Protectionism is back, and with it the traditional kind of facile justification for shooting ourselves in the foot. Or, in the case of one particular industry, firing a missile at it.
Shortly before the election, then defence minister Peter Dutton announced that Raytheon and Lockheed Martin would be “strategic partners” in a $1 billion sovereign missile manufacturing plan.
Australia couldn’t just buy missiles, we had to make them.
“Sovereign” is the new “strategic” — we used to justify protectionism by declaring certain industries “strategic”. For a while we began using the word “security”. Now it’s “sovereign”. They all mean the same thing: we don’t want foreigners making things for us, we have to make them ourselves, even if it costs a lot more. Which it always does. Just slap the word “sovereign” in front of something and people’s critical faculties and sense of guardianship of the public purse dissolve.
Illustrating the extent to which the election has made precisely zero difference in defence policy, last Friday Defence Industry Minister Pat Conroy confirmed that Lockheed and Raytheon would be “reporting back to us shortly on where the opportunities for us are to manufacture parts or entire missiles … I’m confident that at the end of this process we will have a much more sovereign capability to manufacture and upgrade missiles which are so important.”
What’s the bet the two defence giants tell the government that, yes indeed, there are opportunities to manufacture missiles — sorry, to have a sovereign capability. Because manufacturing defence projects locally comes with a 30% markup compared with buying off the shelf overseas. And that means even bigger profits for the likes of Raytheon and Lockheed and their US shareholders.
In the media coverage that followed Conroy’s remarks, a defence manufacturing firm in Adelaide was invited to opine about the need for a sovereign capability and — surprise! — declared it was absolutely necessary. In the event of a war, “We could be left with nothing if we solely rely on imports … What is the cost of not manufacturing our own missiles and not being able to use them when we need them?”
Well, about 30% of the total price, but it’s only taxpayers footing the bill, so who cares?
Coincidentally, at the weekend NSW Labor Leader Chris Minns, sniffing victory next March, revealed his plans to build trains in NSW. Nothing to do with the fact that the powerful Rail, Tram and Bus Industry Union hates foreign-manufactured trains because they don’t need as many crew to operate. Nothing like featherbedding to motivate unions.
The Australian Workers’ Union and the Australian Manufacturing Workers’ Union, the right- and left-wing powerhouses of the manufacturing sector, also hate foreign-manufactured trains. And what the big unions want from Labor, the big unions get. That’s why Prime Minister Anthony Albanese also backs manufacturing trains here.
Building trains locally will cost at least 25% more. But again, it’s just the hapless taxpayer getting mugged. A victimless crime, right? It’s worth it to have a sovereign train-building capacity.
And just to show protectionism isn’t necessarily at home only on the left, NSW Transport Minister David Elliott told News Corp yesterday he wants a sovereign ferry manufacturing capability. To his credit, NSW Treasurer Matt Kean is reluctant to cough up an extra 25% minimum for transport infrastructure.
But let’s pretend that money grows on trees and we can afford to have a sovereign missile capacity and a sovereign ferry capacity and a sovereign train capacity and like a total “sovereign manufacturing capability” to justify handouts to business anywhere.
There’s another impediment: where are the workers coming from? In the three months to August, manufacturing in Australia fell to its lowest level (again): just 834,000 workers. That’s about 6.2% of the workforce. Meantime unemployment is 3.5% and industries are constantly whingeing about labour shortages.
One of the biggest sectors suffering major worker shortages — health and social care services — this year rose above 2 million workers. Education, which Minns also promised to increase funding for, is now consistently above 1.1 million workers, but faces an “unprecedented teacher supply and retention challenge”.
For decades the media and politicians were trained to reflexively demand of any new policy “how will it be paid for?” Maybe we need a new rule that whenever a politician offers a new policy, we reflexively demand to know where the workers will come from. Which sectors does Minns want to take workers from to build trains? Which industry needs to be cut so Lockheed and Raytheon can build missiles here? Where are Elliott’s ferry builders coming from?
Maybe we can go further and have a charter-of-workforce-honesty law during election campaigns. It might stop politicians promising their union donors that they’ll pump money into a dying manufacturing industry without specifying where the workers will come from.
Or we can continue slapping “sovereign” on things and ignoring the problem?
Should we just buy off the shelf overseas, or should Aussies get the jobs, even if it costs more? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
