Kevin Rudd has signalled a determination to pursue "industry policy".
In its original form, this is the long discredited Australian approach of yester-year.
Industry policy meant tariff and tax assistance to a host of manufacturing industries. It was hoped that these measures would be the fertiliser to propel budding activities into world-beating flowers. None of them ever did.
By the late 1970s we were saddled with permanently hospitalised manufacturing industries including cars, clothing, and fridges. In the process, we were paying up to double the going world price for many products.
There were always snake oil salesmen in the universities and the bureaucracy who pushed industry policy as the road to success. They said we must adopt the approaches that they fantasised were being followed by successful economies.
Thirty years ago Japan was the model. Some people thought its firms followed an "indicative planning" model sketched out by some wise bureaucrats. It was, of course, rubbish. Toyota, Sony, Honda and other successful Japanese firms followed their own corporate interests.
Japan at that time differed from Australia in two important respects. It had a very flexible labour force (union muscle was absent). And its tax system favoured very high savings and investment rates. Today China is successfully following a similar path.
The Keating Government started to dismantle industry protection. Today Australia's industry support levels are comparable with those of other advanced economies.
Governments no longer intervene in business decisions. Firms are now free to examine customers' wants and produce the goods and services as efficiently as they can. These reforms have contributed to the radically improved living standards and low levels of unemployment we enjoy today.
Mr Rudd claims his form of industry policy is not a return to the pre-Keating era. But placing Kim Carr as the Shadow Industry Minister is hardly likely to instil confidence in this.
Kim Carr has already outlined an energetic policy of government intervention. This involves identifying industries that are "environmentally sustainable", "strategic", and "contribute to skill formation". Unfortunately this is a re-run of the winner-picking that failed so abysmally in the past.
And while Mr Carr might be dismissed as a token anti-capitalist in an otherwise moderate Rudd team, others echo some of his agenda. Thus, Bill Shorten has advised the car industry to build hybrid vehicles. The industry has excellent products but is barely capable of attracting 20 per cent of new car purchases. It would be horrified if required to add $5000-$10,000 costs to each vehicle.
Mr Rudd himself identifies industry policies as education, R&D support and industrial relations.
Education is great if it means a return to the hard areas of maths, languages, technology. But it is unlikely his supporters among the teachers unions would like to see these favoured ahead of subjects like environmentalism and indigenous rights.
In the case of industrial relations the danger is a return to union controls and the inflexibilities in labour relations that the Howard reforms have done much to redress.
Rudd must further define his version of "industry policy" if he is to be a credible alternative to Howard.
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