GFG Alliance executive chairman Sanjeev Gupta
It’s fair to say Sanjeev Gupta has taken the local media by storm since the announcement that his GFG Alliance would “save” South Australian steelmaker Arrium. That hasn’t quite been paid for yet (sometime next month), but everything uttered by Gupta, who has been on a familiarisation tour of the company’s Australian assets, has been treated as an astonishing insight by journalists.
Speaking yesterday at Rooty Hill in Sydney (where Arrium has a facility), Gupta opined: “Australia has an abundance of natural resources. It should be an industrial nation, its a bit of a tragedy that it’s not … Instead of exporting raw materials like iron ore, like coal, like scrap, we’d like to see that turned into steel here and we would like to see our business here turn into a world class, world-scale, steel producer.”
This sort of thing wouldn’t have gone down well during the brief period in which the Abbott government was actually against protectionism, but otherwise it’s standard stuff that is heard every day of the week for years from those with an interest in taxpayers helping their industries — union, business, Liberal, Labor, whoever.
There’s never any mention of our small population and the difficulty of matching the huge scale of newer, vastly more efficient steel producers offshore, or our remoteness from the rest of the world. It is always cheaper to process raw materials close to major markets where transport costs are low and demand higher — and the maths of that makes it much more difficult for Australia to be an effective large-scale manufacturer. It has been tried by BlueScope, Arrium, Rio Tinto (and BHP), Ford, Toyota, Holden, Mitsubishi, Alcoa, Tomago Aluminium and more. And it has been found to be inefficient and a waste of resources. All these companies have asked for, and got, government aid (tariffs, anti-dumping), subsidies, wage cuts, tax holidays (such as BlueScope) — all of which hurt taxpayers, other businesses and consumers.
It ignores that Australia is a commodity-based economy (and efficient at it — the big miners’ Pilbara operations are remarkable feats of technology and engineering), with a rapidly growing service sector in tech, healthcare, education, tourism, financial services. And all that has produced the longest run of trade surpluses for nearly a decade. If we’re all interventionists now, maybe governments should think about helping our success stories, not the failures.
The world is closer to war than for a long time. How dependent should Australia’s security be on the shipping lanes always remaining open – in either direction?
God help us if the financial services sector, an industry chock full of spivs and ticket clippers, is seen as one of our shining lights.
Yeah, I’m calling a little bit bullshit here.
With vast resources, highly educated workforce, fantastic engineering skills, and with shipping cheap, we should be able to refine these materials here and export them rather than all the raw materials out and the finished product in. Not final products like cars, which let’s face it are heavily subsidised across the world, but elaborately transformed products like high quality steel, and the the world wouldn’t be flooded with low quality and soon to become rust, steel, from countries with no environmental laws or labour or health laws. By ignoring those factors we are just exporting pollution, death, and low quality products.
Sounds like more classical economic crap logic rather than looking at the whole of life production, environmental and human costs.
That it hasn’t been profitable before is more to do with incompetence on the part of our fearless corporate giants, and subsidised manufacture externally competing against us, with more likely shoddy
Between our dependence of foreign owned companies to gut our resources for a pittance, the dodgy cost/tax/debt shifting and the reliance of the world wanting and being able to obtain,let alone pay for our raw materials, we then still have to be able to import & buy all the toys deemed necessary to live our current Lotus eating lifestyle.
Winter comes.
Very unconvinced by bullish talk about tech, healthcare, education, tourism, financial services. I am not seeing much progress on any of these & I am not sure what sort of competitive advantage we have – maybe tourism, but the industry is very poorly run.
I would agree that government support tends to pander to the corporatist interests of large, businesses, however, there are good strategic reasons for retaining locally owned technical capacities. Other countries talk the talk but manage to maintain some support for important industries. I suspect it is only Australians that still take the neoliberal doctrine seriously.
Where I come from this is the situation – foreign miner digging up ore, putting it in imported rail wagons, travelling to foreign owned port & shipped oversea in foreign ships. Neoliberalism is just a cover story for a new set of rent seekers who contribute very little to our country.