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Vote 1 - Protectionism

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rumpole

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Why should we be one of the few countries in the world that doesn't protect our industries & agriculture and give them a chance to grow ?

Our tariffs and import quotas are some of the lowest in the world, and industries are disappearing at a rapid rate, while other countries including Japan, the US and Europe have protection barriers via tariffs, import quotas and direct corporate welfare.

Are we stupid, or is everyone else ?
 
Re: Vote 1 - Protectionism.


Well - who is doing better economically - us or them???

Anyway, we do significantly subsidise our primary agriculture industry when required, (think industry bail-out funds, drought relief funds etc), and also indirectly via strict quarantine regulations etc. Several other sectors like car manufacturing also receive regular government subsidies.
 
Future food protection should be looked at imo. Selling land outright seems a very shortsighted policy. Bad enough that manufacturing industries are vanishing but we appear to be selling the farm to feed the same overseas workers who are now filling the vanished manufacturing jobs.
I'm far from being an economics guru but it all looks to be a worry to me.
I must agree with Rumpole that mining is a massive support to the current economic health.
 
"Size matters" and "Might is Right"
that's what it boils down to.

The US, Europe, Japan have had, for many decades, the necessary economic and/or military clout to "suggest" free world trade and open markets. ... for THEIR goods and policies; to THEIR benefit; in THEIR National interest.

Little Australia, together with the rest of the second and third world countries, had to follow the leaders and play by THEIR rules.
Ultimately, that led to deregulation, which turned Australia into a consumer of subsidised junk, which was pushed under "freedom of speech" advertising, protected by "intellectual property rights", while any profitable "iconic" Australian ideas and companies could be bought ("pilfered" more like it) by foreign capital. ... giving us the "Recession we had to have" ... forcing us into military adventures from Maralinga to Vietnam to Iraq to Pine Gap ... requiring our signature under all sorts of questionable UN policies, many of which are arguably not congruent with our National interest.

How much of our "sovereignty" is left?
With every signature under a UN "treaty", we're signing another piece of independence away. Want to bet that THEY make sure any such "treaties" are in THEIR national interest? And in those few instances, where that's not the case, THEY just ignore them and form a separate "Coalition of the Willing", or impose tariffs under some pretense, or send a fleet out to "research" rather than hunt, daring the rest of the world to challenge in court. Fancy some whale meat, anyone?
 
Tarrifs and import quotas are anti-free market.

The reason our industries are getting destroyed is not because we lack those - but because of very poor economic governance for the last two decades by all governments - which has made us uncompetitive.
 
Starcraftmazter said:
The reason our industries are getting destroyed is not because we lack those - but because of very poor economic governance for the last two decades by all governments - which has made us uncompetitive.
Click to expand...

Can you quantify this ?
 
rumpole said:
Can you quantify this ?
Click to expand...

Well the key issues as I see damaging our productivity are;

1. Very high salaries - this is solely the result of a housing bubble started by the Libs/Nats and propped up by the successive Labor government. If people did not need to service unfathomable mortgages, salaries would be a lot lower.

2. Very high currency value - this is again a fault of both sides of government, for not controlling a currency through tobin taxes, capital controls and most importantly not taxing the mining industry enough in order to set up a sovereign wealth fund to put downwards pressure on our currency.


If we didn't have these two problems, we would be much much more competitive as a country. Not just for industries like manufacturing but also for tourism and education since we'd be a much more attractive destination had we a property valued currency and no housing bubble.

But now, we are seen as the most expensive country in the world - and not one which provides value for this money we are asking. Then you have foreign students complain there is not enough housing for them to come and study.


All these problems did not have to be.... but they are - and nobody is fixing them anytime soon.
 

Well put. I agree with both the points you make.

The housing bubble could be minimised imo, by eliminating negative gearing in a phased way, and by requiring that only residents be allowed to buy residential property, thereby reducing competition pressure on prices. But is this politically realistic ? Governments like stamp duty on house transactions , and home owners like the value of their properties to increase so is any government going to burst the bubble and lose revenue and votes ?

I totally agree with your second point.
 
The great irony about stamp duty is that it is inherently an unreliable source of tax revenue (as every state government is now finding out). It would be far profitable for them to eliminate it in favour of a broad land tax paid by everyone.

It will also be good for the state's construction industry, and there are many other benefits.

But you know what they say....Australia is a first rate country with second rate government.
 
Re: Vote 1 - Protectionism.

Beej said:
Well - who is doing better economically - us or them???
Click to expand...
In the short term we are doing relatively well. But we are doing so in a manner comparable to an athlete on drugs - our short term success is at the expense of ruining long term health.

Let's face it, the classic way to identify a Third World nation is that it has very high economic dependence on "dig it up or chop it down". That's just what happens in those countries - they extract resources and sell them "as is" with not much else happening economically.

Australia in 2012 fits the "Third World" definition in every way except actual GDP, and that's only because we've been lucky thus far.

Any other country in a similar position would be trying to do something about it. For example, even though the Saudi's have the ability to set the price of oil they are still uncomfortable with such heavy reliance on oil exports. Hence their focus on value adding - petrochemicals etc rather than just selling the oil.

What happens 50 years from now when coal production is in decline, the gas is gone and there's an awful lot of holes in the ground but not much else? We're extracting and selling like there's no tomorrow, with no thought for even the medium term future.

At some point we'll go back to manufacturing, but not without one almighty recession / depression and years of pain in between.
 
Re: Vote 1 - Protectionism.


This is The Issue. If Australia wants to be as prosperous in the future, it has to do something now to ensure the wealth generated is being invested for the future or the country is in for some pretty uncomfortable times. Look at the difference between Norway and the UK. Both have extracted significant wealth from the North Sea. One has borrowed, consumed and allowed infrastructure to decay and now suffers massive structural issues. The other has invested, built and saved and survived a regional financial crisis pretty damn well.
Australia has two key competitive advantages - a strong education system and a stable legislative environment close to Asia. We need to shift to high tech industries and integrate more closely with Asia to enable us to provide services and markets (rather than just sending out dirt) for the large economies to the north. Right now the west is looking to invest in Asia, but increasingly Asia will look to invest in the West and Australia is well placed to take advantage of that.
If I were making a shopping list for Aus, I would:
1/ Offer significant tax breaks for technology companies and startups as well as pour enormous amounts of cash into the universities and CSIRO (and similar) to drive research.
2/ Improve education standards at all costs and continue to export education to the world
3/ Start a sovereign wealth fund with the specific goal of investing abroad in priority industries. Israel has done this very well and over time has managed to build their own high-tech industries through the lessons learned from their own investments.
4/ Deepen financial markets significantly. Australia's superannuation pool needs more instruments to invest in as sooner or later the assets will be chasing too few instruments. This means growing the fund management industry, developing private equity, somehow tying into other markets to get more liquidity
5/ Tax reform - introduce a proper mining tax, get rid of subsidies for housing ('negative gearing', FHOG etc) to promote investment in productive things
 
I agree 100% doctorj and I think most other Australians would also.

We just need to vote for the political party that will do that for us, unfortunately we can't.
 
Knobby22 said:
I agree 100% doctorj and I think most other Australians would also.

We just need to vote for the political party that will do that for us, unfortunately we can't.
Click to expand...
+1
"unfortunately we can't" because the one that promises to look after some parts, has it all in piecemeal, haphazard, and wasteful fashion to the point of becoming counter-productive. And the other, who might be able to set some efficient programmes in motion, lacks the will to provide the funds necessary to finance good public education.

QandA running in the background as a glaring example: We debate a non-issue whether gays should be allowed to call their union a union or a marriage. But nobody notices the elephant in the room: the majority of Australians under - let's say 35 - is even lacking the literacy and numeracy to a) describe the in plain language why (or if) the difference matters, and b) calculate percentages, even if they were given the numbers of straight, gays, and swingers.

As long as those discrepancies prevail; as long as it's deemed more important to use schools for social engineering and teaching majorities the importance of accepting every minority's views; as long as citizens are patronised into believing "the Press knows best", we'll remain third world and will continue to sink ever deeper into dependency.
 
Knobby22 said:
We just need to vote for the political party that will do that for us, unfortunately we can't.
Click to expand...

Ignore the main parties and look at Senator Online. Democracy using the Internet.

Obviously it will take generations (and therefore probably be too late) but it is better to vote for someone like them and at least say you tried to change things.

Disc - i have no relationship with them, just think it's a great idea
 
Yes well said but one problem non of it will happen so where are we going and how long before we get there.

I think the simpletons that run Australia just better bring back some protectionism it's easier than trying to think the problem through.
 
These sort of changes won't happen quickly. They also need a trigger. Since the failure of Lehman, Australian politicians have been busy singing their own praises about how their own skill ensured the Australian economy bypassed the crisis, when in reality it was little more than the impact of China, but even the Chinese boom won't last forever.

Things in China are not looking so rosy at the moment. Wages are continuing to rise quickly (Boston Consulting Group estimate wages for tech manufacturing in China has gone up from from 72 cents an hour in 2000, to $2.79 cents in 2010 and will more than double again by 2015) which is forcing manufacturing at the margins to places like Vietnam and Bangladesh and with it, reducing foreign direct investment. Chinese growth targets have been revised downward and inventories of things like copper, steal and cotton are at all time highs. Not to mention finished goods inventory which also are hanging around the highs.

So perhaps an adjustment is coming for Australia. The question is whether or not any politician will cease on the opportunity...
 
Re: Vote 1 - Protectionism.

UK = Thatcher, "economic rationalism", privatisation, reducing everything to a NPV calculation and generally running things the accountants' way. They ran the North Sea as hard as they could and scrapped many other industries (most well known being coal mining and various steel works etc) as the money rolled in. Now production has fallen in a heap due to resource depletion.

Norway = A long term approach much more closely aligned with that which prevailed elsewhere (including Australia) prior to financialisation of everything and following Thatcher etc. Engineers, scientists and other "doers" run the show with accountants doing the books. They actually deliberately held oil production down, knowing full well the benefits this would bring in the long term.

I contend that basically everything economic that most of the West has done in the past 30 - 35 years has been a dud when viewed from a long term perspective. The whole concept that we should sell ore and import metals (or sell wood and import paper - Australia does both of those). The whole idea that things like water utilities and public transport were somehow supposed to make a profit rather than providing a public service. The notion that speculating on the price of steel (or anything else) was some sort of alternative to running a real blast furnace and mining real coal to actually produce steel. The concept that public utilities, which basically built themselves up out of nothing (it never was taxpayers' money in most cases) ought to be sold and the funds frittered away. None of that really did us much good, now did it...
 
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