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Swift action needed to prevent more job losses: Ridout

23-08-2011
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in 

Major job losses at BlueScope Steel represents chilling news for the entire manufacturing sector, says Australian Industry Group Chief Executive, Heather Ridout.

The steel giant is expected to shed at least 1000 jobs in NSW and Victoria, with workers across the manufacturing sector bracing for more job losses.

"The steel industry has been battling weak demand, big cost increases and reduced competitiveness and, very importantly, sees no let-up to these pressures in the foreseeable future,” Ms Ridout said.

Ms Ridout said manufacturing as a whole is enduring many of the same pressures as BlueScope.

This included weak demand fuelled by global uncertainties and rising interest rates and labour costs, rising electricity and other input costs and a high dollar “which has pulled the ground out from below our export and import competitiveness.”

To curb further job losses Ms Ridout says a comprehensive response is urgently needed.

“To alleviate the pressures on Australian manufacturers, the Government should be prepared to amend the proposed carbon tax and emissions trading regime, Ms Ridout said. 

“This should include reducing the uncompetitive prices set for the first three years of the scheme, she said.

Ms Ridout said the Government should also slash the ‘plethora’ of existing regulatory measures related to reducing greenhouse gas emissions to avoid imposing a double carbon tax burden.

“We need a strategy to deal with the stifling impacts of the minerals boom on manufacturing as a whole which is bearing the brunt of the high Australian dollar,” Ms Ridout said. 

The key elements of the strategy should include:

  • Reductions in the tax burden on these sectors to attract investment
  • Creating incentives for the renewal of the capital stock, innovation and workforce training
  • Sponsoring the development of business capabilities all along supply chains;
  • Supporting and facilitating the full and fair participation of Australian suppliers in government contracts and in major commercial projects
  • Enhancing the focus and priority of public sector research including in areas such as:
    - The upstream processing of our mineral and agricultural commodities
    - High-technology manufacturing
    - Ensuring that industrial engineering and design skills receive strong support in education and training initiatives and
    - Unplugging the current severe blockages impeding work in the important industries supplying Australia’s defence capabilities.

“As Ai Group has been emphasising for several years, Australia needs a strategy to drive whole-of-economy productivity gains, Ms Ridout said. 

This includes:

  • A strong commitment to more flexible and adaptable industrial relations system that can drive productivity gains as a basis for the creation of sustainable jobs and wage increases
  • Reform of our tax systems, including the crippling and highly inefficient state and territory tax systems
  • Concerted efforts to reduce regulatory burdens across the Commonwealth
  • A long-term commitment to sustained investment in infrastructure and
  • Greater investment in training and education and greater emphasis on driving the supply of high quality and responsive education services.

Ms Ridout said a longer-term strategy was needed to deal with the strong Australian dollar and its impact on some manufacturing sectors.

“This may include the establishment of a Sovereign Wealth Fund that stabilises the economy without the need for interest rate rises when surges in commodity prices create the risk of overheating, Ms Ridout said. 

“Other countries, including Norway, have adopted this approach and have at the same time helped to offset the appreciation of the exchange rate by investing the fund in assets held offshore.

"With more than 1400 direct jobs lost in the steel industry in the past week alone and some 20,000 lost in this big-employing manufacturing sector since February, we have reached a crucial point which demands, government action in coordination with industry to ensure the sector is given the sustained support necessary to emerge through the current structural pressures and to prosper beyond the boom."

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