While Malcolm Turnbull is offering an economic plan around innovation and business-friendly policies and Bill Shorten is focusing on improving the long-term fundamentals of the economy through investment in education, you might be forgiven for thinking we have a more elevated and thoughtful election campaign than the last two, dominated as they were by hysteria, policy cluelessness and relentless negativity.
Beneath the surface, however, there are some far more traditional approaches to the economy being played out. As Crikey’s Cash Tracker illustrates, both sides are pumping out micro-announcements targeting individual electorates — sporting facilities and carparks being particular favourites. Such spending can be a useful barometer of how parties think they’re faring: the government desperately porkbarrelling sports facilities in the normally safe-as-houses Mayo illustrates how much of a threat NXT is to Jamie Briggs; its concern for the under-threat Kelly O’Dwyer in Higgins was reflected in several million dollars directed at sporting facilities there too.
But both of those are trivial compared to the sports pork monster of Townsville: the $100 million both sides are offering to build a new stadium in that city for the NRL’s North Queensland Cowboys. On the weekend, the Coalition announced it was matching Labor’s funding for a wholly commercially unviable new stadium in a city of 180,000 people. The Prime Minister, hilariously, declared “this is very exciting, and it is the first time a federal government has looked at cities in a holistic way.”
Perhaps he was referring to the hole he would be tipping $100 million into.
But we need to cut the government some slack on this; it had no political choice. It was Labor that created this porcine equivalent of Godzilla, and it should hang its head in shame. Labor is prepared to blow a huge amount of money on a project that makes no sense whatsoever in order to oust Ewen Jones from Herbert. It’s hard to remember a bigger single example of blatant and economically or socially worthless porkbarrelling than Labor’s promise. It forced the government into matching the stupidity in a highly marginal seat in a very tight election.
Political expediency has also forced the government into completely reversing its position on manufacturing protectionism. Here, the porkbarrelling becomes industrial scale. Initially, the Abbott government marked a major departure from all previous governments in being prepared to call the bluff of the multinational car manufacturers and refuse to extend costly taxpayer assistance to maintain Australia’s uncompetitive car industry. Its political handling of this issue — like its handling of pretty much everything — was maladroit but it was a welcome rejection of the politics of protectionism.
It was a similar story with the development and construction of Australia’s next generation of submarines. The procurement of the subs became entangled in Tony Abbott’s political and personal incompetence when he seemed to hand the project to the Japanese with little in the way of rigorous analysis. But the underlying sentiment was correct: Australian taxpayers had for too long overpaid billions for a policy of treating defence as a subset of a neoprotectionist industry policy, and his government was prepared to make the break and procure overseas.
In both cases, Labor enthusiastically exploited the government’s policy bravery (helped, of course, by the Coalition foolishly promising to build all the subs in South Australia in 2013). But it wasn’t merely Labor that seized the chance — Nick Xenophon did as well. Having nearly secured a second Senate spot in the 2013 off the back of a remarkable electoral performance in the Mendicant State, he decided to form his own party. Now, protectionist-minded conservatives in South Australia have someone to vote for as well.
The Abbott government was already trying to feign some last-minute interest in the car industry, retaining $500 million in programs that, with the pending closure of industry, were no longer necessary. Then it began panicking about the submarines, bringing policy incoherence to political ineptitude.
The Turnbull government has gone further, however. Not merely will the submarines be built by the French here (well, we think, it’s not clear how much work will be done in France) but a whole series of Royal Australian Navy contracts are to be built here, despite the Australian naval shipbuilding industry’s rock-solid guarantee of cost overruns and construction delays.
Indeed, such neoprotectionism is now a core part of Turnbull’s “national economic plan” — the budget promised to secure “an advanced local defence manufacturing industry through the twenty year defence industry plan” that would secure 3600 jobs.
Like all protectionism, that plan will come at a significant cost per job. But in the case of defence, there are a couple of extra zeroes on the end of that cost. Several years ago, the Productivity Commission calculated that automotive protectionism cost around $18,000 per job. In committing to spend up to ten billion dollars more in locally building submarines than it would cost to procure them offshore, the government is planning to spend at least several million dollars per job.
Naturally, words like “strategic”, “advanced” and “national security” are bandied around to suggest the benefits go beyond the extraordinarily expensive jobs created, demonstrating that protectionism is always justified by claiming the relevant industry is somehow different and special.
For both Labor — the party that so bravely took apart manufacturing protectionism in the 1980s and 1990s — and NXT, the government’s failing is that it doesn’t go far enough in this ludicrously expensive form of industry policy.
By defence standards, the Townsville stadium is a mere peccadillo, a fudge that would barely be noticed in a major naval procurement. But both illustrate that for all the agility and innovation we’re being offered, old-fashioned pork and protectionism still dominate our politics.
“Not merely will the submarines be built by the French here (well, we think, it’s not clear how much work will be done in France)”. Bernard, here’s a hint. Read the French newspapers. They are very clear that all the important work will be done in France. Australia will have the role of the boy with the meccano set: screwing the pieces together. I have yet to read an intelligent justification for having the submarines at all. Ditto the other expensive boondoggle, the F35 “fighter”. For both projects, our purse seems to have long outrun our common sense.
Yes, they both make the car industry look like a really sensible investment (which by the way I think it was).
Bernard, you forgot to mention the big new pork barrel in Armidale. More scared for Barnaby than anyone else.
It amazes me that the government and the ADF don’t realise that these subs will be useless by the time the last one rolls off the production line. Beasley realises this and said so in Singapore last week. Submarine drones will detect these diesel powered iron beasts many nautical miles away. Technology is moving faster than the brains at the helm of the Fed Gov. I guess thats why the pork barrel is so attractive these desperate pollies. I was told as a youngster we are 10 years behind the rest of the world. Turnbull wants to keep it that way, its his comfort zone.
Not content with Streeton’s 1924 painting of Magnetic Island hanging in their “favourite room” in the Lodge, the Turnbulls have now used the Island as a backdrop for a full scale pork dump in Townsville. Having Environment Minister Hunt on board with them would not have helped because Hunt is a deceiver. He uses cleverly placed Marine Park boundaries to hide the fact that the dredge which keeps open the channel into the Townsville Port dumps its spoil, with his full approval, into the ocean off Magnetic Island. Some of that dumped spoil ends up on Picnic Bay and Hawkings Point (right behind the happy couple in the picture), smothering the last remaining corals on reef flats devastated by 100 years of reckless dredging.
Instead of tipping $100M into the CSIRO or healthcare (or fifty other worthwhile under-funded causes) they squander it on a sporting stadium. Dumb & Dumber.
But, but, but, Zut, where else to put the circus?
Same place as the bread – where the sun don’t shine.
Yeah, but no, but yeah.
Pork barrel for a stadium in Townsville may become a great investment, getting in on the ground floor so to speak. Although it looks bad, the Cowboys pretty much represent all of Far North Queensland and have a huge following. If you really want to grow Australia, people need to be attracted to areas that need them, and FNQ and Adelaide will do desperately well with additional population, whereas Melbourne through the eastern seaboard to Brisbane need more people like a hole in the head. Growth outside that Brisbane to Melbourne corridor would be great for Australia, within it, terrible.
And let’s not discount the politics as much as the protectionism. The F-35, built with no local protectionism issues, is the most expensive boondoggle of all time. Subs, well I can sort of understand the need although new technology suggests they may be obsolete before hitting the water, but planes that can’t fly are always going to be a problem. Actually, a plane that can’t fly is a damned expensive taxi!
For sure; I know the only thing stopping me from migrating to Far North Queensland was the lack of a modern rugby league stadium.
We could decide to fly low on defence, as NZ has and spend little on it. But, if you are not going to do that, then buying off the shelf is the sort of thing you would do if it is all for show. If you are setting up defence forces seriously, with the expectation that they might have to fight in a serious war, then you have to build them at home, since buying off the shelf can get difficult in times of war. It is not a matter of protectionism, though Bernard, and we have to look at other cases on their merits, which cannot be done by trotting out neo-classical myths to the effect that it is as if our economy will work like the models you look at in Economics 1.
This applies to silly things like not sequestering gas because this might look like “protectionism” for Australian industry. Spain could tell you what free trade does to industry when the British went on to develop a textile industry based on Spanish merinos.
Of course, it is not Malcolm’s fault. He after all, has a plan for “jobs and growth”. Let’s elect a Coalition government, Bernard, and welcome freed trade in degrees (we can’t have government intervention to make degrees affordable, now, can we) and free trade in health.
Actually I beg to differ. Much of the problems we see with the defence force procurement comes from the fact that what they buy is not off the shelf, it is some bespoke version that costs a fortune to engineer and can’t be easily maintained. We get weapons systems made the same overseas suppliers as everyone else but at a higher price because nobody else ever asks for what we want. The idea that if we don’t actually make it ourselves we couldn’t possibly fix it when it breaks or service it is not based on fact – we don’t actually make any of it anyway. Bit like asking for a 9 cylinder Mercedes Benz and wondering why it costs a lot and keeps breaking down.