To some Australians the high dollar is cause for celebration.
A great way to pick up a bargain over the internet or a cheap holiday overseas. But for many, including 100 workers at Caterpillar in suburban Melbourne last week, it means watching your industry become less competitive and suddenly finding yourself out of a job.
The cause of the high dollar is Australia’s mining boom.
The mining boom is good for our economy, but not if we allow its effects to run rampant and destroy our manufacturing industry.
If we put all our eggs in the mining boom basket, we will face an economic disaster when the boom eventually ends.
Simply put, selling our dirt to China and India, and buying it back as plasma-screen TVs and photovoltaic solar panels is not a sustainable long-term economic strategy.
While the mining industry can make our country rich, we will end up poor in the long term if we don’t use that money wisely.
The workers at Caterpillar actually made earth-moving equipment for our domestic mining industry, but not even their jobs were safe after the high-dollar made Mexican imports marginally cheaper.
The real economic debate in Australia should not be over our minuscule level of national debt, but about our potential long-term jobs deficit if we don’t invest our mining windfalls for the future.
A ‘mining tax’, such as the Mineral Resource Rent Tax, is important. But more important is the use we make of that money.
We need to invest to make our manufacturing industry more competitive.
This means giving business more incentive to invest in research and development, and training existing workers and young people in the skills they need to work in high-technology, high-skill manufacturing sectors.
Australia’s economic future depends on a strong and competitive manufacturing industry. The clean energy manufacturing sector is already worth billions of dollars globally, but it will become bigger still over the coming decade.
Australia still has the chance to become a global leader in smart technology like solar power, but other countries aren’t waiting for us.
A report released by the Australian National University last week shows that Australia’s solar rebate scheme led to an increase in imports of solar panels from $17 million in 2002 to $295 million in 2009. This is a disgrace. We should have been making those solar panels in Australia.
The attitude that we should simply throw our hands in the air and send all manufacturing to China and India is irresponsible, and ignorant of the policies overseas governments have in place to help their manufacturers compete.
China, India and many countries in South East Asia are successful because their governments have invested heavily in building up their manufacturing capacity. Their governments use economic policy to keep their currencies under control, and they hand out massive subsidies to encourage development.
The economists who argue that Australia should open up our manufacturing industry to unfair competition from Korea or China via ‘free’ trade agreements, are looking at things upside down.
Rather than abolish what industry support policies we have left, we should be asking government to work with business and unions to come up with industry plans to win Australia our fair share of profitable, skilled manufacturing jobs.
If we don’t invest in manufacturing now, after the mining boom is over, we’ll find it is Australia which has become the world’s cheap tourist destination, and not much more.
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