The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > Protectionism and industry policy > Comments

Protectionism and industry policy : Comments

By Des Moore, published 26/9/2011

Whichever side of politics considers supporting protectionist measures, they must first take account of the downward trend in protectionism that started in the early 1970s under the Whitlam government and has since continued.

  1. Pages:
  2. Page 1
  3. All
I think the problem is free trade. We should pursue fair trade policies
Posted by foxydude, Monday, 26 September 2011 3:49:16 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Well argued, Des. The feedback generated by tariffs and protectionist measures almost always pushes an economy in the wrong direction. Steel’s a good example of how the system OUGHT to work, and usually doesn’t.

We’ve been making steel for a good long while, and we’re good at it. The rise of China, though, means we’re suddenly competing with a nation that has economies of scale we can’t match. Our plant is decades old, theirs is brand new. Our labour costs are high, theirs low. We need to adapt.

China’s mass-production focuses on plain carbon and (to a lesser extent) stainless steels. We have the nous and the technological sophistication to make specialty steels with much higher margins, and which are in great demand for mining equipment, chemical processing, etc. Big infrastructure projects often generate demand for highly sophisticated, low volume products (ship keels, for instance). Australia is more than capable of producing high-value-added steel goods for specialty markets; We could even sell to China.

That kind of adaptation takes R&D, investment, upskilling of labour, specialist project management skills, market development ... in a word, it takes lots of time and money. Profitable companies keen to adapt need government assurance that big investments made NOW will be allowed to pay off in 2020, 2040.

At present, the opposite is true. Government doesn’t intend to reward that sort of innovation: they want to tax it. If it involves expansion of existing plant, they’re more likely to discourage than facilitate it. If it involves new technology, they’ll want to regulate it ... but only AFTER the fact. Future energy costs are unknown, exchange rates are manic, IR is in constant flux, labour productivity is static at best, skilled labour is in short supply, transport infrastructure is doubtful. Building new facilities in urban areas will attract protest; greenfield construction will attract protest. Why invest?

Government has to do SOMETHING, of course. Manufacturers expect meagre protectionist measures like local-content rules, a few tenuous tax breaks. They manifestly do NOT see government as benign towards rewarding risk. THAT’s what needs to change.
Posted by donkeygod, Tuesday, 27 September 2011 8:04:26 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. Page 1
  3. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy