Address to the Australian Steel Convention
Thank you very much. G'day, everyone, very good to be here with you all. I'm Ed Husic, the Minister for Industry and Science, and I'm the son of a metalworker and if I'm going to be speaking to anyone on a Monday morning it's here. To me, it's personally pleasing to be able to do so.
I start by acknowledging we're on the traditional lands and I want to pay respect to the traditional owners and thank them for their custodianship and pay respect to elders past and present and pay my respects in the Aboriginal and Torres Strait Islanders present here today.
And thank you very much the Australian Steel Institute for the opportunity to speak. Because we do, certainly as an incoming government, very much value and respect the relationship we have with the Institute. We've built that up over many years and I know a lot of people across our government have had dealings with the Institute as well and we also have a lot of very firm advocates for the industry within this new government.
Steel, from our point of view, is a vital part of the manufacturing landscape in this country. We went to the election with a very firm view that given the events of the previous years, notably the pandemic and the way it changed people's thinking about what we could rely upon when we needed it at the times we needed it most, that has caused a reset in the thinking around industry policy and the way that we gear up and produce and the way that governments engage with the private sector to deliver on those things. So that's been very important as well.
Also, I think the reality is geopolitics has changed. We've had too much dependency on just one country for all our product and there is a recognition that we do need to diversify in terms of that particular issue and to ensure that we build the capability across key areas. And that's driven things in a number of ways that I want to touch on in my speech today.
The theme of the conference says it all, Australia's steel industry is vital and adaptive. The steel industry has diversified [supply chains] from smaller, family-owned businesses through to large national, multinational companies and feeds into construction, manufacturing, mining, defence, and a wide range of high-value uses and in doing so supports over 110,000 jobs and contributes to nearly $13 billion to the nation's economy.
It's encouraging to see the steel sector remain so robust in the face of the global headwinds over the last few years but the Government's certainly not taking it for granted.
We've placed manufacturing as a central priority, as I said, in our policy agenda. Largely through the Future Made in Australia commitment which includes maximising use of Australian made goods through our Buy Australian plan and also taking a fresh look at government procurement and local content rules. Ensuring, for example, things like trains are built in Australia through our national rail manufacturing plan, establishing the $15 billion National Reconstruction Fund our plan to rebuild Australia's industrial base.
Specifically, under the Powering Australia plan, within the Reconstruction Fund, $3 billion will be allocated to investing in green metals, steel, alumina, aluminium; clean energy component manufacturing; hydrogen electrolysers and fuel switching; agricultural methane reduction and waste reduction and through Powering Australia we'll support the energy needs of the manufacturing sector by getting power to where it's needed to an overdue upgrade of our outdated energy grid.
Now, our Government will also support the development and deployment of low-emissions technology through investing in the scientific research and collaboration. The industry will benefit from research from the Heavy Industry Low Carbon Transition Cooperative Research Centre focused on integrating clean energy sources such as hydrogen, ammonia, solar into high heat, high-emissions manufacturing processes for products like steel.
There are tremendous opportunities for the steel industry to be transitioned to a low-emissions economy. Offshore wind, for example, will play an important role in producing robust grid built on renewable energy but we're going to need a hell of a lot of steel for the turbines, steel for the rotors, steel for the towers.
Wave energy is another area. It's been in the news in the last week. Another exciting avenue for renewable energy development here in Australia and to ensure we can reliably store and transport renewable energy we committed to rewiring the grid, providing further scope and opportunity for the industry.
Now, I’ve also had regular conversations with Chris Bowen, the Climate Change and Energy Minister. Our view is we really need to develop industry specific plans that open up opportunity for the steel sector and if we get - we've got what we want to do in terms of energy transition, what we want to do in procurement reform and local content reform, the National Reconstruction Fund to support growing capability locally so that we build capability and we put it to work, that we open up opportunity for steel, particularly Australian steel, and be able to use it in terms of some of the offshore wind, wave energy, rewiring the nation issues that we do have.
And we need to, as I said, be able to have that through an industry specific plan to ensure that we don't miss opportunities and stuff isn't just left to be random or done on the spot.
We're hearing obviously, and I know, a lot of people here have to confront the challenge that's brought about by national skills shortages after a decade of inaction that's left us with a lot of catching up to do. We brought this national focus on addressing skills shortages to the Jobs and Skills Summit we held early last month and we are getting on with the job of working with industry, rebuild the skills base.
One way we're doing it will ensure the training of thousands of workers by mandating that 1 in 10 employees on major government projects have to be an apprentice, trainee or cadet and we'll invest in the skills Australia needs to drive future economic growth. We'll do that as well through what we're doing in driving TAFE fee-free places, just over 460,000 of them, and making sure that we are investing in job transition as well and that has been a feature – that’s policy we took to the election and now we're putting it into place and there will be agreements with the States and funding in the last month, again, to advance that and bring that all to life.
By community and homegrown innovation production we can ensure more smart skills Australians will stay on shore, will have opportunity to be able to go into industries where their skills are in high demand.
On energy prices. Recent spikes in domestic gas and energy prices due to acute local and widespread global factors is absolutely having an effect on Australian manufacturing. And I've made clear my views many times. The gas sector in particular needs to be aware that high prices impact on Australian industry. We are determined to place pressure and bring down lower energy prices.
I’ve previously said I’ll back local manufacturers over multinational greed every day of the week. We can’t continue to see so many great companies doing it tough because of the way gas prices are at the moment.
We signed a Heads of Agreement with east coast natural gas exporters to prevent a gas supply shortfall. We are continuing to work with those companies and industry to ensure affordable, reliable and secure energy for Australian business.
Sure, it’s a complex issue – spikes in energy prices have a number of causes, and don’t have a single solution. But I can let you know – I’ve spoken directly with the gas companies emphasising to them that the pricing that they are going through at the moment – certainly we understand the conditions for them are probably the best market conditions that they’ve had in many years.
But at the same time, Australians rightly expect that an Australian resource will be available to Australian industry at a price that is not being seen on the international market.
We cannot have a situation – and we’ve already seen some of this emerge – where our international competitors are getting access through long-term contracts to gas prices that are lower than what will be offered to Australian business for an Australian resource.
There is an imperative – and I’ve made this clear to gas companies: the government (as I’ve said to you all a few moments ago) was elected with a very clear view that we would revitalise Australian manufacturing and high energy prices sets us back in that ambition, in terms of what you are trying to achieve.
We are also – as I’ve said to the gas companies and as I’ve said to you this morning – focused on addressing those geopolitical challenges that currently confront us. We do want to make sure we have greater sovereign capability and manufacturing capability here and that high gas prices again make that very challenging.
And so the gas companies can either be part of Team Australia or they can be part of Team Greed. They will make the choice.
In my very blunt terms to them that I repeat to you all here today, is that we understand that there are costs of production they have to cover; we also understand that just like you are chasing a reasonable rate of return, they can too.
But what we are seeing at the moment is not a reasonable rate of return. And if that puts pressure on Australian industry capability then I will frankly be speaking up about that any time I have to.
Because we do need to ensure that there is reason and rationality in the way that pricing is occurring and that it doesn’t stifle Australian business.
Emissions reduction is also under the spotlight and it will be a central theme across manufacturing. The steel industry has an important role to play, as I mentioned earlier, and as we decarbonise and work towards our goal of achieving net-zero emissions there are opportunities for this sector.
Steel will be at the centre of energy transformation.
It is the main material used in delivering crucial sources for renewable energy, solar, tidal, geothermal, and plays a central role in supporting and enabling infrastructure.
In order to meet industry-wide commitments by 2050, I know you are planning investments including in low-emission steel technologies where it's financially and technologically viable to do so.
And on that road to reducing emission is absolutely paramount that the steel sector is supported and encouraged to employ those low-emission technologies and processes. In this regard, the Government's promised to strengthen the safeguard mechanism and we will work closely with stakeholders on redesign.
I know that the Steel Institute has made submissions. I saw several of your organisations did as well and I know for a fact that Chris Bowen is reading through them because, again, this is another issue where he and I are talking regularly around the impact of safeguards on heavy manufacturing.
Heavy manufacturing accounts, off the top of my ahead, for about 7% of Australian emissions and about 25% will be potentially covered by safeguards. So I'm very conscious of that and want to make sure that your voice is heard. So please feel free. I urge you to urgently keep in contact if there are any issues around the design because we do want to make sure the mechanism’s fit for purpose and we do thank everyone for time taken to participate in the consultation process.
All around us we see the impact of dramatic change in our climate, change in the way we live, change and its disruption to industry and work. Change and disruption are inevitable at home and across the globe. We as a nation can learn from your industry, be adaptive to change and use it to our advantage.
The alternative is being left behind and that's simply not an option.
Your industry has great opportunity to raise technological advantage and invest in R&D, new processes, productivity and enhancing technologies.
In this highly connected global marketplace, investment in intellectual property and bespoke products and services does offer up new opportunity for businesses to grow into the new high-value markets.
And it's particularly the case with high tensile materials and coatings where we do have the edge over international competition. If I can just shout out to Bisalloy. [Through them] we have an emerging ability to produce protection-grade steel for use in defence projects and I know there are many other examples of world-leading tech being delivered by Australian manufacturing around this room. It's the sort of sovereign capability the Government wants to foster.
The Australian steel industry has ridden the bumps in the last few years, has emerged in good shape to tackle 2022 and beyond. The Government’s focus on manufacturing – on making more things here – will, I believe, help the sector and its workers to land good, secure jobs in stronger firms.
The future of the steel sector will be strong by working together. Our focus is on speeding up the energy transition, hitting our emissions targets which will provide a huge opportunity for industry and I do want to help you take full advantage of that.
Our policy levers should help develop industry-specific plans to boost local production capacity for that energy transition. Steel, locally made steel, more importantly, can become the backbone of offshore wind infrastructure.
An emphasis on creating jobs, boosting skills, bringing industry expertise back on shore, supercharging national productivity is good news for all of us. We are eager to continue working with you all across the steel sector as we build a future made right here in Australia. Thank you and enjoy the rest of the convention.