Labor bails out heavy industry, manufacturing protectionism grows

Taxpayers face a new era of costly manufacturing protectionism as Labor’s Made in Australia Future moves into action and the government continues to bail out beggarly multinationals to the tune of billions of dollars.

South Australia’s Whyalla Steelworks, which is currently in administration $2.4 billion From the Commonwealth and South Australian governments in February. Nasty multinational Trafigura, via its Nyrstar arm $135 million from the federal, Tasmanian and South Australian governments. Equally filthy multinational Glencore also has new ownership 600 million dollars from the federal and Queensland governments. And this is on top of subsidies for so-called “critical minerals” industries, which have seen companies such as Iluka, DeGrey Mining (now Northern Star) and Lynas receive a nice chunk of taxpayer funds to chase the dream of Australia’s critical minerals processing industry.

The number of supported jobs is almost insignificant; And at a surprising cost. Over $1 million per job. The government and lobby groups are shoehorning in every remotely tangentially related business in the affected area to boost job figures, impersonating a shrewd consultant hired by a rent-seeking company to lobby for aid. And this is really about jobs: government media publicationsWhile it’s full of red-flag terms like “sovereign” and “strategic,” it always emphasizes how many jobs have been saved. This is why the Coalition is fully behind these bailouts, as opposed to the Made in Australia Future agenda. Ironically, many of the beneficiaries of these bailouts are regional communities where anti-government sentiment as well as climate denialism and hostility to renewable energy permeates.

Not since the bad old days of car manufacturing protectionism – when multinationals blackmailed taxpayers into running factories here producing unwanted, expensive “local” vehicles – has taxpayers’ money been wasted supporting so few jobs. Only AUKUS will be more expensive in terms of lost money per worker, which will involve several thousand local jobs that will cost tens of billions of dollars in additional spending to build the new submarine locally rather than overseas.

However, before the bailouts, taxpayers were already being pressured by the government to support production.

Productivity Commission’s latest Trade and Aid ReviewExamining levels of protectionism data On tariffs, expenditure and tax concessions used as industrial aid for 2023-24. That year provides a snapshot into financial life before Future Made In Australia began; As PC puts it, “budgetary assistance related to the Australian government’s Made in Australia Future (FMIA) policy agenda will not begin on a large scale until next year…
“So the forecasts for 2023-24 largely do not reflect these commitments.”

However, aid had already begun to increase. In 2023-24, direct budget assistance to manufacturing reached $1.45 billion; This figure does not include tax cuts worth $578 million. If $1.45 billion doesn’t sound like that much, it was $1.15 billion in the last year of the Morrison government and $886 million in 2019. The spread of the manufacturing sector across the entire national workforce means that annual direct budget expenditure per worker has increased from just over $1,000 per worker in 2019 to over $1,600 per worker now.

But not all manufacturing workers are equal. It’s especially helpful if you’re a man. Manufacturing aid is distributed unequally: The biggest winner under Labor was “Oil, coal, chemical and rubber products”, which has more than doubled since 2019 to over $400 million. But according to Bureau of Statistics industry workforce figures, this group only employs around 60,000 people; This means that direct budget aid has increased from $2,470 to $5,200 per worker since 2019. Approximately 65% ​​of this industry is male.

The “metal and fabricated metal products” sectors also performed well; Productivity Commission data shows the benefit has more than doubled from $76 million in 2018-19 to $163 million in 2023-24, or from $550 to $1,072 per worker per year. 82% of employees in this workforce are male. Ditto “Machinery and equipment manufacturing”: aid increased from $190 million to $305 million in 2018-19 and now costs $2,520 per worker; 75 percent of them are men.

But leave aside the textiles, clothing and footwear sector, which is now a shadow of its pre-1980 self but is 56% women: aid was $22 million in 2018-19 and $23 million in 2023-24, meaning it has fallen in real terms. It’s currently around $700 per worker per year. It lacks the appeal of “strategic industries” and “sovereignty capacity”; No one is worried about the supply chain of cheap clothes from China. More specifically, it does not have powerful unions such as the AWU and AMWU (Industry Minister Tim Ayres’s former union) to lobby within the ALP for aid to union-dominated industries, or large multinationals to threaten to close factories and worsen the decline of regional towns.

And again, this was before the billions of dollars earmarked for Future Made In Australia had even begun to be spent. We will see manufacturing subsidies soaring in future Trade and Aid Reviews, fueled by Labour’s industrial policy and bailouts, as powerful rent-seekers and creepy unions sniff out big money and pile in. And it’s all in the hands of you lucky taxpayers.