Manufacturing: What to Do

by Bob Carr

 

In the mid 70s we used to apply a tariff of 57 percent to every vehicle entering the country. When the imports still came, because people preferred better cars from overseas, the government introduced quantitative restrictions. Just banned further imports. The result was an old, rusting and environmentally-inefficient car fleet and a disproportionate share of a family’s income sunk into purchasing the vehicle they needed.

All to prop up a few jobs in decrepit factories at Pagewood (GMH) and Alexandria (Leyland). I’m writing about Sydney. Making cars that Australians preferred not to buy.

Yes, our manufacturing is contacting because of the high Australian dollar and the full-throttle industrialisation of China which will be followed by the full-throttle industrialisation of Indonesia and Vietnam and, in turn, the full-throttle industrialisation of Sub-Saharan Africa.

When I was at school the textbook told us that 27 percent of the Australian workforce worked in manufacturing. As a kid I would cycle on my push bike around the factories of the Botany industrial zone and dream of the day we had even more of them. That was an illusion. Our workforce is better paid in an economy where only 8.6 percent is employed in manufacturing.

What would an inquiry into manufacturing do? In 1975 there was a Jackson Inquiry into the future of Australian manufacturing. It was quality work, but the premises were all wrong. Australian manufacturing was only going to become internationally competitive with the lifting of tariff barriers. They were lifted and it did. No other nostrum was remotely relevant. But in the end without a low dollar it was not able to compete with China.

The question: what to do? Locking out imports makes everybody pay.

Unemployment is half what it was when we had high protection.

 

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