With the two-speed (a.k.a. patchwork) economy driven by the resources boom – and associated high exchange rate – Australia was always going to see more job losses in manufacturing, such as the 1,000 jobs lost at BlueScope Steel. The Government is right to stress the need to provide assistance to re-train and re-locate workers, but should avoid instituting a buy local policy (Gillard pushes the ‘buy local’ barrow), which could be costly in the long-term. There is no point Australia making things we can procure more cheaply overseas. That would represent an inefficient use of our resources, and hence a buy local policy, while providing some short-term relief to struggling sectors, would make us poorer in the long-term.
As the Government crafts its industry jobs package it should consider that it already provides $1.8 billion of financial assistance to the manufacturing sector each year (see p. 15 of the Productivity Commission’s Trade and Assistance Review 2009-10).