Shortly before Christmas 2014, Bernard Salt wrote an excellent column in
The Weekend Australian titled ‘Nation may need to look after itself’.
He discussed the gradual loss of key national capabilities that may be
seen as vital to an island nation that depends upon exports for its prosperity,
and mentioned the importance of ‘retaining core capabilities for strategic
reasons’. I wrote to tell him I couldn’t agree more, but I believe the issue
goes well beyond the defence sector.
As a nation we are losing our ability to design and manufacture things.
The economists would have us believe that we shouldn’t build anything that we
can buy cheaper, but this (only relatively) sensible view seems increasingly to
get mis-interpreted and re-stated incorrectly as ‘We shouldn’t build anything
at all’.
A friend of mine, Peter Smith, has begun researching a doctoral thesis
at the University of South Australia that partly addresses this topic. Peter
has spent a lifetime in the aerospace and defence industries and recently made
an excellent presentation at the University of Sydney’s 75th anniversary
aeronautical engineering conference. He makes the point that government
shouldn’t do for industry what industry should do for itself, but government must
do for industry what industry can’t do for itself, citing the example of
Canada, a country with a comparable population and level of technological
development.
Government policy in Canada, which is designed to facilitate the
development of a sustainable aerospace industry, has resulted in a sector that
turns over $22 billion a year (Australia turns over $4 billion); employs 66,000
trained engineers and technicians (Australia employs 14,000), and exports 80%
of its output (Australia exports 25%, at most). What a contrast in economic
outcomes!
The University of Sydney likely has a copy of Peter’s presentation, if
you’re interested.
The attitude of Australian officialdom to the manufacturing sector is
extremely dry; it does not appear to be moistened by much in the way of insight
or understanding. Yes, commodity-style goods such as cheap cars, consumer
electronics and paper clips may best be imported from low-cost producers. But
relatively high-cost producers such as Australia, Canada, Sweden and the UK can
and do compete on value, not cost (though the distinction is sometimes ignored
within policy-making circles), in areas such as aerospace, defence equipment,
biotechnology and other high-end technical sectors.
Highly educated Australians are in demand overseas, working in these and
other sectors such as Formula 1 motor racing. Why do we educate and train
engineers and scientists, and complain loudly that not enough students are
studying STEM subjects at school and then at university, if government policy, by
a lazy or ignorant default, is to allow the manufacturing sector to wither and
die in any case?
Is it government policy that the manufacturing sector should eventually
fail? Do the policy makers actually understand what goes into creating and
sustaining a credible industry capability, in any sector? And do they understand
the benefits we as a nation will forego if our manufacturing industry is
allowed to fade away?
Peter Smith highlights the contrast between Australia’s
aerospace industry policy, on the one hand, and the UK’s aerospace and
high-technology industry sector policies, on the other, and finds us badly
wanting, both in terms of policy development and the measurable economic benefits that flow from an enlightened policy position.
As a nation we’re not taking a mature, joined-up approach to this
problem, and what debate there is in this country isn’t getting enough exposure
on the air and in the public prints.
Sincere thanks to Bernard Salt for raising in a national newspaper an issue more
people should consider in detail, not just comparing sound bites and the volume
of the primal screams from some of the participants in what has been so far an
unenlightened and unenlightening debate.
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