Centralised economies is the key factor. Australia is now the most centralised federation, with all decisions being inappropriately made in Canberra. Constitutionally, the federal government is meant to keep its snout out of states business so that the states are all competitive, raising their own taxes and spending in ways suited to them. Until Canberrra grasps the idea that one size does not fit all, Australia will continue flatlining. Centralization is Communism.

The above graph should be a wake-up call.
Why Australia is going backwards!

I don't imagine it needs my input to point out, the highest employment is in the health care and social services sector. That is a marker of failure if ever there were one!

The second highest is professional services sector, where the myriad of Health professionals caring for an ageing and sick society, make their squillions in overpriced service fees.

The educational sector churning out the unemployable graduates.

Construction: finally a sector that actually produces something of tangible value.
All be it, super max prisons and the odd second rate hospital.
(The list of the homeless grows larger though)!

And half way down the list to discover the second sector that actually produces value added goods, manufacturing.
This sector could be helped remarkably by Government policy restricting expensive imports; its a dirty word called "tariff".
Won't happen, so little prospect for improvement here.

A lot to agree with here. And remember that the labour cost component of manufacturing is just 16%? Then there's the cost of energy water rates and tax charges! With payroll tax and employee PAYE plus super adding to the eventual cost of manufactured items. Moreover, there is the manufacturing model itself, straight out of the fifties and loaded with exponentially increasing transport costs as components sourced from everywhere come with a whole host of expensive passengers! Debt servicing shareholder dividends, their transport component tax and super liabilities etc.

All of which triples the cost of manufacture, further impacted by paper shuffling middlemen, who add little, but often exorbitant profit demands? Where 100% markups double the retail cost? And or, the basic cost of doing business?

The way to revive manufacturing here is via a combination of cooperative capitalism, even where that requires government involvement and initiation? Streamlined compartmentalised component delivery, from the one site? Cheaper than coal thorium, coupled to middlemen free marketing!

Which could be limited to online sales and earning every dollar, commissioned agents, whose commissions ought never exceed 15%!

If only we had pollies who'd been in the manufacturing business, rather than Doctors, Lawyers and a plethora of (know all the reasons it can't be done) Academics!?

Little wonder the country and the economy is going backwards?

Don't just do something, stand there!
Alan B.

One should add, that real tax reform would remove the need for compliance costs, thereby bulking the average bottom line by around seven percent!? Sometimes the difference between commercial success and going under!

This and all that referred to in my previous post is not only doable but too easy! And resisted to their last breathe by folks willing to put self interest way ahead of a national interest, which if implemented astutely, would more than outweigh their current cash flow models/interests!

Together we stand, divided we fall!
Alan B.

A timely article Ross, thank you. I think the last sentence (conclusion) is a correct summary and deserves to be taken a great deal more seriously by everyone, and certainly by our "learned leaders" in Canberra.

At the same time, while I share *ttbn's* concern about centralized economies, the simple fact that the States will never recover their income taxing powers that were ceded to the Commonwealth Government in 1942 means there is a very limited tax base from which they can operate with any semblance of independence.

One has only to look at the annual bickering over Federal distribution of the G.S.T. to see just how enfeebled are the States in our "wonderful" federation.