Baird Government’s Opposition To Using Local Steel Doesn’t Stack Up: Greens

30 June 2016

There’s a bill in the NSW Parliament that would make the NSW Government use only Australian Steel in all its infrastructure projects. This is such a good idea that it has the support of political parties from across the Parliament. It’s technically a Greens Bill because we introduced it, but we know it is a community bill with the active backing of the NSW ALP, the Christian Democrats and the Shooters and Fishers Party.

So, you might ask, why is Premier Baird and the Liberal National Party Coalition refusing to support it? Here’s what they say, and why none of their reasons stack up.

1. The bill would violate Australia’s free trade agreements

They say that international trade agreements prevent us from having our governments prefer Australian steel. Really? Then how is it that the United States, Canada, the UK and many European countries have in place policies that favour local steel for use in public infrastructure projects. In fact the Bill we have put in the NSW Parliament is modeled on legislation that is already in place in the US states of Illinois and Pennsylvania.

Even recent decisions from the Coalition federally show we can target Australian steel in government projects. In April this year, the federal Coalition government announced that the next fleet of Australia submarines would be made using Australian steel in order to assist South Australian steel company Arrium.

Australia is currently in the process of acceding to the World Trade Organisation Government Procurement Agreement (GPA). If policy makers are concerned that requiring local steel to be used in local infrastructure projects would breach international trade obligations, steel can be excluded from this agreement. All our major trading partners are already doing this. It’s not international law that’s stopping us putting this Bill through the Parliament, it’s bloody-minded ideology from the Liberal Party.

2. It would hurt our ability to export steel

Nothing in the Steel Industry Protection Bill would stop NSW from exporting steel to other countries. Bluescope steel has an annual steel production capacity of 2.6million tonnes, with approximately 800,000 tonnes being exported to countries including the US and China.

A 2015 report produced by BIS Shrapnel found that the local steel industry was well positioned to meet any increase in demand from the government sector while still maintaining exports.

Regardless of export opportunities, policy makers should be focused on keeping the steel industry in NSW and Australia open and viable. If we continue business as usual, the Bluescope plant is at real risk of closure. This would halt all steel production, whether it is destined for the local or international market.

3. Onerous red tape for suppliers and contractors and duplicate supply chains

The steel industry in NSW is at risk of collapse unless decisive action is taken by the state government. Every steel worker, steel manufacturer and fabricator I’ve spoken to would happily fill in one or two procurement forms if it kept their business solvent and kept them in fulfilling high wage jobs.

The benefit to local steel of securing demand for their product through government contracts far outweigh any small cost or inconvenience associated with additional paperwork.

A lack of compliance by imported steel to Australian standards is already costing the construction industry. According to the Australasian Procurement and Construction Council, non-compliant construction projects have caused the collapse of buildings, motor way signs, glass panels and more.

By prioritising the use of locally made steel that meets Australian standards, the NSW government can play a key role in guaranteeing community safety and elevating the status and reliability of Australian steel in the private sector.

4. End up hurting more industries and jobs in NSW than it protects

It is extremely hard to see how the NSW Liberal-National government can justify this claim.

Bluescope steel currently employs 4,500 people at their Port Kembla plant and contributes $3.3 billion every year to the Illawarra economy.

If the last remaining blast furnace at Port Kembla closes, thousands of direct and indirect jobs will be lost, with devastating impacts on the local economy and community. If the blast furnace closes, other businesses involved in further steel processing including fabrication also face economic hardship and closure. The cost of assisting these thousands of workers find new employment will be substantial.

It’s not just the Greens saying this. A 2015 report produced by BIS Shrapnel found that using local steel in local projects would actually add a cumulative $1.3 billion to the real GDP over a five year period.

5. The NSW government is already the largest single steel customer in Australia

The NSW Coalition says they are already buying Australian steel, and to some extent this is true, but it’s only a half truth. A 2015 report produced by BIS Shrapnel found that Australia wide, domestic production of steel produces less than half the steel used in public sector constitution. This share is expected to decrease to 43 per cent by 2019/20 if no action is taken to address overseas steel companies dumping their below-cost product into the Australian market.

If the NSW government is committed to using Australian steel in public projects then they should have no issues in supporting the Steel industry protection Bill.

6. It would increase the cost of steel and put hospitals, highways and other infrastructure projects in jeopardy.

The Coalition’s argument that it is too costly to protect the Australian steel industry is deeply misleading. Requiring public infrastructure projects to use Australian steel would add just 0.2 per cent of total construction costs for public projects.

For these minimal costs, NSW has the opportunity to save 4,500 direct jobs and the entire economy of the Illawarra. In fact the annual cost of mandating Australian steel is about half the cost of the $60 million payroll tax holiday the state government has already committed to.

7. The NSW government has already engaged with measures to support the local steel industry including $60 million in payroll tax relief.

The structured deferral of payroll tax of up to $60 million over three years to Bluescope in November 2015 was a stopgap measure that failed to provide any long term solution to the issues facing the steel industry. After the three years deferral period, BlueScope is expected to repay the full amount to the state in addition to their normal payroll tax payments.

In terms of value for money for taxpayers, it would be far better if the state government bought locally produced steel for their infrastructure projects.

The steel industry protection bill is a blueprint for how NSW, and the rest of the country, can ensure that Australia has a vibrant, sustainable steel industry for decades to come.

It’s time for common sense to prevail and for every public infrastructure project in the country to use locally manufactured steel.


Source :