A shadow of an industry policy
The Good Oil by Rod Brown*
Well the Dries are out in force, selling the manufacturing sector down the river. John Button, the peerless industry Minister of the Hawke/Keating days, would be turning in his grave. Ross Gittins (Economics Editor at the Sydney Morning Herald) is a typical example – he postulates that we don’t have a transitory commodity boom like we’ve experienced many times before.
This time, he says, we “have a historic shift in the structure of the global economy as the Industrial Revolution finally reaches the developing countries…the day will never come when we’re able to reopen our steel mills and canning factories…”
My big worry is that Gittins’ views are beginning to shadow Federal industry policy! Having spent 25 years working in the industry department trying to give our manufacturing industry a future, and a stint at the OECD analysing other nations’ industry policies, I owe it to myself to get cranky. Now let’s be brutally frank.
Six messages
1. Industry policy is defined as a ‘nation’s official strategic effort to influence sectoral development.’ We have nothing like this. Even the title of the industry department – the Department of Innovation, Industry, Science and Research (DIISR) – explains how manufacturing has slipped in importance!
2. Australia’s industry policy has very little sectoral emphasis – except for the alarming spread of reactive adjustment packages in respect of company closures in paper products, automotive, engineering, steel, processed food and the like in places such as Adelaide, northern Tasmania, Wollongong and Lower South East South Australia.
3. Our industry policy is not strategic – it’s mostly about providing diagnostics to improve the performance of companies (Enterprise Connect) or funding innovation via the R&D tax credit and the Commercialisation Australia program. These are good programs, but they are crying out for complementary strategic effort. There is no investment attraction program, no strategic purchasing agenda, no design program, no decent product labelling, no attempt to build global manufacturing alliances and no policies to add value to our mineral exports.
4. There is no longer a kick arse attitude in Canberra. We once had a strong Industry Department, with four manufacturing divisions, who took delight in nailing Treasury. And we had a Department of Trade with real movers and shakers. Now DIISR has a small manufacturing area, and the trade function is swamped by the elites within the Department of Foreign Affairs and Trade. As a sign of the times, Trade Minister Emerson shows alarm at the prospect of adjustment assistance upsetting the World Trade Organisation, when we’ve always been the world’s cleanskins in obeying international trade law!
5. Manufacturing industry is not a sop to the engineering fraternity or to create jobs for the semi skilled. It has the strongest multiplier effects of all the sectors. It provides the glue for long term wealth creation.
6. It is incredibly difficult for any manufacturer to compete with imports when the $A is so high. We have to help them develop sophisticated ways of dealing with our competition. If they can’t compete on price, they must compete on quality and timeliness. To this end, we must surely get into industrial design in a big way. The manufacturing sector is crying out for some programs to encourage a mindset of innovative design
In fairness to Gillard, Carr, Crean and Co., the Opposition has no clear idea of what to do either. It seems to me that our political leaders are clueless due to the lack of sensible advice from their advisers.
The role for Local Government?
First, economic development managers and local MPs should be talking to local manufacturers to relay their needs to Federal and State Governments.
Secondly, I believe an alliance of manufacturing regions should lobby the Federal Government and the Opposition. Councils, especially those in regional areas with few alternative industries, have a vested interest in this.
You are going to bear the brunt of the social problems. Apart from the big retrenchments, virtually every trade exposed manufacturer is shedding labour or thinking about it. The one bright spot is the defence manufacturers. At least we haven’t yet embraced Chinese munitions and equipment!
Déjà Vu
In January this year I suggested in this column that ‘an uncertain year beckons, with regional development coming to the fore. The Gillard Government may not see out 2011, as Abbott et al conspire to force a new poll. And Rudd may prove to be an unsettling influence – like Ricky Ponting, he hasn’t realised his time is up.’
Well, things are going as predicted. But the snigger campaign by the Opposition and their attack dogs against our Prime Minister is appalling. And the pressure is showing on her. Politics is no place for the meek and mild, but gee there will be big scores to settle when the government changes.
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*Rod Brown is a Canberra-based consultant specialising in industry/regional development, investment attraction, clusters and accessing Federal grants. He also runs the Cockatoo Network. He can be contacted at apdcockatoo@iprimus.com.au or phone (02) 6231 7261.
Go to the blog at www.investmentinnovation.wordpress.com for 550+ articles on issues relevant to Local Government.
