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Co-operate or perish

By Tristan Ewins - posted Wednesday, 5 February 2014


SPC-Ardmona has a long history in Australia. In the early 1920s Ardmona had began its life as a co-operative enterprise. SPC also began as a co-op in the 1900s. They merged to form a united co-operative enterprise in 2002. For a period the merged companies operated as a workers' co-op. But In 2005 SPC-Ardmona agreed to a takeover by the multi-national corporation, Coca-Cola Amatil.

Yet the high Australian dollar spelt disaster for SPC-Ardmona, as well as for fruit growers who could not compete with cheap imports. And those same pressures have had a devastating impact on other industries, including automobile production, agriculture, tourism and air travel, education, and manufacturing more broadly.

Here there are the usual arguments about free-trade, and letting the market guide us so as to focus on 'our economic strengths'.

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But there are problems with the laissez-faire strategy.

Firstly, over the long term the high Australian dollar is probably an anomaly driven by the mining boom. Yet once these disadvantaged industries relocate it will likely be permanent. There will be tens of thousands of jobs lost in these industries, with approximately 6,000 to go as a consequence SPC-Ardmona's closure – directly and indirectly. Shepparton will be devastated.

Hence there are arguments for fixing the dollar temporarily – 'as an emergency measure'. Though the gains here need to be considered alongside the losses, and tightly targeted assistance may be a better policy than a 'scattergun' approach.

Furthermore there is an argument to the effect that food security is a matter of national security. A nation which cannot feed itself is dependent upon other nations for this most basic of needs. And as Australia's population grows domestic demand will grow – providing new opportunities

The Abbott Coalition government has no robust industry policy to rescue affected regions. And it has no interventionist industry policy to promote 'sunrise' industries more generally.

On the theme of assistance: In the course of the 2013 Federal Election, Rudd Labor had promised SPC-Ardmona $25 million in assistance to help with 'modernisation'. In the wake of the Federal Election loss, with the announcement of impending job losses at General Motors Holden, Labor also came out in favour of continued assistance for the car industry.

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All this is better than letting strategic industries 'wither and die' without any plan for the future.

Importantly, there is a 'multiplier effect' to the Australian economy and specific regions - with many additional jobs lost when core manufacturing industries die or relocate.

And all those lost jobs result in falling tax revenues, the cost of which must be factored into the balance sheet when considering assistance.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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