Menzies Research Centre – State of Independence08 May 2020
By Senator Alex Antic.
SOUTH AUSTRALIA IS WELL POSITIONED TO REPEAT ITS POSTWAR BOOM ONCE THIS COVID-19 PANDEMIC HAS BLOWN OVER.
The Chinese use the same word for “crisis” as they do for “opportunity”, Lisa told her dad Homer in an episode of The Simpsons in 1994.
For Australians living through the COVID-19 pandemic in 2020, that observation is more ironic than it is accurate, but the sentiment remains true as it simply represents another incarnation of an old saying which goes something like, “God never shuts a door without opening a window”.
In the absence of an international inquiry, we may never know for certain how this pandemic started. What we do know is that the Chinese Communist Party cannot escape responsibility for what has transpired. COVID-19 started in China, it was covered up by the CCP and the CCP has since dictated terms to the world in relation to the supply of critical goods such medical supplies and personal protective equipment.
The CCP must be held accountable by Australia, its allies, and the world. International law provides a mechanism for seeking compensation, but the path to obtaining dollars in hand is fraught.
Seeking “compensation” may be less conventional than first thought as the extraordinary financial cost has not been the only eye opener. Our reliance on China has caused the matters of national security and sovereignty to rear their heads.
The sight of pallets of critical medical and personal protective equipment being shipped back to China by companies with links to the CCP has exposed key deficiencies in our strategic autonomy and shone a spotlight on the urgent need to return manufacturing to Australia.
South Australia provides a unique case study in the rise and fall of manufacturing in this country. Sadly, a state which was once a thriving hub of industry, has seen many of those industries disappear in recent decades due to a combination of high taxes, an inflexible labour market, green costs, high energy prices, the advent of low-cost manufacturing in Asia and union-led standover tactics.
The South Australian manufacturing revolution had its origins in World War II. The state was perfectly suited for wartime manufacturing as it was geographically isolated, and the costs of living were significantly lower than those of the eastern states.
Postwar, it was the visionary premiership of Sir Tom Playford and his plan for rapid industrialisation which saw the value of manufacturing production exceed that of primary production thanks in part to thriving automotive and white-goods manufacturing industries.
There are some clear similarities between postwar South Australia and post-COVID-19 South Australia. Our geographic location still holds many benefits, we have enviable natural resources, a skilled workforce and our cost of living is still low.
The advent of the Defence sector in South Australia also provides a perfect springboard for complimentary industries and our northern suburbs are screaming out for industries to fill the void left by the closure of the General Motors Holden plant in 2017.
That is not to say that we should entertain a return to a traditional Playford-style industrial model, a model which was heavily reliant upon protection and subsidies. Rather, we need to play to our strengths, and we need to sniff out opportunities to excel.
Even before we emerge from the COVID-19 crisis, we have seen examples of South Australian businesses evolving with the likes of the Detmold Group shifting its paper manufacturing into face masks and Bickford’s shifting its lines from cordial production to manufacturing hand sanitiser.
In 2020, Australia is heavily reliant on Chinese supply chains for critical goods like pharmaceuticals. This would be concerning enough if those products were manufactured in a country whose government shared our values. But the CCP’s authoritarian control over such critical goods hangs over our head like the Sword of Damocles.
Most of Australia’s top 10 exports are related to mining and agriculture. Without dismissing their obvious importance, our reliance on those critical industries, and the Chinese market for same, has left Australia’s “economic complexity” ranking at 93, located directly between Senegal and Pakistan.
Sectors including food and agribusiness, energy and minerals, defence and space industries, the high-tech sector and the health and medical sector all suit the South Australian example. An economy with a complex manufacturing base will generate its own growth with a natural skills-creation effect, those industries becoming complimentary.
Bringing manufacturing back from China is another way to extract “compensation” from the Chinese Communist Party. Ultimately, it is not just about jobs, it is also about protecting our sovereign interests.
The task at hand is to get the policy settings right. We need to continue to drive the price of energy into the ground, we need to deregulate, review environmental laws and we need economic reform in the areas of industrial relations.
The red and green tape wrapped around our industries must be loosened to allow the economy to prosper. No longer can the voices of minor parties such as the Australian Greens hold the Australian economy to ransom.
This isn’t to say that we can or should strive to manufacture everything. But the opportunity to rebuild our manufacturing capability is now critical to both our economic and strategic interests.
Together we must make sure that, as the door of COVID-19 shuts, the windows of prosperity and sovereignty are flung wide open.
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