According to the recently elected Labor MP, Andrew Leigh, Australia remains “The Lucky Country”. Leigh refers to Australia’s low unemployment rate (5.3 per cent); Australia’s low government debt (predicted to peak at 6 per cent of GDP in 2011-12); our geographic position close to Asia; and the “bipartisan consensus” that has underpinned major economic reform, such as tariff barriers now being close to zero on most goods.
But the Gillard Labor Government should pay greater attention to recent export data rather than assuming all is well. Given the ongoing struggle of Australian manufacturing and growing competition to Australian agriculture, I would like to know just what kind of jobs will be created to attract Australians and migrants to regional cities.
Why? Because World Trade Organization data indicates just how dependent Australian exports are now on mining, that we are becoming more dependent on agriculture imports, and that the concept of comparative advantage does not explain who gets greater global share.
Take agriculture. While Australia’s agriculture exports increased ($US16.4 billion to $US26.1 billion) between 2000 and 2008, agricultural imports increased at a much faster rate ($US4.2 to $US10.4 billion). In other words, the agriculture export-import ratio in Australia’s favour declined from 390 to 250 per cent.
While we celebrate our farmers producing world-class products and being amongst the least government assisted in the developed world, protectionist economic powerhouses and developing nations with much lower labour costs are smashing Australia in global agricultural export terms. Between 2000 and 2008, this included the EU ($230 billion to $566 billion), the US ($US71.4 billion to $US140 billion), Brazil ($US15.4 to $US61.4 billion), and China ($US16.4 billion to $US42.3 billion).
But the lack of diversity of Australia’s economy is much worse if we recognise the ongoing importance of manufacturing to the global economy. In 2008, manufacturing exports dwarfed global agricultural exports ($US1341 billion to $US10,458 billion), and represented 65 per cent of total world merchandise trade ($US16,070 billion).
While Australia’s manufacturing exports increased from $US15.2 billion to $US29 billion between 2000 and 2008, imports increased much faster (US59.1 billion to $US137 billion). This meant that Australia’s already high export-import manufacturing ratio worsened from 389 to 472 per cent.
No surprise here. China’s manufacturing exports exploded from 2000 to 2008 ($US220 billion to $US1330 billion), along with Brazil ($US32 billion to $US86 billion), and India ($US33 billion to $US112 billion).
So what about services? Maybe, but world merchandise exports still dwarfed world commercial services exports in 2008 ($US16,070 billion to $US3,780 billion).
Perhaps we can overcome our high dollar (in times of a commodity boom) to attract much greater numbers of tourists and their money, although Australia’s share of global travel exports (in value) increased from 2 to 2.6 per cent between 2000 and 2008.
Maybe the universities can encourage governments to increase international student numbers further, despite public opinion currently opposing high immigration, with foreign students a major reason why Australia’s net overseas migration rate reached a record 298,900 in 2008-09.
Perhaps we should just put our heads in the sand and hope that the current mining boom lasts forever. As good old communist China rises, maybe we should just enjoy the ride and hope its government buy our bonds for generations to come when the US disintegrates? Maybe we can increase our record household debt-to-income ratio to an even more ridiculous level.
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.
72 posts so far.