Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

I grieve today about the state of manufacturing in Australia. On 29 June BlueScope Steel in my electorate announced that it would be closing its Port Kembla tin mill and ceasing production of tin plate in Australia.

This decision involves the loss of around 250 direct jobs at the Port Kembla operations. It is a major blow for the workers, their families and our region. BlueScope is the region’s largest employer, with 5,000 staff and as many as 2,000 contractors employed at any one time. The steelworks has an employment multiplier effect of 2.73, so many indirect job losses will follow, bringing the total losses to an estimated 600 jobs.

Steelmaking is central to the Illawarra’s regional economy. In 2004, BlueScope was responsible for about 16 per cent of the entire economic activity of the Illawarra. BlueScope is facing the prospect of a dwindling Australian manufacturing customer base, as companies choose to move their operations offshore or are forced to close because of cheap imports. The experience at Port Kembla steelworks is a case study of the general decline of manufacturing in Australia. We are experiencing a massive decline in employment since the election of the Howard government in 1996. A total of 145,000 manufacturing jobs have gone—that is a rate of 320 jobs per week.

Regrettably, the decline in job losses is accelerating. A recent study by the National Institute of Economic and Industry Research, released in July 2006, had this to say:

The trends identified in this report pose a gloomy future for manufacturing. If current trends continue, our economic modeling predicts stagnation of manufacturing output and job losses of up to 200,000.

That is, by 2020. It goes on to say:

Up to half of these losses would be directly attributable to increased import penetration and offshoring of local production. In other words, Australia is in danger of having its manufacturing sector hollowed out.

The impact of these factors contributed significantly to BlueScope’s decision to close the last remaining Australian tin plate mill. You only need to check the tinned foods on your supermarket shelf—the vast majority use offshore produced cans, contain food farmed overseas or were produced offshore. Cheaper packaged food from overseas is displacing local growers and processors and threatening the country’s industrial base.

A range of agricultural and industrial subsidies have made it possible for large supermarket chains in this country to flood their shelves with imported canned foods labelled as home-brand products replacing Australian produced and packaged foods. Empty cans have also been imported into Australia from subsidised producers mainly in the Middle East, and a number of Australian food companies which traditionally filled cans in Australia have moved those operations offshore.

It is true to say that Australian manufacturers are losing the battle against imports. In 1979-80 manufacturing value-added in GDP was just under 20 per cent; in 2004-05, that share was around 12 per cent. We know that manufacturing exports are falling as a proportion of GDP while imports are rising, reversing the positive trends of the eighties and early nineties. We also know that Australia’s manufacturing industry performance is declining relative to OECD best practice with Australia having one of the smallest manufacturing sectors relative to total economies in the OECD.

The strategic error of policy under this government has been the failure to implement policies designed to offset the negative impacts of globalisation. In that regard, I am critical of Australia’s approach in relation to trade policy. I agree with the comments made by Kirby Adams, the CEO of BlueScope Steel, in a recent speech where he said:

Let’s be realistic—we are a nation of only 20 million people.

Yet we are caught up in ideology ... in the fantasy that we can lead the world to a free trade ‘nirvana’ by unilaterally dropping our tariffs.

He went on to warn:

While some people claim there are overriding benefits for those countries that unilaterally liberalise trade, there are massive costs for Australia’s manufacturers and for the millions of men and women employed by them.

He then talked about the impact of the current imbalance in tariffs between China and Australia and its potential impact on the Australian steel industry were we to sign up to a free trade agreement with China.

As we know, the Australian steel industry has very low levels of tariff protection and negligible government support. Most flat steel products are able to enter Australia from China tariff free. In contrast Australian steel companies face tariffs of up to eight per cent if they export flat steel products to China. He went on to say:

This may not sound like a large barrier, but in a highly competitive global market, it is enough to make Australian steel products uncompetitive in China, the world’s biggest market.

Any trade agreement with China in his view had to address these imbalances either by lowering its tariff—that is, China’s—or increasing Australia’s. He went on to say—and I found these comments quite interesting:

In Canberra, I might be labelled a ‘protectionist’ for expressing these views.

OK. I do want to protect Australian shareholders, Australian jobs and future jobs, and Australian exports. Isn’t that why we employ our governments? To protect us?’

In my view, Mr Adams is absolutely right and his comments are right on the mark.

Recent polling conducted by the AMWU in 12 marginal federal seats confirmed the attitudes expressed by Mr Adams and dissatisfaction with the government’s handling of the manufacturing sector in Australia: 68 per cent of voters in this survey did not think the Howard government has done enough to support industry and keep jobs in Australia; 84 per cent agreed that if Australia loses its manufacturing base it would start a long-term decline in our economy; and 93 per cent agree that it is essential to maintain manufacturing in Australia even if it needs some government support.

Manufacturing has a strategic role in the Australian economy. Despite its small size by world standards, manufacturing in Australia today is still the largest employer and the largest investor in R&D. It accounts for the largest share of merchandise exports by industry sector and represents some of the best paying and highest skilled jobs. It is vital that the loss of the manufacturing industry from Australia is halted and that we do not accept its decline as a fait accompli.

The current mining resources boom will not ensure the long-term sustainability of our economy. As the mining boom fades as our terms of trade fall from their historic high point and the economy slows, Australia will be in a very vulnerable position if we do not heed the wake-up calls about our declining manufacturing base. The report by the National Institute of Economic and Industry Research paints a bleak picture for manufacturing communities around Australia and the future economic health of our nation if current policies persist. The report analyses the importance of manufacturing for the future and why, with government support, local industries can grow. It points out that industry assistance policies need to focus on creating a sustainable competitive manufacturing industry through sustained innovation, research and development, investment strategies and export market schemes, and through training highly skilled labour for advanced technologies.

The report also highlights that without an effective industry policy the Australian economy faces enormous challenges in the future, not least of which is the impact of the loss of 200,000 jobs by 2020. I am pleased to say that the public does not believe that the flood of jobs and industries overseas are an inevitable part of living in a globalised economy; they believe that the government can and should play a role in ensuring the survival of our manufacturing industries. It is time the Howard government made a stand and backed Australian manufacturing.