The corona crisis shows just how economically vulnerable we’ve become.
Things are going to have to change.
Corona is proving to be a wake-up call on a whole lot of levels. Our health systems, our crisis-readiness, our economic resiliency…
But I’m really praying that this will be an economic wake-up call – on how we manage our essential infrastructure.
(No, a bottle-shop is not essential infrastructure.)
What I’m talking about is the way we’ve steadily outsourced great swathes of the real economy over the past twenty or thirty years.
We used to be a country that made stuff. Great stuff.
But our manufacturing sector has been hollowed out, and our economy has become over-weighted towards digging up dirt and selling coffees to each other.
Manufacturing employment has been in free-fall for years.
But now, with the Chinese economy side-lined, we’re realising that we actual need a lot of that stuff we used to make.
And Australians are, rightly, starting to feel a bit nervous about that.
Tony Abbott captured the flavour in an op-ed for the Australian the other day. (Why can pollies never find their voice while they’re in a position to do something about it?)
Australia has traded off long-term national security for short term economic gain. If good is to come from this crisis, it must focus countries’ minds on the need to be self-reliant as well as rich.
…what so many countries are now discovering is their dependence on global supply chains (and ultimately their dependence on other governments) for a host of products that don’t normally seem that important; but are suddenly realised to be absolutely critical in a crisis, like the 80% of the basic ingredients of all the world’s pharmaceutical drugs that are reportedly sourced from China…
This has been the real “China virus”: not the contagion sweeping out of the wet market of Wuhan, but our over-dependence on just one country, not just for inexpensive finished goods, but for vast swathes of our supply chain. This has been our deepest complacency, trading off long-term national security for short term economic gain; giving up deep things for shallow ones…
I hope, we can now ponder whether a self-respecting country can afford not-to-have some serious capacity for manufacturing, when it comes to essential drugs and vital health equipment, as well as sophisticated electronics, and the wherewithal of national defence. Can we ever afford not-to-have adequate stockpiles of essential commodities (such as fuel, let alone lifesaving drugs) on hand here at home? I doubt it very much.
Try telling the governments now desperately seeking ventilators and even surgical masks that necessities can always be bought from abroad.
Well said Tony, though I don’t remember seeing you do all that much about the hollowing out of our manufacturing base when you were PM. Still, better late than never.
The only thing I’d add is that it’s not just our over-reliance on the Chinese economy – it’s that we tipped into this over-reliance at exactly the same time as ever other country in the developed world was doing it too.
Strategically, it just appears bone-dead stupid.
But now, hopefully, this is the wake up call we need.
And if we’re going to throw trillions of dollars at the economy to keep it alive (and we are going to have to throw trillions of dollars at it), then why not use that money to recreate out manufacturing capacity?
We used to be great at it.
Time to make Aussie manufacturing great again.
DB.