Not sure from your post if you think the tax system is a disincentive to employment generally or manufacturing specifically. The reality is that even without indirect taxes (payroll, land tax etc) our labour is too expensive for manufacturing. We can not compete with low wage countries like China. Instead capital has gone to those industries where we can compete - agriculture, banking, resources, education, tourism although the exchange rate is stressing the latter two.
The only way I can see manufacturing growing is via subsidies or import controls. In both cases the consumer pays. I see little value in industry policy as Governments invariable select losers not winners.
Some of the education and tourism jobs may not pay brilliantly but still beat standing on a production line all day. I worked on a production line tto get through uni and soul destroying fails to describe the utter boredom of such work.
