIP consultants to help facilitate a local supply chain network. So one might ask why is there still a problem with local firms getting a share of these projects.</p>
<p>The jobs plan would see the AIP scheme shift from an industry led initiative to a mandated one, requiring projects worth over $500 million to submit AIP Plans. Plus, owners of projects worth over $2 billion who apply under the EPBS for tariff concessions would need to have Australian government officials embedded in their global supply offices. There are also tougher anti-dumping provisions.</p>
<p>The apparent leakage of so much work offshore helps to explain what is behind the government’s initiatives. Yet what are likely to increase the level of local industry participation in major projects are less bureaucratic oversight of the project owners, and more support to get Australian firms, particularly SMEs, up to international best practice standards.</p>
<p><strong>Reactions to the plan</strong></p>
<p>As the reaction from some in the mining sector to the jobs plan already suggests, there will be resistance to greater enforcement and government interference. </p>
<p>Reactions fell broadly along ideological or party political lines. For example, Chris Berg from the politically conservative Institute of Public Affairs <a href="http://www.abc.net.au/unleashed/4527240.html">writing in the ABC’s Drum</a>, dismissed the “Jobs Plan” as being little more than “an obvious sop to the protectionist wing of the union movement”.</p>
<p>This was <a href="http://www.abc.net.au/news/2013-02-18/mixed-response-to-government-manufacturing-plan/4525296">echoed by Michael Roche from the Queensland Resources Council</a>, who described it as “a plan from Soviet Russia” - due to the proposal that government officials would be embedded in the procurement offices of major resources firms. </p>
<p>Both the Australian Chamber of Commerce and Industry (ACCI) and the Minerals Councils of Australia <a href="http://www.news.com.au/national/big-business-to-lose-some-tax-breaks-to-fund-govenments-1-billion-jobs-plan/story-fncynjr2-1226579729984">expressed concern</a> over the impact of the loss of R&D tax concessions for large firms.</p>
<p>In contrast, the <a href="http://www.amwu.asn.au/read-article/news-detail/1100/%E2%80%9CA-Plan-for-Australian-Jobs%E2%80%9D-is-Smart-Policy/">Australian Manufacturing Workers’ Union</a> described the jobs plan as “smart policy”, while the <a href="http://www.icn.org.au/media-releases/national/icn-welcomes-australian-government%E2%80%99s-new-plan-australian-jobs">Industry Capability Network</a> (ICN), which assists Australian firms in securing contracts in major projects, also expressed support.</p>
<p><a href="http://theconversation.com/labors-innovation-plan-provides-hope-for-australian-manufacturing-12302">Writing in The Conversation</a>, Professor Roy Green from University of Technology Sydney, and co-author of the PM’s Manufacturing Task Force Report, broadly backed the plan, but did question the wisdom of cutting the R&D tax concessions to large firms, describing it as a “misplaced obsession with achieving a budget surplus at all costs”.</p>
<p>Now there are signs that the jobs plan might become a victim of party politics with the Greens indicating that they won’t support the R&D tax cuts unless the government fixes the flaws in the mineral resources rent tax (MRRT). The opposition is also likely to block these R&D tax cut measures, which would put the entire plan in jeopardy.</p>
<p><strong>What is at stake?</strong></p>
<p>As I have sought to explain in an earlier <a href="https://theconversation.com/manufacturing-matters-why-it-is-important-for-an-economy-to-have-a-manufacturing-base-8404">article</a>, manufacturing matters to Australia. It also matters to most other countries, and there is no room for complacency or political bickering if our economy is to remain competitive over the long term.</p>
<p>However, as I have also <a href="https://theconversation.com/working-smarter-not-harder-the-future-of-manufacturing-in-a-global-economy-8017">previously noted</a>, Australia’s manufacturing sector faces a number of barriers. First, there has been a decline in the level of capital investment in our manufacturing industries over the past 20 years. Second, there is a lack of skilled technical trades’ workers, and third, the majority (95%) of our manufacturers are SMEs. There is also a relative absence of inter-firm collaboration and networking.</p>
<p>This jobs plan is not without its flaws. The ability to secure more work for local firms is more than might be fixed by more bureaucratic intervention. However, these are the issues that need to be addressed in order to help preserve the nearly one million skilled jobs within the Australian manufacturing sector. Most of these jobs are to be found in Victoria, NSW and South Australia: all large population states that don’t have the same degree of mining and energy project activity enjoyed by Queensland and Western Australia.</p>
<p><em>Tomorrow: Planning for a Blue collar Australia: the role of venture capital and SMEs.</em></p><img src="https://counter.theconversation.com/content/12303/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Mazzarol receives funding from the Australian Research Council, the Government of Western Australia, Co-operatives WA, Co-operative Bulk Handling Group and Capricorn Society. He is also the President of the Small Enterprise Association of Australia and New Zealand (SEAANZ), a not-for-profit organisation founded in 1987 that is dedicated to the advancement of research, education, policy and practice within small enterprise.</span></em></p>Labor has finally delivered the detail of its much-awaited vision for shaping Australian industry beyond the mining boom. But will it deliver? In a two part series, UWA Professor Tim Mazzarol examines…Tim Mazzarol, Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy , The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/56402012-02-29T19:46:50Z2012-02-29T19:46:50ZAs solar hot water gets axed, what is the logic in industry subsidies?<figure><img src="https://images.theconversation.com/files/8229/original/9mm8bpy2-1330493039.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A behind-the-scenes subsidy is likely to stick around longer than a cash subsidy.</span> <span class="attribution"><span class="source">bicyclemark/Flickr</span></span></figcaption></figure><p>The <a href="http://www.theage.com.au/environment/climate-change/jobs-threat-after-solar-water-rebate-is-scrapped-20120228-1u13h.html">sudden cessation</a> of the Federal Government’s subsidies to solar hot water installations illustrates why subsidy-seekers mostly prefer industry assistance to come in hidden forms, rather than cash. </p>
<p>When the cash cost of the subsidy is shown in the budget, it is transparent and contestable. The Departments of Treasury and Finance are always on the look out for ways of cutting or re-allocating public spending. Senate Estimates Committee may question the wisdom and efficacy of the subsidy. Even Cabinet members may see an opportunity to free up some money for their own proposals, if they can kill off those of their colleagues.</p>
<h2>Secret hidden subsidies</h2>
<p>The alternatives to a tax-payer-funded subsidy include subsidy via regulation (like <a href="http://www.climatechange.gov.au/government/initiatives/renewable-target.aspx">Mandatory Renewable Energy Targets</a>) or via cross-subsidy (like generous feed-in tariffs for solar energy from rooftop panels). The costs of these are hidden and do not go through government budgets. </p>
<p>In Australia, we are fortunate to have the Productivity Commission’s annual <a href="http://www.pc.gov.au/annual-reports/trade-assistance">Trade and Assistance Review</a>. This reports the Commission’s estimates of the cash-equivalent costs of such hidden subsidies. It sometimes slips in comments about the strength or weaknesses of the cases for subsidy. (Declaration: I worked for the Commission from 2002-2008.)</p>
<p>As part of the economic reforms of the 1980s and 1990s, many hidden subsidies were converted to visible, cash subsidies. The expectation was they would be subject to more informed and sceptical examination. </p>
<p>The major form of subsidy at that time was the import tariff: the size of cash-equivalent subsidy provided by the tariff was many times the tariff revenue received. In fact, the maximum subsidy is obtained from a tariff so high that it excludes all imports and, therefore, yields no tariff revenue at all.</p>
<p>To ease their transition to lower rates of tariff protection, some industries, and especially iron and steel and <a href="https://theconversation.com/australias-handout-addicted-car-industry-needs-some-tough-love-4907">motor vehicles</a>, were granted cash subsidies for a limited period of structural adjustment. Some special temporary assistance was also given to labour, for retraining and the like.</p>
<h2>No one likes to lose a subsidy</h2>
<p>There is often a larger lobbying effort put into retaining a subsidy than was made in obtaining it in the first place. When an industry, like solar hot water, receives assistance, the existing firms and suppliers and workers immediately reap most of the benefits that flow to producers. </p>
<p>For existing firms, the value of the subsidy is capitalised into share prices. The subsidy, however, attracts new firms (and workers) to the industry, who gain less than did the existing players. The newcomers have to “buy their way” into the industry by purchasing existing firms, or by investing in plant and equipment, or by changing jobs and maybe location. </p>
<p>So when the subsidy is removed, these newer firms and workers suffer capital and other losses, without having gained much from the creation of the subsidy. Common experience and behavioural economics tell us that people react more to losses than they do to similar-sized gains: the lobbying efforts to prevent removal is often more fierce than the effort to obtain the subsidy in the first place. </p>
<p>It was the genius of the Hawke-Keating governments, with the support of the Coalition, to devise ways of staging a massive reform effort: a wide reform program created serious winners as well as losers.</p>
<h2>Who gets subsidies and why?</h2>
<p>There is no simple general theory of subsidies: who gets them, how much, for how long, and in what form? But some widely accepted ideas throw some light.</p>
<p>Governments generally wish to do good, but sometimes make mistakes about the rationale of subsidies or their likely effects. At other times, governments do things mostly to attract the gratitude of some voters or supporters (meaning, those who contribute to the party in various ways, including cash), even if this comes at the greater cost to the society and economy. </p>
<p>A century ago, <a href="http://philosopedia.org/index.php/Arthur_F._Bentley">Arthur F Bentley</a>, an American journalist/political scientist, wrote that all politics was the politics of interest groups. Since then, this idea has been fleshed out, including by the <a href="http://www.econlib.org/library/Enc/PublicChoice.html">Public Choice School</a> of economists, who apply ordinary economics to public decision processes.</p>
<p>The underlying ideas are simple: interest groups are most successful if their membership is relatively small (compared with the usually unorganised collection of people who will lose if the interest group is successful); if what is at stake if large, individually; and if the members have cheap and effective ways of communicating within and outside the group. </p>
<p>So we would expect rural-based groups to be much more active about economic issues that loom large in their wellbeing — for example, subsidised, high quality services — than urban folk would be in opposing such claims. Producers are more likely effective in seeking subsidies than are consumers. </p>
<p>Amongst the many Australian industries, those more likely to obtain subsidies are those very important in a small number of locations, rather than those widely spread geographically. But are these generalisations, and there are many exceptions.</p>
<p>Similarly, it is a useful generalisation that very inefficient subsidies — the most costly, and least justifiable — are less likely to be enacted and sustained. Sometimes removal is triggered by the revelation of cost and ineffectiveness.</p>
<h2>If a subsidy is good for everyone, it’s more likely to succeed</h2>
<p>What motivate members of interest groups may be moral or social issues, or naked financial interest. Interest groups of the last kind are generally more effective if they can convince themselves and others that they are really pursuing the public interest and that their private gains are incidental. The solar hot water industry would argue that it provides a service that benefits the country and indeed the world.</p>
<p>Of course, subsidies can contribute to the general wellbeing of Australians. Subsidies to good school education help to create better citizens. Subsidies to “public good” research help create good ideas (disclosure: I worked in universities for 35 years). Transitional adjustment assistance helps to remove political barriers to efficient reforms. </p>
<p>By their nature, such beneficial “spill overs” are hard to estimate, because they are not simple marketed goods and services. There are many exaggerated claims made about these benefits; some are honest, but some are not.</p><img src="https://counter.theconversation.com/content/5640/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>I worked for the Productivity Commission, 2002-2008.</span></em></p>The sudden cessation of the Federal Government’s subsidies to solar hot water installations illustrates why subsidy-seekers mostly prefer industry assistance to come in hidden forms, rather than cash…Jonathan Pincus, Visiting Professor, School of Economics , University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/41782011-11-08T03:31:26Z2011-11-08T03:31:26ZFirst Qantas, now the Commodore: are we losing what makes Australia great?<figure><img src="https://images.theconversation.com/files/5278/original/Car_Industry.jpg?ixlib=rb-1.1.0&rect=23%2C13%2C815%2C544&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia needs to have a serious and healthy debate on what the “Australian made” brand represents.</span> <span class="attribution"><span class="source">iStockphoto/Hamza Bendemra</span></span></figcaption></figure><p>Reports suggesting Holden is considering phasing out major parts of the manufacturing chain for the iconic Commodore points to a worrying trend of off-shoring the very skills manufacturing needs in order to survive. </p>
<p>While Holden have denied any decision has been made, the Association of Professional Engineers, Scientists and Managers (APESMA) chief Chris Walton has claimed hundreds of engineering and design jobs may go - with the potential for many more in the supply chain to be affected.</p>
<p>“We would expect thousands of jobs could go in the related auto manufacturing sector, so all of the suppliers to Holden, because not only would the design be done overseas, a significant proportion of the components of the car would be brought in from overseas and simply bolted together here,” Walton told the media.</p>
<p>The loss would represent a serious blow the Australian manufacturing community as the Commodore has been <a href="http://www.heraldsun.com.au/ipad/jobs-at-risk-as-holden-looks-to-scale-down-commodore-production/story-fn6bfkm6-1226184880065">Australia’s best-selling car for the last 15 years</a>, and represents more than half of large car sales. </p>
<p>As downsizing of major manufacturing facilities continues, the future of manufacturing in Australia has been put in focus once again - after the <a href="http://www.abc.net.au/news/2011-10-30/qantas-grounding-australian-tourism/3608652">Qantas debacle</a>, <a href="http://www.smh.com.au/opinion/politics/debate-on-manufacturing-has-more-than-two-faces-20110826-1jeg7.html#ixzz1cdigC4jP">BlueScope’s export operations</a> which affected 1400 employees, <a href="http://www.smh.com.au/small-business/manufacturers-struggling-to-pay-the-bills-20110829-1jhr7.html">OneSteel</a> who scrapped 400 jobs, <a href="http://www.wsws.org/articles/2011/apr2011/ford-a16.shtml">Toyota</a> which temporarily downsized its operations, <a href="http://www.theage.com.au/victoria/faltering-ford-to-cut-local-workers-20110414-1dg1v.html">Ford</a> which already planned to reduce its workforce, and now the Commodore operations seem to be in danger. </p>
<p>There are a number of reasons why the manufacturing sector is suffering at the moment, the main influence being the strong dollar and the high cost incurred for potential buyers of Australian goods. </p>
<p>Although the public has become <a href="http://www.smh.com.au/small-business/manufacturers-struggling-to-pay-the-bills-20110829-1jhr7.html">practically numb</a> to this cycle, it is important to realise that the manufacturing sector isn’t isolated from the rest of the economy, <a href="http://www.smh.com.au/business/manufacturing-improves-but-headwinds-remain-20111101-1msu3.html#ixzz1cdhjPbO5">representing a 10% portion</a> - when the <a href="http://www.theage.com.au/victoria/faltering-ford-to-cut-local-workers-20110414-1dg1v.html#ixzz1cdpkeUaV">manufacturing sector experiences slim-to-none growth</a>, the rest of the economy suffers. </p>
<p>As Green and Toner point out in an <a href="http://theconversation.com/does-manufacturing-have-a-future-in-australia-3098">excellent article</a> published on The Conversation:</p>
<p>“The future [of manufacturing] remains important for at least two reasons: first, manufacturing drives innovation and technological change – key elements of our productivity performance – and second it contributes to our external trade balance. </p>
<p>Looking to the future, manufacturing directly employs one in five engineers, and many more indirectly as consultants. Without a solid manufacturing base, Australia faces the prospect of losing scientific, engineering and computing expertise that has taken generations to nurture in research and production.”</p>
<p>The other issue at stake is the future well-being of the newly unemployed technical staff due to these cuts. </p>
<p>Most engineers have acquired skills that can be transferred to other areas, for instance, in public service departments such as Defence, consulting firms or private contractors. </p>
<p>However, no structure is in place for the highly skilled to be trained to use their knowledge in new environments. Also, the longer an employee has been working in the same workplace, the harder it becomes to adapt to new work culture and practices. </p>
<p>As long as we continue to blame globalisation for these job cuts, we will be missing the larger point, which is the loss of knowledge and skills due to a lack of support for the highly skilled to get them back into the workforce.</p>
<p>The public at large also agrees with this point of view. A 2009 poll by the Australian National University looking at the <a href="http://publicpolicy.anu.edu.au/anupoll/documents/2010-12-07_ANUpoll_science.pdf">public opinion about science</a> found 85% of Australians felt that science (including engineering) has made life easier for most people, rating the contribution of scientists to society above nearly all other professions.</p>
<p>According to the poll, engineering ranked fourth place behind doctors, teachers and scientists to their contribution to society.</p>
<p>However, the poll found Australians are less pleased with government’s response to the scientific community, believing politicians do not adequately consider scientific advice, or adequately regulate industry.</p>
<p><figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=483&fit=crop&dpr=1 600w, https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=483&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=483&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=607&fit=crop&dpr=1 754w, https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=607&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/5268/original/chart_1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=607&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">ANU poll</span>
</figcaption>
</figure>
Figure 1: ANUPoll “Public about science” (ANU 2009)</p>
<p>There is little doubt that Australia simply cannot compete with China and India when it comes to mass manufacturing over the long-term.</p>
<p>But Australia does have the resources to compete in the high-end manufacturing world, and there have been some investments made at various Australian universities (including the Australian National University) in high-end robotics manufacturing technology (which my PhD currently focuses on). </p>
<p>That is the future of Australian manufacturing. </p>
<p>However, more investment in training and equipment is required to keep our world-class experts and expand our knowledge base. </p>
<p>Australia needs to have a serious and healthy debate on what the “Australian made” brand represents, what sacrifices are necessary, and what type of protection and safety nets are needed to keep the manufacturing industry alive in this increasingly competitive and globalised world.</p><img src="https://counter.theconversation.com/content/4178/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hamza Bendemra is currently involved with APESMA as the Student Development Officer for the ACT region</span></em></p>Reports suggesting Holden is considering phasing out major parts of the manufacturing chain for the iconic Commodore points to a worrying trend of off-shoring the very skills manufacturing needs in order…Hamza Bendemra, Doctoral Candidate, Engineering, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/41752011-11-07T03:49:50Z2011-11-07T03:49:50ZThe end of the Commodore? Redefining the myth of the Australian family car<figure><img src="https://images.theconversation.com/files/5227/original/commodore_blentley.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is the family car of our imagination the family car of the future?</span> <span class="attribution"><span class="source">blentley</span></span></figcaption></figure><p>Over the past ten years, total vehicle sales in Australia have increased by roughly 35%. But sales of the once-most-popular cars, the Holden Commodore and Ford Falcon, have halved. </p>
<p>This fall in sales has lowered local production to levels not seen since the mid-1950s. Imports now make up around 80% of total vehicle sales in Australia.</p>
<p>Does the fall in sales of these two large cars mean we’re seeing the end of the large passenger car – and the end of automotive manufacturing – in Australia?</p>
<p>Reports that Holden is considering moving its Commodore design work offshore after 2014 has done little to soothe fears for the future of the industry.</p>
<p>Holden says it has made <a href="http://www.news.com.au/breaking-news/holden-denies-union-commodore-claims/story-e6frfku0-1226184903164">no decision</a> on the future of the design division, but the Association of Professional Engineers, Scientists and Managers Australia claims the move would cost 360 local jobs. </p>
<h2>A new kind of family car</h2>
<p>The Department of Innovation, Industry, Science and Research <a href="http://www.innovation.gov.au/Industry/Automotive/Statistics/Pages/default.aspx">reports vehicle sales</a> under various categories, including nine for passenger cars and six for light trucks. Passenger cars are generally classified by engine size, while light trucks, which include SUVs, depend on vehicle style or type. </p>
<p>Since 2005, annual sales of passenger cars have remained almost constant at around 600,000. Sales of light trucks have increased by almost 20% to 414,000. </p>
<p>In the passenger car sector, the shift away from large cars has been balanced by take-up of light and small cars. Small and light cars now make up 36% of total sales, while large cars make up less than 10%. </p>
<p>Sales of SUV and utility vehicles have increased by more than 20% since 2005. SUV sales are now almost equal to those of small cars. In 1996, large cars outsold SUVs four to one; now SUVs outsell large cars more than two to one.</p>
<p>Yes, there has been a shift away from large to smaller cars. But the largest single growth over recent years has been in sales of SUVs. </p>
<p>Since SUVs are not classified on the basis of their size it is difficult to directly compare this category of vehicles to passenger vehicles. But the continued growth suggests Australians now prefer SUVs to almost any other vehicle and sales might soon even eclipse those of small vehicles. </p>
<h2>Still hanging on to the myth of car as freedom</h2>
<p>It seems the long-held myth of the Australian family car as defined by the Commodore and Falcon (and the earlier Kingswood) no longer resonates with the Australian public. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/5247/original/4wd_k.ivoutin.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">We buy cars that sell us the myth of freedom.</span>
<span class="attribution"><span class="source">k.ivoutin</span></span>
</figcaption>
</figure>
<p>Adding further to the dimming of the myth is that fact most large passenger cars sold in Australia are purchased by government and commercial fleet operators and not the general public. In fact, the ratio is more than two to one.</p>
<p>The myth of the iconic Aussie car lingers only in the car parks of government buildings and the offices of company fleet managers. </p>
<p>Decreasing family size, increasing congestion, longer travel times and longer working hours have seen the rise of a new motoring myth, or rather the re-emergence of an old Australian story. </p>
<p>As a recent car ad suggests, while the older generation thinks the young couple’s new SUV purchase heralds the birth of their first grandchild, the young couple believe it heralds the birth of a new life <a href="http://theconversation.com/wide-open-road-how-did-australia-plan-pedestrians-cyclists-and-transit-out-of-its-cities-3944">free of the constraints</a> of modern existence. </p>
<p>The SUV allows us to continue the myth of the Australian bush that we all desire to experience. Now we’re seeing it from the comfort of our new air conditioned thoroughbred.</p>
<h2>Will SUVs stand up to the pressure at the pump?</h2>
<p>How much longer can we expect to see the growth in SUVs sales continue? Apart from the Ford Territory, these wild bush horses are no longer from Australia.</p>
<p>On average they have higher fuel consumption than their passenger vehicle equivalents and require far more resources to manufacture. Their growth has seen the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/9208.0">average fuel consumption</a> of the Australian fleet remain almost constant for ten years, and well above that of most countries but the USA. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/5245/original/traffic_kate_dreyer.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The reality of car travel is starting to affect the vehicles we choose.</span>
<span class="attribution"><span class="source">Kate Dreyer</span></span>
</figcaption>
</figure>
<p>There is considerable international pressure to reduce vehicle fuel consumption though reductions in per-kilometre greenhouse house emissions. In Europe, <a href="http://ec.europa.eu/environment/air/transport/road.htm">reductions are mandated</a>. In Australia we are still trying to work out the best approach. </p>
<p>For Australians not caught up in the new marketing myth, fuel costs as well as environmental factors have driven the rise in small car sales. There has been a shift towards hybrid vehicles, although sales have remained relatively minor so far. </p>
<p>As with many passenger car manufacturers, SUV manufacturers are producing diesel-powered variants, and many SUVs are now two-wheel-drive rather than four (suggesting a merging of myth with reality). </p>
<h2>Supporting a different kind of auto industry</h2>
<p>Supported by the now defunct <a href="http://www.innovation.gov.au/INDUSTRY/AUTOMOTIVE/NEWCARPLAN/Pages/default.aspx">Green Car Plan</a>, Australian manufacturers have developed a <a href="http://www.cairns.com.au/article/2010/02/13/93351_motoring.html">hybrid passenger car</a>(the petrol-electric hybrid Toyota Camry), and are using more lightweight materials and more efficient fuel injection systems. </p>
<p>We are now seeing delivery of the <a href="http://www.manmonthly.com.au/news/australia-s-holden-cruze-2012-hatch-running-off-pr">Holden Cruze</a>, the first small-to-medium passenger car to be produced in Australia for some time.</p>
<p>Sales of the Cruze are <a href="http://m.smh.com.au/drive/motor-news/local-cars-on-the-nose-20111104-1mz1s.html">almost equal to</a> those of the Commodore. Sales of the Ford Territory remain relatively small, and given the stiff competition in this sector, are likely to remain so.</p>
<p>In the next five years it is likely that continued pressure to reduce transport greenhouse emissions, combined with rising fuel costs, will see a plateauing in sales of SUVs. Such vehicles are also likely to continue morphing into more passenger-like cars through greater urban styling. </p>
<p>Small passenger cars powered by small turbo-charged petrol and diesel engines have up to half the fuel consumption of SUVs. Their numbers will continue to increase at the cost of increased SUV sales and possibly hybrid vehicles. <a href="http://theconversation.com/why-electric-cars-are-in-pole-position-295">Electric cars</a> are still some way off with energy storage and recharging technology being the major limiting factor. </p>
<p>In Australia, the two most important factors for the industry will be the success of new developments such as the Cruze, and continued government support for production through “co-investment”.</p>
<p>The question is whether the government wants to keep funding production of cars only they and fleet operators seem interested in buying.</p><img src="https://counter.theconversation.com/content/4175/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Damon Honnery receives funding from the Australian Research Council and owns both an SUV and a small car.</span></em></p>Over the past ten years, total vehicle sales in Australia have increased by roughly 35%. But sales of the once-most-popular cars, the Holden Commodore and Ford Falcon, have halved. This fall in sales has…Damon Honnery, Associate Professor, Department of Mechanical Engineering, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/29672011-08-24T03:33:33Z2011-08-24T03:33:33Z‘Once upon a time, when Australia had a steel industry …’<figure><img src="https://images.theconversation.com/files/3126/original/steel.jpg?ixlib=rb-1.1.0&rect=67%2C96%2C4130%2C2660&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">BlueScope has fallen victim to a changing export market, high Australian dollar and gradual structural shift to free trade policies.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Once upon a time, 30 years ago, when we still thought the steel industry was an endless and bottomless well for economic growth and employment, many of us also believed in industry policy, corporate responsibility to communities, and the right to stay in the same place and space as long as we wanted. </p>
<p>We were happily unaware that “restructuring” would become inevitably intertwined with “job losses” or that the inheritors of the <a href="http://gallery.oldholden.com/d/170907-1/1976+HOLDEN+HX+KINGSWOOD-1.jpg">Kingswood</a> (which many of us drove back then) would soon be driving cars neither built in Australia nor made from Australian steel.</p>
<p>But that was 30 years ago. Shortly after, the Australian steel industry began to spin into crisis, an early home-grown casualty of the globalisation of production.</p>
<p>Indeed, the crisis should probably have happened sooner but in those days there was a fair investment in Australian steel production and the low Aussie dollar meant good steel export prices – the US even accused Australia of dumping cheap steel – and profit levels were generally accepted at lower rates than today.</p>
<h2>Shock to the system</h2>
<p>Even so, when it came, that first steel crisis was pretty shocking – postwar Australians were not yet used to major job losses, nor the allied multiplier effects that devastated towns and communities. </p>
<p>I remember writing in the introduction to the <a href="http://www.abc.net.au/rn/playingthe20thcentury/stories/2011/3087132.htm">Katherine Thompson play, Diving for Pearls</a>, (set in an industrial town experiencing major job losses) that Christmas 1982 was a time of fear and spending, as people avoided each other, fearful of hearing bad news or telling it, and spending up big because of redundancy pay – or fear of job loss.</p>
<p>Yet, sooner than we hoped, most of us bounced back. That was because they had a wonderful instrument in those days called industry policy. </p>
<p>In those distant decades, governments were not wedded to day trading for policies – they took longer term views, knew “the market” could be as mindless and destructive as <a href="http://www.bleedingcool.com/wp-content/uploads//2010/10/they-are-coming-to-get-you-barbara.gif">Triffids</a>, and also took it as their responsibility to intervene so the polity, society and economy were not mere flotsam among the blips and bumps of market fluctuations.</p>
<h2>Industry plan</h2>
<p>And that was the case in 1983 when the <a href="http://www.rba.gov.au/publications/confs/1995/demura.pdf">Steel Industry Plan (SIP)</a> was proposed, debated and implemented over a few months. </p>
<p>The SIP was not just a comprehensive and integrated set of assistance, responsibilities, goals and gains for the steel stakeholders, it was even a tripartite policy (that is sooo 20th century!) and had the commitment of the steel company, the trade unions and communities, and the government. It worked – at least for a time.</p>
<p>Now again in 2011, we have a steel industry crisis. After reports of an annual loss of nearly $1 billion (nearly ten times the average profits of 20 years ago), 1000 redundancies and a major reduction of contractors have been announced at BlueScope Steel. The causes are fourfold. </p>
<h2>Paradox</h2>
<p>The most important factor has been the high Australian dollar – paradoxically driven by the resources boom – which has raised the price of steel exports. </p>
<p>The paradox is that the second factor leading to the current steel crisis has been increased input costs – notably iron ore and coal. The drivers of the very mining boom which has raised the Australian dollar have also raised the costs of production – coal prices for example have tripled in the last decade. </p>
<p>The effect of these factors has meant the crisis has been more pronounced on BlueScope, which has less favourable access to inputs than has its former sister company, OneSteel. </p>
<p>Third, there is pressure on steel companies throughout the developed world – the Brazilian company Usiminas is in trouble, and even ArcelorMittal, the biggest steel company of them all is struggling.</p>
<h2>Market shift</h2>
<p>Export markets are shifting. Japan is planning to buy steel for post-earthquake reconstruction from China or Korea, and many former customers of Australian steel are now exporters. And on top of all of that, in Australia, the fall of steel is tied to the inexorable decline of local manufacturing.</p>
<p>When manufacturing booms, steel bounces, but employment in manufacturing has fallen to well less than 10% of employment in the last decade, and its contribution to the national economy has fallen similarly.</p>
<p>So it is perhaps not surprising that we have another steel crisis. The job losses may be fewer and the impact on buyer, supplier and contractor firms may be less, but we have a steel crisis that will once again weaken and depress the steel communities of the Illawarra. Brave words are being spoken of resilience and hope, but the options in steel are few.</p>
<h2>Anti-competitive </h2>
<p>Certainly we won’t have a Steel Industry Plan this time around – the WTO has put paid to that. Giving preference to local product for construction is now “anticompetitive”, and so are tariffs and subsidies. </p>
<p>Governments can support the steel communities – at least a little – but they cannot support the steel industry, they cannot offer carrots to encourage capital investment or enforce requirements on major new projects to buying Australian made products. </p>
<p>They can ask nicely, but in the brave new world of free trade, governments are tied to the higgling of the market. </p>
<p>Chillingly, perhaps the story books of the future might begin – “Once upon a time, when Australia had a steel industry …”</p><img src="https://counter.theconversation.com/content/2967/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diana Kelly does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Once upon a time, 30 years ago, when we still thought the steel industry was an endless and bottomless well for economic growth and employment, many of us also believed in industry policy, corporate responsibility…Diana Kelly, Associate Professor, School of History and Politics, University of WollongongLicensed as Creative Commons – attribution, no derivatives.