May 3rd 2003

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Articles from this issue:

COVER STORY: Why Crean's departure won't rescue Labor

EDITORIAL: Slash and burn for Australian textile industry

AGRICULTURE: Murray Darling farmers could lose 30% of water allocations

Will Alston repeat Keating's mistakes on media ownership?

STRAWS IN THE WIND: The thieves of Baghdad ... and Melbourne / Veritas / Shadow of Khomeini

COMMENT: Allowing nature to take its course is not euthanasia

HEALTH: How 'safe sex' misinformation puts young lives at risk

LETTERS: Nationals policy wrong (letter)

FAMILY: Men and marriage: rising inequality linked to falling fertility

DOCUMENTATION: Ethanol benefits become important public health issue

BIOETHICS: Do No Harm's major role in stem cell debate

Queensland National Party moves to stop sugar deregulation

BOOKS: Power Politics, edited by John Spoehr

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Slash and burn for Australian textile industry

by Peter Westmore

News Weekly, May 3, 2003
For 30 years the Irish Development Agency courted the world's leading computer firms to make Ireland their bridgehead into Europe, capitalising on Ireland having the youngest, best educated workforce in Europe. Ireland is now referred to as the Celtic Tiger.

The world's leading industries want to tap into Asian markets. For many of them, Australia could be their bridgehead, boasting many advantages: an extremely low risk of terrorism; absence of widespread graft and corruption; property rights are guaranteed and easily transferable; a transparent legal and financial system.

Instead of picking winners and attracting investors, Australia's leaders once again are pursuing their well-worn path of slash and burn policies aimed at making Australia one of the few free trade nations of the world.

The Federal Government is now considering proposals from the Productivity Commission which would see the virtual extinction of three of the industries - textile, clothing and footwear - where levels of protection remain.

The Government has given an academic and a failed businessman - neither of whom have any practical working knowledge of the textile, clothing or footwear (TCF) industries - the key role in determining the future of these embattled industries, through an inquiry currently being conducted by the Productivity Commission.

Advisory body

The productivity Commission is the Federal Government's principal advisory body on industry policy.

It was known as the Industries Assistance Commission, until the policies of the Hawke and Keating Governments transformed it into a body for implementing the Government's deregulationist agenda, which plainly did not mean industry assistance.

Renamed the Industry Commission, its recommendations led to widespread factory closures and unemployment in manufacturing industry, and the decline in Australian manufacturing which has pushed Australia towards the bottom of the manufacturing nations in the developed world.

A central element of this assault was the reduction of government support programs for industry, and the removal of tariff protection.

Under the general programs of phased tariff reductions introduced since the late 1980s, most Australian tariff rates were reduced to 5% or less by July 1996.

Remaining tariffs

The only remaining general tariffs of more than 5% post-2000 were in the Passenger Motor Vehicle and TCF sectors, where they were maintained at 25% on clothing and finished textiles and 15% on footwear and fabrics.

These tariffs have little impact on Australian consumers; but are very important for the hundreds of thousands employed in these and related industries.

The next planned tariff reduction, on 1 January 2005, will cut tariffs on clothing and finished textiles to 17.5%; and on footwear and fabrics to 10%. However, goods originating from the world's 50 least developed countries will all become duty free from 1 July this year.

In announcing the new inquiry into the textile, clothing and footwear industries late last year, the Federal Treasurer, Peter Costello, flagged his view that tariffs in the TCF industries should be cut to the minimum rate by 2010.

Not unexpectedly, the Productivity Commission recommended that most tariffs should fall to 5 per cent - which is negligible - by 2010.

It is bizarre that the future of these industries should be influenced by people who lack any practical knowledge of them: David Robertson, who previously was Director of the Centre for the Practice of International Trade at the Melbourne Business School, and Philip Weickhart, who in 2001 was dumped as as managing director of explosives manufacturer and systems supplier, Orica Ltd, after the company's share price had fallen from $12 to as low as $4.20.

The Productivity Commission report argued that there was "little that can or should be done to stop further adjustment out of the manufacture of labour intensive, standardised TCF products in Australia."

Italian example

Yet the Italian textile, clothing and footwear industry did not die in the face of cheap Asian imports. Industry policies saw them reposition themselves in the high quality fashion market, and these industries thrived.

Australia needs strong industry development programs - such as those currently used in the motor vehicle manufacturing industry, tourism and the film industry.

The United States, Japan and West European nations such as Ireland have successfully implemented industry development programs.

Are Australian governments too blind to do the same, or just too stupid?

  • Peter Westmore is President of the National Civic Council

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