Address to the Menzies Research Centre Manufacturing Industry Roundtable, Melbourne
Posted on Monday, 7 November 2011
Thanks very much Tom, it’s great to be here. I want to thank everyone who has been part of what has obviously been a pretty special morning and I think that it will be a pretty special afternoon as we hear from people who have been in the real world, who have been manufacturing and succeeding in a hardscrabble marketplace. It’s good, Tom, that the Menzies Research Centre is attracting such a calibre of speaker.
It’s also good that so many of my parliamentary colleagues are playing such a role with the Centre and showing such interest in its work and I too should acknowledge and thank my shadow ministerial and parliamentary colleagues for being here, Andrew Robb, Ian Macfarlane, Sophie Mirabella, Bruce Billson, Dan Tehan, Jamie Briggs, Karen Andrews, Kevin Andrews and it is also good to have Vickie Chapman here. It’s particularly good to have some of our former ministerial and parliamentary colleagues with us today, Mark Birrell, former distinguished minister in an excellent state government, Robert Hill, a brilliant minister for defence, and Guy Barnett, one of the finest senators Tasmania has ever produced. So it’s very good to have you all here.
Can I just say of the Menzies Research Centre that it’s very important that politicians are informed by the best thinking and I like to think of the Menzies Research Centre as proof positive that we are the thinking party, that we are the party of reform and that where necessary we are the party of change. John Howard used to say that we were the custodian of both the liberal and the conservative traditions in this country. I think he was right but people shouldn’t think of political conservatism as being opposed to change. It was one of the greatest of all conservatives, Benjamin Disraeli, who said that conservatism is in favour of change provided it is change which accords with the customs and traditions of the people. I understand from Tom and from the others that I’ve been speaking to this morning that you have been interested in policy improvements that conform with the best instincts and the best practices of Australia over time.
Now, I’m pleased, Tom, that there has been universal agreement that not only do we need a manufacturing sector but that we will have a manufacturing sector into the future because it’s very important that the Australian economy not simply rest on mining. I think we are very lucky to have a strong and expanding mining sector. I am distinctly uncomfortable with those critics of the two speed economy who suggest that the success of the mining industry is somehow bad for Australia. It’s not bad for Australia, it’s good for Australia and I think it’s important that we remember always that you don’t speed up the slow lane by slowing down the fast lane. But we can’t just be a one pillar economy. We can’t just be a mine just as we can’t just be a farm or a hotel. We need the factories, we need the banks and the other financial institutions, we need the educational institutions to flourish if we are to be a well-rounded modern economy.
Now, it’s true that manufacturing industry in this country has been under pressure, a great deal of pressure for quite a long time. The manufacturing sector has shrunk from about 17 per cent of GDP to about nine per cent of GDP over the last generation and a half. In the last four years alone we’ve shed 136,000 jobs in manufacturing. We all know the problems. We have small domestic markets, we have great distances to overseas markets, recently we’ve had a high dollar and of course we are normally a high wage economy. Now I’m pleased, Tom, to already have spoken to some of the successful manufacturers in this room and to have heard the message that we don’t want to complain about the difficulties, we want to build on the opportunities, but there are difficulties and it is our responsibility as Members of Parliament, as the alternative government of Australia, to do what we reasonably can to address these difficulties and where we can remove them.
Government has been part of the problem rather than part of the solution in so many ways over the last few years. I want to particularly focus on the high taxes and the limited flexibility which have been a product of the policies of the current Government. You all know, anyone who has any real world experience, that the carbon tax is poison for the manufacturing sector, absolute poison for the manufacturing sector and the more we see of this carbon tax the more toxic it seems. I congratulate the Minerals Council for the modelling that was released today, modelling based on much more realistic assumptions about what the rest of the world will do which suggests that the Australian economy will be a cumulative $180 billion poorer by 2020 with a carbon tax than without one, that our wages in 2020 will be 1.9 per cent lower with a carbon tax than without one and that the carbon tax in 2020 won’t be $29 a tonne as the Government is forecasting, but $43 a tonne because the overseas opportunities for abatement will practically be far less than the Government is currently forecasting.
Colleagues and friends, I don’t want to leave it at that. I should also acknowledge the difficulties that the Government’s workplace changes have been causing our manufacturing industries, indeed difficulties that have afflicted so many parts of our economy. Award modernisation has in many cases involved averaging up and caused enormous difficulties for small businesses. The Fair Work Act has plainly imposed significant rigidities on our economy. Heather Ridout is hardly a workplace relations radical and yet she has said quite rightly that individual flexibility agreements have promised so much, delivered so little and it will be important for the next government to build on the possibilities in the Act and vastly improve these agreements.
Then of course there’s the new wave of industrial militancy that we have seen most recently with Qantas. In the last 12 months of the Howard Government just 35,000 days were lost through strikes. In the first year of Fair Work 126,000 days were lost to strikes and in the last concluded year of Fair Work 160,000 days were lost to strikes. This is a significant upsurge in union militancy and it is almost certainly going to get worse.
Now, lest anyone get tremendously and prematurely excited, let me repeat the Coalition will have a strong and effective workplace relations policy. It will be based on problem solving, not on ideology and it will be released at the time that suits us, not the time that suits the Government and that means that it will be released in good time before the election but as I stress, at a time that suits us, not the Government and not some of our more self-interested critics.
A more flexible workplace is a very important component of our six point plan to boost productivity and boost wealth and I should briefly run through the five other elements because in the end the best way to improve manufacturing in this country is to have a strong and dynamic economy and a strong and dynamic economy will have higher levels of workforce participation. We have too many people who could be productive but are not because of the cult of youth in our workforce or the tendency of our welfare system to keep people out of work who could be in work. Now, we took some strong and innovative policies to the last election to boost participation, to boost youth participation, to boost seniors’ participation. They will be important parts of our policy at the next election. We will expand on them but what we took to the last election will be the foundation of those policies at the next election.
We do need more productive public as well as more productive private institutions. We can get better performance from our schools, our hospitals and our other great public institutions and in large measure this means making them more responsive to the people they serve.
We do need a serious attack on regulation and red tape – I gather, Tom, that this has been one of the staples of this morning’s discussion. Now, it’s easier to promise to remove red tape than actually to do so, but there has been operating for some years now in Victoria what appears to be the best practice model of red tape reduction. We are going to adapt that to the federal scene and we believe that we can save $1 billion a year for business by adopting that model.
We do need a genuinely level competitive playing field, not just internationally but domestically. So we will review competition policy to ensure that it is genuinely fair to small players as well as to big players and finally, the billions and billions that the federal government spends on infrastructure needs to be spent as efficiently and as effectively as possible. One of the first promises that the Rudd-Gillard Government broke was the promise not to make major infrastructure spending without a published cost-benefit analysis first. I don’t believe there has been one published cost-benefit analysis but this Government, even though there have been vast projects announced, many of which have already become white elephants. So we will be different.
Above all else, though, as my friend and colleague Andrew Robb so often says, we will live and govern in accordance with three principles. We will live within our means, we will build on our strengths and we will avoid the manifestations of the nanny state which have been so obvious from this Government.
Today, ladies and gentlemen, I want to specifically announce an important component of our policy for a stronger manufacturing sector. As those of you in the real world of manufacturing would know, it is all too easy for larger international rivals to damage your business through the practice known as dumping, through exporting to Australia, goods at below cost with the particular purpose of damaging local competitors. There have been numerous instances over the years of destructive dumping. I simply want to draw attention to one recent example where we had paper products from China and Indonesia dumped in this country at up to 40 per cent below cost. Kimberly-Clark, our major paper product manufacturer brought anti-dumping action. After spending hundreds of thousands of dollars and consuming several years, that action was inconclusive. Shortly after, the action ran into the sands, they closed two plants with a loss of 170 staff.
Dumping is not just a theoretical threat. We need to cope with the threat of dumping if we are to allow our local manufacturers the fighting chance they need to survive in a difficult international environment.
So today, thanks to the good work of Sophie Mirabella, assisted by other frontbench colleagues including Ian Macfarlane, we do release an anti-dumping policy. The three most important principles of which are first, we will shift anti-dumping rules administration from the Department of Customs to the Department of Industry. Customs has more than enough on its plate right now with border protection and other difficulties for it usefully to surrender to industry this important area of policy. This has happened in the United States and it’s something which would usefully happen here in Australia as well. We are significantly increasing by about a third the anti-dumping resources available to government. Most importantly of all, we are reversing the onus of proof in anti-dumping actions. Under our proposed changes, once a prima facie case of dumping has been established, after 60 days unless the dumper can demonstrate that in fact no dumping is taking place, countervailing duties can be imposed.
I want to make it very clear that everything we are proposing today is entirely consistent with our World Trade Organisation obligations. We believe in free trade, we really do believe in free trade, as a great international trading organisation. We must do everything we humanly can to protect and promote free trade principles, but what we are announcing today is entirely compliant with our World Trade Organisation obligations and it’s entirely consistent with what other countries such as the United States and the European countries do.
The other point I want to make is that there will never be under the Coalition a return to protection. We don’t want to build walls against the world. As far as we can in this country we want to break down those walls against free trade. So there won’t be new subsidises under the Coalition but we do have to ensure that as far as is humanly possibly the ingenuity, the creativity and the industry of our industrial entrepreneurs is not destroyed by unfair competition and that’s why I think these rules are important.
It’s sometimes said that we have been a negative Opposition. Well, I believe the most positive thing the Coalition can do for our country right now is to stop the damage that this Government is inflicting upon it. We say no to a mining tax because we believe in the investment and jobs that mining can bring. We say no to a carbon tax because we say yes to affordable energy and we say yes to the lowest possible cost of living for Australian families. We say no to mandatory pre-commitment because we say no to the nanny state and we say yes to sensible policies to reduce problem gambling, not foolish policies that will take a sledgehammer to crack a nut.
In every area of policy we believe that there is a better way and that’s what we are doing today with the announcement of our anti-dumping policy. We are showing the public of Australia that there is a better way to protect and promote manufacturing industry than that which we have seen from this Government.
Our plan, ladies and gentlemen, is for a stronger economy that will give us a stronger country. Above all else, this means government living within its means, as families do, because lower government spending means lower taxes, less government borrowing means lower interest rates and that means less pressure on families’ cost of living.
We will scrap Labor’s toxic taxes. We will get Labor’s debt under control. We will stop the boats and strengthen our borders and we will produce better services for the Australian public in health and education. Above all else, we want to restore hope, reward and opportunity to the Australian people. My mission, the mission of all my parliamentary colleagues, particularly the mission of all my shadow ministerial colleagues, is to give a great country the better government that it deserves.
I think events like this are very important in bringing that about and again I want to thank the Menzies Research Centre for its work in promoting intellectual and informed debate and I particularly want to thank all of you for your contribution to that today.