Sunday, June 3, 2012

free trade between the states

This series of posts begins with Part One: trade off
followed by Part Two: who's listening?

Three professors were shipwrecked on a desert island, with nothing but a can of baked beans to survive on. They had no can-opener, but believed that if they were all reasonably intelligent academics they should be able to work together and find a way to open the can.

The nutritionist was able to describe in great detail the benefits each would derive once the can was opened and they were able to eat the contents;

The physicist explained that a fire of a specific temperature would be able to generate enough internal pressure to blow the can open – without burning the contents – but could not think of a way to stop the contents being scattered across the beach and therefore un-usable;

The economist waited til the other two had finished, then smugly announced the solution to the problem was simple: ‘All we have to do”, she said, “is assume the can is open”. 

Theories about free markets are built on as many assumptions as other economic theories. One assumption is “buyers make rational decisions”, and another is "buyers and sellers have perfect information".  [When Adam Smith came up with the latter assumption in 1776, he'd obviously not tried getting served in a large department store.] 

Australia at its best was a country founded on a good mix of government and private market investment though, as we have seen in recent times, it is moving increasingly and rapidly towards the goal of a totally free market – despite the fact that no such market can exist in practice.

The Australian Constitution was a product of its time, its primary purpose being to find a way several individual colonial governments might work together. To oversimplify, it was believed a federal government could deal with three pressing issues of late 19th Century Australia:
  • Mutual cooperation for the purposes of defence;
  • Mutual cooperation to get rid of non-white labour which could only undermine the white standard of living; and
  • Free trade between states.

In the 1890s, free trade would mean that the cattle barons could move fattened cows from Queensland to their own meat markets in other states without paying excise to cross borders. Stuff like that.


Labour and human skills are market products. That’s it in a nutshell.

Mr Abbott likes to rabbit on about how bludgers should be told to move west and fill all the job vacancies in the mining sector, or have their dole payments cut. [At the rate things are going, cuts to unemployment benefits would mean unemployed people should start making payments to the government, but I digress.]

In a free market place – assumed to be an efficient one – the free movement of labour and skills across state borders would seem to be essential.
It is only in this sense that the Prime Minister’s vision of Australia-wide qualifications has some merit – if only she and her mates could get their act together.

The states punish people who move across borders. Relocation costs include transfer of motor registration and driving licences, roadworthy certificates for cars, security deposits for rental accommodation, connection fees for utilities, and stamp duty and bank fees if buying or selling houses.

It would seem, from people I’ve spoken to and from letters to newspaper editors, that a lot of people from eastern states have run themselves ragged trying to work out how to actually get a job in the mining industry. Yet we now learn that Gina Rinehart has been given the go-ahead to import 1,700 unskilled workers to help her get a mining project off the ground.

This announcement made by Immigration Minister Chris Bowen has put just one more pin in the voodoo doll of Gillard, as they had a public spat about whether or not she had been given notice of the decision or a chance to review it before it was announced. 
Here I was all this time, hoping the Coalition would implode and replace Abbott as an alternative Prime Minister before the next election but, here too, Julia Gillard is letting me down by competing with Abbott to see if the Labor Party can't self-implode first.

Excuses often given to mining job applicants from the eastern states include 

  • not the right experience
  • no experience
  • not the right training

I don't for a moment presume everyone on unemployment benefits is free to leave family commitments, or is healthy enough to work in the mining industry. But what is so wrong with Australia's unskilled workers - the scapegoats of Abbott's social security plans - that there is no mining company or TAFE course in the east, and no way in for those willing and able to get on the mining bandwagon? 

Perhaps it doesn't matter, and we can still trust that decent, hard-working Australians all have a chance to get ahead - in spite of our government if not with its help.

Part Four: hot potato, hot potato


  1. Our Labor Government has made some very un-Labor like decisions, and this one is very high on the list.

    1. Andrew, it all just gets curiouser and curiouser.

  2. Is it only the coalition government telling people in the east to go west for jobs? Or is it both governments?

    I'm trying to understand if it's a Labor vs. Liberal thing. Liberal wants people to move west; Labor is making it very difficult to do so. Or is it a matter of government people saying one thing (Move west), but in reality they don't mean it. And their actions indicate this.

    Moving in itself is very difficult...even just on a emotional/social basis. So if the government wants people to go west; they should make it VERY easy for them.

    I look forward to reading your next post.

    1. I'm torn between my hope that democracy works and governments can be decent, and my fear that none of them can be taken seriously.

      Both sides seem rather opportunistic about their attempts to grab media attention, and part of their marketing strategy requires them to be different enough from each other to attract votes from the other side, but similar enough not to lose votes to the other side, if that makes sense. ['minimum differentiation'].

      Although they disagree about the means of reducing the number of 'boat people' arriving, it's become fairly clear they both want to sell the same goal,and so they need a new issue to use as a way of making themselves look different. So-called dole bludgers are an easy target for someone wanting to harvest community resentment and encourage voters to become emotionally engaged again.

      I don't think either side are true anymore to their supposed core philosophies.

      Abbott was the one making a lot of noise about dole bludgers and mining, while Gillard has made a lot of noise about jobs for hard-working people.
      Now the Minister for Immigration has left Gillard between a rock and a hard place.
      If she wants to placate the Union Movement - Labor's traditional core members, she will need to do something drastic to stop the jobs going to outsiders until Australians have a fair chance of taking them.

      Sadly, I doubt if either side was serious about moving people into mining jobs they would be competent enough to make it practical for anyone. The challenge would be a big one because of the nature of Australia's federalism, and WAs tradition of threatening to secede.

  3. My question is: Do these 1,700 unskilled imported workers have the right qualifications and experience for the jobs on offer? or are they being employed as cheap labour at the expense of Australian workers? :-).

    1. Here is a helpful article spelling out how much of the Enterprise Migration Agreement [EMA] must be revealed to the public.

      Theoretically, there will be jobs for everyone, but my next post has more to say about training in general and in this case as well.