Friday, September 21, 2012

Stagnation flows from our banana republic laws

Australia has thrived by achieving high productivity levels, especially in our agricultural and mining industries.

Commercial fishing has had a more mixed success, partly because Australia's catch quotas are set extremely conservatively.  As a result, we are a net importer of fish despite having the one of the world's largest oceanic territories.

Aggravating this is the Commonwealth Government banning the Abel Tasman, one of a new more productive class of trawlers, from taking part in Australia's fish harvesting.  The ban has no effect on the catch because it is already limited by a fixed quota.

The action was a response to a Twitter campaign by green activists openly hostile to all modern primary production activities.  The activists' campaign persuaded the Government to pass new laws that override the regulatory approval provided by the Commonwealth fisheries management.

This not only denies lowest-cost technology, but tells all entrepreneurs that rules are arbitrary and subject to political whim.  This is the banana republic approach to government — without fixed rules, enterprises must lobby to buy favours as a condition of doing business.

The outcome is economic stagnation.

In promoting the ban, Environment Minister Tony Burke falsely claimed this would conserve fish supplies.

Truth-bending is common among environment ministers eager to please anti-business constituencies.

But Mr Burke has taken this to a new low.  His trawler ban adds to his long list of productivity-busting measures, which include unnecessary duplications of environmental reviews, costly conditions imposed on projects and lengthy approval delays that have inhibited development.

However, a most disappointing feature of the trawler ban is that it is support by the federal Primary Industries Minister, Joe Ludwig.

In supporting the ban on efficient trawling technology, Mr Ludwig cited the ''precautionary principle'', which provides an excuse to curtail productive activity without evidence about any deleterious side-effects.

The ''precautionary principle'' allows politics to usurp commercial decisions, magnifying the influence of politicians and making increased costs inevitable.

Industry ministers are supposed to promote, not impede, productivity.  In the past ALP ministers have occasionally overlooked this.

For example, they supported the union ban on wide combs for shearing — a ban designed to increase jobs at the expense of productivity.

But Minister Ludwig has made such policy aberrations the norm.  He banned exports of cattle to the valuable Indonesian market because an ABC program showed apparent ill-treatment of the animals before their slaughter.  That knee-jerk reaction created a major loss of wealth for northern Australia's beef growers.

Minister Ludwig toed the green line in opposing additional dams to provide irrigation.  And he also railed against cuts to an unproductive agricultural bureaucracy.

Unfortunately, other primary industry ministers seem to have caught the Ludwig disease that substitutes political for commercial decisions.  Victoria's Agriculture Minister, Peter Walsh, and South Australia's Fisheries Minister, Gail Gago, have endorsed the trawler ban, absurdly claiming that it would prevent over fishing.

Unless quickly reversed, the idiocy prevailing among agricultural ministers will bring a costly toll to primary production.

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