none

Don’t blame high dollar for manufacturing slump

31-08-2010
by 
in 
Don’t blame high dollar for manufacturing slump

 

The high exchange rate, mining boom and global financial crisis are not to blame for the decline of manufacturing, says Gary Banks, head of the Productivity Commission.

According to a report in the Brisbane Times, Mr Banks believes that manufacturing was “suffering anyway.”

Addressing a Deakin University seminar at Parliament House in Canberra, Mr Banks said the mining boom has just compounded longer-term trends that every OECD country is now experiencing.

"Manufacturing has been shrinking relative to the rest of the economy for decades, he said. “In absolute terms it hasn't shrunk much, but as other parts of the economy grow it has to shrink as a proportion. We can't add up everything to more than 100 per cent I am afraid – that’s just the way the arithmetic pans out."

Mr Banks said the main way the mining boom has hurt manufacturing has been by making Australians more wealthy. With more to spend, especially on services, this means other goods have to "make way".

"The rising exchange rate has simply been a facilitator of that," he said.

"It has made Australia's traded goods relatively more expensive. In the old days that would have happened through inflation, which would have led to greater unemployment and it would have been very disruptive.

"So the exchange rate - which is getting a bad name for appreciating – is actually delivering adjustment more painlessly than was ever the case in Australia in the past in response to the kind of structural pressures that we are seeing.

"In relation to manufacturing the boom and the GFC have merely accelerated the longer-term trend decline in the share of manufacturing by 1½ to two years.

"That impact has not been uniform. The biggest job losses have been where the activities have been the least competitive. These also happen to be the most highly assisted parts of manufacturing."

Related news & editorials

  1. 15.08.2018
    15.08.2018
    by      In
    BHP’s new $4.8 billion South Flank iron ore mine in the Pilbara is expected to create about 2500 jobs during construction and 600 ongoing roles. But local fabricators are quire rightly up in arms about the company’s decision to award the contract for 20,000 tonnes of structural steel work to... Read More
  2. 14.08.2018
    14.08.2018
    by      In
    The former Trade Commissioner of Denmark to Australia and New Zealand, Michael T Hansen has been named General Manager of Nilfisk in Australia.
    Originally from Denmark, Hansen has more than 25 years of experience in business development and sales.
    Over the last 9 years as Trade Commissioner, Hansen... Read More
  3. 14.08.2018
    14.08.2018
    by      In
    World-renowned physicist Dr Cathy Foley has been named CSIRO Chief Scientist with a brief to help champion science, its impact and contribution to the world. Dr Foley is best known for her work developing superconducting devices and systems that have assisted in unearthing over $6 billion in... Read More
  4. 14.08.2018
    14.08.2018
    by      In
    Australian industry is cleaning up its act – both figuratively and literally, with the trend towards more eco-friendly cleaning techniques gathering pace in recent years. And as a company that has pioneered some of the greatest advances in this field, Tennant finds itself in the perfect position to... Read More