The stainless steel pork: Labor gets even dumber on Arrium

Oh for a bit of that “war on business” that Labor is charged with conducting.

Having already achieved the impressive record of the single largest piece of pork in this or probably any election campaign with its $100 million commitment to a new, entirely unviable, footy stadium in Townsville, Labor is seeking to secure its credentials as the kings of pork barrelling with another porcine Godzilla: today’s $100 million commitment to try to prop up unviable steel manufacturer Arrium. If Labor’s in a war on business, it’s firing money at the enemy.

The handout has been dressed up as a “Steel Reserve” that will “promote the long-term sustainability of Arrium’s steel business”, “secure Arrium’s operations across Australia, and particularly in Whyalla” and “assist the business in permanent cost reductions which do not cost jobs”. You can just see what’s left of Arrium management wandering around being shown cost reductions they missed because they were too busy sacking workers.

The South Australian Labor government will also be joining in the frolic, with $50 million from South Australian taxpayers.

[All bow to the great god of manufacturing, you hypocrites]

As Crikey has previously explained, Arrium, even if it emerges from administration and is managed much better than it has been, has no hope of ever being competitive in a world awash with cheap steel — much of it made by China with our iron ore. And you could impose all the local content quotas you like — mandating domestic consumption of Australian steel won’t defeat the basic economics that we can’t make steel cheaply enough. In fact, we already have a de facto local content quota via our inefficient anti-dumping system in which, like virtually every steel-producing country in the world (including China), we allege other countries are dumping steel on us at below-cost prices and slap a tariff on imports.

[Does the government have the steel to resist a protectionist push?]

In April, Bill Shorten announced a set of tortuously constructed measures to prop up Arrium, but he has now gone the full handout route, putting more pressure on the government to commit to more than just promising to toughen up anti-dumping processes (which, inconveniently, it has already “toughened up” once while in government).

Labor (and parties like NXT, which is even more protectionist) are treating voters like mugs. Yes, voters like protectionism and propping up traditional industries. But propping up the likes of Arrium — a victim of its own mismanagement as much as the Chinese steel industry — perpetuates the myth that there’s no cost to keeping such industries on life support and that lazy, incompetent business people, if they’re lucky enough to be in the right industry, can expect governments to save them from the consequences of their own decisions.

Manufacturing has lost hundreds of thousands of workers in recent decades and approximately halved its share of the Australian workforce in that time. A generation of manufacturing workers, in what were once five car manufacturers around the country, and textile workers, mainly women and disproportionately non-English-speaking, lost their jobs as we abandoned protectionism. They paid a price so that the economy could achieve the kind of long-term growth we’ve enjoyed for over two decades and a big rise in the wealth of all Australians. Despite being the party that accepted that economic trade-off, Labor now wants to help freeze manufacturing at its current level, because Australia should “make things”.