Pacific Brands’ decision to cut 1850 jobs says a lot more about the ineptitude of the company’s board and management than about Australia’s textile, clothing and footwear industry policy or, for that matter, the Government’s stimulus packages.
The Opposition yesterday was trying to use the closures to justify its position on the stimulus packages. If I can work out the logic, the Coalition seems to be arguing that the closures show that the first stimulus package, which it supported, didn’t work, but this doesn’t mean the second stimulus package was needed, only that there should have been a different stimulus package, presumably involving tax cuts.
Or it might be simple gainsaying of any statement the Government makes. For all the good it is doing them in the polls, it might as well be the latter.
The Opposition is making use of Kim Carr’s statement that he had foreknowledge of the closures and tried to offer the company assistance. Presumably if he hadn’t done the latter he’d have been criticised, as he would if he had not known in advance. There’s a suggestion Brendan O’Connor’s Tuesday announcement of a package of assistance for retrenched workers was timed to coincide with the Pacific Brands announcement. It’s hard to know what the problem is if it was. Should he have waited until after the announcement? In any event, presumably the Government wasn’t thinking that there’d be no retrenchment announcements in the near future. As Julia Gillard said at yesterday’s press conference, there’ll be a lot more days like this.
Meantime the Government is finally extracting its digit on the most pressing problem facing business, the lack of bank lending, and the high rates of lending, for Australian businesses — especially small businesses. The Government’s sloth on this issue is inexplicable given its oft-repeated commitment to staying ahead of the curve on the economic crisis.
The gougers and usurers at the Australian Bankers’ Association have adopted a “blame the victim” approach, saying the fall in lending reflects the unwillingness of business to borrow in difficult economic conditions, and that banks have not passed through reductions in interest rates to businesses because businesses are riskier. Given the enormous benefit the major banks have derived from the Government’s response to the financial crisis, there is no reason for the Government to treat them with kid gloves when they are preventing investment and costing jobs.
The Pacific Brands decision also shines a light on one of the more interesting differences in industry policy under a Government that wants Australia to “make things”. TCF tariffs are scheduled to fall next year after a five-year pause, to 10% for clothing and 5% for everything else. At the same time, automotive tariffs will also fall to 5%.
Like the automotive sector, TCF has seen a drift to “new protectionism”, in which tariffs are reduced but the relevant industry receives significant assistance from taxpayers. However, the scale of assistance to the TCF industry is vastly smaller than that provided to the automotive sector, which can count its assistance, now programmed out to 2020, in the billions. TCF assistance will total about $270m between 2005 and 2015, when clothing tariffs are scheduled to fall to 5%.
The recent Green report on the sector supported financial assistance but emphasised innovation and industry focus on high-end value-added rather than trying to compete with low-wage countries. The approach is similar to that adopted by Steve Bracks in his review of the automotive sector, except there were a lot more zeroes in the sums he was talking about. In any event, the Government significantly exceeded the Bracks recommendations in determining how much more money it was going to pour into the sector.
Two industries, two vastly different amounts of protectionism. But the automotive sector directly employs about 60,000 people, and TCF employs 52,000.
Why the difference? Is it because making cars is somehow a real job and making clothes isn’t? Is it because car manufacturing, as Kim Carr argued last year, was important if we wanted to make jet fighters? (as if Australia would ever make jet fighters) Is it because blokes making cars are more important than migrant women making clothes?
Here’s another possible reason. The main car manufacturing union, the Australian Manufacturing Workers’ Union, donated $270,000 to the federal ALP in 2007. The Textile Clothing and Footwear Union didn’t give anything — in fact Michele O’Neil, the National Secretary, publicly considered disaffiliating with the ALP in 2004 over its support for tariff cuts. Coincidentally, the Government is happy to waste billions of taxpayer dollars propping up a car industry Australians won’t support when they buy their cars, but will only offer a far smaller version of the same rort to the TCF sector.