Why Australia Manufacturing Decline Was a Policy Choice

16 Comments

1. I don’t know if it was a conscious decision, but our production of military hardware for sale suggests that governments have chosen the path of military Keynesianism.
   This is such a short-sighted path to take.

   Investment in infrastructure rather than export industries has several significant advantages.
   Investments in roads, bridges, schools, hospitals etc are good for 50 years, 100 years, sometimes more. The primary school I attended is still in use after well over a century.

   Those types of investments are not susceptible to global shocks.
   They protect the economy from the worst effects of recessions, and protect those in less secure employment from recessions.
   Governments can keep building no matter what is going on elsewhere in the world.

   And of course, when we rely on the sale of military hardware, then products are sold without regard to their end-use.
   Military production for export depends on murder and suffering and contributes to murder and suffering.

2. I often wonder about some of the decisions of the FIRB – the Foreign Investments Review Board. It seems they let in mega foreign investment corporations that ultimately contest our home grown industries. Compliant governments offer subsidies and tax advantages to foreigners while local industries are largely unsupported. In the end our industries shut down or move to an overseas tax haven where they do similar damage to a 3rd World nation. Australia was once an innovative small industry manufacturing nation – we made high quality consumer items as well sophisticated machinery and value adding to our natural resources. Now we export our natural resources unrefined and have become an assembly and packaging line for imported low quality items from foreign owned corporations that siphon off profits to distant shores. And to make matters worse we are subject to unreasonable tariffs for our exports to nations that take great pride in telling the World that Australians are their most valued allies – bull shit!!
   It’s about time that our future planners and politicians stop pandering to vested interest entities and realise that the best future for Australia – socially, culturally, security, economically, commercially , trade lies within Asia with the caveat that Australia declares itself to be nuclear free, politically and militarily non-aligned without foreign military bases, in perpetuity.

3. One point, the begining of the decline was earlier than the ’80s. It started when the Whitlam Government signed the Lima Agreement which started the rot of sending Australian Manufacturing offshore.
   This was sold as helping to lift impoverished 3rd world countries up out of poverty. And to a part it has achieved this goal. But, what happened along the way was the true beneficiaries of the policy were Multinational corporations that relocated to low wage / cost countries with the resultant increase in Shareholder profits. Successive Governments have continued to run Australia down this path, along the way accepting “Donations” from these same Corporate gients to allow the loss of stability for the Australian workforce.
   Successive Governments have forgotten they’re here to do good for the Australian citizens.
   Many years ago the derogatory term “he’s a Machiavellian politician” was bandied about. This prompted me to read about Machiavelli and a couple of his works. Basically my interpretation was; a politician should do what’s best for the majority of the citizens and do what they can for the minority so long as, no detriment of the majority.
   I have to say I agree.

4. @ Steve: Now add the regional effect – neglect of public infrastructure maintenance and upgrading for decades by successive governments, then ”re-development ”upgrading” at multi-BILLION expense because of huge expenditure on metropolitan passenger rail systems and motorways (too often sold off to consortia of COALition supporting bankers by inept COALition politicians).

   Regional centres export their most valuable product, their kids, to metro cities because there are no jobs or careers at home. No support for local manufacturing industries while propping up imports from foreign owned multinational corporations overseas is hardly a thinking policy. (@ Mediocrates, Russel Wattie: Agreed).

5. Steve, you’ve made a very strong and important point.

   The idea of “military Keynesianism” raises serious questions about the direction of public investment. When governments rely on defence spending and exports to drive economic activity, it can create jobs, but it also ties growth to industries that don’t necessarily improve everyday life.

   Your point about infrastructure is hard to argue with. Investments in roads, schools, and hospitals deliver long-term value, strengthen communities, and provide stability during economic downturns. They also build productive capacity rather than depending on global demand or geopolitical tensions.

   The ethical side you raise is also significant. Exporting military equipment means we lose control over how it is ultimately used, and that sits uneasily with many people.

   It does seem like a short-term approach compared to building lasting assets that support people and the economy for generations.

6. Mediocrates, you’ve raised a lot of issues that many Australians are starting to question more closely.

   The role of the Foreign Investment Review Board is definitely worth scrutiny. Foreign investment can bring benefits, but when it undermines local industries or shifts profits offshore, the long-term cost to Australia can be significant.

   Your point about moving from value-adding to exporting raw resources is a key one. That shift has reduced our ability to build strong, diverse industries and retain skills here at home.

   On trade, it shows that countries don’t make decisions based on friendship. They act in their own interest. Even close allies will protect their own industries if it suits them.

   The broader issue you’re pointing to is direction. Do we continue with a model that prioritises short-term gains, or do we rebuild a more balanced, self-reliant economy with strong regional relationships?

   That’s a discussion we really need to have more openly.

7. Russell, the Lima Declaration was certainly part of a broader push toward global industrial development, and as you said, it did contribute to lifting living standards in some developing countries.

   Where many people share your concern is what followed. As globalisation accelerated, multinational corporations were able to take advantage of lower wages and weaker regulations, and governments here didn’t always put in place policies to protect or transition local industries effectively.

   So while the Lima Agreement may have been one step in that direction, the bigger issue seems to be the long-term policy choices that came after it, across multiple governments, that allowed manufacturing capacity to steadily decline without a clear replacement strategy.

   Your point about who benefits is also important. When policy settings align more with corporate interests than community outcomes, the impacts on workers and regional stability can be significant.

   It really comes back to the same question, how do we make sure future decisions genuinely prioritise the majority of Australians?

8. New England Cocky, you’ve highlighted a really important part of the picture that often gets overlooked.

   The regional impact has been huge. When local industries decline and infrastructure investment is concentrated in major cities, it creates a cycle where opportunities dry up outside metro areas.

   As you say, one of the biggest losses is young people leaving regional communities because there simply aren’t enough secure jobs or career pathways locally. Once that happens, it becomes even harder for those regions to recover.

   The lack of support for local manufacturing and industry only reinforces that trend. Instead of building regional capacity, policy settings have often favoured imports and centralised growth.

   It raises a bigger question about balance. How do we ensure regional Australia is seen as a place to invest and build, not just a place people leave?

9. Denis, would it be reasonable to argue that the argument put forward by proponents is for countries, not just Australia, to allow manufacturing, and other sectors, go by the wayside is that to be prosperous a country needs to focus on what it does best? That it shouldn’t try to compete with other countries that do it better than you.

   Further, is it reasonable to argue that as we saw with the Covid pandemic, and now this illegal US-Israel war that Labor has joined Australia to at the hip, that to do so is to destroy your country’s national security? Because if you can’t cover your own energy needs, manufacture your own pharmaceuticals at scale, etc. then your country suffers from that dysfunction.

   That a country with Australia’s resources should be able to keep its ability to maintain total independence from international trade if necessary.

10. Thommo, Denis will know far more than me to your question “would it be reasonable to argue that the argument put forward by proponents is for countries, not just Australia, to allow manufacturing, and other sectors, go by the wayside is that to be prosperous a country needs to focus on what it does best?” but I’ll insert the little I know.
    That suggestion was developed by David Ricardo back in the early 1800s, and finalised in the form of “comparative advantage”.

    The concept is useful, but only if used with care.
    As Chomsky pointed out, the example Ricardo used — Portugal producing wine for Britain and Britain producing manufactured goods for Portugal — ends up a disaster for Portugal for various reasons if Portugal relies on wine for export income.

    Australia is in a similar position to Portugal — we rely heavily on mined products, the markets for which can dry up overnight for any number of reasons, so your suggestion to pursue independence in trade is sound, I believe.

11. All excellent comment on the main story. Our successive governments, poorly advised have been seduced by the ‘others can make it cheaper’ mantra allowing our industries to be forced out by cheap imports. It is visible everywhere. Gutless politicians lobbied by rapacious businesses selling lies, have made us into a mendicant nation now at the mercy of exporting countries. See China bans on barley, wine etc as punishment for perceived slights. One of most angering things for me is that we allow foreigners to buy houses and land without necessarily occupying it. This forces up prices and limits supply to the detriment of our would-be home buyers. We should force the sale of all foreign owned housing that is not occupied or rented and limit future purchases. Abandon negative gearing and the cHT subsidy and franking credits.I am fortunate to be a homeowner but would not argue agains a collapse in the housing market if it made home ownership a possibility for all citizens particularly the young, who want to buy.

12. This article is on the right track and is trying to deal with a fundamental issue for our future. However, it falls short of an adequate account of why we have a problem, and that has implications for what “we” can do about it. There are 2 essential points. The first is about history. The manufacturing decline did not start in the 1980s. After the Whitlam government’s tariff cuts in 1974, the Fraser government set upon the manufacturing industry, responding to the demands from the more intense role of foreign transnational corporations, using the equivalent of today’s Productivity Commission as a foil.
    That takes us to the second essential point, which is historical AND POLITICAL. There was a fightback against the winding down of manufacturing. The story is incomplete without understanding that fightback. All of this is well described in the Australian Manufacturing Union’s series of popular booklets that started with “Australia Uprooted”. These can be accessed by anybody who wants to take the problem seriously. The union members fought vigorously against the profits-before-and-above-all-else priority of the tnc’s and other employers. The union took these booklets en masse to the streets knowing, the people in the street knew instinctively that what was happening did not make sense. The union struggle required active intervention in the investment decision-making in the boardrooms. Of course, there was no way the Fraser government would make laws to facilitate that. They did the opposite with their anti-secondary boycott laws that inflicted heavy financial punishments on any union that sought, or proposed to act in solidarity, to save manufacturing jobs. In the 1980’s, the wrecking was slowed down using aspects of the Accord, with protest and some industrial activity when possible. There is some detail about that at the archives pages of the Carmichael Centre web site. The AMWU continued its efforts in the noughties, defying the direction of LNP governments, including with its analysis and proposals for a manufacturing-led green transition. Much of the material in that comprehensive booklet remains useful, both as policy and strategy. The AMWU – although much-diminished – continues its efforts both as policy and practical outcome. Note, for example, its recent submissions to governments and its organising of the green transition around Collie in s-w Western Australia. The AMWU has never received the credit it has earned in constantly standing up for Australian manufacturing in the face of all the forces that have pushed its destruction. Now is the time to hitch our wagon to theirs to build the power required to force the re-build of manufacturing. On that front One Nation is dead end. new forms of good old fashioned union community alliances is the immediate task.

13. Don Sutherland, thanks for a great comment!

14. Howard contributed heavily to the decline of the union movement. The coalition touted EBA’s for any employee to front the employer and negotiate their own salary and conditions -n this was a grand deception because the employers had far more resources and ability to fend off the employees and so without the right of employees to union representation in wage and conditions negotiations the unions lost membership. Today any effort to encourage union activity is met with a barrage of “socialism” and Communists” crap by the barking mad Murdochracy. The Coalition, Greens and ON are not interested in collective bargaining and the current Labor Party in no way represents the Labor Movement of old.

15. There would be very few in this country that would not remember that useless Howard treasurer Joe Hockey and his abusive taunts in Parliament about closing down the vehicle manufacturing industry! His current variation on a theme is no different.

    What many fail to recognise was that manufacturing is the equivalent of ‘savings’ in a country’s ledger, remove savings and you run with nothing, which is what we have today.

    Economies are built on energy, knowledge and skills of the people, not corporations who claim otherwise who manipulate every aspect for ‘shareholder’ value when the first shareholder is the people who produce commodities.

    So, the need to go back and educate, train and rebuild ‘manufacturing’ is now more urgent than ever before if we are going to weather the storms of the so-called elite who have caused this bloody mess.

    A person with a trade will always find employment and have a fallback in such times, a two-bob millionaire not so much as the resources and people he abused along the way will dry up.

16. Oz land baron’s grip.

    During the beguilement of the ‘gold rush’ then after the world wars there were massive building of homes & infrastructure. Manufacturing only existed to service this or provide for extraction by Oz’ imperial masters. The steel industry only developed and lasted at the behest of them because of the tyranny of distance. The Oz toady political class deceived the populous re debt & payback.

    From the 70s onward Oz policies let US neolib/neocon overtake everything Oz. We let it happen. The toady politicians & elite rent-seeking collaborators with the merciless Anglo-American money machine dug the hole in which we are now stuck.

    The LNP, the primary dung pile of the land barons didn’t and don’t give a stuff. And Labor remained stuck in (essential) ideological battles, and every time they nibbled at costly restructure, the sell-out LNP lurched back conning the populous that sticking with the old imperia and the home-grown elite collaborators was the way to go.

    So here we are, conned, with the guts ripped out of Oz; can’t even build homes or maintain infrastructure or civil services. Today Labor is attempting to restructure a century of abject colonial & post-colonial stupidity. And never before have they been so viciously attacked by the ongoing psyops and money from the feckless transnational brattish techbros, the toffs & oligarchs.

    The same techbros, toffs and oligarchs that have trashed western Europe, Britain and the USA. Its been such a long hard road for them from feudalism and slavery through pesky enlightenment to industrial revolution wars, the brief enlightenment of rebuilding through imposed debt, and back to feckless supremacy, extraction, slavery and inevitable environmental devastation.

    A techno-feudalism now lead by the brutal demented narcissistic liar Trump and his US-Zionista regime of greedy ignorant ethno-fascists, slaking their psychotic greed by the lies of supremacy and selective mass murder. They only manufacture to achieve their M.O.

    Oz has trapped itself, and getting out is a very risky business that requires quiet determination (and some loss of bling), whilst at the same time avoiding the vengeful wrath of the Trumpist regime.