There is a
massive structural change happening in the Australian economy at the moment. Unfortunately,
no one is reporting it. Will Peter Costello acknowledge it in the Budget
tonight?

Just look
at the different state growth figures. NSW is down the bottom on 2.3 per cent.
SA’s is 3.1. Victoria’s in 4.3. Then look at the states reaping the
benefits of the commodities boom: Queensland – growth rate 6.5 per cent – and
WA, topping the list on a massive 9.2 per cent.

Economists
worry that higher interest rates could slow economic recovery in the poorer
performing states, particularly NSW. So what’s the Government doing about it?

Well, on
Friday the Prime Minister announced a $52.5 million
financial assistance package to car manufacturer Ford Australia, to encourage
the company to keep manufacturing operations in Australia .
Most of the funds went to Ford’s two Victorian plants, in Broadmeadows and Geelong.

But look
how the Melbourne Age‘s leader writers greeted the news:

Last month,
Australian Industry Group chief executive Heather Ridout said an AIG survey
had found half of all manufacturers planned to increase their use of cheaper
imported components. By year’s end, 25 per cent of Australian manufacturers’
production would be offshore, up from 15 per cent last year. As a result,
30,000 manufacturing jobs were lost last year and 40,000 more were likely to go
this year. On current trends, she warned, more than 300,000 jobs would be lost
over the next decade, including 100,000 in Victoria.

Three
hundred thousand jobs! Remember the manufacturing shakeout of the early
nineties? Remember the closure of Melbourne’s Nissan plant? Will we see that
again? The Prime Minister’s statement promises just “the creation of 273 new
jobs at Ford”. Do the sums.

Last month
the Australian Industry Group released a report entitled Manufacturing Futures
– Achieving Global Fitness.
It warns:

[I]n the early years of the 21st century,
Australian manufacturing is encountering a considerable intensification of
international competition associated with profound structural shift s in the global
economy. At the same time, a range of domestic factors is placing additional
pressures on the sector.

Manufacturing
isn’t sexy. It’s old hat. Minerals and the service sector are much more
interesting. We’re probably destined to become a resources/services economy,
anyway.

But there’s
just one little problem. An acute political problem. Manufacturing employs a
lot of people. More than services and commodities.

And it
particularly employs people in the south-eastern corner of the country, where
there’s a higher concentration of population. How many more marginals are there
in NSW and Victoria than in, say, the boom territory of regional Western Australia or the NT?

Will our
lazy Treasurer have any ideas on how to deal with this issue tonight?

Peter Fray

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