News Article

Reforms won't restore Aust non-resources sector: Henry

13/07/2012 - The mining boom meant Australians must embrace a brave new world and forget about hoping other struggling industries could return to past glories, former Treasury secretary Dr Ken Henry says. Greg Roberts

Dr Henry backed the sustainability of the boom and said it should be expanded more, saying Australians were in the right place at the right time.
 
He attacked some of the solutions being proposed for propping up struggling industries.
 
Dr Henry is special adviser to the prime minister, leading the development of a White Paper on Australia in the Asian Century, and said structural changes in the Australian economy included having to respond to China's extraordinary growth.
 
"It is no exaggeration to say that if Australia is going to navigate successfully the structural adjustment and terms of trade shock presented by the extraordinary growth of China and others in the region, a new mindset will be required, in government certainly, business and the broader community also," he told the Australian Conference of Economists.
 
"No feasible structural adjustment reverses all or even a larger proportion of the loss of international competitiveness presently being experienced by Australia's trade exposed non-resources industries.
 
"I don't kid myself into thinking that productivity reforms are somehow going to restore the international competitiveness of Australia's non-resources sector to where they were back in year 2000-01 or even 2002... it's about time people started figuring out how on earth they are going to adapt to this challenge."
 
He endorsed initiatives supporting more efficient usage of intermediary good and services, including transport and logistics.
 
The expansion of activity in resources was necessarily crowding out activity and the international competitiveness of competing sectors, through increases in the exchange rate and wages.
 
He said a re-allocation of labour was required into mining and mining-related industries and it would happen, with mining currently comprising only two per cent of the workforce, although including mining-related industries makes the figure far higher.
 
He said that, theoretically, if the price of resources had quadrupled in the last decade — with commodities prices having shot up — it then followed, that the resources industry could afford to expand production in Australia to the point where the marginal cost of production was 300 per cent higher.
 
The non-resources sector would be therefore unable to achieve massive productivity gains needed to compete and prevent employment from falling.
 
If the mining boom ended, that would not be a disaster, Dr Henry said, because Australia's terms of trade and currency would weaken, making the nation's non-resources industries more competitive again.

Source: AAP
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Have your say...
Pat | 13/07/2012 09:49 1
And that planning should include, downstream improvement of our resource base, where it is applicable. Every time someone wants to create a processing or downstream improvement of our raw materials, greens make it impossible. And yet, these are the same people who are happy that it provides jobs to someone else overseas and make Australians pay more for the improved product when we have to import it back here as consumers. If we want more jobs and a smarter nation. THATS where we have to be.
Mike Turner | 14/07/2012 05:26 2
"If the mining boom ended, that would not be a disaster, Dr Henry said, because Australia's terms of trade and currency would weaken, making the nation's non-resources industries more competitive again." Yes but what Dr Henry is not realising is that the nation's non-resources industries are currently bleeding due to Federal Govt actions and that by the time he envisages there will be little left of the non-resources industries and the expertise / skills that operated them. This is the issue and reality currently being faced by especially Australian manufacturing today.
Lou Furbadamo | 17/07/2012 00:07 3
After last weeks condemnation of Emerson’s article, pathetically suggesting Australian companies relocate manufacturing overseas, where costs are cheaper. I’m surprised there’s not more criticism of this even more defeatist article, which condemns Aussie industry to progressive failure and massive job losses! It’s resigned outlook and complacency is the most shocking piece of incriminating destructive industrial nonsense in a long time. Alarmingly, our adviser prone, economically clueless PM is repeatedly splurging big money for short-sighted, disastrously doomed advice and recipe for failure! In her insecurity & naivety she must believe that by surrounding herself with numerous dubious advisers and committees. She can shield herself from failing responsibilities and that they’ll all throw her a lifebuoy to keep her safe and afloat. Silly, Silly! Cause much of her foolish expense is only buying heavy lead anchors, that’ll deservedly, mercilessly sink her to the dreaded, drowning bottom! And unfortunately take many Australian jobs with her. Henry’s incredible crystal ball, backs the “sustainability of the boom” & that “it should be expanded” But how can expanded exploitation of fixed, non regenerating, ancient consumable natural resources be sustainable? Will all the minerals we’ve gouged and sold over the last hundred years, magically reconstitute themselves ready for re- mining over and over, so we can flog them again & again? “Pigs Ar*e E’nry”. You’re not talking about wool regrowing on a sheep’s back ready for the next shearing, as when “Australia rode on the sheep’s back” Most understand that every mine and resource has a limited expected working life! So what happens to sustainability, when they’re greedily exploited and consumed? Someone else’s problem? Further he simplistically squibs “If the mining boom ended, that would not be disaster, because…the terms of trade and currency would weaken, making our non-resources industries more competitive again” Presumable the renewed slack would be taken up overnight? Oh Yeah! And industry would effortlessly dust off the cobwebs, self lubricate and instantaneously switch back on. With all it’s technical know how, processes, expertise, experience, facilities, specialist engineers and designers etc. in tact! And new complexes would magically appear without any delay nor costs! The closest his theory comes to switched on, self lubricated, rapid heat generating spontaneous activity is called political w**king! Has the PM ever checked if her advisers have spent reasonable familiarisation time inside a factory?? Undaunted, Henry enlighteningly observes, “Australians were in the right place at the right time” Too bad our grand children won’t be when our export minerals are depleted! Then they’ll revert to being the poor, un-clever and unlucky, or as he and Penny might put it “the Wong place at the Wong time”! So much for sustainability? Pity there’s no advice to cut government waste and implement economic & fiscal changes to improve the competitiveness of local manufacturing again. Dismissively, he attacks support for “struggling industries”. Too bad development of a strong, competitiveness recovery plan isn’t on the Agenda? Seeing, Henry is leading the White Paper on “Australia in the Asian Century”. Are biased, pre declared views & opinions, suitable premise for objective assessment and inquiry, or simply that of predetermined contrivance? What outcome does the PM want? Or is this analogous to the imminent result from those Independent Parliamentary Salary Review? Clearly black days are looming for Australia with his scenario, cause the wimps want to cowardly raise a white paper surrender and betrayal flag to “the Asian Century”! Woe is the economic destiny of future generations! Pity and regret for Past Diggers that died fighting to defend their nation
Lou Furbadamo | 20/07/2012 10:36 4
In a world of political and economic upheaval, spin doctors, intrigue, bias & ignorance. As our economy falters and political spin intensifies with the Ford contraction and other closures. One needs to fathom conflicting truths, causal incompetence and best recovery strategies, rather than abandon, cut losses & rely solely on mining, as key advisers deviously suggest. Pertinently, there’s two concerning, fundamental economic mining lies conveniently perpetrated, at the premise to this dependence article! The first is that mining creates national wealth and enriches the country, as if minerals are worthless unless quickly ravaged or exploited by the big extracting miners! This is at best deceiving, because minerals and natural resources are god given, limited and valuable assets that have sat there for millennia. Who are we to now usurp & devour all we can? Like money in the bank, once withdrawn and blown, It’s gone! And in Australia’s case there’s little to show for it. So like tellers or cash converter attendants, miners basically retrieve and dispense these pre-existing valuable assets for money. Similarly, it’s possible to get fleeced by a rash, desperate, naïve or infatuated sale, as we’ve done? Typically, gold, uranium and other precious metals, once refined, generally go back into another secure vault or hole anyway! The second lie concerns mining sustainability, as discredited previously. No matter how alluring & sweet they sugar candy this Mining Boom. Limited resources progressively deplete and are therefore “unsustainable”, despite temporarily funding desperate, fixated, wasteful governments. Importantly, it’s distorted national priorities & forcing invaluable traditional manufacturing to the wall, with disastrous employment & social consequences. Needlessly devastating wealth generation & bulk private employment in major cities. Gloomy manufacturing survival on “un level playing fields” is progressively burdened by culpable government waste, apathy and other inflicted handicaps. As expected, they deny their hapless, wasteful cause and responsibility to urgently restore competitiveness & guarantee a future! With hopeless understanding, recovery plan, initiative & drive! Boom entranced, they conveniently distance & shun manufacturing, opting for this Mining Sustainability phurphy. They shamelessly camouflage irresponsible short sightedness and betrayal by hiding behind glorious Mining Profits, Carbon Taxes and Spin. Seeing Excellence and Quality are beneficially inspiring and contagious and that the seemingly Aussie reverse is also true! ie. Bad, inefficient government permeates down to spoil many facets of society, as clearly evident today. A “Dim” Advertiser 17/7/12. Survey of industrial elite “Germans and Japanese”, accordingly affirms perception that we are Not: Reliable, Visionary, Innovative, Authentic, High quality, nor Good Value! They must be reading our Spin doctor’s luminary articles too! There’s a kick in the pants to government’s original devious, “Clever Country” propaganda hype, that was said to save our industries, before the rot set in! That’s why current policy is resigned Industrial & Technological defeat! Hence all the defeatist advice to absurdly simply sell the mines, farms and our children’s heritage. As disastrous policy, gross inactions & broader knock on effects, critically directly impact rank and file workers. The surreal question is “Where are the major unions in this battle”? Cause according to “der Bruyn”: Sacked workers have high paid better employment in bustling supermarkets? Until boom money fizzes out & the glut sets in? Hopefully they’ll be checkout trained to wear name tags, clean uniforms, wash finger nails and politely remember that the back chatting “bastard customer is always right”. Pessimistically, “it’s time” governments, industry & unions stopped accepting spurious Spin & Prod
Lou Furbadamo | 20/07/2012 18:14 5
Cont- Pessimistically, “it’s time” governments, industry & unions stopped accepting spurious Spin & Productivity Commission destructive nonsense and started constructively earning the exemplary money they extort! Perhaps they can first sit down & apportblame first to help work out what’s gone , cause someone’s facilitated our serious Industrial malaise!
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