Comment by Alan A. Parker
Two million new jobs needed by the year 2000? Yet, a report prepared recently for the Victorian premier predicts 10% unemployment until then unless major changes are made.
The underlying problem is that Australia's manufacturing output has declined — from 26% of gross domestic product in 1965 to 15% in 1989. This is a very steep dive compared to Japan's drop from 34% to 30%. Around 94% of our imports are manufactures (about $12 billion worth of which we could make ourselves), and since 1980 our net national debt has grown very rapidly to $125 billion. On average, every working person now owes $20,000.
Some of the manufacturing jobs have been lost to new technology, but most have fallen to closures or moves offshore largely in response to reduced import substitution incentives.
Import substitution is by no means a new idea. It featured prominently in the Chifley government's 1943 National Reconstruction Program. It advocated massive job creation schemes and debt reduction. Chifley was able to reduce the war debt as a percentage of GDP and create jobs for 500,000 returning soldiers. Faced with a large increase in imports in 1947, he restricted 50% of semi-luxury imports and continued to pay off the national debt.
Despite the free-trade dogma of our present leaders, there is no way to bring our foreign debt under control or to achieve full employment without protection of our local industries. This was understood years ago, and still is in many countries.
Irreparable damage has been done to industry because a group of econocrats, who in no way represent the aspirations of the Australian people, are committed to a high-export, high-import economy wide open to both fair and unfair foreign competition.
Data on the decline of Australia's manufacturing foundation points very strongly to incompetence in Canberra. This is evident in the litter of dead companies and in the reduced capacity of the state to protect its own citizens and maintain full employment.
Twenty years ago, economists in the Industries Assistance Commission set in motion this policy of deindustrialisation, which has particularly hit the metal, textiles, clothing, footwear and food industries.
Michael Pusey, criticising the anti-social assumptions of economic rationalism, outlines the anti-democratic consequences clearly: "... after a decade of economic 'rationalism' the state has, internally and externally, even less 'relative autonomy' than before and a reduced capacity to control Australian business or to compensate or protect its population from further predatory attacks".
A recent, much needed, increase in value-added manufactured exports is a result of federal government policy initiatives, but the deliberate run-down of import substitute manufacturing over a very much longer threat of permanently high unemployment. Capital-intensive manufactures are competitive because high levels of automation and mechanisation have reduced high-cost Australian labour content to a minimum. While we need these capital-intensive exports to reduce our national debt, we also need employment-intensive, highly skilled manufacturing.
Manufacturing is a major provider of jobs as well as export earnings, even though the average miner makes a much larger contribution to the gross product than either the agricultural or factory worker. Manufacturing is more labour-intensive than mining, and should be the backbone of wealth creation, new jobs and debt control.
But without government intervention to create new industries, there is no way jobs can be created faster than they are being destroyed. More than a million of Australia's 8.8 million workers are now unemployed, and current policies seem certain to create a pool of 350,000 unemployed for more than a year. This pool looks like remaining for five years or more.
A correlation between the rate of manufacturing decline (as a percentage of GDP) and unemployment suggests that jobs cannot be created in the service sector without a strong manufacturing base. Economist Michael Porter has noted: "The manufacturing-services link is becoming an important part of the argument that a nation cannot afford to ignore its international competitive position in manufacturing. If services and manufacturing are linked, a nation cannot expect its service sector to replace lost manufacturing."
Without government intervention to create conditions conducive to industrial development, permanent high unemployment is unavoidable. Unlike Germany or Japan, Australia has no long-term strategic plan for industrial development, nor is there an arm of the bureaucracy experienced in assisting industries to achieve strategic national objectives.
There are no long-term plans to exploit the renewable energy sources that give Australia a competitive advantage over nearly all other countries. There are a thousand energy-conserving, greenhouse-friendly products yet to be designed and manufactured. Jobs would be created by a development strategy to ensure this country's adaptation to the greenhouse world of tomorrow.
Indeed, nurturing and protecting green industries may be the only way to provide skilled work for young people in the capital cities. Manufacturing provides 56% of Australia's exports, but the main opportunity is the domestic market.
There is nothing stopping us from making ecologically sustainable products if we decide to do so. Australians need to embrace green manufacturing as part of ecologically sustainable development. But if we do not act decisively now, we will finish further in debt, importing other nations' green technology, and our cities will become cesspits of unemployment-generated poverty and violence.