Trade Minister Craig Emerson has savaged Tony Abbott as "a duplicitous hypocrite" after the Opposition Leader called for a debate on steel industry protection while simultaneously declaring his faith in free markets.

And Industry Minister Kim Carr has unambiguously rejected calls by trade unions and employers for a formal inquiry into the future of manufacturing, insisting the sector put its faith in innovation and ruling out any form of protectionism.

Senator Carr's rejection of the idea came just hours after Julia Gillard told key union officials she would consider their plan for an inquiry similar to that conducted by Steve Bracks into the automobile industry in 2008.

Yesterday's developments came a week after steelmaker BlueScope announced it would sack 1000 workers and 400 contractors in NSW and Victoria, sparking union warnings of a crisis in manufacturing.

As manufacturers come under pressure from a high Australian dollar, unions and employers have complained that developers of big mines are not sourcing manufactured items, including steel, from Australian producers and have called for government help to lift local content.

The Opposition Leader, criticised by Labor last week for failing to show interest in the job losses, said yesterday although the Coalition's instinct was to defend free markets and oppose "featherbedding", there was the need for "a forum" to consider future policy.

"The government should be investigating what can be done to ensure a genuinely level playing field with a fair go for Australian companies," he told the Committee for the Economic Development of Australia in Melbourne. "If there's a respectable case that can be made for maintaining a heavy manufacturing base on the grounds of national security, the inherent value of a diversified economy or the transitional costs of shutting down capital-intensive industries only to start them up again when market conditions change, there needs to be a forum where it can be addressed."

A few minutes later, Mr Abbott said: "The Coalition's instinct is always to defend and extend the role of markets. Protectionist sentiment can't be shouted down or asserted away -- it has to be argued against patiently, rationally and with a clear appreciation of what's best for people in the longer term."

Dr Emerson seized on Mr Abbott's comments as evidence he was "an unreconstructed protectionist". "Tony Abbott is a duplicitous hypocrite," Dr Emerson said. "He speaks out of both sides of his mouth, seeking to appeal to protectionist sentiments while also pretending to support free trade".

Dr Emerson said Mr Abbott had last week been shamed into dumping a Nationals bill that would have seen Australia flout a World Trade Organisation ruling allowing the importation of New Zealand apples.

He said the Opposition Leader was also supporting a bill on labelling of palm oil in products that was at odds with WTO rules and that Coalition views on anti-dumping measures also put it outside the rules of free trade.

Earlier, key manufacturing unions and the Australian Industry Group met Julia Gillard to call for a formal inquiry into manufacturing, which, like Mr Bracks' car inquiry, would take submissions and propose an industry support plan.

Australian Manufacturing Workers Union national secretary Dave Oliver told The Australian that the Prime Minister had agreed to discuss the idea with her colleagues. "That (Bracks plan) saved the car industry," Mr Oliver said. "The government is already acting to support manufacturing across a range of areas. We think an inquiry would be able to bring it all together."

Despite Ms Gillard's undertaking to Mr Oliver, Senator Carr rejected interventionist measures to address the squeeze on Australian manufacturers and backed adaptation through innovation as the solution to a maintaining a vibrant manufacturing base.

"We don't believe an inquiry is the right approach to ensuring the continuing prosperity to Australian manufacturing," he said.

"The approach is to look at the policy framework and examine ways in which it can be reviewed." Senator Carr said the economy was foisting new challenges on Australian manufacturers that would force the transformation of traditional industries and the creation of new sectors that included new "world-class companies".

While Senator Carr backed giving Australian manufacturers "fair and reasonable" access to major resource projects, he insisted there would be no retreat to protectionism through means such as mandating local content.

"It's no good pretending the world is as we once thought it was in the 1950s, as the Libs would have us believe," he said. "It's about building for the 21st century." Opposition industry spokeswoman Sophie Mirabella said the government could take more immediate steps to help Australian manufacturers that did not violate world trading rules.

However, Ms Mirabella, appointed by Mr Abbott to co-chair an opposition industry policy review, would not name the steps, urging voters to "watch this space". Responding to the government criticism, Ms Mirabella said any response would be within WTO rules.

"For the last three years the government has done nothing to find out what the challenges are for manufacturing. I predict that anything we say, they will say we are just protectionist," she said.

"We've been looking at the parameters of our international obligations, particularly the World Trade Organisation, and we are very mindful that any policy response that we have as an alternative will be within those obligations."

In his CEDA speech, Mr Abbott said Ms Gillard needed to consult more widely about the future of manufacturing. "Instead of telling business what's good for it and abusing people who dare to disagree with her government, the Prime Minister should be talking to everyone involved in manufacturing not just union officials," he said.

Greens leader Bob Brown also attacked Mr Abbott's speech, questioning how the Opposition Leader could on one hand champion the free market while on the other refusing the back carbon pricing, which was designed to use market forces to tackle climate change.

"Tony Abbott's speech today showed just how contorted his two-speed economics policy has become," Senator Brown said. After yesterday's meeting with with unions and the AI Group in Canberra, Ms Gillard released a statement describing it as positive and constructive.

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I have been involved in public life since the age of twenty three when I was first elected to the Mulgrave Shire Council.
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