Transitioning our Economy instead of Complaining about Lost Jobs
6 November, 2016
It seems just about every Australian politician, media commentator and everyday citizen is bemoaning Australian jobs being ‘shipped off’ to countries with much lower labour costs.
They blame Government policy for not ‘protecting’ our industries. They don’t seem to understand that we can’t expect to manufacture or produce anything at a much higher cost than another country and expect to have a market for our overpriced product — not even from Australians.
How many Australians now travel overseas for holidays because it is cheaper than holidaying in Australia? Are they suggesting the Government whack a $1,000 per person departure tax to stop all those hotel, restaurant and hospitality jobs being shipped over to the profit hungry foreign companies?
How many Australians are regularly buying their electronics and books and clothing over the internet, often shipped from overseas because they can get them cheaper and often sooner than buying in Australia? Are those Australians demanding the Government put a stop to overseas internet purchases? In fact they went berserk when it was suggested that a GST should be payable on such purchases.
The fact is we have to come to terms with the need to transition our economic activity. We shouldn’t expect or encourage the Government to make financially frivolous, inefficient and militarily risky decisions such as building submarines in Australia, least of all in one of the least strategically placed locations for maintaining a submarine fleet.
Nor should Australians deliberately increase our living costs, and business operating costs, by replacing cheap and reliable coal and gas fired power generation with expensive, unreliable and inefficient solar and wind for ideological political purposes and no net global benefit. We are simply shifting our industry to developing countries, locking up our valuable resources, and increasing net global emissions because the developing countries are taking up our manufacturing slack with much less efficient fossil fuel plants and environmental controls than we have in Australia.
Yes we should do as much secondary processing and manufacturing as is economically viable on our primary products, but we also need to be realistic about our abilities to provide a quality, cost efficient product.
We need to come to terms with transitioning our economy to the areas we have a competitive advantage.
Transition of economies is admittedly very, very difficult and many individuals suffer in this necessary process. I saw this with my father’s trade in the 1950’s in the factories of Manchester, England was an ‘oil-blender’. His task was to blend oils and grease to create lubricants specific to the needs of each piece of machinery in the factory, and to keep those machines lubricated. His trade was replaced by mass produced specialised lubricants, as well as better, quality of standardisation machinery.
He then spent the next almost four decades as a general labourer, an aircraft refueller, a roadworker and finally as a groundsman before retiring. He needed to adapt, just like we all do when we find the market for our labour has changed.
The Government’s job is to try to assist in the transition and support individuals through welfare and training where appropriate.
Someone complained that contrary to Prime Minister Malcolm Turnbull’s vision of the high tech, ‘clever’ country, we can’t all be ‘computer nerds’. I’m not in fact sure that was a correct characterisation of what Mr Turnbull was suggesting. But in fact many of the current ‘computer nerds’ are doomed to be replaced pretty soon.
This will happen with much more user friendly computer applications which are ‘idiot proof’, and don’t require an ‘administrator’ or coding genius to keep them running. There will also be more computer generated coding, without the requirement of a ‘coding nerd’ to be involved. So don’t all rush out and train up to be ‘computer nerds’.
We are however seeing a skyrocketing need for people in other areas which weren’t ‘jobs’ which existed in our earlier economy, and these jobs cannot be shipped overseas.
For instance I have a photograph of my year 5 class in 1969 with over 50 students taught by just one teacher who was also the school’s football coach. And she coached a champion team with our year 5 class thrashing the year sevens in the school, and taking us to an inter-school premiership three years in a row.
The late and great Dominican nun, Sister Julian, AKA Denise Bacuriski, who coached the 1969 Year 5 St Augustine’s school team made up of almost every boy in the class of over 50 children.
That many students would now attract at least three full time equivalent teachers just to cover the normal classes, parental leave, sick leave, personal leave, long service leave, professional development and so on.
In addition there would now be specialist input from art, music and physical education teachers not to mention school counsellors.
A sizeable portion of the class were immigrants from European countries where English wasn’t their first language. And who knows how many of us would have been diagnosed ADD, ADHD today, or who were on the Autism spectrum. In today’s new economy there are Teacher’s Assistants required to take the load from the main teacher to provide such students with special assistance.
Back then the classroom cleaning was done by the students. The canteen, and the uniform store were run by volunteer parents. The school grounds were taken care of by parents and through regular parent ‘busy bees’. Rubbish was picked up by students instructed to do an ‘emu hunt’ for the last 5 minutes of the lunch break every now and then.
Now all of those jobs are done by paid employees. These are not jobs which can be shipped overseas. They are not jobs which existed before the recent generation.
Childcare for babies to pre-schoolers, as well as before and after school care is considered a necessity today, to the point that it receives a great deal of tax payer funding. This goes to pay for the private businesses which have been set up to provide these services and employ all the tertiary trained and other employees.
This is a still expanding industry with regular complaints that there are not enough places for the demand to be filled. How many people could easily re-train for this industry? Of course we need the trainers, academics and professors to teach the teacher’s assistants and child care professionals. None of these jobs can be shipped overseas.
We have a burgeoning public service due to the explosion in Government regulations which need to be administered in nearly every sector of our economy and our lives. You can now get a Public Administration degree, Masters and PhD! We can’t ship out our local, state and federal Government administration to Asian countries. We need locally trained and employed staff.
Most of the developing world is focused on just surviving, ensuring food and shelter for their citizens. But first world countries like Australia are becoming more and more focused on saving and improving our environment. That means we need plenty of specialists in every area of the environment from hydrologists, botanists, marine biologists, animal, reptile and insect experts, cultural experts, foresters and so no, not to mention all the academics and researchers to support this growing area of our economy.
I haven’t even touched on expanding health, and aged care needs; from the building and maintaining of facilities to staffing and training for them. None of these jobs can be shipped overseas either.
Unfortunately the public expects most of the areas I have covered so far to be largely funded by the government which means we need businesses, and individuals earning an income and paying taxes which are largely separate from those areas covered.
One of the most obvious areas of comparative advantage which we have in Australia is agribusiness. The growing of crops, (grain, fruit, and vegetables), and the production of the various meat and dairy products and seafood from our oceans and from aquaculture. We could expand this area dramatically if there was a sensible approach to minimum wage and penalty rates for entry level positions.
With our expanse of land, and the quantity of rainfall we could capture if we chose to, Australia has the capacity to grow many multiples of the food we currently produce. Foreign investors understand this, which is why they are buying Australian farm and pastoral land.
We need forward thinking governments who will help develop additional agricultural land rather than frustrate its development. This means infrastructure like flood mitigation, water catchment for drought proofing and transporting water by pipe or canal from places of plenty to places of shortage.
The planners and administrators in ancient and more recent times understood these concepts in Europe where we see hundreds of years old aqueducts, canals, dykes, fishing harbours, reservoirs and so on, which were built then, much of which is still in use today for commercial benefit.
Such nation building projects would provide massive employment now and in the future.
Wouldn’t it be great if every indigenous person who wanted to work productively could do so without having to move from regional Australia to the cities? Wouldn’t it be great if there was a compelling reason for people to move out of our overcrowded cities to our regional and country areas where there are jobs aplenty and a wonderful, clean lifestyle and much cheaper housing market?
Australia has the largest Exclusive Economic Zone of any country in the world but we import up to 75% of the seafood we eat. This is largely because we have closed off much of our productive fishing grounds from fishing at the demand of misguided but perhaps well-meaning eco-activists. Thus we are pushing our seafood demand to largely Asian countries with fewer environmental and hygienic controls than we have.
Australia has the largest fishing zone (EEZ) per capita in the world. It is over 6 million square kilometres in area. While the global average for EEZ area is about 2 hectares per capita, Australia has close to 30 hectares per capita.
The Australian annual fishery harvest rate is the lowest in the world at around 37 kilograms per square kilometre (or 370 grams per hectare) while the global average rate is over twenty times greater.
We need to stop being silly about this and understand that if you sustainably harvest from an area of the sea, fish stocks are naturally replaced because you have made room for them. If you don’t harvest from an area, fish stocks remain static because fish compete for territory, and are cannibalistic. Harvesting allows room for re-growth just like a forest.
We also have a huge opportunity to expand the higher tech aquaculture area to replace at least some of the seafood we import and to produce product for export. We have the coastline and land space to do this.
Businesses and jobs in harvesting seafood, aquaculture, the processing and value adding of sea-food, and the exporting and retailing of seafood are just waiting to be created with the right Government support and regulation and they too cannot be shipped overseas. But our quality produce can be.
Of course there are the other often trotted out industry sectors of hospitality and tourism. But if every country is suffering from economic decline, and our own people’s standard of living is falling, we can’t expect those sectors to grow significantly unless we are prepared to make changes in the sector.
To make it viable, we need to reconsider penalty rates. This will provide our youth with entry level jobs. At the moment they are largely taken by backpackers and overseas students. But if your child gains a foothold in the industry, there is no reason they can’t go on to supervision, management or even starting their own business in the sector.
Money we save on welfare can be spent on the nation building projects to create a growing level of employment and government revenue.
The opportunities are plentiful, we just need to get ourselves out of the old mind sets and be prepared to transition our economy to the areas of comparative advantage.