Keynote address to the National Manufacturing Summit
If we are to rebuild Australia’s industrial base and seize the opportunities of our net zero future, we will need everyone working together to transform our economy.
Australia has all the ingredients that would make us a renewable superpower. This includes:
- limitless solar and wind reserves,
- globally significant supplies of critical minerals,
- advanced critical technology capabilities, and
- close proximity to the fastest growing region of the world in human history.
The Albanese Government finally brings coherence to this crucial area of economic and social policy, after a decade of ineptitude and complacency.
A legislated commitment to clear 2050 and 2030 targets and a credible pathway to deliver them.
A return to Australia’s position as a low-cost energy jurisdiction, through the insertion of low-cost renewables and storage, with all of the competitive manufacturing edge that brings.
A determination to make Australia a renewable energy superpower for the region and rebuilding our manufacturing sector.
No complacency from the Albanese Government here – just a determination to grab hold of the future.
Complacency locks in a future as a low complexity economy, exporting commodities to the world – a farm, a quarry, and a nice place to visit.
The complacency and neglect of the Abbott-Turnbull-Morrison governments in goading the car industry offshore, sending tens of thousands of jobs with it, saw Australia’s manufacturing sector decline.
This is the base from which the Albanese Government is starting, the mess and shambles left by the Liberals and Nationals:
- A decade of the worst productivity growth in 60 years under the Abbott-Turnbull-Morrison governments,
- A decade of grant schemes plagued by waste and rorts with colour-coded spreadsheets and captain’s picks, undermining business, investor and community confidence in our industrial capability,
- A decade of Coalition climate and energy policy incoherence with 22 failed climate and energy policies, and
- A decade of lost opportunities, low investment, and energy and manufacturing investors choosing other economies.
Australia simply cannot afford another wasted decade.
As the Treasurer Jim Chalmers noted ahead of the May Budget;
“The energy transition is central to our prospects for growth and that makes it central to our plans for growth.”
This week’s update of the Harvard University Economic Complexity Index demotes Australia further down international rankings, from 91st to 93rd in the world for 2021 – between Uganda and Pakistan.
Australia’s product exports are dominated by raw commodities rather than value-added products.
The need to drive Australian exports up the value chain has never been more significant, or more urgent.
Improving economic complexity means making high-value products for Australia and the world, creating good jobs in the outer suburbs and regions, and to play our part in tackling shared global challenges.
It matters for our geostrategic and national security interests, supply resilience, and trade diversity in products, services and markets.
It matters for industrial communities, Australians living in the outer suburbs and regions, who need good, secure jobs and apprenticeships.
It matters for social and economic justice, for the strength of our nation.
The challenge of reindustrialisation, the challenge of reshaping Defence innovation to boost national security, the challenge of moving Australia up the agricultural value chains, the challenge of the energy transition – all critical problems that the Australian Government is determined to solve with ambitious action.
When the Albanese Government came to office in May last year, we had an ambitious agenda to build a better future for Australia, which we’re delivering on.
Big ticket items to address the commercialisation and capital challenge – our National Reconstruction Fund and Rewiring the Nation.
It is a transformation of industry policy in this country – marked by modern ambition, scale, new partnerships between business, unions, and society, the research and investment communities working together to build industrial capability in priority areas that matter for Australia’s national interest.
It is smart, new, purposeful and modern industry policy that will transform our industrial capability, help solve key national problems and reshape our economy.
But the world moves fast, and we must be agile in responding to the competitive landscape that Australia faces.
The Inflation Reduction Act – passed by the US Congress in August last year – is the largest investment in renewable energy and clean energy manufacturing in history.
It is, in fact, the biggest piece of economic policy since World War II.
It not only responds to the commercialisation and capital challenge, but also to the competitive challenge, making the US a cost-competitive manufacturer of wind towers, solar panels, batteries, and a processor of critical minerals.
It’s a twin challenge that Australia must meet head on and put our shoulder to the wheel.
Which is why the Government is working on the best ways to leverage Australia’s competitive strengths in renewable energy, critical minerals and highly skilled workforce to accelerate our clean industrial and manufacturing capabilities.
Australian steel, aluminium and critical minerals are pivotal in how we construct renewable energy projects and transmission lines.
And Australia is home to some of the world’s largest reserves of critical minerals and metals that will be required in the global decarbonisation effort.
Creating opportunities for our manufacturing sector
Of course, at the heart of the Albanese Government’s plan to diversify and transform Australia’s industry and economy is the $15 billion National Reconstruction Fund (NRF).
The NRF is one of the largest investments in manufacturing in Australian peacetime history.
It will help Australian industry move up the value chain to take advantage of opportunities in a net zero economy.
The NRF will invest $3 billion in renewables and low emission technologies, one of the seven priority areas identified for targeted investments.
Investments could include the manufacture of clean energy components; hydrogen electrolysers, or other products used in connection with renewable energy generation, transmission, distribution or storage.
An additional target investment level of $1 billion from the fund has been identified for value-add in resources. This will help Australia gain more value from its mining industry, by leveraging our natural and competitive strengths.
Complementing the NRF, our $392 million Industry Growth Program will support innovative businesses to commercialise ideas and expand their operations in the NRF’s seven priority areas.
This includes manufacturing of products for use in or connection with renewables and low emissions technologies and value-add in resources.
The Industry Growth Program will support innovative SMEs by providing expert advice and matched grant funding from $50,000 to $5 million for eligible projects.
The Program will launch later this year and increase the pipeline of investment-ready projects for the NRF to consider in coming years.
Investment in energy enables future green manufacturing
The government will also scale up development of a domestic renewable hydrogen industry through our $2 billion Hydrogen Headstart program, announced in the last budget.
This program will provide revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts, putting Australia on course for up to a gigawatt of electrolyser capacity by 2030.
Green hydrogen is a critical enabler for the future manufacture of green metals and other coveted products.
Hydrogen Headstart builds on more than half a billion dollars of investment by the government in regional hydrogen hubs in Gladstone, the Hunter Valley, Bell Bay and the Pilbara.
It is estimated that a large-scale local hydrogen industry could generate $50 billion in additional GDP by 2050 and create more than 16,000 jobs in regional Australia.
In May I visited the Hysata facility at Port Kembla which is building a manufacturing line to produce the most efficient electrolyser to produce green hydrogen in the world.
This electrolyser, invented here in Australia, shows what can be done onshore.
What Australia is calling out for at this critical juncture is more public and private investment.
The Government’s $20 billion investment in our Rewiring the Nation plan will create new investment opportunities in cheaper renewables and long duration grid storage.
It will unlock cleaner, cheaper and more reliable energy.
Low-cost renewable energy will mean more jobs. The 2020 Clean Energy Council’s Clean Energy At Work report found that by 2025, the renewable energy sector could employ as many as 44,000 people.
That’s an opportunity that we must grasp with both hands.
Positioning Australia as a green manufacturing powerhouse
Australia will work cooperatively with our key trading partners like the United States, Japan and the Republic of Korea on our shared clean energy and green industrial objectives.
Because the global challenge of decarbonisation requires a global solution. And Australia is set on playing its part.
The Australian Government will support our trading partners in their own transition to net zero – including by being a reliable supplier of the resources they need during the process.
Particularly as we are seeing major modern economies around the world taking leaps towards creating a domestic market for green energy and technologies.
Almost one year ago, the US Senate approved the Inflation Reduction Act, a massive stimulus package of $USD369 billion to power the transition to net zero.
And the European Union is powering along a similar path.
Earlier this year, the European Commission revealed its Green Deal Industrial Plan, which will see more than $270 billion in existing funds directed towards cutting red tape and providing tax breaks for net zero investments.
Modern economies are speeding towards a net zero future.
This will create new markets for manufactured products and speed up the pace of the global shift to low emissions technology, emissions reduction and rejuvenate US manufacturing.
That’s good for the world.
But the IRA distorts global investment, as well as growing global investment. That is why the EU, Canada and other economies have responded vigorously, with bold industry policies of their own.
The Albanese Government acted in the May Budget to ensure that Australia too maintains its competitive edge.
In an interview with Peter Hartcher for the Sydney Morning Herald and the Age, Treasurer Jim Chalmers said, “The energy transformation is the central component of the budget’s major focus on a new generation of growth and opportunity. We want to be beneficiaries, not victims, of the massive investments the Americans are making in clean energy technology.”
As I said earlier, the world comes at you fast. Australia now has a twin challenge.
The capital, co-investment challenge – the NRF and Industry Growth Program are directed toward this.
But the advent of the IRA presents a second challenge for Australia – a competitive challenge.
And the Albanese Government is acting.
The May budget delivered $2 billion to the Hydrogen Headstart Program and committed $5.6 million to develop a comprehensive set of measures to complete Australia’s response to the IRA.
This includes consideration of clean energy industries, manufacturing and sovereign capability, including green energy, critical minerals, green metals, and clean energy technology manufacturing.
The Government will identify further actions by the end of this year.
Promoting and encouraging domestic manufacturing capability does not mean retreating into protectionism.
Indeed, as the Assistant Minister for Trade and Manufacturing, I want to make it very clear; one of the defining challenges of this era is to build industry capability with smart, modern and purposeful industry policy while simultaneously maintaining Australia’s status as a strong, confident open market economy that trades with the region and the world.
A retreat into narrow protectionism is not an option for Australia – in the fastest growing region of the world it would just deliver lower income and lower investment.
Ensuring the transformation of our nation into a high-value, high-wage modern green economy needs to be a collaborative effort.
It will involve governments, industry, unions, the research sector and other stakeholders.
If we work together Australia will reach our emissions reduction goals while placing ourselves in the forefront of advanced manufacturing nations.
Because there is too much at stake to simply retreat or be resigned to another decade of slipping down the global value chain.