Regional development in times of uncertainty – 2
Just two articles today provide more background to the topic of the effects of uncertainty – even reversal of policy positions – 0n Australian regions.
The Economist, using the North American Free Trade Agreement (NAFTA) as its example, looks at whether the dominant trade liberalisation policies of recent years will hold in the face of political opposition such as is likely from a Trump presidency. The article also compares NAFTA to the Trans-Pacific Partnership (TPP), currently under considerations by its 12 potential members. Interestingly, while there are some strong views in Australia that the TPP unduly benefits the USA, in the USA itself there are equally strong views that its shortchanges the US vis-a-vis other proposed members. Not all these views are well-founded in understanding of the facts, however they do translate into votes at election time.
Meanwhile Greg Jericho, as always in far more detail and reasoning, lays out the points I hinted at in my last piece about how the benefits and downsides of trade liberalisation are both distributed and perceived. The downsides are easily recognised, but the benefits of cheaper imports not so much, particularly where these are inputs are “invisible” such as those to local industries like manufacturing, building and construction.
From a regional development perspective, the discussions between PM Turnbull and Leader of the National Party Barnaby Joyce are likely to have far more direct impact. Issues include better broadband connectivity and changes to the Trade Practices Act to better protect small business along with traditional interests such as roads and water. Key in all these issues is, of course, detail in implementation should any progress be made. The diverging views of members of the incoming Senate are likely to support some but not other measures – thus perversely adding to the policy uncertainty. Small communities are likely to welcome brakes on the dominant retail duopoly in favour of locally owned business. Direct support to farmers and graziers would get some support, improvements to infrastructure supporting the agriculture sector would be better.
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