Published in The cANBERRA tIMES 6 October 2011
The trouble with the discussion or debate on raising or lowering trade barriers in Australia is that it is conducted without any notion of what constitutes the national good. Policy development, though calling it that is to over-blow the process, is done within an ideological vacuum.
Policy development with respect to manufacturing or agriculture is undertaken with short-term and most often self interest as the driving force rather than long-term vision and planning.
Where does Australia want to be in 10, 20, 50 years? What sort of infrastructure is required to sustain a population of 35 – 50 million people? How should we manage water, education, health, and food production?
What percentage of mining profits should be returned to the state to ensure projections of future requirements can be met in terms of fulfilling state responsibilities toward a growing population?
What should be the role of the state in Australia toward managing and providing the services listed above?
What sort of framework should the state create and maintain for the pursuits, activities, jobs and welfare to take place within? What should be the extent and strength of this framework? How self-reliant should the state be in providing for these needs?
These are the questions that should guide our planning processes.
The private enterprise model adopted in Australia to provide many of the services and infrastructure previously employed by the state has failed. It was enthusiastically embraced, following the love affair with Thatcher by conservatives in the West. Greiner, Keating, Howard, Costello, Rudd, Swan and Gillard have been and are songbirds for the private sector assuming state responsibility. Governments in Australia and the West more generally have leapt at government shedding responsibility.
They felt that less responsibility would lead to lessened possibilities of criticism. For example, when power failed or trains ran late. The notion was seductive – power without responsibility for the functioning of the state, offered all the perks of office, without the electoral difficulty of accountability.
But this model has not worked. The private sector has refused to take responsibility for failure of the public services they own and manage, tollways being a case in point.
Howard and Costello pushed the Keating model, resulting in emaciated public schools and a bloated private school sector. Universities and the CSIRO have been forced to lower or compromise standards. Apprenticeships are no longer provided by the state. Dental services for pensioners and the poor barely exist.
The basic infrastructure for commercial undertakings, other than the mining industry, is run down, inadequate for future growth and causing current productivity decline.
The normal economy, that is all activity other than that associated with mining, is in decline.
The management of scarce water resources, in conjunction with the sale of water licenses, means that the state cannot manage water equitably and fairly on behalf of all of its citizens.
Major corporations are in the business of buying these licenses including offshore interests, for perceived future profit when water becomes even more scarce than it is at the moment. They will sell water to the highest bidder, which will not include impoverished country towns or local food producers. They will sell to multi-nationals and major nationals growing cotton and crops for direct export to captive home markets or to previously secured global markets.
In Pakistan local landlords bought the rights to water generations ago, turning small farmers into tenants, and themselves into major landholders, when the price of land fell following denied access to water.
The Howard government failed to support the solar industry, a significant part of which went off shore. Many, if not a majority, of solar panels are now imported. It is an industry in which Australia should have been a world leader but vested interests and lack of will and vision saw an opportunity squandered.
What has all this to do with trade barriers, managing trade and implementing industry policy?
Consideration of this question turns on sustainability. To what extent can we rely on others to sustain an equitable standard of living and the environment for all in Australia?
Do we wish to destroy the local dairy industry and vegetable producers by allowing the major super markets to source from overseas? Cheap prices might have an initial appeal, but what if problems occur in the supply chain at some future point and local consumers are left in the lurch perhaps for some considerable period of time?
What control does a local consumer of imported food stuffs have over the use of pesticides offshore?
Where is the long-term benefit of offshore interests owning the rights to water? Surely access to sufficient potable water, at reasonable cost, is akin to the right of access to pollution free air. It should be an inalienable right. It should be a right managed by government, particularly with the population growth predicted.
Australia purchases most of its big-ticket defence items offshore. What is the threat that these items are purchased to meet? To what extent are items purchased to secure a place within the US defence framework? The costs of the F35 have blown out further than equivalent blowouts on the F III; do we need the F35? Did we need the Abrams tank?
To what extent do we want to be dependent on overseas manufacturers of our defence equipment? During the Vietnam War, Sweden refused to supply contracted Entac missiles because of our involvement in that war, is this sort of dependency healthy? It certainly does not enhance sustainability.
Many third world countries rely entirely on selling raw materials for their GDP and then use these earnings to purchase defence equipment, cars and other manufactured items and luxury goods. Are we starting to assume the profile of a third world country?
With a small and declining manufacturing base unable to meet ambitious defence requirements, Australian mining wealth is used to purchase expensive items of equipment that the government, more often than not, is unable to justify. Luxury and necessary items are imported from north Asia, but our dependency is underlined when inventories of Toyota vehicles and parts are still disrupted due to the Tsunami.
Submarines and large passenger aircraft are probably things that Australia should not be manufacturing; however farm implements, pumps, solar panels and farm vehicles probably are.
Trade barriers in the national interest are necessary but they need to be selective. The US protects industry and agriculture through a variety of measures, some more transparent than others, including the unequal and unbalanced US/Australia Free Trade Agreement. The EU has in place protective measures, as does Japan and China.
Australia needs to work out what it wants for the future and put in place measures to achieve those outcomes. The tyranny of distance both within the country and from most other countries ought to dictate a greater self-reliance in terms of doing and making things for ourselves.
It also dictates a greater role for government in providing a more secure framework for self-reliance and for the production of goods, which otherwise would not be manufactured here.
The forthcoming economic crises might in fact push us toward greater self-reliance, as revenue streams and offshore purchasing options contract.
Bruce Haigh is a political commentator and retired diplomat.