A policy when you don’t want a policy

In releasing their Industry Innovation and Competitiveness Agenda, the government has finally recognised that ‘get out of the way’ is no substitute for real industry policy. Unfortunately, once we look at the facts that sit behind the fanfare of the Competitiveness Agenda, its clear the Government has simply replaced ‘get out of the way’ with ‘do something that sounds good’.

The Competitiveness agenda was billed as a policy designed to support better industry-research collaboration, spur innovation and the take up of new technologies, promote new business creation and SME growth and generally promote a broader based economy. The best way to see if this new policy lives up to that promise is to consider the comparison with what came before.

In 2013, after extensive consultation with industry and unions, the former government announced a $1 billion industry policy; the Plan for Australian Jobs. This included 10 (later expanded to 12) Industry Innovation Precincts, supported by a $500 million Collaboration Fund which would co-fund precinct projects. It included a $350 million Venture Australia fund, to be matched by private sector contributions, boosting the venture capital finance available for SMEs and start ups by $700 million. It included changes to the anti-dumping regime, making stronger penalties possible. It expanded the reach of Enterprise Connect and Commercialisation Australia, so they could assist more businesses to grow into new markets and products. It reformed Australian Industry Participation (AIP) policies, mandating strengthened AIP plans for large private sector projects over $500 million, so Australian businesses weren’t locked out of global supply chains, especially when used at home by multinationals.

The Plan for Australian Jobs was not perfect, but it was a big step forward. If this was the last step taken, then the Government’s Competitiveness Agenda is a significant step backwards.

We’ve gone from 12 strongly supported precincts that would have covered the vast majority of economic activity, to five ‘growth centres’ that don’t come close. The five growth centres will be supported by a $63 project fund, severely limiting both the projects that they will generate and the buy-in from both researchers and industry. Sectors like education, IT and tourism aren’t represented while two of the five sectors chosen, or 40%, are in resource extraction industries; oil and gas and mining engineering, technology and services. To put it kindly, this is a significant oddity for a program that should be about growing non-mining sectors of the economy. The more cynical of us should be forgiven for not seeing this as something best explained by wilful economic ignorance.

Business service agencies like Enterprise Connect and Commercialisation Australia were abolished in the Federal Budget but the Competitiveness Agenda moves some of their functions and budget to the new Entrepreneurs Infrastructure program and growth centres. No one should be under the impression this is an increase in the services businesses can access to help them commercialise new products, improve their operational and management processes or gain access to new markets. It’s a cut in these services by a quantum of roughly half.

AIP plans are on the government’s chopping block, but since introducing the legislation required to officially end the program might end in another embarrassment at the hands of the PUPs, the government is content to de-fund the authority established to ensure compliance with the program.

Venture Capital funding is gone, while restrictions on the use of already rorted 457 visas are wound back, making it harder, not easier for unemployed Australians to find jobs. An employee share ownership tax break will be implemented, which is fine, but no one should be under the impression this gets at the fundamental challenges facing the country.

In fact, the Competitiveness agenda is noteworthy for ignoring our major industry challenges, either entirely or substantively.

Some of these challenges are longer term; the low level of research industry collaboration, poor management skills, under investment and access to finance, especially for SMEs, an unfair trade playing field and the need to de-carbonise our economy, to name just a few. Of these, the only one notionally addressed by the Competitiveness Agenda is collaboration and as we’ve seen, that’s actually a step backwards, even before we contemplate the impact of massive cuts to research bodies like the CSIRO and universities.

Added to these long term challenges are pressing shorter term ones, including the closure of automotive manufacturing, an impending gas price crisis that threatens every gas intensive business on the east coast and a shipbuilding industry tittering on the edge because the government can’t commit to keeping the industry alive. Besides silence all we have seen on these issues is a mix of platitudes and woefully inadequate resources, as well as the obligatory promise to cut regulations.

Not for the first time, rather than recognising and addressing the real and pressing challenges facing industry, the Government has in effect abrogated its economic responsibility and refused to act. But they have also realised that regardless of their view, the Australian people do think the government has a role to play in shaping our economic future. The solution to this conundrum; a national challenge that the Australian people but not the Coalition recognise, was both obvious and familiar.

One can easily imagine an ambitious young staffer in the Prime Minister’s Office ruffling through the Liberal Party Manual for Government and breathing a sigh of relief as they get to the page headed; ‘How to design a policy when you don’t actually want a policy’. It’s the same page that inspired Direct Action, the government’s embarrassing climate change policy and I’m sure the government believes it will serve its purpose, which is political not economic, just as well in this case.

Of course whether its industry or climate change policy, the problem is that while the Government buries its head further in the sand, far from going away the real challenges being put off are gathering momentum in size and scope, making their inevitable impact greater and their solutions more costly.

Wouldn’t it be nice if our national government was firmly focused on these national challenges rather than people’s head attire in Parliament House? But that would need a grown-up, mature government, squarely focused on the national interest. Since that’s what was promised by PM Abbott in the election campaign, based on his record to date, it’s not something we should expect.

About Tom Skladzien

Tom Skladzien

Tom Skladzien holds a PhD in economics, was an economic adviser to Minister Combet and Treasurer Bowen in the last government and is currently the National Economic and Industry Adviser to the Australian Manufacturers Workers’ Union.

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