Weaning and whining

Once upon a time —in the mid-1990s—I was the CEO of the Australian Dairy Industry Council. Farmers and the processing companies they own (Murray Goulburn Coop; Bonlac; DairyFarmers etc) were starting to recover from the Australia-NZ Closer Economic Relations Agreement (ANZ-CER) that introduced zero tariffs on imports from the most competitive dairy producer in the world.

Contrary to the widespread expectation, the industry survived the loss of protection. With fewer farms but the same number of cows, the industry re-structured on the back of a decade-or-so of sun-setted consumer subsidies (the so called ‘Kerin Plan’) and administered pricing of milk by State Governmments. Since 1991 it has been effectively without tariff protection. Price regulations disappeared in the late 1990s and subsidies within eight years after that. Now, the dairy industry is highly competitive in global markets. An icon of successful, rational planning that turned a small-scale, inward-looking, technically backward, industry into a world-beater.

There’s a big difference between dairy and the motor vehicle industry, however. It’s not the tariff. The Unions, especially, complain about the planned cuts from 10% to 5%, but in reality that’s a furphy. Exchange rate variations are much larger than that.

The difference in motor vehicles is that they’ve been “on the public tit” for forty years or more and want to go on slugging the consumer and taxpayer for another forty. Steve Bracks’ recommendations are a tired old song. Philip King in today’s Australian newspaper has their measure.

Attempts by them to recruit us to their cause are persuasive because many of the benefits are real, such as a tradition of sophisticated engineering, thousands of jobs and $5 billion a year in exports. Like captives we’re being fed and watered, but we’re deluding ourselves about the nature of the relationship and paying through the nose for the privilege

[From Cars at a fork in the road | The Australian]

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