Australia needs a manufacturing industry higher-education “future fund” supported by a Resources Rent Tax.
By Gary Scarrabelotti
Scarra Blog’s thinking on the building how to re-build Australia’s manufacturing base converges with that Andrew Liveris.
Liveris is the Darwin-born CEO of US multinational company Dow Chemical and is co-chairman of US President Barack Obama’s manufacturing industry advisory committee. Liveris was in Australia at the invitation of Prime Minister Julia Gillard to give the keynote address at the government’s closed “job’s forum” in Canberra yesterday.
On 24 August this year I wrote – as it happened from a major mining and manufacturing city deep in Eastern Europe — the following:
Like it or not, a future Abbott government is going to have to re-visit the Resources Rent Tax (RRT) as a matter of priority. There is a straightforward solution that Abbott could safely make his own: introduce a simple increase in the corporate tax rate for mining companies.
Whatever its final design, however, an RRT should form a key element in any strategy to reindustrialise Australia. As the late, and my much admired friend, Mike Davis (aka Sir Wellington Boote of HenryThornton.com) used to argue, a RRT should be used to fund major investment in university level, manufacturing ‑relevant education and research: especially education in the fields of mathematics, engineering, design, computing, robotics, and the like.
Mike was spot on. One of the key issues confronting industry in Australia is the lack of a deep manufacturing-related intellectual and skills base of the kind that could support high-end manufacturing enterprises. The one really significant contribution a government could make in this area would be sustained, long-term investment, via a manufacturing industry higher-education “future fund” abundantly supported by an RRT.
(See “Free Market Blues”, www.scarrablog.com.au/2011/08/24/free-market-blues/)
Well, we are not alone. In an interview reported today in The Australian, Liveris backed the use of a sovereign wealth fund to support the development of new manufacturing industries in Australia.
According to The Australian, Liveris argued that
Australia faced a crisis because it had a one-speed economy that relied too much on mining for income … he said redistributing funds from new taxes [the proposed mining and carbon taxes] to pay for government health or social benefits would be a “short-term fix” that sidestepped the need to have a diversified economy with manufacturing industries that created long-term jobs. Mr Liveris urged the government to consider a “piggy bank, like a sovereign wealth fund”, to ensure revenue raised was “distributed to productive uses”.
He used his address to the Future Jobs Forum to call for “thoughtful and smart intervention” by the government, urging it to play a major role in encouraging manufacturing.
Mr Liveris said the government should pick winning sectors, not individual companies, which produced products the world needed …
Scarra Blog could not agree more.
As it happens, I am very much opposed to a having a tax on the emission of carbon dioxide. But I strongly support a RRT in some shape or form. And, while the Leader of the Opposition,Tony Abbott, will be obliged by his policies to repeal both the Gillard “carbon” and mining taxes, should he win the next election, there is no reason why he cannot impose his own more elegantly designed RRT — and do it with the agreement of the mining industry.
In any case, the national interest calls for it.