State treasurer Christian Porter has sounded a warning over constant references to Australia’s economy as ‘two-speed’, claiming the policies that lie beneath the simplistic term aim to transfer wealth away from the resources sector and to replace it with other unamed industries.
“These notions are gaining some very serious currency in federal public policy circles, particularly those outside of Queensland and Western Australia,” he said at a John Curtin Institute of Public Policy event last week.
“The triviality isn’t the reason why sensible policy makers should be very wary of the term ‘two-speed economy’.
“Those persons who use the term move breathlessly and thoughtlessly from what is a trivial and unenlightening observation about the economy to a broad set of policy solutions that they say will fix the problem.”
The treasurer said the term was used a lot at the recent federal tax forum, during which his concerns over the transfer and replace policies were heightened.
He said use of the term was aimed at slowing the ‘fast-lane’ resources sector in order to benefit ‘slow-lane’ sectors like manufacturing and to find a better industry set to replace the resources sector.
“This replacement idea by extension holds that visionary governments should be seeking to slow down resources sector growth and ultimately replace the resources industries with alternative economic growth sectors as soon as is reasonably possible,” Mr Porter said.
“What is the emergent but as yet unseen non-resources-based economic behemoth?
“No one in the transfer and replace policy camp can nominate what the great saviour industry is going to be, but everyone who advocates for their imminent arrival can nominate exactly what they are going to be like.
“They are going to be non-mining, non-resources, clean, green, service-based, high-tech and, of course, immensely productive and internationally competitive.
“When you look at what is happening at the top echelons of policy thinking in Australia, the idea of moving past our great comparative advantage has many very powerful advocates.”
Mr Porter said the transfer policy involved shifting wealth from the resources sector through super profits tax regimes, carbon tax and GST to other states and industries.
“I would argue the GST distribution and the principle of interstate horizontal fiscal equalisation is another means of achieving, in effect, a slowing down of one part of the national economy,” he said.
“Successful governments do not devote their energies to slowing down growth and replacing their great comparative advantage; rather, they seek to build on that comparative advantage and through that create more diverse, competitive edges in their economy.”
Mr Porter said national media was also advocating for the replace and transfer policies, which was a concern.
Misconceptions that label the resources industry as lacking in technology, skills and environmental standards were undermining the importance of the industry to the national economy.
Mr Porter questioned the theory that manufacturing and tourism was suffering at the hands of resources, and pointed out that WA was the only Australian state in which manufacturing output had increased in the past decade, by 1.1 per cent, while Australia’s total figure decreased by 7.1 per cent in the same decade.
“The transfer and replace position … mistakes the Australian manufacturing sector as being constituted by a geographically concentrated east coast food, clothing and textile industry,” he said.
Mr Porter said blaming the resources sector for raising the value of the dollar and thereby increasing wages and international competition pressure on the manufacturing industry ignored the complex internal and external factors affecting the currency.
“A cynic might conclude that it is convenient for government, and the Commonwealth government in particular, that has in truth not engaged in nearly enough real reform around regulatory and tax burdens, increased labour market flexibility – the sorts of reforms that could enhance Australia’s manufacturing industry’s capabilities to face international competition,” he said.
“I think the idea that the Australian economy would be much the same as it is without the resources industry is the most utter piece of nonsense, plain and simple.”
