A very good article, Saul. Sadly the economically illiterate are
rather common on OLO. But the Australian public have overwhelmingly
voted with their wallets on this one.

Something like 85% of the public prefer imported cars. Interestingly
virtually none of these are made in China, which negates Sarnians
argument.

I did in fact post a link some time ago on OLO, showing that only
around 20% of our imports came from China, in 2010. Germany, France,
Japan, USA and a myriad of other countries are our trading partners.

Tariffs only increase production inputs for the remaining efficient
export industries, such as agriculture. If agriculture can be
efficient, perhaps city people should get off their butts too and
not hide behind trade barriers.

Saul of course believes in the good old 'level playing field'. I don't any more.

I see of other countries in and out of the WTO excepting parts of their economies from the LPF and manipulating their curracies giving themselves advantage. I'm less enamoured with the LPF.

We've advantages. We own and supply the highest quality minerals, particularly iron ore, and coal in the world. Distance and our effective Unions are two other advantages.

He's a suggestion.

Put a GST on exports of minerals and coal. Ten percent, 20% or whatever. Exempt all totally Australian manufactured goods from our internal GST.

Goods made overseas using Australian minerals or from power produced by our coal then come much closer to locally made goods especially when the costs of transport to and from the overseas factories is included.

Encourage waterside and maritime unions to act against overseas owned and operated shipping lines, transporting imported goods, when employing cheap Asian labor.

Other countries exporting iron ore and/or coal will soon fall into line with our policies.

Who will complain. The miners? Hardly, they aren't the ones paying the GST and the public would ridicule them for defending overseas entities.

The WTO? What right do they have to determine our tax policies?

The shipping companies? Hardly they'd be sure to use appropriate labor at costs closer to our own to maintain their market share. Yeah sure the costs would go up... the cost of imported goods go up.

The countries buying our minerals and coal? Hardly, could they replace our quality minerals and coal and maintain the same smelting efficiency and cheap cost of production? No.

They could retaliate but how? By putting an embago on our imports from them or by raising our costs of their goods? Yes of course they could and who would that benefit? That's right our manufacturing sector.

Yep I'm no economist nor a believer in a level playing field when it isn't level. I do however believe Australians are an innovative and capable bunch who would easily overcome any unforseen import shortages or adverse financial actions.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216830

Sarnian, correct, What industry/jobs will there be when there are no rocks left in the quarry?

The gold will all be gone in 5 to 10 years.

The iron ore will last a bit longer but not that long.

http://www.youtube.com/watch?v=s2HTtFURkyw&feature=related other economies are moving towards protectionism, if they have not already.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216832

Luciferase, agree, some of our "cheap" food imports did not come from China or NZ, but Europe because they are being dumped here after EU subsidies "manufactured" them.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216833

Grim, true, some of our maunfactured goods were in fact reasonably good, but what is the worst of 2 bad options? Mass unemployment with some cheaper products, or full employment for all with some more expensive products?

http://forum.onlineopinion.com.au/thread.asp?article=12521#216834

Peter Hume, spot on, http://www.youtube.com/watch?v=gc5E6pvDv2Y&feature=channel_video_title have you seen this one Pete?

http://forum.onlineopinion.com.au/thread.asp?article=12521#216845

Curmudgeon, as a fellow conservative i often agree with you on many issues, but between 1945 & 1965 we had full employment despite a tsunami of migrants & a baby boom.

Some of our manufactured goods were not perfect, but we were a stronger, healthier, more independent nation in every way, shape & form. There are also other ways to improve productivity while still having "protected" industries, other ways to achieve protection without a tarriff barrier.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216852

Also true, without cheap oil there will not be vast numbers of ships going backwards & forwards "trading".

If transpotation becomes more expensive & it will, local cottage industries become more viable.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216853

Yabby, Ah the good little Fabian/Trotskyist rides again, all critcism & no answers to any problem.

http://www.youtube.com/watch?v=gc5E6pvDv2Y&feature=channel_video_title

enjoy Yabby, economic treason may one day soon be a retrospective crime.

Yabby’s a Fabian/Trotsyist? Gee, I have misread him over the years.

Saul is quite right of course. We do neither manufacturers nor consumers a favour by trying to reintroduce sheltered workshops. And Yabby is right – the real damage protectionism inflicts is on the competitiveness of exporters, who must pay higher domestic input prices while being price takers in international markets for the goods they sell.

I will happily pay more for higher quality Australian goods, but that’s my choice. And the Australian alternative will not remain higher quality for long when Australian producers no longer need to use quality to differentiate their products from cheap inferior imports.

The resource expansion is transforming our economy. On balance this is mostly a good thing, though there are some negative impacts. We should manage these and also be realistic about what government can and should do. There is a growing cargo cultism that presumes every manufacturer is entitled to a share in the spoils of the resource sector

Geoff of Perth
Perpetual no growth situation? Its a two speed economy with considerable consumer hestitation but its definitely growing. Try again. As for this resources limitation business you're scaring yourself with, that stuff has been endlessly refuted. As has been pointed out many times, known reserves of resources vary with price, not consumption.

yabby -quite correct..

imajulianutter
Although I don't disagree with most of your post, the bit about a GST on coal is surprising.. you did realise the heavily amended Federal resources profits tax is now in place, or about to go in place. Differnt states had differnt versions of the tax before the Federal version. It applies to coal and iron ore and is far more than GST.

Formersnag
Your arguement ignores a lot of economic history. The protection system (tariffs, quotas, agarian socialism ect) was still firmly in place when the economic dream ended in the 1970s, and remained in place for a full decade and more afterwards. High unemployment and bad economic performance was one of the reasons they got rid of it.
In other words, Australia got away with the old system until the 1980s or so, with no incentive to change, then it really started to drag.. NZ didn't do the same things we did, or did not do enough of them, and its economy has done worse than ours.

hi Curmudgeon,

of course there are taxes present but the difference between a GST and a tax on profits is?

The buyer pays the gst and mining companies cannot minimise the gst.
With the tax the mining companies pay the tax and can minimise the amount they pay. The smaller miners who don't have the diversity of the majors are not disadvantaged.