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Published 12:52 PM, 20 Aug 2012 Last update 3:21 PM, 20 Aug 2012

AAP

Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future.

Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate.

“There is no silver bullet that is going to rapidly devalue the dollar and make things easier for Australian businesses in the immediate future,” he said.

Many trade-exposed businesses have suffered under the strong currency, which has been lifted by strong demand for the nation’s commodities and economic troubles in the US.

However, Dr Henry said Australia’s economic policy framework – which includes a floating exchange rate, the independent setting of monetary policy and competition policy – had served the nation well.

“These things have helped to protect Australia from the impact of several economic shocks emanating from overseas,” he said.

“It is important that we will build on them and resist the temptation to dismantle parts of the framework, even though we may perceive from that dismantling a short term advantage.”

He also said local businesses must start acting like regional entities, by becoming part of regional supply chains, partnering with similar or complimentary foreign firms or moving parts of their operations to Asia.

Dr Henry conceded that moving components to Asia was not easy because such plans often attracted criticism from unions and local communities.

But he pointed to the example of Australian bootmaker Blundstone, which prospered from moving part of its business offshore despite being criticised.

“It is clear today that if Blundstone had not shifted elements of its manufacturing to Asia five years ago, it would have gone out of business completely,” he said.

Separately, Mr Henry also said his soon to be released Asia white paper will be a strategic plan for the decades ahead, not a shopping list of spending proposals.

Tax debate could improve

The debate about Australia’s tax system needs to be a “hell of a lot better”, Dr Henry believes.

He told the business forum that if governments don’t lead change, change will be forced upon.

“You want to avoid putting yourself on a burning platform,” he said.

“In order to get to the place that we need to get to, we are going to need a hell of a lot better debate.”

Dr Henry agreed with current Treasury Secretary Martin Parkinson, who in a speech last week warned governments may have trouble meeting demands for spending from the existing tax base.

Dr Henry said commonwealth tax revenue, as a ratio to gross domestic product, would not return to where it was before the global financial crisis – at least not under the present system.

He said state revenues were in a much worse position, describing it as “fragile”.

“At the moment, it looks okay for the resource rich states, and for the others it looks desperately bad,” Dr Henry said.

“But even for the resource rich states, at some stage the royalties will deliver less revenue than they have been delivering. They are going to front a grimmer fiscal reality as well.”

http://www.businessspectator.com.au/bs.nsf/Article/Dont-bank-on-early-A-fall-says-Henry-XC56Z?OpenDocument&src=pm&utm_source=exact&utm_medium=email&utm_content=92636&utm_campaign=pm&modapt=news

by: By Tim Ayres

IT might seem like everything’s made in China these days but chances are, you use something every day that’s made in Sydney’s western suburbs – whether it’s the automatic transmission in your car, a scratchie, a solar panel or a smoke alarm.

As trains and motorways are funneling commuters east, work is already under way at the thousands of small and medium-sized factories and workshops often hidden from view.

Near Liverpool, workers at HPM make the only Australian-made powerboards, sockets, smoke alarms and switches you’ll find at your local hardware store.

At Minto, workers churn out Streets paddle pops and Cornettos. At Bella Vista, workers at ResMed make devices to treat sleep apnea.

Of course, making things in Sydney has its challenges. Across Australia, manufacturers are being squeezed by the high Australian dollar and low-cost overseas competitors.

As western Sydney is a manufacturing centre, the current squeeze on the industry disproportionately hurts the region. 

Jobs are being hit.

Two hundred jobs were lost when multinational Reckitt Benckiser closed its West Ryde factory, sending the manufacture of its iconic Australian brands Mortein and Dettol overseas. The Huntington factory that supplies Australia with its scratchie instant lottery tickets is soon to shut, with the work being sent overseas. Sixty jobs are going there.

Hundreds of jobs will be lost when Shell stops refining oil at its Clyde site.

The same story of job losses is playing out on a smaller scale at many workplaces across western Sydney. If we don’t pay attention to our manufacturing base in western Sydney, we face watching it fade away. Good, skilled trades jobs in manufacturing industries with a future are critical to the economic success of the region.

Wages from good blue-collar jobs sustain suburban economies, while local manufacturing creates supply chains that spread economic benefit well beyond a single enterprise.

With real commitment from industry and government, Sydney’s west can be a smart and skilled manufacturing centre in the competitive global economy.

We need to aim for a future in which an auto component maker in Blacktown can win a contract against one in Guangzhou.

We won’t get there on labour costs: we’re lucky to live in a country where people earn fair wages. It will be through investment in technology, innovation and skills; a commitment from industry to employ managers who are capable of leading their enterprises in a tough environment; and a serious effort from government.

Government’s role is not to prop up outdated technologies and industries. But it should be fighting for good local jobs, supporting the industries of the future and creating the environment for them to thrive.

We haven’t seen much of that lately: 17,000 manufacturing jobs have been lost from NSW since the O’Farrell government took office. Barry O’Farrell may not have personally sacked those workers but nor has he been defending them nor putting up the big ideas for the NSW manufacturing jobs of the future.

A place to start would be the North West Rail Link. The state government has trumpeted the project’s potential to create jobs, yet has set no local-content target.

The North West Rail Link could be a driver of manufacturing jobs in western Sydney in steel fabrication, in rolling-stock components, in air-conditioning units, in concrete.

Or tenderers could just send all of that work – for thousands of Aussie jobs – overseas.

In Granville, workers at Knorr-Bremse produce brake sets for trains – I’d love to see them get the chance to supply the trains that run on the new train line. But I’m not holding my breath.

A mandated ratio of apprentices to skilled tradespeople on North West Rail Link contracts would deliver some serious investment in training and valuable opportunities for young people to take up a trade.

There are many elements to building a thriving manufacturing future for western Sydney. Business, unions, training organisations, residents and government at all levels have a role to play.

But it won’t happen by itself. 

Tim Ayres is NSW secretary of the Australian Manufacturing Workers Union

From: AAP January 10, 2010 4:41AM

Car production in Australia has plunged to its lowest level since 1957.

CAR production in Australia has plunged to its lowest level since 1957, with manufacturers hit by the global economic slump and the high Australian dollar.

Despite strong local car sales, helped by the federal government’s business tax breaks, exports to markets such as the Middle East and the United States have all but collapsed, Fairfax newspapers say.

The industry is set to be further buffeted by a January 1 tariff cut that has lowered the price of imported models relative to locally produced cars.

Figures from the Federal Chamber of Automotive Industries show Australia produced just 225,713 vehicles last year, almost 100,000 fewer than in 2008 and 55 per cent of the output in 2004.

The chamber’s chief executive, Andrew McKellar, told Fairfax a “crucial factor” this year will be the speed of recovery in export markets, warning that the high dollar poses a serious long-term threat to the competitiveness of the industry.

Separate figures from the Bureau of Statistics confirmed the dramatic collapse in exports.

The export slump will leave Australia’s car industry even more heavily dependent on taxpayer-funded assistance, which is mainly provided through the Government’s $6.2 billion car industry plan.

Industry Minister Kim Carr said production had been running at half its usual pace, although local producers had fared better than elsewhere in the world, given no major companies had gone broke.

Another 15 jobs have been lost from South Australia’s manufacturing sector, with the collapse of engineering firm Clyde-Apac.

The Woodville-based company makes wheels and casters for trolleys and other products.

Joe Kane from the Australian Workers Union says the 15 workers were sacked after the company was placed into administration.

“Mostly the financial crisis, cash flow orders not being, lack of orders and eventually they got into debt and have gone under,” he said.

He says workers are owed two weeks’ pay plus entitlements and will have to apply to the Federal Government’s assistance scheme to recoup any money.

Clyde-Apac was dealt a major blow two years ago when it lost its contract with Ford.

Since that time it ceased to supply any of Australia’s car makers.

http://www.abc.net.au/news/stories/2009/04/16/2544069.htm