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The march of neo-liberalism

image What is the Abbott Government doing wrong? Many could argue long and hard over that question, but in this guest article Andreas Bimba points to their strong neo-liberalism as one of their main failings.

In December 2012 Toyota announced the opening of its new engine plant at Toyota Australia’s centralised manufacturing operations in Altona, a western suburb of Melbourne. This was a little more than a year ago. Although times were tough then with a historically high Australian dollar, a fragmented market, almost no trade protection and only moderate government co-investment (to partially compensate for relatively high Australian wages), Toyota must still have seen a future for the Australian automotive manufacturing industry.

These external negative factors have not really changed from one year ago. If anything, the Australian dollar has fallen so conditions should in reality be better.

What is different is the attitude of the current Federal Government, with their hardened attitude of the government’s primary economic advisory body, the Productivity Commission. The Productivity Commission recently recommended that all government support for the Australian automotive industry cease by 2020. This is effectively a decision that declared an Australian automotive manufacturing industry is not welcome past 2020 and that the government’s key advisers want the industry to, simply, close down.

The Abbott Government has politically moved to the right much more than any previous national government. Philosophically they could be described as neo-liberals who promote small government, minimal government intervention in the economy, free trade, globalisation and free flow of capital to the most profitable sectors of the economy. This philosophy currently has wide support in the community, especially from people who work hard, face a high cost of living and resent governments taxing them excessively and wasting that money on unnecessary social services or corporate welfare.

As the inevitable consequences of this ‘dry’ economic philosophy become better known, public support will fall and in fact it is already unlikely the LNP Coalition will win the next federal election in late 2016, even with most of the Australian commercial media being heavily biased towards them.

The neo-liberal philosophy is, however, an overly simplistic and failed economic philosophy. No one, not even China or India follow this philosophy, nor does the United States even though its business leaders often claim to be free traders but the world is well aware of the local, state and national government support US industry receives.

In a country like Australia with a relatively high living standard, the concept of total free trade will inevitable mean a race to the bottom. Firstly, most of the manufacturing industry will disappear, but it will not stop there and eventually much of the service sector will also be transferred to lower cost foreign providers. The internet provides easy trade for information based industries such as accountancy, education, engineering, architecture, IT support and so on. Even work that must be performed in Australia such as construction, food harvesting, plant operators and maintenance services are now often performed by non-resident workers allowed into the country with temporary visas such as the 457 visa.

The only sectors of the Australian economy likely to prosper in such an environment are the bulk minerals/resources industry and the bulk agricultural commodity export industry. Neither of these sectors employ many Australians. The inevitable end result of neo-liberalism is unemployment for most, and fabulous wealth for a few. The classic third world banana republic.

When Toyota closes down its Australian manufacturing operations, this means about 90 per cent of the components and other supporting businesses will go as well. Probably about 40,000 direct jobs, mostly in Victoria and South Australia, as well as some in New South Wales and Queensland. An estimated three times that number will go in the wider economy as the economic demand for goods and services of those auto manufacturing businesses and their employees will subside substantially. Probably as many as 160,000 jobs will go.

As the manufacturing industry will continue to contract under neo-liberalism the service sector of the economy will also shrink and unemployment is going to be much more than it otherwise would have been. If, however, the Abbott Government is frustrated at every step of the way, the level of economic destruction may be lessened.

With China switching to renewable and nuclear power and also transforming its economy across the board to an advanced sustainable economy, it is inevitable that the demand and price for mineral resources will fall substantially. Australia will suffer badly in such a downturn with such a narrowly focused economy.

The global atmospheric CO2 limit that has been set to avoid catastrophic climate change will inevitably lead to a collapse of the coal industry and possibly much of the gas industry in the short to medium term. This is another factor our current government fails to acknowledge. Much of the associated unserviceable loans will fall onto the major Australian banks, the government, and the Australian taxpayer.

The alternative economic approach to neo-liberalism of balanced trade protection which allows a larger and more equitable mixed economy with a healthy manufacturing, service and resource export economy is essential for Australia’s future prosperity. This approach provides a ‘level playing field’ for Australian businesses but does not remove national or international competition.

So with a Labor Government likely to be returned in late 2016 that is most likely to support a balanced trade protection philosophy, why did Toyota announce the closure of its Australian manufacturing operations for late 2017? Will Toyota change its mind about closure of its Australian manufacturing operations after the expected Labor victory in late 2016? I and a few million other Australians certainly hope so.

 

38 comments

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  1. john921fraser

    <

    The Japanese have learnt a lot about Aussies over the 5 + decades they have been dealing with us in trade and business.

    They see that we will not go like sheep to the slaughter and they foresee industrial unrest and political trouble.

    They may no longer be the powerhouse they once were and are no longer as inscrutable as they once were for unsophisticated Aussies.

    Hard times are coming thanks to the Abbott extreme right followers.

    And they will expect you to thank them for it.

  2. Fed up

    Did anyone see Abbott make the condolence motion in regards to Grietzel, a former Labor senator, before QT. It was disgraceful. I have never seen Labor look so angry at the house. Abbott could not resist taking a political swipe. His front bench talked all the way through it. Burke is complained to the chair, without any success.

    This mob has no decency whatever. It seems there is nothing so low, that they are not willing to go to.

    Yes, Carol, I suspect business is beginning to get very worried.

  3. mark delmege

    ‘So with a Labor Government likely to be returned in late 2016 that is most likely to support a balanced trade protection philosophy,’

    I think you are dreaming. sorry.

  4. Dissenter

    Australians are watching with horror at the daily TOLL of disastrous decisions, actions and statements made by ABBOTT and the other CON ARTISTS of the LNP.

    THE TOYOTA TRAVESTY is only one but of huge signifcance.

    As you rightly say this is the most far Right government Australia has ever seen. Their propaganda is inspired by GOebbels, their attempts to stifle the media reporting government actions SMACKS OF FASCISM as do their ATTACKS on Unions and Labor and Labor supporters. Our Asylum seekers are our JEWS ( in concentration camps living a slow abusive death).
    So who is ABBOTT?
    Juxtapositions aside the ABBOTT government is to this point a SHAM. They have not been governing. They have not been managing to govern. They have not been MANAGING at the mast basic level.

    Government is the management of the national interests in the BEST interests of all of the people and future generations. A test of government is the capacity to make decisions which reflect compromise and flexibility within a given context for beneficial outcomes. All we have seen is HARD LINE ideology in practice.
    No concessions and the reliance on so called Investigations and commissions for authoritative advice( where entire government public service departments EXIST for this purpose) and the manipulation of the military to legitimise abuses of refugees,

    How have Australia’s BEST interests been served by ANY one of the actions, events, demonstrations, activities or announcements that have been made?
    How have these commissions and audits and investigations and consultants been funded and to what COST?
    Are these the MOST prudent decisions that could have been made for the expenditure of such large sums of money?
    THe questions are many.

  5. Fed up

    Have to admit there is little rationality to any of Abbott’s decision.

  6. derp

    One cannot simply compare Abbott to Hitler.

    For one, apart from the death camps, a lot of Hitler’s decisions were “rational”. What I mean by that is that if you look at the reasons, they would seem to justify his decisions (and that part is scary, anybody can do things as bad as Hitler did). Also, Hitler didn’t have too many external bodies affecting him as well.

  7. Tracie

    derp, the external bodies are reducing. Even though I haven’t seen the whole story in relation to a top silk having a contract taken away simply for criticising the LNP, it does appear that the LNP are acting quite similarly to 1933 Germany.

    After speaking to a friend who lived in Germany during this time, he agrees. He can see it from a mile away.

    So yes, we can compare abbott to Hitler. Easily.

  8. Wayne

    While I agree with most of this article, the thought that Labor is a shoo in for the next election is pretty much dreaming I am afraid. I would LOVE to think its true, but its just way way way too early to say that. IMHO the Labor party made the wrong choice with Shorten over Albenese, and while people might wise up to Abbott they still have a lingering distrust of Shorten (as I do and I am a member of Labor), and I think its unlikely they will kick him out after one term based on what we know so far!.

  9. John Kelly

    I agree with Mark Delmege that the demise of this government in 2016 is overly optimistic. For that to happen, other events must precede it. It took 12 years for Americans to wake up to Reagan’s failed economics. The demise of manufacturing in Australia will take more than 3 years and longer for the public to see it. What will, however, help the public to see the fallacy of neo-liberalism is the rise of unemployment, lower wages and a higher cost of living. That is possible inside 3 years but could be offset by a militant union revolt leading to severe industrial unrest. This is precisely what the Abbott government is hoping for, and, trying to ignite.

  10. Dissenter

    To John, Yes but unemployment is already at the high of 1999 as of the end of December, It has not been addressed politically or used as a wedge by Labor so it is not PUBLIC knowledge.
    Tracie, I am not actually likening Abbott to Hitler. But he has set some processes in action which are a threat to our democracy and if many more follow THEN WE ARE REALLY in trouble.There are parallels with Nazi Germany and the MOST obvious one is HOW Murdoch ASSISTED ABBOTT to steal an Election by SUFFOCATING Labors policies and positives by ATTACK and saturation criticism.
    If the OPPOSITION is NOT allowed to OPPOSE or present its policies or values with clarity then the democratic process is undermined. This is what happened and the frustration and fatigue from it caused Labor to undermine itself from within but in the PUBLIC view.

  11. Dissenter

    Yes John Keppy you are also right that Abbott would seize on any demonstration of union militancy as a reason the hamper them moreso by perhaps imposing Vlad style laws or worse.
    THe marchers in MARCH also have to be forewarned that any sign of militancy or violence will have the marchers in confrontation with police because the police will be on alert.

  12. lawrencewinder

    .”..died of a theory…?”

  13. Catriona Thoolen

    “mark delmege
    February 12, 2014 • 2:39 am
    ‘So with a Labor Government likely to be returned in late 2016 that is most likely to support a balanced trade protection philosophy,’

    I think you are dreaming. sorry.”

    We also need to remember a lot of the FTAs we are now dealing with were signed off by an ALP govt. I do not believe that they will renegotiate FTAs to get Australia a better deal. Had they wanted to, with the evidence of dumping (shown in application by SPCA) but also dumped fresh produce, competing against locally grown…all before the last election, they would have acted then. No one except Katter suggested we replace tariffs to protect our producers against ‘overseas governments’ subsidised imports.

    So, don’t look for any protectionism from ALP either.

  14. Fed up

    Wayne, I disagree about Albanese. I am a great fan of his, but not for PM. Yes, I wish he would return to his previous role as leader of the house. I like Burke, but Albanese is the one with the talent. Reminds me of another, from back in Whitlam’s day. A man called Fred Daley.

    It is too early and unfair to wipe off Shorten. I say this, even if he was not my first pick.

    I believe Shorten performed well yesterday, and today, miles out in front of Abbott.

    Abbott has put great store in his ability to deal with the Aborigine question. Shorten speech has just put Abbott back in his box. He has stolen Abbott’s thunder.

  15. Fed up

    Labor did not sign those FTA. They did not agree to the terms. It was Abbott, that came in saying he would sign all before Christmas. This meant he shut off any chance of getting improvements. I suspect he will sign regardless of the harm they will cause THIS COUNTRY.

    We can at least be glad, that only one has been signed. One that both GMH and Toyota has mentioned as a reason for closing down in this country.

  16. Fed up

    John, I see no sign that the unions are going to rush out with any militancy action, no matter how much Abbott prods.

    In fact, I do not believe they have to. Mostly because they have right and common sense on their side.

    Could be wrong.

    The same goes when it comes to any protest marches. They must all be kept friendly. One must not be goaded into any action that undermines the cause.

  17. Graeme Rust

    abbortt is the biggest threat to our democracy that we have ever had, when you see troops in the streets then you will know we have become a fascist led country, abbortt is way out of his depth in the leadership of the country, hence we see him stumbling from one disaster to another, it’s policy on the run from day to day, mr eleventy is no better as he’s letting abbortt close down the moter industry , probably hasn’t got his abbaccass working yet ?? $16m to a company that isn’t in any trouble, but nothing for SPC, when will the libs graduate from prep to first grade ?? not in the foreseeable future sorry.

  18. diannaart

    Abbott has never ceased campaigning. Whatever decisions he makes, Abbott references Labor or unions negatively, with the aim that by 2016 the Liberals (should be known as the Authoritarians) will appear to be the only option for voters.

    His only long term plans are for continued political power over Australia.

  19. Dissenter

    Yes diannart I do agree. They are embedding themselves in a way that suggests it is for a very long time in spite of the democratic election process. So what further Lies and TRICKS and entrenching actions do they have up their sleeves?

  20. cassilva48

    Nice idea, but I doubt this will happen, as Toyota will be ‘winding down’ its operations long before 2016.

  21. Patty

    Fear, fear, fear – that’s all the Coalition knows – I agree @diannaart – we are being bombarded by negativity yet again. 1000 of workers will lose their jobs, yet Hockey and Abbott continue to kick them while their down – offering them no support, only blaming them for the closures . They’ll have the Australian voters running for the bunkers by the time the 2016 election comes around. Very concerning, what with the limited attention span the average Aussie voter has.

  22. guest

    The devil is in the detail. Look closely at what the LNP do and say.

    They talk of freedom of speech, but the ABC is not allowed to report allegations, especially when the allegations come from untrustworthy “illegals” (although of course the LNP are bleeding hearts when it comes to drownings}.

    The LNP refuses to speak about Operational Matters. No point in asking questions.

    When Labor seeks to call for a censure motion against the LNP’s handling of loss of businesses, loss of jobs, the motion is blocked by a motion that the Member not be heard. Blocked. Censored.

    Reasons were given for the loss of jobs: Carbon Tax, Mining Tax, “Green” Tape… No explanation given, no details, no examples – just wild assertions in the form of minimally-worded mantras.

    Examples of businesses with high electricity bills are named and a cost number in dollars is given, but no details about how much of the bill is about the Carbon Levy, how much is GST or how much is rise in electricity use or how much is an increase in supplier charges. So these accusations are veiled in a kind of silence of omission which blurs the details – and therefore the truth.

    The LNP keeps raising the issue of debt. Abbott did it in Davos, where he lectured listeners on the futility of debt/deficit, how no govnt grew economy with high taxes, how Labor created an economic disaster in Oz. Never mind that many of the listeners came from countries in more debt than Oz, that the current most successful countries have high taxes, and that Labor was highly praised internationally for its responsible management of the economy (which the listeners would have known}. No wonder Abbott’s speech was either criticised or completely ignored.

    We have a secretive, dissembling govnt which will hear no criticism and continues to blame everyone else for any problems. It is not a good look.

  23. diannaart

    Yep, to paraphrase Orwell, some have more freedom of speech than others.

  24. Stephen Tardrew

    Agreed Carol well argued. I do have reservations about 2016 unless the alternative parties join forces right now to hold Abbot and Co accountable. By making predictions immediately based upon future projections that come to fruition Labor and Co can set the foundations for a strong attack on the opposition even if we do not win.

    We must accept that it is the long game that matters and start to plan straight away. I keep on about attacking like Abbot simply because, other than proof they buggered employment and the economy, Abbot will continue to blame unions and the left forever. It was an interminable Howard strategy after all. However now we have the clone gone wrong which is even worse. Coherent predictions and arguments formulated right now can drive a process of unremitting criticism that will be demonstrated to be correct. Abbot proves that the attack dog approach works. Scream loud; long enough; and often enough, and people will believe you.

    We avoided phase one of the global collapse partly through the futures fund, good management and the resources boom however we are completely unprepared for phase two of a multiple dip recession structured to increase the profits of investments banks while making workers and the banking sector vulnerable to more shenanigans. Wake up Australia austerity is a crock of shit meant to enslave you. Look at Europe.

    Tie LNP to the US treasury and corporate malfeasance and their weakening of new regulations allowing for another financial bubble and crisis. Point out the lack of accountability of the banking sector an the lack of criminal investigations. Rabbit on about the TPP and its consequences but do not be lulled into reasonable repartee with a bunch of unreasonable troglodytes.

    These buggers want a global corptocracy so lets give them a global bashing. We are only part way through a multiple dip recessions that has nothing at all to do with labour but everything to do with the rampant and out of control corporate greed.

    These elitist oligarchs are completely unrelenting just look at the Coke Brothers and their Super PACs. Wki when in doubt.

    Make no bones about it the right is the right regardless of nationality and the USA, as the major economic player, is trying to force their poor corrupt regulatory regime on the rest of the world. Like a good lap dog Abbot will come running tongue hanging out: tail wagging; mouth drooling; subservient eyes sparkling for the peanuts left to the poor and middle class of the world. And bang goes the environment as well and my children and grandchildren future with it.

    Planning, planning, planning. Repetition repetition repetition. One of the main strategies for learning is repetition and if you do not repeat long enough and often enough your message will be drowned in a seas of cynicism and abuse.

  25. Stephen Tardrew

    Wanna find out whats going on in the US then access The Real News, truthdig Robert Reich and Bill Moyers.

  26. mark delmege

    Yes Catriona you nailed it. The ALP doesn’t yet seem to have any alternative to what it has done in the past, what the liberals are doing and what it might do in the future – which seems to be more of the same. They all seem to follow a vassal ideology – not realising empire central – with all the bullying resources of a superpower, a global currency that screws all others and the pumping of gazillions of dollars into its (and our) financial systems – continues to fail – even before considering their failure to understand the nature of triple bottom line. All those countries in Central Europe and elsewhere who followed a similar lead have been cored out – devoid of industry and now that they have maxed out on their credit cards they have no where to go. No jobs No industries and no hope. Much the same as Uncle Samuel who shipped all their jobs off to China. Mind you the captains of industry are doing quite nicely with their squillian dollar bonuses and handouts but the US government wallows in untold debt – probably never to be repaid and the global banking system sinking fast under systemic collusion and corruption with double double black holes.
    But don’t you worry about that …. we will find industries that no one else will be able to replicate that will make us global leaders in technology and development and employ all those tens of thousands of once productive workers making real things….I don’t think so.

  27. Nuovo Novalis in Terra Australis

    This is an excellent article, which comes to almost identical conclusions to those I posted previously:

    Austerity vs. Stimulus

    Only terms like neo-liberalism are explained more thoroughly rather than assumed to be understood. I also like the point about how China’s change to a lower carbon intensive economy will significantly undermine the Abbott government’s economic strategy, which is why they bury their heads in the sand about the problem of climate change. In the Abbott world-view, if you close your eyes to the impending clean energy revolution, it no longer exists… problem solved.

  28. randalstella

    No, as a matter of fact, I have not seen Mrs. Abbott lately. If I don’t see her, if this goes on for much longer, I know we have completely nailed the bastard; and the problem is over – thanks to our sense of principle.

  29. Darren

    I find it telling that Abbott expressed a desire to build the ‘roads of the future’ in Australia, almost exactly mirroring Hitler’s creation of the Autobahns.

  30. John Armour

    The keystone in the Coalition’s “arc de triomphe” is the “Debt Myth”.

    It’s the widespread acceptance of the “Debt Myth” (even here) that makes it easy for the LNP to pursue policies that represent core neo-liberal belief with minimal risk to its electoral support.

    Knock that out, and the whole phoney arch comes crashing to the ground.

    Unfortunately the ALP helped them build and maintain it so nothing of real importance will change.

    We already accept that 5% is “full employment”, so what’s going to be the big deal about 6.5%?

  31. Stephen Tardrew

    John92 Great article clear precise and to the point. This is just appalling. The Australian public have no idea what is going on and by the time austerity hits it will be too late. I am hitting the panic button simply because the chance to roll back this draconian austerity plan is quickly receding. To the LNP all workers are greedy and unionist are the greediest of all. Take em down a step or twenty, increase unemployment, and then lets see if they join unions or attempt to improve work conditions or opt for self-protection. This has absolutely nothing to do with labour but everything to do with absolute power and control regardless of the consequences to peoples lives. There is going to be immense suffering for absolutely no rational reason. I am so upset I just cannot bring myself to watch LNP politicians on TV so I rely upon the reports of others.

    Thanks for the great article.

  32. John Armour

    The Australian public have no idea what is going on and by the time austerity hits it will be too late.

    You’re already up to your neck in it Stephen.

    Labor’s cuts to spending in its last budget were the largest in 40 years according to Treasury records.

    Like I said, when it comes to neo-liberal ideology there’s not much difference between Labor and the Coalition.

  33. Stephen Tardrew

    Point taken John A. and agree.

  34. Andrew Stevenson

    We’ll need an active manufacturing industry to churn out armour, munitions,aircraft to fight off our northern neighbors if the LNP keeps going.

    March in March!

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