If the first rule of medicine is “do no harm”, the government’s new industry statement — or to give it its proper title, the “Industry Innovation and Competitiveness Agenda” — that is “a central part of the Government’s Economic Action Strategy to build a strong, prosperous economy for a safe, secure Australia”, is good economic doctoring. This tiddler of a package — so small the total price tag of $400 million was deemed unworthy of advertising in the accompanying media releases — won’t do much harm. It reverses Labor’s seemed-a-good-idea-at-the-time share taxation changes from 2009, which even Labor now wants fixed, throws some money at apprenticeships to try to target regional areas, gives some loose change from down the back of a Prime Minister’s Office couch to science, and picks five economic winners (which is, inevitably, “not picking winners, but playing to our strengths”).
The only risk is that, in further degrading standards for 457 visa holders, and in particular on English language skills, we end up with 457 visa holders among our workplace fatalities. But workplace safety, which is declining in industries like mining, doesn’t count for much in “a safe, secure Australia”. Otherwise, the package isn’t enough of anything much to help or hinder the task of getting Australia’s “animal spirits” moving, which the Reserve Bank has identified as probably our greatest overall economic challenge at this point.
In opposition, the Coalition liked to explain how its economic strategy was based on five “pillars”. Originally, they were mining, agriculture, manufacturing, services, and the “knowledge economy”. But “knowledge economy” was dumped to make way for the less 21st century-sounding “education and research”. Now “education and research” have gone the way of “knowledge economy”: the “five key sectors” of the economy in which there will be funding to establish “Industry Growth Centres” are now food and agribusiness; mining; oil, gas and energy resources; medical technologies and pharmaceuticals; and advanced manufacturing sectors. Think of it as four pillars and a fifth, optional pillar that you can mix and match.
And bear in mind, of course, that “energy resources” do not include renewable energy sources — fossil fuel energy only, please, given the government has gone out of its way to trash $10 billion worth of investment in renewable energy by working to kill the Renewable Energy Target and vilifying prominent renewable energy industry figures. You’d think a country like Australia would have the potential to be a world leader in solar and wind tech given our remarkable natural endowments, but “playing to our strengths” seems to only go so far.
But the strategy does enable a government whose core economic philosophy is getting government out of the way of business and ending the “age of entitlement” to pretend to voters that it has an economic vision, in an era when even the Business Council is talking about picking winners and national champions and other forms of intervention. Inside most voters, regardless of partisanship, lurks an economic planner, and it’s a tough sell to explain to voters that your “Economic Action Strategy” is to get the macro settings right, cut red tape and let businesses get on with it. For $400 million and change, the government has bought itself something it can advertise to voters as visionary but which doesn’t distort markets too much (although, The Australian Financial Review‘s Alan Mitchell warns today just identifying priority economic areas can enable rent-seeking down the track).
That’s not to say the government couldn’t target its funding better. In abandoning the “knowledge economy”, for example, the Coalition has turned its back on rapidly growing markets in apps and especially digital content across multiple platforms, fixed and mobile. The British have put together a series of policies, designed to promote and help the UK content sectors. Earlier this week PACT, the industry body for the UK’s media content production industry revealed the sector’s exports in 2013-14 totalled 1.28 billion pounds. That’s not just finished programs like Downton Abbey, but program formats such as The X Factor and The Great British Bake Off.
Content and the need for more of it — a lot more of it, to fill ever-proliferating platforms — is the hot topic at the huge MIPCOM TV conference and market in Cannes this week (all the Australian networks and producers are there). The UK government has had no trouble providing relatively inexpensive programs (just 16 million pounds were announced in grants a few weeks ago) designed to support British content production.
Australia’s content sector is dominated by the Seven Network and the ABC. The latter is under financial attack by the government and given little incentive to develop programming and formats for export. The Seven Network is the major domestic producer and the most successful: Home and Away is heavily sold internationally, and has been for years, and Seven has also developed and sold formats such as My Kitchen Rules and Million Dollar Minute. Nine and independent producers have had some success in the past (think McLeod’s Daughters and Flying Doctors), but Ten buys in many of its programs (The Biggest Loser, So You Think You Can Dance Australia, Idol) with most of its big programs coming from Shine, the Murdoch family controlled production house which is about to merge with Endemol (Big Brother) and Core Media (American Idol). Australia need not be a net importer of content and content formats — content not just for television but online and mobile as well, where there’s heavy demand for content.
If the government is going to hand out tens of millions of dollars of assistance, it’s unlikely to have much of an impact in manufacturing or mining, but could enable Australia to play a stronger role in a multibillion-dollar global content market.