Gillard’s manufacturing plan

Many would have by now heard of Gillard’s grandiose plan to “save” Australian manufacturing. The policy is clearly pitched to secure the support of what was once Labor’s traditional constituency, the blue collar worker – a constituency that the party has neglected for decades.

The plan announced by Gillard in Melbourne focuses on a legal requirement for companies involved in major projects to utilise as much local labour and technology as possible – indeed an admirable plan.

This, combined with headline-grabbing “feel good” policies such as the establishment of “trade hubs” located in Adelaide and Melbourne designed for the purpose of pushing for export contracts makes for a renewed hope that perhaps Labor is once again returning to a genuine concern for the forgotten constituency – working Australia.

However, Australians have a right to ask for more details regarding this exciting development. The truth is, Australian manufacturing has been under assault by both parties for decades, with Labor (strangely enough) being the worst culprit. Our nation’s manufacturers have faced ever-increasing hardship due to the political penchant for open borders and ludicrous “free trade” agreements – but never was it quite as evident as under the Hawke-Keating regime.

The use of taxpayer funds to lure business is nothing new in politics. The practice was commonplace in South Australia, a state which once boasted 33% of its workforce to be in manufacturing related employment. What wasn’t acceptable was the fact that millions of dollars was used to lure the companies, only to see them close up operations to move overseas or interstate (after awarding the management hefty bonuses). No penalties followed for breach of agreement and in one case, the company offered to repay the government the incentive payment and was refused!

On the surface, Gillard’s plan looks refreshing but is painfully short of detail. For example, any projects worth more than $500 million will need to have an Australian Industry Participation Plan. This seems fair enough, however, in the case of mining which is overwhelmingly handled by foreign investment and multinationals, what is to stop them finding a loophole which involves breaking the project up into smaller operations each worth less than $500 million and subcontract operations and supply contracts to companies within their own group? “Vertical supply” is commonplace within multinational operations and this policy will not be enough for them to change their practices. Furthermore, the “plan” only identifies local companies with the capacity to pitch for the work and ensures they have early notice about “opportunities”.

Departmental officials suggest the changes could deliver up to $1.6 billion a year in extra work for local business, rising to over $16 billion in the next decade – “suggest” being the operative word.

Perhaps we are too harsh. Perhaps we should be applauding Labor’s “Road to Damascus” epiphany in regards to manufacturing, regardless of how flawed it may be. However, it is a given that local manufacturers, producers and farmers need a secure local market as a foundation upon which to build their operations and create local jobs. Unless the government secures that basic condition by strengthening quarantine regulations, actually pursuing Anti-Dumping Legislation and implementing a sound and moderate system of tariffs on foreign made goods, then all the “feel good” policy fluff such as exciting “export hubs” are nothing but a waste of taxpayer money.

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