Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

In the 1960s, manufacturing accounted for 25 per cent of the Australian economy. Today it has fallen to around eight per cent. The decline has been dismissively attributed by many to cheap labour costs in developing countries. That may have been the case in past years but today, when innovation and automation have substantially reduced labour content, the argument rings hollow.

The more likely reason for the continued loss of manufacturing industries to developing countries are lower energy costs, lower environmental standards, lower compliance costs and different product quality combined with government incentives and favourable taxation regimes and currency values. Indeed, advanced countries such as Germany, Japan and the United Kingdom have all maintained strong manufacturing sectors in the face of similar pressures from developing countries. According to a recent study by the Boston Consulting Group, businesses are now relocating back to the USA from China because the USA has a competitive advantage.

Yet in Australia the Abbott government seems determined to destroy what remains of Australian manufacturing. The Abbott government has no supportive policies and no interest in manufacturing. In signing free trade agreements and government procurement contracts the Abbott government has recklessly sacrificed Australian manufacturing. For example, that the contract for the supply of Defence boots went to an Indonesian manufacturer, rather than to South Australian manufacturer Rossi Boots, sums up the Abbott government's short-sightedness. Then we saw the hostile reaction of the Abbott government toward Australian car makers. There was no concern or consideration for the job losses, the business closures, the balance-of-trade impact or the temporary impact of the high Australian dollar—which logic dictated would inevitably fall, as it has done. With the Australian dollar today at US76c compared to over US$1 two years ago, Australian car makers are now much more competitive. But is it too late?

The Abbott government never had any intention of supporting Australia's car makers and its sham Productivity Commission inquiry into the industry was a $1.1 million waste of Australian taxpayers money. The same charade is now occurring with the replacement submarine contract, where it seems all roads lead to Japan. The decision by the Abbott government to shut the ASC out of the process is a clear admission that the government does not have confidence in the ASC to build the submarines either in their own right or in partnership with others, including international defence firms such as SAAB. Nor is the Abbott government prepared to support the development of a long-term strategic industry for our nation, yet government members cry crocodile tears about their concerns for future generations. Claims that many Australian jobs will be created from the submarine contract are not at all reassuring.

The fact remains that every submarine contract job that is carried out in another country is a job, paid for by Australian taxpayers, that has been denied to an Australian worker by the Abbott government. It also means exporting of Australian dollars at a time when the Abbott government disingenuously talks about Australian government debt and the need to reduce it. Nor do last week's comments by the head of Defence about most jobs being in maintenance fill Australian workers with optimism. A strong argument for building the summaries in Australia has always been that it secures ongoing maintenance work for Australian workers. Conversely, building the submarines overseas means that the maintenance is not secured. Secondly, the construction work begins now, not in years to come when the maintenance work kicks in. It is now that the Australian economy needs a boost; that Australian shipbuilders need certainty; that manufacturing businesses need confidence; and that thousands of skilled Australian workers need jobs. I note the Minister for Defence last week announced an open tender for the construction of a $10 billion Defence project, LAND 400. He should do the same for all Defence contracts.

That brings me to the question of government procurement policies. In calling for tenders for the supply of goods or services, the assessment of tenders should be made against several criteria and not simply price. Nor does price necessarily reflect the true cost to Australia. We need to know what the accumulated benefits, over the decades ahead, of buying Australian will be. For example, how many jobs will be created? How much tax revenue will return to the government from each of those jobs, and the many small and medium businesses that remain viable? How much will GST receipts increase by? What are the social costs and what social costs will be saved in the form of unemployment benefits, family breakdowns, health costs and so on which inevitably arise when unemployment rises? Lastly, what R&D investments are made? These are only some of the costs that must be factored in when determining what is the best value for money.

As the nation's largest investor in goods and services, it is incumbent on the federal government to place the national interest first when looking at procurement policies. It is in our national interest to maintain a viable manufacturing sector. Regrettably, it will be future generations that will pay dearly for the Abbott government's short-sightedness and its failure to support Australian manufacturers.