Our Bill has donned the hard hat:
Labor is promising to help embattled manufacturers by establishing a $1 billion loan fund to help the sector modernise factories and move into high value production.
In a speech to the South Australian Labor conference on Saturday, Opposition Leader Bill Shorten said he would commit to creating an Australian Manufacturing Future Fund should he win the next election.
The fund would be modelled on the Clean Energy Finance Corporation to assist advanced manufacturers gain finance when the private sector is reluctant to lend to them due to the risk profile.
The fund, to be established from mid 2019, would be overseen by an independent board with its own investment mandate. A benchmark rate of return would be determined once the fund was set up, to protect taxpayers from losing money.
Priority would be given to automotive manufacturers – which face an uncertain future with the demise of car making in Australia – to retool or diversify into other industries.
I’ll note in passing that that is twice the amount of dough that was refused for car manufacturers to stay.
I don’t mind a bit of industry policy but with respect, Bill, borrowing costs are at generational lows.
On the other hand, energy input prices are stratospheric. What is Labor’s policy on that? Shorten has said he’ll pull the gas reservation lever but what will he do when the cartel doesn’t lower prices and threatens an ad campaign?
That touches on the real problem here. We can’t compete with our overvalued real exchange rate. Negative gearing cuts will help lower the dollar so that’s good but it’s only scratching the surface. What about productivity, competitiveness, innovation, research and development, procurement plus education reforms, not to mention land prices driven wild by the population ponzi. The only point to owning a factory today is to land bank it for a Chinese developer tomorrow.
We need an entire suite of reforms to shift the structure of the economy towards non-mining tradables, not just the odd symbolic billion thrown upon the funeral pyre:
Until the real exchange rate deflates by another third, manufacturing ain’t going to grow.
