March 8, 2012


The Coalition is not discounting the Australian dollar hitting $US1.25 as it shapes policy proposals for those industries which would be most affected.   

In a broad-ranging speech on the economy yesterday, the shadow treasurer, Joe Hockey, said that if elected, the Coalition would ask the Productivity Commission to look into the dollar and other structural changes which were afflicting industry and ''recommend appropriate government responses''.

Mr Hockey said that according to some analysts, ''it is not inconceivable for the Australian dollar to reach $US1.25 over the next 12 to 18 months''.

"It is time to carefully consider what a comparatively high Australian dollar means for key sectors of our economy" ... Joe Hockey.



''It is time to carefully consider what a comparatively high Australian dollar means for key sectors of our economy,'' he said.

In a warning to those in the Coalition advocating protectionism, Mr Hockey said it would not be propping up unsustainable industries.

While it was worth providing help to those industries facing short-to-medium-term pressures, such as the high dollar, industries which are proving unsustainable over the longer term for many reasons would not be saved.   

While they could be eligible for such assistance as retraining or relocating workers, ''we should not, however, be in the business of propping up industries that for many reasons do not have a sustainable future in Australia'', he said.

He said the ''brutal truth'' was that managers and consumers, not government, would determine the fate of individual businesses.

Mr Hockey did not single out any specific industries but his words were, in part, a message to those colleagues pushing for tighter regulation of the supermarket giants, Coles and Woolworths.

Also, in January, Mr Hockey won an internal battle to ensure the Coalition would not increase assistance to the automotive industry by 2015 by matching the $500 million extra that Labor has pledged.   

The Coalition has also yet to announce what assistance it will provide the car industry post-2015.

While much of Mr Hockey's speech was spent attacking the government, he agreed the Reserve Bank was Australia's frontline defence against another financial crisis.

With the budget in deficit because of the stimulus measures taken to keep the global financial crisis at bay, the government believes monetary policy - decreased interest rates - should be the first weapon deployed should further stimulus be required.

''Under the Coalition, the budget will not be the first lever pulled in the event of another downturn,'' Mr Hockey said.

''I would prefer to see greater use of monetary policy for managing demand, with movements in interest rates to smooth the economic cycle.''

However, Mr Hockey would face the same problem as the government because the big four banks, Westpac, ANZ, NAB and the Commonwealth, now ignore the signals sent by the Reserve. 

Last month, after the Reserve Bank left its rates on hold, the big four increased their rates, a move that would slow growth rather than help it.

The Treasurer, Wayne Swan, said yesterday there was no excuse for the behaviour of the big banks.

After a recent week of confusion and conflicting messages within the Coalition about when it would return the budget to surplus, Mr Hockey pledged yesterday that there would be a surplus year in the Coalition's first year in power along with each subsequent year of its first term.

comments so far

        So Mr Hockey you will see manufacturers go to the wall but banks who have customers locked in to debt contracts for years will be able to unilaterally change the interest rate at their leisure?
        Seems like the banks with their funding and deposit guarantees are 'koala' industries - not to be shot at, not for export and protected.   

    Commenter
        vk
    Location
    Date and time
        March 08, 2012, 6:58AM

        Mr Hockey in his speech has really highlighted a lack of any vision or indeed expertise in the steering this country in a competent manner. First of all he will refer the big question of the "Strong Dollar and other Structural Changes afflicting Industry" to the Productivity Commission. It will recommend how the government should respond. That is code for "I and the Coalition have not got a clue what to do". In addition Mr Abbotts years of visiting every factory and workshop in Australia giving hope to the owners and their workers is a hoax. Mr Hockey is going throw their fate to the harsh economic winds. Keep talking Joe.   

    Commenter
        Rob
    Location
        Gymea Bay
    Date and time
        March 08, 2012, 7:14AM

        Stand by for the big end of town making mega profits if this bunch of big business lovers ever get into power.
        However surely the Australian voters would not be so stupid as to revert to the Howard years by electing this bunch.   

    Commenter
        srg
    Location
        nambucca heads
    Date and time
        March 08, 2012, 7:31AM

        What are your solutions Mr Hockey if manufacturing industries close down due to a high dollar and services industries continue to outsource foreign labour as it is cheaper? You have not said how the coalition will tackle these challenges and you come across as lazy. You seem resigned to Australia becoming a nation of FIFO workers purchasing home brand products from Coles and Woolworths?   

    Commenter
        Gordon
    Location
    Date and time
        March 08, 2012, 7:34AM

        So Joe wants to let some industries fail. Which ones? How many jobs are to go? In which areas? And while he's at it can he tell us why he'll send this to the Productivity Commission for recommendations when his leader has rubbished the Commissiion in the past? This just reeks of ignorance about what the Opposition thinks it should be doing. Maybe we're better off with the devil we know.   

    Commenter
        Long Xuyen
    Location
        Viet Nam
    Date and time
        March 08, 2012, 7:50AM


Read more: http://www.smh.com.au/opinion/political-news/coalition-will-allow-some-industries-to-fail--hockey-20120307-1ukiq.html#ixzz1oT5gU1Em

adelcrow wrote on Mar 8^th, 2012 at 7:37am:




and cruel our economy or whats left of it.

cods wrote on Mar 8^th, 2012 at 7:39am:


Its the price we pay for good economic management in this country.
The dollar would have been much less if the Libs had got into power because their policy of a surplus at all costs would have sent us into a deep recession.
Take your pick ..a strong economy and a strong dollar or a weak economy and a weak dollar.

Hard to argue with allowing market forces determine the structure of our economy, pity Hockey doesn't seem to get the importance of increasing competition. Give the ACCC some teeth and turn Australia Post into the fifth pillar.

GoddyofOz wrote on Mar 9^th, 2012 at 4:51am:


Hockey's problem is that he is a moderate treasurer with a megalomaniac sociopath as a boss that will say and do anything for power.
Hockey doesn't do himself any favours by taking on Abbotts mantra...deceive and lie at all costs

cods wrote on Mar 9^th, 2012 at 6:39am:


The manufacturing industry you are talking about has been shrinking since the late 1970's

cods wrote on Mar 9^th, 2012 at 6:49am:


No...Im just showing that it started under a Fraser/Howard govt and has continued under Labor and Liberal govts.

cods wrote on Mar 9^th, 2012 at 6:57am:


How am I digging myself deeper..I reckon we should keep looking forward to new sustainable industries and jobs in the global market. I agree with the govts that we have had since the 1970's and I disagree with the backward thinking of Tony Abbott and his ministry of hate.