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Is the nostalgia surrounding the Button Steel Plan misguided?

By Mikayla Novak - posted Friday, 23 September 2011


What is less surprising than the local content policy ambit is the repeat of the oft‑stated cries of anti‑dumping by domestic industries, or unions representing workers in domestic industries, whenever it loses a contract to cheaper imports.

And so the process has been repeated, this time concerning the case of cost‑competitive steel imports entering Australian markets.

But we shouldn't make the mistake of falling into the trap that anti‑dumping isn't the rank protectionism that it is, that would deprive industries that use steel as part of their inputs to furnish final products at the most affordable prices to Australian consumers.

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The yearning for a big Plan to rescue domestic industries from the continuous‑improvement logic of markets, or to curiously substitute structural change sponsored by a caring, subsidy‑sharing government for the structural change facilitated by markets, also still runs deep within the veins of the union movement and sections of the Labor Party and some industries.

This has been aptly illustrated by Dave Oliver's recently expressed approval of the fact that during the 1980s "the government worked with the unions and the employers and came up with plans like the Button plan for … the steel industry."

There is unquestionably a great sense of nostalgia within the labour movement about the Button steel plan, with many claims that it transformed the Australian steel industry once before and a modern iteration could do so again.

In exchange for acceptance of the Hawke government's agenda for tariff reductions, then Industry Minister Senator John Button marshalled BHP and the unions to guarantee BHP 80 per cent of the Australian market if it invested $800 million in plant upgrades and agreed to no forced redundancies.

The unions committed themselves to restraining wage claims, a climate of industrial peace and accepting productivity improvements in the production plants.

For its part, the federal government committed initially to dole out bounty payments over a five‑year period to BHP encouraging domestic production of certain cold rolled products, pipes, tubes, high alloy steel bar products and stainless steel flat products.

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BHP certainly appeared to invest more than what they initially agreed, as well as providing skill upgrades for its workforce. However, productivity improvements over the five years from 1985 under the plan did not succeed in closing the productivity gap between BHP and the best practice Japanese and Chinese steelmakers.

From 1986 there was also evidence of renewed industrial disputation, with strike action occurring in Newcastle and Port Kembla, leading to a substantial increase in the numbers of working days lost due to industrial disputes within the steel industry.

While improvements in production occurred during the life of the Button plan, the Industries Assistance Commission astutely noted in its 1986‑87 Annual Report:

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About the Author

Mikayla Novak is a Research Fellow with the Institute of Public Affairs. She has previously worked for Commonwealth and State public sector agencies, including the Commonwealth Treasury and Productivity Commission. Mikayla was also previously advisor to the Queensland Chamber of Commerce and Industry. Her opinion pieces have been published in The Australian, Australian Financial Review, The Age, and The Courier-Mail, on issues ranging from state public finances to social services reform.

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