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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