CHOICE membership

Australian Manufacturing

This is very true, and rushing into goverment policy to ensure Australia can manufacture medical supplies and equipment…or other essential products may have no influence over the outcome of the next major global event. Spending taxpayers money to support such ventures could prove an enormous waste of time and monies.

Do we predict that there will be a major global war? Or how about another Krakatoa sized or bigger eruption which could through land surface cooling (due to ash cloud shading and solar reflection) impact significantly on global food production? And different scenario lists go on. Each one would have different responses, different essential products and services and different government/community responses.

If one supports the argument that Australia needs to be self sufficient in production of all potential essential products/services, Australia would have massive redundancy in manufacturing/the economy to protect it from any future global event. There would be excess capacity hoping that one day it would be utilised. It would be a bit like tradie buying a prime mover and trailer instead of a ute, just in case truck drivers go on strike and are unable to deliver building materials. It doesn’t make economic sense.

The costs to satisify perceived impacts of any potential global event would be significant and be a burden to all future generations.

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A glut of oranges which, IIRC was caused by the import of tonnes from CA.

Yeah I had forgotten about the bendy banana issue.

Not quite. There was a glut due to the season and inability of Australia to export excess oranges to traditional markets. Maybe if these other countries stopped the import of all oranges from other countries other than Australia, Australia may have had a solution to the orange glut.

This website has import tonnages of oranges…and the size of the Australian industry. Australia exports about 20% of citrus grown and imports about 3% fresh oranges compared to the total production.

3% did not cause the glut and for oranges to be wasted.

Facts about the Australian citrus industry can also be found here:

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Thanks for the info.

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My guess is that Capitalism’s best-before date was some time before 1970. The energy crisis of the 1970s opened some of the cracks, but the flaws of extreme Capitalism were already there.

I prefer to think of it as engineering the economy.

Manufacturing is part of the picture. The labour market is, I reckon, a bigger part. That raises issues like a Universal Basic Income and Jobs Guarantee. Totalitarian Capitalism is unhealthy. We need to be looking after the welfare of the nation as a whole.

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Beyond our own borders, we should be investigating regional cooperation opportunities.

I agree that some balanced combination of a market and state management is required for a reasonable future. As my favourite left-leaning economist Ross Gittins put it, a society is not an economy.

I went searching for the author’s justification for saying the pandemic will bring it about: didn’t find it. The same for the death of market fundamentalism, he explains that in his view it is an act of faith not well supported by evidence (true) but as for this being the end of it - nothing substantial.

Wishing alone will not make it so.

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We’re often not spoon-fed every detail. I find engaging my mind constructive. What I come up with isn’t necessarily what the author intended, but that doesn’t matter. The reference is a start, not an end.

There are several reasons why manufacturing moved offshore. The cost of labour (high wages, holiday pay, leave loading, sick pay, limited hours) that are not experienced in SE Asia. Then there is the high cost of energy here. What assistance will federal & state governments offer to establish manufacturing here? Most states have high levels of debt which limits what they can do. And of course, China has seduced manufacturers here to setup there.

Better questions are why should they and what will be achieved if they do. The car industry was propped up for decades and that only put off the day when it collapsed. This cost the taxpayer a great deal, for that we got some jobs for a time. I can accept that in some cases money can be spent in that way but before doing so there must be a clear plan in mind about what is going to be achieved by it and how long it is going to last. Throwing money at manufacturing without answering those questions and considering where it would be best spent is not a good policy.

There is also economies of scale. The more widgets made, usually the lower the unit manufacturing cost and willingness to reduce profit margins.

It is not just manufacturing that has declined in Australia to be replaced offshore. It is also services. The economic principle of comparative advantage is just as strong in both areas. With the advent of high-speed data communications came outsourcing and then offshoring in the IT support area, and in “cloud” computing.
But that is a bit straying off topic.
I think that what can happen if a society offshores its basic needs can be seen in Venezuela today. Vast amounts of oil revenue. Government decrees that everything we need can just be imported using the oil export revenues. Local ability to produce things declines. Then the oil price crashes.

A thinking person might wonder why the worlds largest producer of lithium does little more than export concentrate.

I found the following from Austrade and the Govt. A brief thought the minister credited Simon Birmingham was super keen on lithium batteries as part of Australia’s future.

The value chain is represented in the following chart. It is a year or two old.

From global production of lithium batteries just 0.5% of the final value is earned in Australia. It’s difficult to say it is also earned by Australia (IE value kept in the country) without pulling apart the ownership of each Miner and producer of lithium in Oz.

The global industry was worth more than $213 billions in 2017. Relevant to another topic is the prominent role of China in the key processing stages of production after mining.

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The opportunities clearly exist!

The USA’s and world no 1 battery fan (Elon Musk) is looking to invest in nickel mining/production in Indonesia along with another battery factory.

Not that Australia is into batteries?

Cynically or tearfully, we must just be plain lucky to have the gas lead recovery, popularity assured?

P.S.
Should Australia stick to what it’s best at? Buying stuff on line from Amazon and Alibaba

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Interesting question, and not one with a simple answer.

Much of the problem comes down to money. Beyond human imagination, money doesn’t exist, yet we obsess over it. From the perspective of a nation with a sovereign fiat currency, if we imagine that we don’t have enough money, then we can simply imagine more. Some will panic about inflation but, in an economy with spare capacity, increasing the money supply doesn’t cause inflation.

So does Australia have spare capacity? The answer lies in what we waste. Underemployment has been trending upward for at least forty years.


If we can afford to waste so much labour, then we have spare capacity.

We have thousands of times as much energy available to us as we use. So we have spare capacity.

In short, if anyone can show me an economic sector where Australia doesn’t have spare capacity, then I’d be interested to see it. So why do we allow so much waste?

I reckon it comes down to fear and self-interest. The self-absorbed fear that they’ll be worse off, so they resist change. Positives of living in a stronger, fairer society and a more robust, more resilient economy are invisible to that mindset.

The COVID-19 pandemic exposed our fragile supply lines. China’s belligerence reveals our dependence on too few markets and sources of supply. Those are weaknesses that effective management could overcome. All it would take is leadership with the intellectual capacity, the ideological will and the courage to manage our resources.

Unemployment keeps a lid on wage demands, which maintains corporate returns on investment, which (in the short term) makes owners richer. You say unemployment has been rising for 40 years. Rather than a steady rise there was a big jump in the middle 70s and the graph has wiggled along up here and down there ever since. This was due to policy. Both sides of politics now have a policy of maintaining around 4-5% unemployed whereas in the post-war era of “full employment” it was more like 1-2% and most of those were short term stints between jobs.

We now have a permanent underclass of long term unemployed. When reality catches up with dogma and our leaders accept that keeping wage growth too low puts a big damper on growth - and almighty growth has to be maintained at all costs - we may see some change. It won’t be because keeping a reserve of poverty is doing wrong by a slice of society, it will be because we are here to feed the machine not that it is here to feed us.

An article about the RBA expecting weak wages growth to impede economic recovery.

Perhaps Government and business may be shooting themselves in the foot?

Which is pretty mad, IMO, its just not possible to continue growing infinitely… taht will kill the planet as surely as climate change.

No.

One hour per week of paid work is classed as “employed”. “Unemployment” therefore doesn’t measure anything meaningful.

There are many things, local manufacture of which would benefit the nation, though it might not be as cheap as importing. :thinking: Maybe privatising CSL wasn’t such a good idea.

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