By Jack Liang
Jack takes on the election promises and commitments made by the Prime Minister. Here is his verdict…
While the rest of the world was struck with steady bouts of economic recession, Australia enjoyed a near ten year long mining boom that carried us through the GFC and onwards.
Macro-economically, the mining boom of recent years has been closely linked to the emerging economies of the world like China, and other Asian countries.
Heading into the 2016 July Federal elections, the Coalition knew that the benefits of the mining boom had already come to an end with many towns that were built on mining jobs being vacated in the major mining state of Western Australia. Australia can no longer rely on the demand of foreign economies demand for our natural resources in the long term.
Prime Minister Turnbull campaigned on the back of the slogan, “Jobs & Growth”, and he summed up the five points of his plan:
- Company tax cuts
- National Innovation and Science Agenda
- Defence Industry
- International Trade Agreements
- Work Experience for young jobseekers
While these five points are good and will help generate positive economic benefits such as lower consumer costs of living, through increasing trade and production efficiency, it can be argued that a new high-tech manufacturing base will create many more domestic jobs and be lower cost than defence spending. A plan that helps sustain and develop the capabilities of the everyday Australian should be preferred over creating incentives for large foreign companies to enter Australia, as while they may bring jobs, it is often in the short term, and at the moment, we cannot compete with the low labour costs of emerging economies.
Manufacturing is one of the few industries that can act as an economic multiplier in creating jobs and economic activity through product creation and it also helps stimulate other areas of society such as education and health due to the basic needs of the workers and their families based near the manufacturing centres.
Another positive aspect of manufacturing is that manufacturing in the past has accounted for about a quarter of Australia’s private sector R&D spending and more was spent on innovating new business models, practices, and systems to integrate new technologies. The flow on effects of technology diffusion and job creation through manufacturing also comes with the added benefit of long term job retention rates that services industries do not enjoy.
However, under threats of the carbon tax, the mining industry has unfortunately been focusing on minimising tax rather than maximising technology.
This has led to the local producers of equipment for the resources sector only constituting 2% of total manufacturing sales. Former Prime Minister Tony Abbott made the right move to repeal the carbon tax, but should have further pursued structural changes to encourage high tech mining rather than merely removing red tape.
Firstly, Turnbull’s idea of a National Innovation and Science Agenda will form the cornerstone of the this new manufacturing base that Australia will need to create if it is to be weaned from its reliance on resource commodities. National incentive to train and develop professionals and workers in creating and innovating new or more efficient technologies is essential to helping the economy develop new competitive advantages to ensure that Australians can still enjoy their way of life without the prospect of a weak economy.
Secondly, defence spending is good, but it is also very costly as at the present, as Australia does not have domestic technologies or capabilities to produce world class military equipment as shown through our reliance on French designs in our latest purchase of submarines. Defence spending will be worthwhile if we militarised a sector of our economy to produce enough equipment and vehicles to sustainably patrol and defend this continent. Defence spending will ultimately be a long term goal, and a worthy one considering that Australia is as large as the whole of Europe, while our army is only a fraction of the population. Economically, defence is an industry that has a robust, long term multiplier effect, while the production of this equipment will lead to the expansion of our military which will create long term jobs and bring about some good old patriotic spirit.
Finally, in our pursuit of jobs and growth, the efforts to turn this slogan into a political and economic success story are a great challenge for the present government and all future governments. Turnbull has set a precedent that the economy needs to restructure; the economy needs fresh leadership to take it into a post-mining boom world. Let’s hope that the Prime Minister and his ministers will come up with a solution soon, or we may face the prospect of losing not only our way of life, but also the ability to decide the fate of our nation through the hard work and dedication of every day Australians.