Australia Day lessons from the USA

Barack Obama's 2012 state of the union address revealed how America has learned from mistakes made in the past half-decade – mistakes both Gillard and Abbott must avoid.

I am very proud to be an Australian on Australia Day – but we can all learn from other nations.

Both our Prime Minister Julia Gillard and Opposition Leader Tony Abbott can learn a great deal from the state of the union address of President Obama. Many of the trials that Australia is headed into during the next two or three years have been experienced by the US in the last half decade.

Obama’s address shows that, for the first time, he understands the forces that need to be mobilised to get America moving again.

In Australia, because we have not been through an American-style crisis, our politicians do not understand what will be required in the years ahead. For most of the last decade the US adopted the strategy that is proposed by Australia’s ‘best’ commentators, economists and opposition politicians – you do not need manufacturing so send it off to China or anywhere else.

Obama now knows that this is a disaster and he is welcoming back American manufacturers – and he will make it very tax attractive for them to return. During those tough years American companies have substantially improved their productivity and, while highly labour-intensive manufacturing is unlikely to come back (nor should it), high technology manufacturing is essential for the long-term prosperity of any western country.

The Gillard government understands this. Their problem is that our currency is bloated by a combination of traders and a mining boom and, just as seriously, our companies have not improved their productivity like the American companies. The new industrial relations laws have not helped.

The second plank of Obama’s strategy is energy. Whereas Australia’s government thinks that all that is required is a carbon price, the Americans are light years ahead of us. They will achieve their carbon reduction via gas, including shale and coal gas. BHP is at the forefront of the shale gas movement in the US.

Australia has not woken up to this yet and we are in the process of sending our best gas overseas.

Obama should have tackled the housing foreclosure problem much earlier and is now beginning a strategy to solve the problem, but he has further to go. Obama also realises that America needs skilled migrants and he welcomes with open arms those who have been through the American education system.

Neither our government nor opposition understands these issues.

The government is making it harder and harder for overseas students to gain work here – exactly the mistake the US made. It would make sense to send both Julia Gillard and Tony Abbot to the US for a week so they can learn from Obama’s mistakes and avoid making those same errors in Australia.