A series of articles today raises a rarely confronted issue in the Australian economy that keeps the boys club of rentiers in clover and the rest us all the poorer. In international trade they’re known as “behind the border” protections and Australia is something of a specialist. First up, The Australian attacks the infrastructure duopoly:
In a submission to an inquiry ordered by the Abbott government to act on barriers that stop major projects going ahead, Salini Australia, set up as a subsidiary of Italy’s construction fim Salini, has also attacked the “excessive complexity and effort” to tender as having “no equal in the world”.
…”This bias, combined with flaws in procurement systems . . . ‘lock in’ higher prices and exclude international players notwithstanding their track record of delivering to cost and specification internationally,” the submission says.
…In its submission, Salini Australia is highly critical of the shortlisting on major projects, saying it is “often a murky process” that generally leads to just two or three companies being invited to participate in the final stage of a tender.
The builder argues the major Australian groups are usually both shortlisted, while the selection of the one other player is often in favour of those with some local experience.
..”As it stands, the Australian market is not a real open market despite claims to the contrary; while anyone can establish a subsidiary or branch office in Australia, get prequalified and participate in expressions of interest, this is as far as it goes in most of the cases, regardless of the capability and experience of the company.”
Next up it’s steel, from the AFR:
OneSteel and BlueScope Steel have been accused of a plot involving expensive and unnecessary chemical tests used nowhere else in the world as part of a campaign to keep out foreign competition.
The claim was made in letters sent to Standards Australia and the Australian Consumer and Competition Commission by a coalition of 98 steel businesses that includes major importers such as Sanwa of Japan, Thyssen-Krupp of Germany, Australian-owned Chinese-based Steelscope and local steel consumers who are concerned the measures will push up steel prices.
The key concern is that a draft technical standard for four kinds of steel used in mining, infrastructure and construction is significantly different from the International Standards Organisation which means foreign steel will no longer comply with local rules unless it re-engineers production specifically for the Australian market.
…The letter says BlueScope and OneSteel, also called Arrium, have excessive influence on a committee of Standards Australia that set the standard. Currently eight of 15 members are employed by BlueScope or OneSteel or by industry groups funded by them.
One would be tempted to laugh were it not going to come out of mine and your pocket.
There is renewed vigor in these “behind the border” strategies and they have been adopted and endorsed by the Australian Industry Group which recently declared:
New Ai Group research out today reveals the widespread use of non-conforming products across the building and construction sector. An extremely large proportion (92%) of companies responding to our survey reported non-conforming products in their supply chains. This raises important questions about quality and safety and it poses serious commercial challenges for the businesses that do play by the rules,” Ai Group Chief Executive, Innes Willox said today.
“The report – The quest for a level playing field: The non-conforming building products dilemma – is based on a survey of more than 220 individuals and organisations across manufacturing, fabrication, supply and building industries and face to face meetings with over 240 industry participants. Almost half of businesses surveyed (45%) reported lost revenue, reduced margins or lower employment numbers due to non-conforming products in the steel, electrical, glass and aluminium, and engineered wood sectors. The majority of the non-conforming products do not meet regulatory, Australian or industry standards. Others are not fit for their intended purpose, are not of acceptable quality, contain false or misleading claims or are counterfeit product.
“In addition to evidence of non-conforming products, the report also reveals significant confusion among companies about how to identify non-conforming products and who to report them to.
Ah, it’s an oldy but a goodie. Gotta protect those standards! And it’s not just construction of course. The retail lobby appears to be competing successfully too. No, not for your business, for your handout:
The Labor and Coalition states are united in their in-principle support to extend the goods and services tax to more online foreign purchases, putting pressure on the federal government to abandon its neutral stance and facilitate a change.
Ahead of the meeting of treasurers in Canberra on Wednesday, South Australian Labor Premier and Treasurer Jay Weatherill indicated his preparedness to support the move for change, which is being led by NSW.
…With regard to online offshore shopping, he said he was keen to examine the detail of the various proposals, but added that “the current arrangements do put local retailers at a disadvantage which is hurting local jobs”.
The other Labor Premier, Tasmania’s Lara Giddings, also restated her support on Monday for lowering the $1000 threshold at which GST applies to online goods bought from overseas.
Victorian Liberal Treasurer Michael O’Brien said lowering the threshold would improve his state’s budget by tens of millions of dollars.
And what will it do to your households Mr O’Brien?
I have some sympathy for these various businesses. Because our authorities have no cojonies and have failed utterly to address competitiveness at any level – in the currency, competition policy, tax reform, industrial relations, land – it is only natural to turn to the same teat for greater succour.
