The Labor spokesman for Industry, Kim Carr, has reopened a settled debate by hinting at a reversal of the lower tariff regime that for 20 years has enjoyed bi partisan support.

Senator Carr says he wants to make sure Australian manufacturing does not die. He says he is interested in protecting jobs, in improving innovation and enhancing productivity in manufacturing. Does the Australian manufacturing sector need Kim Carr to rescue it from dastardly distress?

Manufacturing is not in perpetual decline. It has in fact grown fourfold since the 1950s and still employs about a million people. It’s just that other sectors of the economy have grown even faster, so in relative terms, manufacturing is a smaller component of the economy today than it was 30 years ago.

International competition explains only a small part of this relative decline. As incomes rise, consumer preferences shift and people buy more services than manufactured goods. They go on holidays, eat out at restaurants and perhaps take up golf. Demand for manufactured goods accounts for about 30% of consumer expenditure today, down from 50% in 1960. So the services sector of the economy has expanded to meet the extra demand, as it has in every other rich country in the world. A relatively smaller manufacturing sector is a common feature of economic development.

Likewise, although employment in manufacturing is relatively smaller today than 30 years ago, this has more to do with technology investments and the greater productivity of the average Australian worker being applied to different industries. So we are designing clothes and engineering mines rather than sewing socks. Is this so bad?

While tariffs have been falling productivity in manufacturing has actually been rising. In response to low wage competition, companies have moved higher up the value chain. Manufacturing is also far more export orientated than in earlier periods. Both these trends, of greater productivity and export orientation are a result of reduced tariffs.

The wisdom of lowering barriers to trade has not faced serious opposition in Australia because it is, and has been, good for the country.

Tariffs do protect jobs in the short run, but they hurt other domestic industries in doing so. Protection does no favours for the Australian economy. The debate about protection and tariffs has been had and re-had. It is over.