What surprises me most about this discussion is that 2 particular words have not been mentioned, although Candide way back when raised some good associated points. The words I am of course alluding to are:
Peak Oil.
When we are on the downward slide of oil production (probably no more than 2 decades away) fuel and transport costs will be as effective as tariffs.
A couple of decades ago, I investigated the possibility of growing garlic, as an 'import replacement project'. After a few hours at the local library, poring through microfiche files. The stats I turned up indicated that we exported just about as much garlic as we imported, from New Zealand and Singapore.
We may as well have had the ships meet in the middle of the Tasman sea, do a doe ce doe, and come back again.
In Port Macquarie, NSW, (once a great vegetable growing district) the local Growers Market bought most of it's -locally grown!- veggies from the markets in Sydney, 500 kilometres away.
This kind of absurdity simply won't be affordable in coming decades.

We are exporting almost exclusively our mining goods - Non-value added, non renewable, and the value added goods that we had been producing 40 years ago, are now imported by those companies Target, K-Mart, Lowes, Big W, Wesfarmwers, Bunnings and a hundred other stores, because they can buy them cheaper foreign made than Australian made. This is more because we are trading our coal and other resources at something like 11%, 25% and 30% of their real value. Coal that BHP Billiton was exoporting for $US98/ton, was being re traded in Pohang from Sth. Korea, for an estimated $US308.70 / ton, and I doubt that many or most of our other resources are similarly under valued, and are subsidising the price of our imports. and just remember, that when these resources are gone, they are gone for good, no iron ore for manufacture, no coal to produce the large quantities of power we need for manufacture and Railway, I don't like the look at what is in store for our future, unless our politicans grow a brain, and get wise, I know it's a bit to ask, isn't it.

Looking at some of the earlier remarks, I have to ask how many years ago are you talking about, The changing of the top tax level has had a lot to do with prices of goods and charges of services, the last 20 years has been the worst, as the top tax has been lowered to 47%, the best of our economy was in the 1950's to 1970, from then, it has consistently gone downhill, the same in the US and the UK. Check on "Tax history of Australia", "Tax history of US", "Tax history of UK" and "Taxs around the world". You will find that when the top tax goes below about 48%, there will most likely be a recession which we have had and when it goes below 365 or 40%, there is most likely a depression which the US has now. The best conditions we have ever had with economy, was in those years 1950 to 1970.

merv09,

Yes, i do not see many good signs from the major parties.

I know the solutions are complex, but everything appears to be based on 'we will be right' as long as Chinamerica relationship holds up.

Perhaps Grim is right when talking about issues such as high fuel prices changing our mindset about food production.

I would hope that there are some influential people in politics that can force a major rethink about how many policy issues are linked, and that some hard decisions (which will cause some conflict between different interest groups) need to be made.

While Labor, and some of its jokers and supporters, pretend they are
the only way to truth and justice in the Australian way, I have a gut felling that minor parties (including the Greens and rogue Nationals), and even Coalition members, are going to play an important role.

In other words, someone needs to challenge the economic orthodoxy of the day. Things are indeed not alright if we continue on our current way, although I can understand why recent policy trends occurred.

As I once argued in Quadrant, support for current trends will continue only as long as people will accept higher and higher levels of debt. I doubt very much that the Western world will keep on accepting trends as they are, although I may be wishful.

*Because they thought it would be inferior or inefficient, and an imported product would always be better, even if they had to pay money for it*

Vanna, I can't really comment on the product that you are discussing
as I don't know what it is.

But it is true, that once people suffer from affluenza, things like
status symbols and snob value become an issue. There are two sides
to that coin, as for clever manufacturers and marketers, it is
a dream.

Take China, everything is made dirt cheap. Yet today the largest
market for French and other European luxury goods, is in fact
with the Chinese nouveau riche. Fropm 5000$ Hermes handbags to
Rolex watches, they are snapping them up like never before.

Just look at Apple! Today its market cap is larger then that
of Microsoft. All based on clever design, great marketing and
appealing to people owning a status symbol.

I think in Australia too, companies will emerge, which stand
out from the crowd, which can compete globally. Price is only
one reason why a certain segment of the market buys something.

BTW Pericles, I lashed out and tried that "Deluxe Fruit Muesli"
of Carman's. Whew 1 whole $ more then her Bircher Muesli. Yup
its yummy! She exports to 20 countries now it seems. It just
goes to show that a smart university student can make it happen,
from here right in Australia.

There are in fact a number of new and emerging Australian
success stories. Sadly that is despite the fact, that we
make it as difficult as possible for them, with our ridiculous
labour laws.

The ultimate aim should be to develop more exports.

Depending on the product, the Australian population may be too small to support more than a few Australian manufacturers of that product.

So the manufactures have to develop the product in Australia, and then head for the export market. To sell on the export market, the product has to be unique or better in some way than what is available. IE. it has to be innovative.

Vanna, I have been attempting to do this for some time. Innovations galore not already patented. The problemo is the red tape regarding patency laws and the process here in addition to banks backing up projects. Similar to the hurdles the film making industry had always faced.

Banks do not like to take any risks or support here without significant assets or a sufficiently high income.

A couple of engineering companies agreed over the phone one day to meet and discuss one of my innovative concepts; after the patency process was in full swing. Several Banking institutions were not interested. Raising children, working a couple of jobs and other obstacles took over the remaining years.

Last year I observed that one of the innovative concepts [that I had ultimately planned to export] is now up and running and highly successful in the city.

Congrats to the person who found the time to engineer and market the product.

One day I may decide to take a risk and follow through the patency process!