Saturday, June 13, 2009

Protectionism won't wash

The fight between the Rudd government and the ACTU is only slightly less fake than the Prime Minister's response when asked why more women weren't promoted in his cabinet reshuffle.  When the PM replied "fair shake of the sauce bottle", the 24 per cent of Australians born overseas wouldn't have had a clue what he was talking about.

The ALP is quite happy to have a stage-managed brawl with the union movement over the Australian Building and Construction Commission.  This way the public is more likely to focus on the one demand of the unions that the government hasn't given in to, as opposed to the 99 demands the government has given in on.  And nothing is better designed to prove that Kevin Rudd is not in thrall to the unions than to have ministers booed at last week's ACTU national meeting.

The reality is that since Labor's election, unions have got nearly everything they wanted.  The chances of the union movement not supporting the ALP at the next election are nil.

The reason the ACTU has declared the abolition of the coercive powers of the ABCC its No. 1 priority is that it's practically the only issue on which the ACTU hasn't yet got its way.  This is because the government knows there's not much sympathy in the electorate for union thugs on building sites, and bringing the construction union under control is essential if there's any chance of delivering infrastructure projects on time and anywhere close to their estimated budgets.

The union movement understands its chance of winning the fight over the building industry watchdog is small, but it's willing to carry on its campaign nonetheless.  For the unions, the fight has important symbolic purposes.

And there's another symbolic fight that the unions are also carrying on.  It's a fight that has much more potential significance, and which, if the unions ever won, would have diabolical consequences.

Last week the ACTU reiterated its call for the Rudd government's stimulus package to be spent in Australia on Australian things.  So, for example, the Textile, Clothing and Footwear Union insisted that all uniforms of state and federal government employees be Australian-made.  This, we were assured, was "not a call for a new wave of protectionism, this is about a fair go for Australian jobs and industries".  The union didn't explain how such a move could be anything other than protectionism that would do more harm than good to local jobs.

Until now Australian government ministers have, to their credit, resisted these sorts of protectionist tendencies.  Simon Crean, who is proving to be one of this country's best trade ministers, issued a stern warning.  He said there was "no way" the Australian government could ever mandate "buy Australian" requirements at the same time as it was arguing against measures such as the reintroduction of dairy export subsidies by the United States.  He put it nicely.  "We can't be hypocrites."  Crean might once have been the president of the ACTU, but he also knows that if it ever comes to a trade war we would lose.

Given all of this, the comments from brand new minister Mark Arbib are disappointing.  Just hours after he was sworn in as Minister for Employment Participation all the government's good work was undone.  Arbib said he was "listening" to the unions' proposals that projects funded from Rudd's stimulus package use only Australian-made products.  But what is there to listen to?

If anyone wants to know the consequences of these policies they need only consider what's happening in the United States right now.  Because of their disdain for the Bush administration, many people are willing to forgive Barack Obama for many things.  One of those things being blithely ignored is Obama's less than wholehearted endorsement of free trade.  His stimulus package contained a "Buy American" requirement.  The result was entirely predictable.

Part of the package is to be spent building internet broadband networks and creating jobs in the construction industry.  The problem is that telecommunications company Cisco can't fulfil the requirements of the stimulus package because the equipment needed to build the networks isn't made in America.  And so construction of the broadband network has stopped.  According to the Communications Workers of America, a union with 700,000 members, this is bad luck.  The union says "this is about creating American jobs - not Chinese jobs".

Unfortunately what American and Australian unions, and Arbib, haven't yet realised is that ultimately Chinese jobs are also Australian jobs.


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