I had to check my pulse to see if I was OK — or, perhaps, dead. I was flummoxed, unhappy and in need of reassurance. I had, I’d just discovered, agreed with Judith Sloan.

The good prof isn’t happy with how the government has compromised on Australian Building and Construction Commission bill. In fact, she’s a very long way from happy. “An appalling mishmash of inconsistent and ­unworkable provisions that completely undermines any benefits that could flow from the restoration of the ABCC,” was one of Sloan’s descriptions. She even, quelle horreur, quoted Penny Wong approvingly.

[Crossbenchers carve ABCC bill into the biggest protectionist turkey in decades]

But the bit that had me thumping the table in agreement was her observation “save us from all those protectionist procurement provisions that the Xenophon Team insisted on. They are likely to be in violation of the World Trade Organisation rules and the terms of recently negotiated trade agreements. These measures alone will drive up building costs.”

Dead right, Professor Sloan — and she’s the only commentator I’ve spotted who is wise to what the local content rules demanded and secured by NXT mean for an industry that is already labouring under a massive cost burden from anti-dumping rules.

[Want to cut construction costs? Try dumping.]

I’ve been banging on, apparently futilely, for ages about rising protectionism in Australia. What happened on Tuesday night is a sign of how casually it can now slip back into government regulation. To the extent that they register outside the commentariat at all, rules to require construction companies to use more Australian products and comply with Australians Standards probably sound to voters like a good idea. After all, they don’t see the extra costs facing builders in major construction projects — although they end up paying for them through more expensive products, or fewer services and less infrastructure from governments. Keeping out “cheap Chinese steel” doubtless appeals to a lot of voters, although we could completely ban all foreign steel from Australia and it still wouldn’t even go close to giving our steel industry the economies of scale necessary to become competitive. We’re imposing extra costs on ourselves for an industry that will never be competitive again, barring a dramatic collapse in the dollar.

Those sorts of measures legitimise protectionism. There are now more stringent local content rules in construction. Why not in manufacturing? Why not ban offshoring of services? It’d be popular with voters. And it creates an unholy alliance of local companies who stand to benefit from protectionism and unions keen to support local jobs no matter what the cost.

The turnaround since the end of 2014 is remarkable. Back then, under different leadership, this government was taking the big stick to protectionist rent-seekers. Now we’re heading back into a new era of protectionism at a rate of knots, with little in the way of protest from anyone.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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