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Hawke-Like in Appearance But Not in Reality

Last week the Business Council of Australia called for it and today Prime Minister Julia Gillard reached out and offered it. Today the Gillard Government wrote to the Business Council of Australia and the Australian Council of Trade Unions offering what at first glance has the appearance of an olive branch to the business community from the Labor Government. The Prime Minister has now sought to give business, the unions and community groups the chance to participate in a national forum, to be named the National Economic Reform Panel.

The proposal from the Prime Minister is an attempt to get business onside, or at least to get them in closer proximity to the unions on a more regular basis than is currently the case. At present, aside from issue-specific working groups and committees, the relationship is limited to largely informal communications between the two interest groups.

The idea of the National Economic Reform Panel is said to be in the spirit of the Hawke Government Accords which saw unions make concessions in order to benefit from other policy changes.

The reality is more than likely going to be quite different. The only likely similarity is the make-up of the panel. They may agree from time-to-time in certain areas but overall, little compromise, except perhaps on taxation, is likely to be achieved.

The idea that the Gillard Government, through this panel, can achieve trade-offs similar to the ones that characterised the agreements which Bob Hawke’s government reached is just fanciful. Prime Minister Hawke’s agreements between business and the union movement were much deeper and broader than any Julia Gillard and her government may achieve, both in theory and practice.

An important part of negotiating is that nothing, within reason, be left off the table from the outset. However, it appears that changes in certain areas of law, specifically industrial relations, will not be on the table from the outset. That’s all fixed according to the government.

Of course, the unions are unlikely to budge on industrial relations in any case, unless it results in significant new power for their side of the bargaining table. But law changes that do not impact negatively on wages and conditions for employees must have a place at the meetings of this tripartite group.

It would appear likely that most of the changes that the panel would find itself agreeing to would just tinker around the edges of existing policy. Some existing rules and regulations and government policy would undoubtedly remain untouched as a result of negotiations between the three parties. So then unilateral government action would be required from time-to-time, defeating the purpose of such a panel.

Instead of being more like the accords under Hawke’s Labor Party, it appears, according to the letter that talks between business, the unions and community groups will have a central focus around how to implement the key recommendations of the Australia in the Asian Century White Paper. To this end, the idea of the panel is, in a way, more issue-specific again than about the broader economic challenges in the future which involves much more than just looking to Asia and thinking about how it is we can best compete in our region, the Asia-Pacific.

While the Asian Century White Paper does allude to domestic decisions that need to be made and implemented to compete with Asia in the Asian region, some of these are quite Asia-specific and we cannot spend too much time as a nation focusing on one geographical area. Other areas of the world that we engage with have a diverse range of needs quite independent to that of the Asia-Pacific and Indo-Pacific regions.

The timing of the announcement and what that implies suggests that the broader intent of the negotiating platform flagged by the Prime Minister has come too late, despite the fact that the BCA boss called for the panel as recently as last week.

The announcement of the reform group comes over two years into the second term of the Rudd-Gillard Government. Many of the key reform decisions have already left the parliament having been made into law. Some of these economic changes have had more business input than others, some with quite limited formal and direct negotiation with peak business bodies and company representatives.

Another certainty is that just about any agreed action in the near future faces the likely prospect of not being implemented. The budget is in a poor position and appears as though it will get worse before it gets better. So, in effect, business, the unions and community groups would be working towards having the government acknowledge aspirations in the near future at least, rather than implementing dramatic actions.

A nice symbol that gives the false impression of cooperation and a willingness to negotiate, but the reality underlying today’s decision is something almost completely different.

Perhaps it would have been better if the call to formal and ongoing discussions from the government had not come after five years of aggression towards certain areas of the business community from the same administration.

The likely outcome of discussions however, would probably be much the same.

Australia: the World’s Value-Added Foodbowl?

Australia, way back over 200 years ago from the time of the First Fleet literally grew as a nation “on the sheep’s back”. As a nation Australia began to grow a broader agriculture sector which included a diverse combination of crops across particularly along the length of the eastern mainland states of Queensland, New South Whales and Victoria. That sector also included other animals in addition to sheep, with cattle and dairy farming playing a crucial role in the early economy.

Indeed agriculture does still play a crucial role in our economy albeit a much diminished one in recent decades with our comparative standing in various exports dropping markedly in some cases.

In the global community Australia is among the biggest exporters in the world of wheat, beef, wool and dairy and our three biggest exports are grain/oilseeds, meat and dairy that has obviously been the case for a prolonged period of time, given the industries on which Australia established itself as a fledgling colony and then nation state in the 1900s.

Agriculture in Australia now sits at only a 3% share of GDP in itself and last night Prime Minister Julia Gillard made a speech to the Global Foundation conference in Melbourne where Ms Gillard said she saw Australia becoming  a foodbowl power, particularly in the Asia-Pacific region, where a rapidly growing population needs increasing access to a variety of different food imports.

The Prime Minister in her speech last night said that Australia should harness our potential in agriculture, like we did in the past and like the mining sector is now harnessing the potential of our vast mineral wealth.

There is certainly a space for Australia to grow its agriculture sector again, particularly when faced with an economy that at present is powering along on resources which are finite, but the way we do it and the markets and niches we seek to develop as a nation are a lot more intricate than just producing and distributing food across our region and the world.

Prime Minister Gillard in her speech to the foundation did acknowledge that Australia would have to focus its efforts, for the most part, on exporting food products which are value-added, rather than simply trying to up exports of foods that have not undergone the value-adding process.

Australia as a nation simply cannot compete with nations in the region on many basic fruits and vegetables which can be produced in similar climates around our region with much lower input and final product costs than we can achieve in Australia.

We would also tend to be seeking more niche and higher-end markets with our value-added production, thereby in a way limiting just how much we can grow the sector, but still an improvement.

We would have to focus on sending more goods from Australia to countries in our region like China, which is booming and will have a bigger middle class market, as well as countries like South Korea and Japan, even though the latter continues to struggle with economic woes both prior to and exacerbated by the horrific earthquake and tsunami event that destroyed so many lives and areas of the economy with it.

Far from just focusing on Asia, there is huge potential for our food exports to go elsewhere, particularly to the United States of America and Europe in a bigger way than at present and that is being worked on at present in a fairly big, if little discussed way.

There is also huge potential to continue to expand the market for our top class wine, with very few countries in the world producing truly exceptional wines, making this market a great hope for Australian producers. This market could be expanded and is beginning to be delivered to Asia and for that to continue would be a massive boon for the economy.

In a way, it seems that the speech the PM gave last night was a subtle way of saying, “hey, here’s a way that we can keep the decline of manufacturing somewhat at bay if we do more food processing in Australia”.

If we add the processing of food products to the agriculture sector of the Australian economy, we suddenly get a sector that is approximately 12% of Gross Domestic Product, a significant sector by any measure when the services sector takes up over 2/3 of the overall national economy on its own.

So Australia can definitely look to becoming a major food exporter to both the region and the globe. There are various challenges, not the least of which is a water shortage along the Murray-Darling Basin food bowl and this will mean that the challenge to grow our food exports will be a medium to long-term effort, rather than a rapid expansion, which would be difficult in itself anyway even if external factors didn’t exist.

The vision is there, but helping to move the idea to a reality will be a long and enduring process that will require the political will of governments of both political stripes to oversee its development.

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