No. 89

STONE the crows! Now actors as well as artificers are playing the protectionist card!

Last week, heavy industry union leaders and lobbyists for film and TV content makers argued for government assistance to protect jobs.

Both demands demonstrate the truth of the old political adage that in politics when the policy players are absolutely sick of saying something the electorate is just starting to listen.

Or rather isn’t. Because rent-seekers still ignore the lesson of the last 20 years, that Australia is part of the global economy and propping up local industries that cannot compete is an insane impost on the public, taxes that require ordinary workers to pay for local products that they either do no want or can buy cheaper equivalents offshore.

Perhaps the most predictable pleas for protection came as Bluescope Steel abandoned exporting and halved the size of its Port Kembla steel plant. [i] The company says the high price of raw materials and the strong dollar means it cannot compete against China for export sales and will have to slim down to focus on the domestic market.[ii] And the Australian Workers Union wants something done about it, such as production bounties and compulsory use of local steel in infrastructure projects.[iii]

Why? Because “doing nothing risks the collapse of our domestic steel supply. The result will be import dependence for a strategic industry, and the transfer of value added wealth, as well as jobs, to other producer nations.”[iv]

Coalition trade spokesperson Sophie Mirabella appears to have some sympathy, being quoted on the weekend as saying, “people are sick of being told there is a level playing field internationally, people are sick of being told its protectionist if you acknowledge the reality that there is not.”

Not, you understand, that protectionism is on anybody’s agenda. As put by the Australian Steel Institute, quoted favourably by the AWU, an Australian jobs first policy, “is not about promoting protection, but rather opportunities for Australian steel suppliers.”[v]

If demanding assistance for an industry caught by hard times and harder foreign competitors, is not protectionism, what pray is?

But the especially cynical stunt came from public sector agency Screen Australia, which also suggested last week the public should stump up to support the local industry.

Rather than cheap Chinese labour, the film industry is bothered by the ability of the Americans to put products on Australian screens cheaper than local producers can. That, and the way technology is changing the industry.

Naturally they started the case for assistance with claims it is all about protecting jobs: “If local production ceased, there would be a net loss of more than 6000 jobs or 20 per cent of all people working in the overall audiovisual production sector.” [vi]

But 6000 jobs may not seem like many, so screen industry advocates play the cultural nationalism card, arguing that government should force TV networks to screen local product, wherever or not there is an economic audience:

The Australian Content Standard represents the regulatory response to the disproportionate commercial power of the US industry and the means by which the Australian industry can ensure the provision of local, culturally relevant content to local audiences where they consume it most – on linear broadcast television.

Whilst the level of overall Australian content, including news, lifestyle, variety and entertainment programming, is important, a key driver of the Government’s cultural objective is the production of high-quality, narrative-based screen content. The delivery of quality drama, documentary and children’s programming is seen as essential to the health and vitality of Australia’s cultural life.[vii]

Well, when you put it like that, it still sounds like a claim for insulating privileged people from competition. As Stuart Cunningham explains;

“a cultural mandate” is the key rationale for the continued legitimacy of government intervention and support in areas of the arts, television, film and heritage. It retains more legitimacy than arguments for economic multipliers arising from the cultural industries and has been a more persuasive argument than employment protection. [viii]

This confuses the Crows because the culturatti’s nationalism only applies when it suits. Sure, the commercial TV networks and the producers who provide the ABC with outsourced drama understand the market for local content. But if the Australian voices telling the Australian stories argument applies universally – why does the film industry make so few of them?

The Crows remember well the culturatti’s contempt for Crocodile Dundee. As Tom O’Regan put it, there was both a critical and cash gulf between Paul Hogan’s work and what the industry insiders were up to.[ix] And today, for every film like The Castle, Kenny and Red Dog there are five flicks that nobody much wants to see. The good news about the film industry is in fact pretty bad: “In 2010, there were nine Australian films grossing more than $2 million for the first time in over a decade.”[x]

Suggesting the state should protect an Australian industry from imports when the local product is unpopular is a bit rich.  Film Australia also argues local production quotas are required for television, because the local industry cannot compete on cost against dumping by the Yanks:

With production costs more likely to be fully recouped domestically, US programs can then be offered on the export market for licence fees substantially lower than the cost of production. [xi]

To which the Crows respond by changing channels. This is an argument from the days when broadcast TV (pay or free to air) was just about the only in-home screen entertainment option. As with newspapers, the broadcasters’ competition is less from each other than individual consumers who assemble their own schedules online.

While Communications Minister Senator Conroy’s case for cutting the networks licence fees, to “help boost local content”, is far from entirely convincing it is a bit rich to impose local production quotas when the audience can choose what it wants from all over the world via online video providers. [xii]

As Screen Australia points out, there are no quotas on content suppliers online. And if, more likely when, long-form commercial content starts being created for on-line audiences and IP based rentals really take off, broadcast TV will surely lose share.

According to Screen Australia, “while high-speed broadband is set to hyperaccelerate the process of convergence, television remains the leading way of viewing screen content, with a participation rate of 96 per cent and viewing across all free-to-air channels up by 14 per cent.” [xiii]

Really? Movie renter Netflix now accounts for 30 per cent of peak internet traffic, in North America, demonstrating the market is not tied to old fashioned TV and if the NBN charges what people are prepared to pay the same will surely happen here. [xiv]

Without blocking offshore sites there seems no way of enforcing local content quotas on IP sourced suppliers.

So why keep calling for protection?

Perhaps it is just force of cultural habit, the Australian way of dealing with efficient competitors and new products that undercut local industries is to cry foul.

In 1935, NSW established a quota system to stop local films being locked out of the market.[xv] The argument that the state has a role in deciding what is on the box or showing at the flicks has not changed all that much since then.

And all the economic arguments that protection is rent seeking, imposing a cost on us all to profit a few just does not cut through.

As Eric Jones puts it,

Economists have never been able to persuade the public to reason the way they do themselves. Among the laments of the profession is that protectionism is perpetual, though what this really means is that advocacy for it never quite goes away. ’[xvi]

From steel to screen, the more things change the more they stay the same.


[i] Peter Ker, “Complete shutdown considered: Bluescope,” Sydney Morning Herald, August 22

[ii] Michael Stutchbury, “Steel manufacturing bust is the flipside of our Chinese mining wealth,” The Australian, August 27

[iii] Australian Workers Union, New steel plan: Our vision for Australian steel in the 21st century, @ www.awu.net.au/awu_steel_plan_april_final__2__3.pdf recovered on August 27

[iv] AWU, New steel plan, ibid 16, 4

[v] Lenore Taylor, “Coalition to target blue-collar voters,” Sydney Morning Herald, August 27

[vi] Screen Australia, Convergence 2011: Australian Content State of Play, (August 2011) @ www.screenaustralia.gov.au/documents/SA_publications/Rpt_Convergence2011.pdf 7 recovered on August 27

[vii] Screen Australia, op cit 19

[viii] Stuart Cunningham, In the vernacular: A generation of Australian culture and controversy (UQP, 2008) 206

[ix] Tom O’Regan, “ ‘Fair dinkum fillums’: the Crocodile Dundee phenomenon,”  (1988) @ http://wwwmcc.murdoch.edu.au/ReadingRoom/film/Croc.html recovered on August 28

[x] Screen Australia, “Australian films at the local box office in 2010,” January 20 2011 www.screenaustralia.gov.au/news_and_events/2011/mr_110120_boxoffice.aspx

[xi] Screen Australia, op cit, 25

[xii] Lyndal McFarland, “Stephen Conroy’s licence fee rebate sends TV network shares higher,” The Australian, February 8 2010

[xiii] Screen Australia, op cit 5

[xiv] Kalen Lumsden, “Netflix is the largest source of internet traffic in North America,” IPOsgoode May 28 2011, @ http://www.iposgoode.ca/2011/05/netflix-is-the-largest-source-of-internet-traffic-in-north-america-at-30/ recovered on August 28

[xv] Australian Screen, “Australian film and television chronology,” @ http://aso.gov.au/chronology/1930s/ recovered on August 28

[xvi] Eric Jones, “Cultural nationalism: the last resort of scoundrels,” Policy 23, 2 (Winter 2007) 20-26, 20

'2012