Sonnie Hopkins makes an arguable case that the manufacturing sector could make a bigger contribution to Australia’s economy than the basic support I suggested, in my letter of March 23, as being its limit (“Specialised home manufacture a possibility”, CCN 384).
I’d never dismiss the idea that there are openings in the manufactured-goods market that we could exploit, and his contention that we could focus on specialised, high-value, small-scale products is theoretically sound: there are several countries that do exactly that.
However, this idea does not get us any further forward.
Any progress in this field depends on our identifying innovative products that we are uniquely skilled at producing and on our initiating the global marketing that would be necessary to make them a profitable investment.
If Mr Hopkins can detect any hint of this happening in the present local manufacturing sector, I’d be interested to hear about it, because I see no sign of it: it would require an enormously sophisticated approach to business that seems entirely lacking in our entrepreneurial class.
As for his suggestion that spending $368B on the fabrication of submarines could result in the spin-off of needed skills in other industries, I shall have to express my scepticism on this point.
The claim that the monstrous subsidies paid to the auto industry were, somehow, justified by the development of sector-wide skills is, as far as I know, completely unsubstantiated.
If there is research that demonstrates this outcome, I’d be interested to hear about it, but my impression has always been that the idea was put forward as an article of political faith and never challenged until the subsidies became so onerous that they could no longer be tolerated.
If a fraction of those subsidies had been put into direct training programs, we could have had all the skills we ever needed and, perhaps, seed-money left over for competitive product development.
Parenthetically, and in fairness to the submarine program, I have to point out that $368B spread out to the infinitely distant time horizon that seems to be involved doesn’t really amount to much on an annual basis.
We have spent as much as that on other useless weaponry – F.111 fighters, Abrams tanks, Collins submarines – but we apparently have to have our big boys’ toys, trivial as they are in number, so that we can play in the game, and, with a bit of luck, undersea drones will have made submarines obsolete before the bulk of that money has been committed.
Paul Keating is exaggerating a bit but he is fundamentally right that the submarines are a bum deal: the point is that they are the ante that we have to put up to keep on the good side of the allies that we need.
Email, Apr 3
Bruce Hyland, Woy Woy