While Malcolm Turnbull is offering an economic plan around innovation and business-friendly policies and Bill Shorten is focusing on improving the long-term fundamentals of the economy through investment in education, you might be forgiven for thinking we have a more elevated and thoughtful election campaign than the last two, dominated as they were by hysteria, policy cluelessness and relentless negativity.
Beneath the surface, however, there are some far more traditional approaches to the economy being played out. As Crikey’s Cash Tracker illustrates, both sides are pumping out micro-announcements targeting individual electorates — sporting facilities and carparks being particular favourites. Such spending can be a useful barometer of how parties think they’re faring: the government desperately porkbarrelling sports facilities in the normally safe-as-houses Mayo illustrates how much of a threat NXT is to Jamie Briggs; its concern for the under-threat Kelly O’Dwyer in Higgins was reflected in several million dollars directed at sporting facilities there too.
But both of those are trivial compared to the sports pork monster of Townsville: the $100 million both sides are offering to build a new stadium in that city for the NRL’s North Queensland Cowboys. On the weekend, the Coalition announced it was matching Labor’s funding for a wholly commercially unviable new stadium in a city of 180,000 people. The Prime Minister, hilariously, declared “this is very exciting, and it is the first time a federal government has looked at cities in a holistic way.”
Perhaps he was referring to the hole he would be tipping $100 million into.
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But we need to cut the government some slack on this; it had no political choice. It was Labor that created this porcine equivalent of Godzilla, and it should hang its head in shame. Labor is prepared to blow a huge amount of money on a project that makes no sense whatsoever in order to oust Ewen Jones from Herbert. It’s hard to remember a bigger single example of blatant and economically or socially worthless porkbarrelling than Labor’s promise. It forced the government into matching the stupidity in a highly marginal seat in a very tight election.
Political expediency has also forced the government into completely reversing its position on manufacturing protectionism. Here, the porkbarrelling becomes industrial scale. Initially, the Abbott government marked a major departure from all previous governments in being prepared to call the bluff of the multinational car manufacturers and refuse to extend costly taxpayer assistance to maintain Australia’s uncompetitive car industry. Its political handling of this issue — like its handling of pretty much everything — was maladroit but it was a welcome rejection of the politics of protectionism.
It was a similar story with the development and construction of Australia’s next generation of submarines. The procurement of the subs became entangled in Tony Abbott’s political and personal incompetence when he seemed to hand the project to the Japanese with little in the way of rigorous analysis. But the underlying sentiment was correct: Australian taxpayers had for too long overpaid billions for a policy of treating defence as a subset of a neoprotectionist industry policy, and his government was prepared to make the break and procure overseas.
In both cases, Labor enthusiastically exploited the government’s policy bravery (helped, of course, by the Coalition foolishly promising to build all the subs in South Australia in 2013). But it wasn’t merely Labor that seized the chance — Nick Xenophon did as well. Having nearly secured a second Senate spot in the 2013 off the back of a remarkable electoral performance in the Mendicant State, he decided to form his own party. Now, protectionist-minded conservatives in South Australia have someone to vote for as well.
The Abbott government was already trying to feign some last-minute interest in the car industry, retaining $500 million in programs that, with the pending closure of industry, were no longer necessary. Then it began panicking about the submarines, bringing policy incoherence to political ineptitude.
The Turnbull government has gone further, however. Not merely will the submarines be built by the French here (well, we think, it’s not clear how much work will be done in France) but a whole series of Royal Australian Navy contracts are to be built here, despite the Australian naval shipbuilding industry’s rock-solid guarantee of cost overruns and construction delays.
Indeed, such neoprotectionism is now a core part of Turnbull’s “national economic plan” — the budget promised to secure “an advanced local defence manufacturing industry through the twenty year defence industry plan” that would secure 3600 jobs.
Like all protectionism, that plan will come at a significant cost per job. But in the case of defence, there are a couple of extra zeroes on the end of that cost. Several years ago, the Productivity Commission calculated that automotive protectionism cost around $18,000 per job. In committing to spend up to ten billion dollars more in locally building submarines than it would cost to procure them offshore, the government is planning to spend at least several million dollars per job.
Naturally, words like “strategic”, “advanced” and “national security” are bandied around to suggest the benefits go beyond the extraordinarily expensive jobs created, demonstrating that protectionism is always justified by claiming the relevant industry is somehow different and special.
For both Labor — the party that so bravely took apart manufacturing protectionism in the 1980s and 1990s — and NXT, the government’s failing is that it doesn’t go far enough in this ludicrously expensive form of industry policy.
By defence standards, the Townsville stadium is a mere peccadillo, a fudge that would barely be noticed in a major naval procurement. But both illustrate that for all the agility and innovation we’re being offered, old-fashioned pork and protectionism still dominate our politics.