Comment: Why Australia needs a strong manufacturing baseby Doug CameronNews Weekly
, May 5, 2001
This is an edited version of the paper given by Doug Cameron, the National Secretary of the Australian Manufacturing Workers Union (AMWU), to the Society for Australian Industry and Employment. Whether one agrees or not with every point raised, this paper shows a clear awareness of the consequences of the decline in Australia's manufacturing industry.
On February 11, 2001 the Prime Minister made the following statement on the Sunday program on Channel 9:
"The reality is that economic sovereignty, economic independence and economic dignity are a very important part of political independence and political dignity."
You would have to be as out-of-touch as our current Prime Minister not to realise that our economic sovereignty, our economic independence and economic dignity is under daily siege and diminishing at a rate of knots.
Internationally we are viewed as no more than a quarry, a farm and a "nice" place to visit.
Our dollar is one of the weakest currencies in the world, economic commentators dubbing it the "Pacific Peso". Why no politician in the two major parties is championing a Tobin Tax or a currency transaction tax is a mystery.
We have a massive $60 billion trade deficit in elaborately transformed manufactures. This is double the deficit at the beginning of the decade.
We have lost, through lack of vision and the sheer incompetence of the Federal Government, 75,000 manufacturing jobs since May 1996. There are growing divides within Australia in relation to: wealth; power; democratic rights; health; education; the environment, and access to technology.
We have almost lost any claim to sovereignty, independence and economic dignity. As we become more enmeshed in the neo-liberal economic theories of the Howard Government our capacity for political independence and political dignity disappears.
Unfortunately, on many of the key political and economic issues there is bipartisan support from the conservatives and the ALP. These issues include, but are not limited to free trade; balanced budgets; low interest rates; and market force supremacy
The ALP, as a result of AMWU intervention at the Hobart Conference, has a reasonable policy on manufacturing and industry development. If it adopts economic rationalist policies in other areas, the opportunity to develop its industry policy will be diminished. This will be an ongoing challenge for progressive forces within the ALP.
Of particular concern to the AMWU is the promotion of bilateral "Free Trade" Agreements with the USA, Singapore and, from the ALP, China.
The proposal for a "Free Trade" Agreement with China, or any other country, without proper analysis of the effect on manufacturing and employment, is sheer stupidity. Currently we export $473 million worth of elaborately transformed manufactures (ETMs) to China. We import $6.7 billion.
The myopic focus of our politicians on primary products and minerals as the basis of our economic prosperity will ensure the impoverishment of this country.
It will hasten the growing divide between the rich and the poor and create an ever-growing groundswell of opposition to, and backlash against, neo-liberal economic policies.
The backlash will be industrial, political and community-based. The demise of our manufacturing base is slowly being recognised as the major economic problem facing the country.
BHP's "merger" (reverse takeover) with Billiton was hailed by John Howard as "a marvellous merger that is going to make Australia the centre of activity". What a myopic, misguided view!
The BHP merger has all the hallmarks of a "reverse takeover". BHP's petroleum arm will move to London. Billiton's share price goes up and BHP's down.The CEO of Billiton will take over as CEO of the merged company. BHP will "spin off" its manufacturing capacity. Eventually BHP headquarters will end up in London.
For John Howard to applaud this is reprehensible. This merger confirms the overseas view that we are a huge quarry.
There should be a legislative requirement that resource-based companies which exploit Australia's natural resources have an obligation to create strong supply chains with downstream value-adding, skilled manufacturing jobs and apprenticeships.
The AMWU will not sit back and quietly watch the economic vandalism perpetuated on our nation by visionless, uninspiring politicians who have been captured by, and capitulated to, economic rationalism.
We will take our twin messages of "Fair Trade Not Free Trade" and "Make It Here Or Jobs Disappear" to the community and, in particular, to marginal electorates around Australia.
We will not allow the manufacturing industry to be ignored, marginalised and diminished without a fight to save it!
In addition to our campaigning, we will continue to develop alternatives to the economic orthodoxy which is blighting our country. The AMWU will fight for: Fair Trade Not Free Trade
*Core labour standards for workers in all nations around the world.
* The outlawing of child labour and forced labour.
* National impact assessment analysis of Trade Agreements, particularly whether the agreement will adversely affect Australia's manufacturing base.Make it Here or Jobs Disappear
* Compulsory local content requirements for projects which receive public funding or exploit the nation's resources.
* Modifications to Competition Policy to enable governments to create Australian jobs on Australian projects.
* Significant upgrading of the Industrial Supply Office funding and capabilities.
* Lobby Australian superannuation funds to increase investment in private equity investment in manufacturing. STA will increase allocations from 2 per cent to 5 per cent. This will deliver $750 million for manufacturing investment by 2008.
The AMWU will seek to expand the concept of community based "social audits".
The Hunter Taskforce is currently undertaking a study of the economic and social impacts of the loss of thousands of manufacturing jobs in the region. Both major political parties have been proclaiming a "Hunter miracle" based on official unemployment figures.
Welfare and church groups on the Taskforce claimed that they were struggling to keep up with the increased demand for assistance. They were not witnessing a "miracle".
As part of its contribution to the Taskforce, the AMWU commissioned Dr Peter Brain and the National Institute of Economic and Industrial Research (NIEIR) to undertake a Hunter study. The results are an indictment of economic orthodoxy practised by our major political parties. Real unemployment
in the Hunter was 11.2 per cent compared to the official figure of 7.8 per cent. In Muswellbrook the real rate is 16.2 per cent, official rates claim 6.7 per cent.Wealth distribution.
The average Hunter household income in 1991 was $23,130 or 93% of the state average of $24,871. In 1996 the percentage had dropped to 87 per cent or $6,317 less than the state average.
The supply chain was weak and the Hunter was not fully benefiting from its abundance of natural resources.
I want to turn briefly to the issue of tariff reductions. Again the AMWU commissioned NIEIR to prepare an easy-to-read summary of the consequences of tariff reductions. NIEIR found:
* The cost to the Australian economy of reductions in tariffs and other forms of industry assistance are greater than the benefits.
* The costs have been disproportionately borne by the manufacturing industry and manufacturing workers.
* Tariff reductions have increased the inequality of income distribution.
* Tariff reductions have made the economy more, not less, dependent on mining, natural resources and primary industry.
The reduction of tariffs since 1987 has resulted in the loss of approximately 60,000 jobs. There were approximately 90,000 fewer jobs in the year 2000 as a result of tariff reductions.
By 2005 total employment in the economy will be 200,000 less as a result of the tariff phase-down.
One of the pre-conditions for achieving sustainable reductions in unemployment as well as improvements in community living standards is for governments to develop and implement sophisticated and adequately resourced industry assistance policies. Conclusion
In conclusion I wish to raise a number of initiatives designed to build a more robust, broader-based economy in Australia.
How do you create a realistic vision for manufacturing? How do we embrace:
* traditional manufacturing, as well as new start up manufacturing;
* import replacement, export expansion as well as manufacturing that services the domestic market;
* small, medium and large scale firms across a wide and diverse range of products and industries - be they low, medium or high-technology, domestically or foreign-owned?
According to our analysis, 11 areas need particular attention:
1. The provision of venture capital at the start-up, early expansion stage for a wide range of manufacturing firms.
2. Moving Australia from a significant user and importer of new technologies, to a developer and manufacturer of information hardware and software. How do we encourage "partnerships for development" with companies like Telstra and Australia Post?
3. How do we learn from Ireland's manufacturing growth and foster the development of clusters of new knowledge intensive enterprises in regional Australia?
4. What can we do to lift the level of investment in education and training to the levels of leading industrialised economies?
Current investment is billions of dollars short of this target. Should additional investment in training leading to national qualifications be eligible for R&D tax concessions? After all, it is an investment in the future.
Should those firms which fail to invest at least three per cent of payroll in training for national qualifications pay more tax than those who do made a contribution to the nation's skills?
Should those on higher incomes pay a levy, much like the Timor levy or the guns buy-back levy, to build a knowledge nation?
Should we as a nation adopt some clear and realistic targets on education and training for the next five years? This would include lifting the number of apprentices at trade level or above by 50 per cent, we ensure that 50 per cent of the workforce actually participate in training towards national qualifications each year and 95 per cent of all 20-year-olds should have completed Year 12 or an initial post-school vocational qualification or be in higher education or training.
5. What do we do to replace the Government's failed "Innovation Statement"? How do we make up for the $10 billion investment gap in research and development (R&D) as a result of the removal of the 150 per cent R&D tax concession? How do we provide long term certainty in the area of R&D legislation?
6. Of the 50,000 businesses nationally which are classified as manufacturing, only 15 per cent export. What initiatives do we need to double this figure? How does the emergence of the on-line economy and e-commerce change the parameters of this challenge?
7. What are the challenges facing our "naturally protected" manufacturing enterprises as a result of e-commerce and the on-line economy? How can we use government procurement policies and import replacement policies in an innovative manner and still meet WTO obligations?
8. How do we make "serviced enhanced manufacturing" a key part of industry sector plans in:
* Scientific, medical equipment
* Auto components
* Metals fabrication
* Food processing
* Printing and multimedia.
9. How do we assess the strengths and weaknesses of the management systems, organisational capabilities, skills and work organisation systems and culture in the nations manufacturing plants?
What parts of the Karpin Report on Australia's management need to be revisited?
How do we overcome prevailing employer culture of managerial prerogative and "false partnerships"?
10. How does the nation fund a set of innovative trade and industry policies designed to correct the structural imbalance of the economy?
11. How do we create a sense of urgency and ensure a national development strategy that becomes an organic process of rebuilding and renewal? How do we harness the energy, commitment and leadership to make this new agenda a reality?
These are the questions our politicians, business leaders and opinion formers must address. Failure to address the plight of manufacturing effectively will leave a legacy of poverty, social dislocation and a society incapable of care, compassion and growth.
Let's work together for the sake of our community, our children and our future.