As we’ve been writing for a while now, the last thing Australia needs is to invent new industries to employ workers, who are becoming an increasingly scarce commodity. Both sides of politics want us to get into building and crewing nuclear submarines. Peter Dutton wants a whole new nuclear power industry. And Labor is now throwing $1 billion at manufacturing solar panels — all part of our effort to be a “renewable superpower”, and also because, apparently, Australia invented the solar panels before losing control of the technology, so we’re really just bringing solar panels “home”.
The $1 billion price tag is small compared to the tens of billions Dutton’s nuclear fantasy will cost and insignificant compared to the waste of money involved in AUKUS, but Albanese’s solar panel investment might be the dumbest of the lot.
Why? Because other, much bigger governments, especially China, are also subsidising solar panel production — resulting in a huge production glut right at the time when Australia, belatedly, is joining in the stupidity.
A fortnight ago there was a rush of reports about massive job cuts at the world’s biggest solar panel maker, LONGi Green Energy Technology of China — perhaps up to one-third of its workforce. LONGi rejected the reports and said it was only planning to cut 5% of its total headcount of 80,000. The reason is the surge in global supplies of solar energy cells.
As the Financial Times noted, LONGi was part of Xi Jinping’s quest for self-sufficiency and even mastery of crucial renewable technology sectors. As protectionism always does, that has prompted China’s competitors, the European Union and the United States, to hit back both with their own subsidies and with blocks on Chinese exports, although these appear to be doing little to curb China’s growing dominance of the solar panel sector. But there is now a massive global oversupply of solar panels.
As a result, there’s never been a better time to buy solar panels — and never been a worse time to get into the production of them.
If, as Albanese says, the expenditure in solar panel manufacturing is about securing supply chains, that could easily be accomplished by redirecting that $1 billion to buying up Chinese solar panels so cheap they’re now being used as garden features, and storing them for use on Australian rooftops. But that lacks the political appeal of last week’s announcement in the Hunter Valley.
So what will we do with all the Australian-manufactured solar panels? Force the local industry to use them, pushing up the costs of renewables at a time when they should be falling?
Labor’s obsession with manufacturing — one that the Coalition for the most part shares, despite Tony Abbott chasing the car industry out of Australia — continues to reflect both the power of the (climate denialist) Australian Workers Union on the right of the party, and the Australian Manufacturing Workers Union on the left. It also reflects the mindset of many not just within the union movement or Labor, but more broadly, that manufacturing is somehow a more real economic activity than services industries or extractive industries.
The story of the Australian economy over the past 30 years has been the rise and rise of extractive industries and service industries. Our mining industry is very, very efficient, and the iron ore industry is cutting edge technologically: it is far advanced in areas like remote-controlled trains and autonomous vehicles compared to other countries — though that doesn’t stop it from being derided as merely “ripping dirt out of the ground”. Our agricultural industry, while not producing anywhere near as much in terms of export values, has enjoyed massive productivity growth and now exports and produces far more, with far fewer workers and less water per unit of production, than it ever used to.
And our services industries in areas like education and tourism are also massive export earners, reflecting Australia’s natural advantages in education and lifestyle.
Meanwhile, like every other western country, the proportion of the economy and workforce devoted to services has grown massively, with the new frontier of employment being caring services, from early childhood to old age and everywhere in between — all heavily feminised workforces.
But ignore all that, Labor is saying let’s invest more in traditional male-dominated manufacturing, despite Australia being hopelessly uncompetitive in production costs and scale, and not having enough workers for the rest of the economy let alone new industries.
And all of this, despite this being literally the worst time in history to invest in solar panel production. Dumb, dumb, dumb.
Dennis Pratt
A better idea would be to set up a factory to retrieve the valuable materials from used panels which are currently being dumped in landfill.
Not manly enough
And too “renewably” to be popular.
I am currently in California and both refurbishing and recycling of solar panels is done here. Aluminium, solar cells and junction boxes are all recyclable, most commonly when panels are fractured.
50 years ago, we had 30 government factories, supplying munitions, clothing and aircraft to defence forces. In peacetime, their capacity was far greater than the needs of Australian forces and we sold $750m/yr overseas. That is no longer an economic model because government-owned factories are uncompetitive and have been supplanted by private enterprise with government subsidies and support.
Yes, Australia should be in manufacturing. Yes, recycling is attractive. Yes, solar panels are interesting choices because Australia’s needs for panels, in our geographically dispersed, low-population areas helps overcome the upgrading of our expensive and inefficient electricity reticulation network. Roughly one third of Australian residences are equipped with solar panels, so the market is far from saturated.
Australia’s tertiary exports including education will soon be outstripped by SE Asian developing countries if we totally lose our remaining skills in the operation and administration of appropriate secondary industries. As Bernard says, this is a bad time to start manufacturing solar cells (and it will be a worse time in the future). But recycling is worth a look, among other secondary industry options. And yes, it is a job for CSIRO to start.
Lots of people have a talent for making stuff. It would be nice if they could get jobs making stuff, preferably stuff which involves more mechanical engineering than panels. It would be really nice if all the relevant skills acquired by previous generations didn’t just evaporate.
It would also be nice if we didn’t have to get all our devices from overseas, and actually added some value to all those raw materials we lean on so hard. Obviously, competing with slave economies is pretty tough, but there’d have to be some segments of the market for engineered devices prepared to pay for them to be made by first-world labour.
Construction equipment, for instance, isn’t cheap. And diesel powered hydraulics requires a lot of expensive maintenance; there has to be a smarter way to do it. Remember what the CSIRO is for?
I agree with both you guys on the lack of necessity to home grow solar panel production but I think you are missing on a few things. For a start, Australia’s story of the last 30-40 years, possibly longer, has been the decimation of our manufacturing base. We saw with COVID, we could not make our own PPE because production of it is overseas and procurement of it requires its importation. This is foolish. We need a manufacturing industry here and if we are short of workers, then get the private sector and government to incentivise, sweeten the deal, to get more people into work. Get retirees into work by allowing them to earn not the piddly $5-7,000 extra on top of a woefully inadequate pension but a whopping $20-30,000 more.
The government should increase the feed in tariff. Reward those who have made the effort to decrease their GHG emissions.
Government agencies like the Defence and border agencies should be procuring their uniforms locally.
Our corporations should have their call centres and maintenance facilities located locally too.
Instead of solar panels I would like to see us make steel more and build more railways. We should be building our own railway engines and rolling stock. Same for passenger ferries and buses.
I think solar panels are easier to make and that’s why Albo has chosen them. Like Lego blocks for dummies. Manufacturing for dummies I call it.
I would also start planting tons of trees in QLD’s outback for future home construction.
There’s plenty to do other than just solar panels and residential construction. That was the growth industry and the go-to sector for those kids who failed at school in the late 1980s and throughout the 1990s. Time for a rethink and get industry back. We have been a 1 trick economy for a long time now. Property/real estate. This is both the source of our wealth personally but the cause of our detriment as a nation collectively and economically.
Bernard, I agree with your views about AUKUS and the Nuclear Power Plants fantasy, however, I part company with your views on protectionism and Keynesian economics in general. IMO it is also demonstrably true that public housing and renewable infrastructure (eg. grid) spending is urgently needed and should be a higher priority than building solar panels.
When Friedrich Hayek and his fellow ideologues formed the Mont Pelerin Society in 1947, they developed a long term strategy to capture the economic curriculum of universities, develop think tanks dedicated to their misguided and ultimately destructive ideology and to completely overturn the social democratic policies that dominated western governments in the immediate post war decades. The majority of contemporary economists since the 1970’s have been successfully indoctrinated with that economic dogma as though it is holy writ.
The economic policies of the post war decades were characterised by protectionism, and public ownership of critical infrastructure and services. Those policies were successful in providing a prosperous Australia, where a single income working class family of six could afford to purchase a house, comfortably manage the mortgage and provide for the needs of their children. An impossible dream now.
All of that was dismantled and thrown out, in the decades following 1970, by the new breed of economists and their political and business collaborators. Protectionism became a dirty word, publicly owned assets were flogged off and a new policy of ‘public private partnership’ was adopted, whereby profits were privatised and losses were nationalised. Manufacturing was destroyed and outsourced to low wage countries. The politicians who implemented these changes were rewarded with lucrative directorships and consultancies post political career.
In conclusion Bernard, those economic doctrines you espouse have proven to be an economic disaster for ordinary Australians. Undoubtedly many economists meant well and willingly drank of the Hayek cool-aid, naively believing they were going to build a better world. After 40 years of failure it is time to be honest, admit you were wrong and apologise to the young people who are the victims of this misguided economic ideology. You should repent, beg forgiveness, and revert to the successful social democratic economic policies of the past.
And realise that the prospects for synergy in collectivism are far greater than ever before, thanks to ubiquitous communications.
The internet is a vile mockery of what it could be, strangled as it is by the invasive monocultures of a handful of dominant corporations.
I’m old and have retired. 63 thank you. I remember what it used to be like in the 80s and 90s looking for work and working in manual type jobs. Unstable, full of dodgy employers, on tenterhooks all the time, afraid of not getting paid, afraid of getting the sack. I have had 28 relatively trouble-free years of work in the federal public service. I can afford now to go back to work and get the sack. Many young people who go down this path may not and it could all come crashing down again. By showing the attitudes that Bernard and Glenn display, they are happy to condemn young people to a life time of service and servile employment which lacks personal creativity and empowerment and national wealth creation. They are ready to put the boot in to young people or people of any age who stick their hand up for a job in manufacturing. They are saying we should import everything. If our exports in resources and services Iike education fall off a cliff we could end up with massive trade deficits as we will import all our manufactured goods. This is what happened in parts of the 1980s and throughout the 1990s and much of the 2000s. A country that does not make much of its own products, consumer or capital goods, is doomed to be a weak country, a simple country, a country that can be easily overrun by foreign military or capital. Only countries that can make much of their own products succeed in a full, broad range of metrics. USA, Germany, France, UK. These are what we should aspire to. It’s all very well to hold solar panel production in contempt but you haven’t suggested anything worthwhile other than to just be a feminist paradise for carers and teachers. It wasn’t men’s fault that they lost jobs in the 1980s right through to now. This was a conscious decision by governments, by the employers themselves and by the public at large who bought the free market line. I never did. We were too all-embracing in the free market attitude and didn’t think for one minute that some of our industries need either protection or more direct and indirect government support. This happens in every other country.
You guys get me angry. You almost disgust me. A country that has all technology and manufacturing yet inadequate resources will fail. Germany and France are such countries. It was the inadequacy of titanium that Germany wasn’t able to use in its propellor blades which cost it valuable flying hours and cost it the war (thank heaven) as it also lacked other crucial resources like chromium. A country that can do a measure of both extraction and production is strong physically, militarily, culturally and economically. Really importation of anything is a sign of weakness. It is just that some countries are weaker than others and display this weakness differently.
Australia can’t even make a box of matches anymore. Our famous Australian Redheads are now imported from Sweden, and God only knows the carbon footprint on all this importing of stuff we cold be making here.
Sweden??! Wow, you’re correct. With comparable if not higher labour costs. Sweden used to make all IKEA furniture and goods at one stage before outsourcing it to Türkiye and eschewed quality for quantity. I am really surprised.
Australia could consider manufacturing something. We need to be independent in essential supplies. But solar panels? There is a world glut of them and they are worth nothing.
Good point
Agree, and like we used to, we should be at the forefront of high level research e.g. solar cells, with innovation and high value sophisticated manufacturing at SME level, but many many have been encouraged to be resentful towards education, innovation, change etc.
‘Really importation of anything is a sign of weakness’ why? Simply a populist talking point (see Brexit & Trump) but not supported by anything cogent reasons?
We cannot make everything, it simply doesn’t make any economic sense except nostalgia amongst mass of above median age voters for an old economy, borders and autarky; on the latter see 1930s Italy-Germany, North Korea and now Russia.
Sorry you don’t get my absolutist sense of humour. I said importing anything is a sign of weakness and it is. I mean what I say. But I also said that every country has weaknesses. Precisely because not every country can make everything or has everything and doesn’t need to import anything. The US import capital from mainly China and the Arab countries. It also imports many Chinese consumer and capital products to go into production. That was why Trump stuffed up. The US can do it all but chose not to for the reasons you and others who have never done a day’s manual work in your lives suggest – Cost. They also find it easier for a cheaper country to mass produce items so it can concentrate on more complex tasks it really needs to do. it’s not a populist talking point. I am anything but populist. Read my comment on our wool farmers of the 80s and 90s. I a purist in my definition. It is not possible for every country to have every resource and manufacture everything. The US is the country that potentially comes closest but it has many other social and economic problems not quite or even tangentially related to imports. The US has the potential to be the best country in the world at everything. It just chooses not to.
I couldn’t give a stuff how cheap overseas labour might be; from an holistic perspective, exporting and importing goods willy-nilly is inherently inefficient, requiring fuel to be burnt and inevitably transferring species from ecosystem to ecosystem where they often become invasive.
Money doesn’t exist. It’s actual physical stuff that matters, particularly the arrangement of all that stuff in complicated systems. Economists are not cleverer than the rest of us, and should never be considered to be the high priests of our civilisation again.