April 13, 2020

Coronavirus triggers Australian self-sufficiency push

Austraia would be greatly impoversished if we had to make everything ourselves.  China will always be way cheaper at making most things. But giving local industries with good prospects a bit of a push to get them going would make some sense.  But that would give the government the job of picking winners -- and they have no expertise at that.

 It is very hard to see any one thing that we should stop importing and start making ourselves.  At the moment there would be some justification for producung more face masks etc but the next emergency might be quite different and generate different shortages. We just don't have the predictive power to make any changes that would be reliably useful


Australia's reliance on imported products will be put under the microscope by the federal government as it pushes the economy to become more self-sufficient in the wake of the coronavirus pandemic.

Federal Agriculture Minister David Littleproud has started quietly pulling together a policy roundtable from the public and private sectors so agriculture is the industry "best placed" to thrive after COVID-19 restrictions are relaxed as rain soaks into drought-baked paddocks of eastern Australia.

Mr Littleproud said even though agriculture delivered just 2 per cent of GDP, the industry would be crucial in helping the nation rebound after this crisis.

"Growing the industry is going to be so important to helping our nation repair. It's the bedrock of our nation's economy and our nation's security," he said.

He was circumspect about bringing back food manufacturing jobs, but said there were opportunities for “new jobs in innovation and science” to boost livestock and crop yields with new farming techniques and technology.

Richard Heath, executive director of the think tank Australian Farm Institute, said there was potential to look at job creation through food manufacturing, provided the government brought in "very different policies".

"This is where it gets really complicated," Mr Heath said, explaining that post-coronavirus "Australia will still have really high processing, energy and labour cost".

"We'd have to add some sort of economic stimulus, or export and import restrictions, to create a competitive processing sector," he said.

Moves to wind back Australia's free trade policies would meet resistance from the government.

Treasurer Josh Frydenberg on Sunday said that even the current demand for locally made medical equipment "should not be seen as an argument for protectionism" and Australia didn't "need to engage in mass national subsidies of industries".

Mr Frydenberg said there would have to be a "proper assessment" of global supply chains and that while Australia was self-sufficient in terms of agriculture, other areas such as fuel security would need to be closely considered.

Grattan Institute household finances program director Brendan Coates said while there were benefits of having global supply chains and not being overly reliant on domestic supplies, there should be careful consideration about concentrating too much risk in one place.

"The crisis has clearly exposed that Australia did not have adequate domestic supplies or productive capacity for critical health equipment like masks, respirators and some of the reagents for producing tests for COVID-19," Mr Coates said.

"We've maybe relied more heavily on China than we should've," he said, adding that firms had started diversifying outside of China in the past decade into other countries.

EY Asia Pacific supply chain reinvention leader Nathan Roost said there was an opportunity for a rethink of the Australian manufacturing strategy and supply chain at a national level.

"There is an effort by corporate enterprises and government departments to identify additional suppliers in different countries, including Australian sources of supply, to limit future input disruption or shortages," he said.

Former NSW primary industries minister Niall Blair, who retired from politics last year and started a new role as professor of food sustainability at Charles Sturt University, is bullish about the prospect for new jobs in agriculture, particularly exporting food products to the growing Asian middle classes.

"There are enough people, with enough disposable income, for us to be able to make a lot of money out of our higher quality, clean and green, value-added food and fibre products," Mr Blair said.

"I've seen people in China pay $11 for a litre of Australian milk. They just don't trust their own produce in some cases and they've got the income to afford it."

Mr Blair said new food processing systems, where food waste was recycled in biodigesters to produce heat and methane for power, could reduce ongoing operating costs.

"Some of the smarter farming and processing businesses are starting to generate their own electricity, their own heat and their own fertiliser, which can make them a lot more sustainable."

Carolyn Creswell, founder and owner of Australian muesli brand Carman's, said local production had enabled the company to meet a 50 per cent rise in demand during coronavirus restrictions.

"So many times I've had conversations that we could have had packaging printed in China and saved a bit of money. What happened to a lot of companies, they could actually make the product, they just didn't have the packaging," Ms Creswell said.

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