Comment: Time for decision on Australia’s future

THE federal government has been following the extreme free trade philosophies dictated by the big-money political lobbies in the US since the 1960s and 1970s, when it was in the interests of US manufacturers to force less developed countries to open their markets.

There was, of course, little reciprocation, with those less developed countries being prevented from selling the products they were good at making – mainly agricultural – because the US wanted to protect its own farmers.

Free trade has always been a chimera. It was designed by the powerful and dressed up to look egalitarian so as to suck, or pressure, other countries into a one-sided deal. How can anyone object to “free” trade?That’s what happened when the US struck a free trade deal with Australia. Once more, exports of Australia’s primary produce remained restricted, even though that is one area where we can produce competitively.

There were many other exceptions, too. Why else would a free trade agreement need to stretch to 200 or 300 pages? For instance, Australia was cowed into accepting a ban on the export of aluminium ferries and other ships to the US, even though Australia is a world leader in aluminium ships.

Our leadership should have ensured a vibrant ship-building industry in Perth but, no, because of the US ban in the so-called free trade agreement we have to drag ourselves over to the US and make the ships there, which means we miss out on the jobs our intellectual property should bring to Australia.

Unfortunately, Australia has swallowed the free trade pill holus bolus. We now have the lowest import tariffs in the world, a basic five per cent impost, while those all around us continue to protect what they prize.

So, in essence, we are granting unlimited market access to companies and exporters that are far bigger than our own companies.

It’s an unequal contest. There is no level playing field. Governments have to intervene to even up the contest.

The laughable tariff policy allows Australian politicians to strut across the world stage beating their chests telling every other country – including the US and Europe – that they should reduce their trade barriers, too, and stop subsidising their farmers.

Gosh, that makes the politicians feel proud. But the strutting might be about to end.

Canberra – politicians and bureaucrats alike – have been far too cavalier about this free trade business, and it is to be hoped that the Ford Australia decision to cease manufacturing in 2016 will start to wake up a few of our elected representatives.

The slavish reliance on free trade dogma – which no other first-world country adopts as fiercely as Australia – has thrown tens of thousands of Australians out of work in recent years.

Many industries have gone bust and no longer exist in Australia. We don’t make televisions or radios, bicycles, car tyres, clothing, toys, shoes, tools, gardening equipment: the list goes on.

The Australian manufacturing sector has been gutted, and there are no real jobs being created to fill the void. As manufacturing subsides, more and more jobs in the service sector are being converted to casual, part-time jobs. They don’t pay enough to raise a family and buy a house.

The politicians will argue that there are not many courses of action available, because we belong to the World Trade Organisation. But this is the very organisation – really a stalking horse – that is used by the free trade zealots to promote their bankrupt ideas.

We should not be afraid to throw off the WTO straitjacket.

There are policies we can adopt to preserve and promote Australian manufacturing, but we may have to break a few eggs because we have allowed ourselves to be closely penned-in by our trade rivals. The US free trade agreement is not the only one-sided deal we have signed.

Brazil is a shining example of what can be done to protect your own economy in difficult times. Quite apart from Mardi Gras, Brazil is strikingly similar to Australia. It derives around 25 per cent of its gross domestic product from industry but also possesses a big resources sector.

When the minerals boom took off and took the Brazilian currency, the Real, with it, the Brazilian government acted quickly. It declared that it would not allow a flood of cheap imports to deindustrialise Brazil.

To protect the car industry, Brazil imposed a second, floating tariff on imported cars. This tariff was tied to the Brazilian currency and increased the cost of imported vehicles, which otherwise would have fallen due to the strength of the Brazilian Real.

This maintained the price relationship between the imports and the domestic vehicles to prevent the market from being distorted.

What did Australia do? We stood by and watched as imports were given a massive free kick. The rise in the value of the Australian dollar produced an additional 33 per cent profit margin for vehicle importers. They were able to load up their cars with extra features, reduce selling prices and hammer the Australian-made products.

No industry can survive if its competitors are handed a 33 per cent price advantage overnight.

But the Australian government sat on its hands.

The federal opposition prattles on about why Australian car-makers don’t make cars Australians want to buy.

That’s irrelevant. Would you buy a Corolla that costs 33 per cent more than the identical imported car? Thought not.

So, what can be done, apart from – or as well as – a Brazilian-style floating tariff? Well, the car industry would get a big shot in the arm if companies – and holders of novated leases – were only given tax deductions on Australian-made cars. If you insist on driving an import because you are so important or your automotive tastes are so refined, pay the tax.

Similarly with whitegoods. Buy Australian and pay no goods and services tax.

Of course, if we go around granting tax rebates or holidays to all manner of goods (not that there are many goods still made in Australia), we would have to raise tax revenue elsewhere.

That could be done by raising import tariffs on goods that compete directly with Australian-made goods. Yes, it means prices would rise, but it would also mean more Australians would be in good-paying manufacturing jobs, paying income tax and generally boosting the economy by spending their income.

That’s far preferable to them being in part-time jobs or on the dole.

Australia has to decide what is important to its future and then go out and protect it, preserve it and promote it.

If we don’t respect ourselves and design the future we want, other people overseas will take control of our economy and force on us the future they want.