April 23, 2008 | Graham

Open for foreign supermarkets, but not foreign ships



Every government, no matter how honest its intentions, ends up shaving the common good for sectional interest. It’s unavoidable, but spotting the inconsistencies can be fun.
With increased food prices the government is desperate to be seen to do something about them, particularly as they can’t and it was a core election promise that they would. So today they announce that they will make it easier for overseas supermarket chains to enter Australia.
They will do this by allowing overseas supermarkets to take 5 years to develop vacant commercial land rather than the current 12 months.
In fact, the initiaitve won’t make any difference.
It would only have an effect on owner-occupied stores, and most retailing in Australia happens in leased premises. And finding good well-located vacant sites is the problem, not developing them. Once you find a site you’d have to be a dunce if you couldn’t do a deal with the owner which easily met the 12 month consideration.
It might make a difference at the margin in greenfields areas, but I’m not sure that encouraging land banking is what the housing consumer really needs at the moment.
Ineffective as the measure might be, contrast it to the government’s treatment of foreign shipping, where there are real savings to the economy. Cabotage is the process of restricting domestic shipping to domestic firms. It was in decline under Howard. If you own a ship importing cargo to various Australian ports, it makes good sense to take-on domestic inter-port cargo to replace what you are off-loading, and in most cases you should be able to do this more cheaply than purely domestic shipping.
There are two wins for domestic consumers from this. One is that prices of goods are lower, because transport costs are lower. The other is that as transport costs are lower at sea, fewer goods are carried by road, leading to fewer deaths on the road.
It would appear that the government, under influence from its union base, wants to restrict the access of foreign ships to coastal shipping.
Why the difference in approach to essentially the same issue? Well, the “miscos” are a relatively weak union, and anyway, more retail outlets appears to equal more jobs, while the MUA is a strong union, and more Australian ships would appear to mean more Australian jobs.
Except that it won’t. Making the economy less, rather than more, productive will always cost jobs, which is what the shipping proposal does. And it will put up prices.
Everyone knows this, but the government also knows that amongst all the bills that Australians have to pay, it needs to pay its to good supporters like the MUA.



Posted by Graham at 10:47 am | Comments (5) |
Filed under: Economics

5 Comments

  1. Graham, my father was an active MUA member for over 20 years. I will tell you why foreign, FOC (flag of convenience) shipping is so cheap. The ships are environmentally hazardous (barely) floating rustbuckets and the crews are horrendously exploited third-world labour.
    On a number of occasions, the tug skippers refused to put them into our harbour becuase they were afraid that as they bumped against them with the fenders they would punch right through the hull. Since we are on the southern end of the great barrier reef, imagine the environmental consequences of one of them breaking up and spilling it’s nasties becuase it was in such poor condition that it should have been dry docked and cut up for scrap years earlier.
    My father investigated cases of men (often Fillipino crews) not being paid for over six months and subsisting on a diet of boiled sausages, boiled cabbage and boiled potatoes – three times a day, seven days a week. I have seen ships where the toilets consist of a board with holes cut in it hanging over the stern. In rough weather, the crews obviously defecate in their quaters so they don’t end up becoming shark food.
    Their living and working conditions are apalling.
    But yes, all this means they are cheaper than shipping bound by much stricter Australian standards. Who cares as long as we can argue that the customer can buy the cheapest goods, right?

    Comment by Fozz — April 23, 2008 @ 8:48 pm

  2. Graham:
    I tend to agree with Fozz here. Cabotage is not entirely evil though; besides, it can be used skillfully to our own commercial advantage.
    The one thing that must be done is to keep rustbuckets and coffin-ships right away from our coasts. All you would need is for one of them to create an environmental disaster and any money we “saved” by using them would vanish instantly in the massive costs of disaster-control measures.
    Still, it’s not all bleak, trying to pursue the owners and operators recently-unfloating rustbuckets through the courts of the world would be a wonderful wealth-creator for the lawyers involved and provide much-needed mirth and amusement to the whole business world.
    There is probably a very good reason why some firms are very careful indeed about choosing which shipping companies carry their goods. As the old Chinese saying goes “That which is dear is not dear; that which is cheap is not cheap” [gui-de bu gui; jian-de bu jian]

    Comment by Graham Bell — April 24, 2008 @ 12:23 am

  3. Waireesoice:
    What’s say You pay Me 115 roubles/year and you can have a large quantity of scrap-iron currently located between Milson’s Point and the Rocks, as-is-where-is. You won’t get a better deal than that anywhere. :-)

    Comment by Graham Bell — April 25, 2008 @ 11:24 pm

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