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Government's industry policy lacks a compass

By Matt Grudnoff - posted Monday, 17 February 2014

The government’s industry policy is a complete mess. They can’t seem to decide if they want to crack down on corporate welfare or spend big on industry development.  The Liberals in the Coalition aren’t even sure if they’re friends or enemies with their junior National Party colleagues.

The high Australian dollar is going to continue to put manufacturing businesses under stress. Claims for assistance will keep on coming and the government is deeply conflicted.

SPC Ardmona have been told they’re not worthy of government support but an almost identical grant was pledged to Cadbury a few months prior.


But the biggest contradiction is in the government’s desire to end the ‘age of entitlement’ and its Northern Australia development policy.

Development in the Top End will see the agrarian socialists in the National Party pitted against the economic dries in the Liberal party.

During the last federal election campaign we seemed to have sudden bi-partisan support for the development of the north. Kevin Rudd foisted the initiative on his shocked frontbench colleagues, most only finding out the minute it was announced to the media; the Coalition plan seemed to have been more widely considered within the party. Widely considered doesn’t necessarily mean well thought out.

The Coalition plan centres on producing a white paper and expects to focus on agriculture, tourism, education and infrastructure spending. Importantly for some of its biggest supporters like Gina Rinehart, it also includes personal and business tax incentives.

Talk of opening up northern Australia is not new. It has gone on for more than 100 years.  The attempts that have been made have usually failed at considerable expense to the tax payer. 

If the Coalition wants to buck the trend and succeed, then it is off to a strange start with its reaction to Rio Tinto’s decision to close the Gove alumina plant. While the north has and is being exploited for its natural resources, Gove is rather unusual in that it processes these resources in a large manufacturing operation.


Surely this is the kind of northern development that the government would be keen to support?

The lack of support for the Gove plant is also strange when compared to the $100 million given as regional assistance because of the closure of Holden. Holden’s decision to stop manufacturing cars in Australia will cost 2,900 jobs and is likely to have significant impacts on manufacturing regions in Victoria and South Australia.

With the first round of redundancy letters sent out this week, the township of Nhulunbuy that services Rio Tinto’s Gove alumina plant is about to be devastated. The eventual 1,000 job loses will come out of a town of 4,000. More than half the town could potentially leave. The federal government has not proposed to give any regional assistance. Apparently some jobs are more politically valuable than others.

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About the Author

Matt Grudnoff is a Senior Economist at The Australia Institute, a Canberra-based think tank, He is the co-author of The real cost of direct action: An analysis of the Coalition's Direct Action Plan.

Other articles by this Author

All articles by Matt Grudnoff

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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