19/09/2006 - 22:00

On the right side of the great divide

19/09/2006 - 22:00

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A pet theme of Briefcase’s, if you hadn’t noticed, is the disconnect between government and business in a rapidly changing world. Over the next few years, this gap between the people who make the law and those who really run the economy will become more pronounced, with last week’s decision by Electrolux to close a large part of its manufacturing operations in South Australia a taste of things to come.

The explanation from Sweden, the home of Electrolux, was that it’s cheaper to make washing machine and dishwashers in Asia than it is in Australia, a fact that no-one in business disputes, but which seems to have caught politicians off guard. This leads to this week’s question: why is it so?

Why are so many of the lawmakers in Australia out of touch with the reality of the global marketplace?

To save the reader from thinking too deeply, the answer goes like this. We’re here, and they’re there – in time, location and by head count.

A long time ago, when Australia was safe behind its tariff barriers and the world was a foreign place, two things happened. Manufacturing industry (and its associated labor force) thrived in the south-east of the country, and the electoral boundaries were drawn around the factories and the people.

In other words, the political power in Australia was centred south of a line drawn from Brisbane to Adelaide, which is where it resides to this day.

Meanwhile, out in provincial Queensland, the Northern Territory and Western Australia, a miracle started to occur sometime in the 1960s. Japan began to buy increasing volumes of coal, iron ore, nickel and copper to feed its version of an industrial revolution; the first in Asia, but really just an extension of what started in Britain around 1760, and then rumbled through Europe and North America.

By the 1990s, the writing was on the wall for those who wanted to see. Australian manufacturing, as it had come to be known between the 1930s and 1950s, was migrating to Asia. Briefcase can still remember the arrival of the first Toyota cars in Australia, and the protests from returned servicemen, complete with banners that read “No Japanese cars in RSL car parks”.

Today, the game is all but over. Taiwan and South Korea have chimed in with their industrial revolutions, and now it’s the big boys of Asia, China and India, which are unleashing their cheap labour to make the stuff that Australian households use daily.

None of this is rocket science, though perhaps it is only people in Perth, Brisbane and Darwin who see it so clearly – because this time we’re on the winning side of the Brisbane-line divide.

Smirk as we might at the way the game has changed, as seen in job creation, wage rates and property prices, there is a clash looming.

Sitting (and fuming) across the border, wondering what happened to the local Electrolux factory, and a host of other inefficient manufacturing plants, are most of the law makers who continue to represent people in electorates that are being devastated by the rolling Asian industrial revolution.

This is what Briefcase means by the great disconnect, which is pointing to rocky times ahead as the south-east of the country attempts to retreat back to the good old days, and the west and north embrace the future as suppliers of goods to the factories of Asia – and as the developers of new-age mineral processing technologies which we are, in turn, exporting to the rest of the world.

How all this plays out is in the realm of guesswork but, if Briefcase was gambling, it would put its money on this divide of the past and future leading to the election of a Labour government in Canberra, and a determined effort by the union movement to wind back the clock as a last desperate attempt to reclaim lost manufacturing jobs.

It is the job losses to Asia, combined with unreasonable fear of Australia’s new industrial relations laws, which will trigger an attempted retreat to the past, and an attempt to prop up failed industries and jobs that have migrated.

Over time, the rest of the country will be forced to acknowledge that Asia’s industrial revolution has changed Australia forever – and then, perhaps, they (those people south of the Brisbane line) will join the wealth creators on the other side, and stop living in a past that cannot be recreated.

•••

On the question of the past versus the future, there is a local variation on this theme of government versus business.

The government view of the world is that it wants to sponsor big-ticket tourist promotion events, which include the artificial propping up of the white elephant on the Swan – the Perth Convention Exhibition Centre.

This classic ‘think big’ approach is a throwback to the days when government would assist in the creation of a new industry; the bigger the better because it meant more jobs for manufacturing workers.

Meanwhile, out in the real world, Briefcase has been watching a series of genuine tourist-type events that are performing brilliantly – perhaps because there is no government involvement, but more because they are built on strong financial grounds.

One is the annual Diggers & Dealers forum in Kalgoorlie, which attracts 1,500 delegates to a town of minimal comforts because it’s where the miners (and their suppliers) want to meet.

Another two are the Africa Down Under and Asia Down Under mining conferences, which have come from nowhere to attract 500 and 200 delegates respectively to Perth. Why? Same as Diggers, it’s what industry wants in a place it wants to meet.

In each example, industry has recognised that Australia’s future is pretty much like its past, as a supplier of raw materials to the rest of the world. But this time around we are playing a world-leading role, and that’s why African and Asian investors are looking to Perth to set a lead – with, or without, government involvement.

•••

“Nagging is the repetition of unpalatable truths.” Edith Summerskill.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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