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Issue #1667      December 3, 2014


Australia’s sinking manufacturing future

Defence Minister David Johnston’s comment last week that he wouldn’t trust the Australian Submarine Corporation (ASC) “to build a canoe” certainly lit a fire under a number of debates going on as Australia continues to de-industrialise. He later made a carefully crafted apology for the “rhetorical flourish” but pleaded provocation. The ASC’s Air Warfare Destroyer project is reported to be $350 million over budget and two years behind schedule.

The “apology” did not dampen disquiet about the objectivity of the tendering process for a new generation of submarines to replace the ageing Collins Class fleet. Early favourite for the replacement, the Japanese-built Soryu class sub, is claimed to cost half the amount of an Australian designed and built project. In this era of austerity and the end of the “age of entitlement”, the figures are scandalous. The Japanese submarine could cost slightly less than $20 billion; the Australian one around $36 billion. Other competitors are entering the bidding.

Government and opposition spokespersons have rushed to insist a fleet of new, long-range submarines is essential for Australia’s defence, given that our neighbours are getting richer and likely to spend their new-found wealth on high-tech military equipment. Every part of this argument is bogus. The truth is that the Commonwealth’s high level of military spending – roughly $85 million a day – is due to successive governments’ commitment to the US to relieve it of some of the economic burden of maintaining its grip on the region. The “Pivot” or “Rebalancing” of the US to the Asia-Pacific and Indian Ocean regions is being carried out to contain the growing influence of the People’s Republic of China, which doesn’t have a single foreign military base.

The defence minister’s behaviour over the submarine contract reveals a lot about the federal government’s vision for the future of the country. The Liberal Party used to champion the sorts of manufacturing capital attracted to Australia by high tariff walls and import quotas. Those mechanisms protected transnationals’ profits. This was feasible given the relatively undeveloped nature of infrastructure in low-wage centres at the time. Plant can now move more easily to follow low costs and even higher profits so political players like the Liberals have turned sour on local industries. Make no mistake, they are loyal to the international capitalist class, not Australian jobs.

Holden, Ford and Toyota will all cease production in Australia by 2017. The knock-on effect in manufacturing will be massive. Skills needed to maintain a manufacturing base and underpin our sovereignty will no longer be needed and will disappear. Once they go, the process of re-establishing them is hard to imagine. Job prospects for whole regions will suffer a hefty blow.

Industry Minister Ian Macfarlane once told the Sydney Institute that Australia is embarking on a “third wave” of economic development. The first was based on farming and agriculture, the second on heavy manufacturing and consumer goods and the third will be ushered in with the decline of the car industry. It is claimed the new wave will feature industries based on innovation, research and a high-skilled workforce. “Australia must move decisively to focus on the industries of the future,” Mr Macfarlane said.

Until recently, this was presumed to include military industries – industries where issues of national security would override the otherwise dominant neo-liberal “logic” of manufacturing in the lowest cost environment possible. That notion seems to have been thrown overboard, too. It appears that 2,000 jobs are at risk on the new Air Warfare Destroyer project. The South Australian government has proposed privatising the ASC in a submission to the Commonwealth’s Defence White Paper in a desperate but misguided move to keep much-needed, decently paid jobs in the state. UK weapons giant BAE might be interested, it is said.

Unfortunately for Australian workers dependent on this chaotic economic system for jobs, the Coalition doesn’t have a plan “B” for the Australian economy. It and its predecessors have avoided investment in industries of the future, such as in renewable energy and public transport infrastructure as much as possible and relied heavily on the mining sector. Extractive industries are capital but not labour intensive. Governments of the sort that have overseen the decline of Australian manufacturing need to be shown the door and replaced by one loyal to the interests of the Australian people. That would be the beginning of a genuine “new wave” for the economy.

Next article – Govt is too negative – Dodson

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