Ideas@TheCentre
Protectionism is socialism
Australia has long had a special place in its heart for people who ‘work the land.’ For much of its history, Australia ‘rode on the sheep’s back’ as the expression went – relying on primary industry for prosperity.
Unfortunately, Australia also has had a long history of protectionism, especially in primary industries. Not that Australia is alone in its endeavours to protect its farmers. Agriculture protection is high on the agenda of the (stalled) Doha Development Round.
The benefits of free trade have been clear for a long time, yet for some industries emotion trumps reason. The Productivity Commission noted that ‘primary production’ received more than $1.45 billion in financial assistance during 2009–10.
Many in Australia advocate even greater protection and exceptionalism for primary industries. The policies of these agrarian socialists and fringe parties should be scrutinised because of their potential to be economically destructive.
Nationals Senate leader Barnaby Joyce has opposed the sale of Cubbie Station against the advice of the foreign investment review board because, as he told the 7:30 Report, it was the biggest value station in Australia. Yet surely it is important these high-value assets remain in use and are productive?
Foreign investment in primary industry is linked closely to export, and growth in investment and exports are crucial for Australia. As for concerns about poor management – surely the potential loss of millions of dollars is an incentive to work the land well? Nor are foreign owners exempt from the strangling regulations governing every aspect of business that supposedly protect society.
Worse still are some of the policies of Bob Katter’s Australian Party, which aims to ‘reconstruct failing industries,’ ‘rebalance unfair market dominance by Coles and Woolworths,’ ‘oversee industry stability and development services,’ and ‘ban banana imports as they put at risk the entire industry.’
The agriculture policy document approves of an EU policy that says ‘the EU does supplement farmer’s income with direct support.’
The idea that it is appropriate for the Australian government to continually prop up uncompetitive industries must disappear. The onus to support Australian production should lie with the consumers of those goods. If an industry is unprofitable because Australians are unwilling to pay extra for Australian-made goods, what grounds are there to force others to do so via taxes?
The idea that socialising costs, which people refuse to pay directly, is acceptable is the mindset feeding the growth of the nanny state. That wolf is no less dangerous when wrapped in sheep’s clothing.
Simon Cowan is a Research Fellow at The Centre for Independent Studies.
