Australian Industry and Manufacturing
27 October 2020
The world has changed in unthinkable ways this year.
Industries that are normally sure bets for Australia, like tourism, have been among the hardest hit by COVID-19.
The road going forward will be winding, there are new obstacles in our path, and our challenges are numerous.
Yet amidst the obstacles, our path is paved with opportunity.
Australia has always been a manufacturing nation. As the Prime Minister has said – we make things and we’re good at making things.
Today, in this Ministerial Statement on Australian industry and manufacturing, I will outline the Government’s plan to keep making things in Australia.
There will be no business-as-usual in the post COVID-19 world.
Mr Speaker, this once-in-a-century global pandemic has revealed many things:
It’s revealed the ingenuity and determination of our manufacturers in the way they stepped up and pivoted to make masks, ventilators, and other essential medical supplies.
It’s revealed the vital nature of our manufacturers as they worked to keep supply chains operational and our supermarket shelves stocked.
And it’s also revealed our vulnerabilities as a nation.
Before the pandemic, we’d already been working on our manufacturing plan and delivering support for manufacturers to encourage investment and modernisation.
But now we are turbo charging our efforts with our $1.5 billion Modern Manufacturing Strategy – to create income and jobs not just for the recovery, but for generations to come, including in regional Australia.
Our strategy is about Australian manufacturing taking on the world by building scale and capturing income in high-value areas of manufacturing.
It’s about harnessing our strengths in key priority areas to help our manufacturers become more competitive, more resilient and to scale-up.
Our goal is not only to deliver more products for Australians – but to position quality Australian products as the solution for other nations looking for reliable supply in an increasingly uncertain world.
It’s about expanding our value-added exports. And in the process, creating jobs and strengthening our supply chains in the interest of long term national security.
The Strategy reflects both our common sense and our core beliefs. This is not about propping up failing firms, this is not about government subsidies, this is not about bureaucratic fiefdoms, and this is not about national isolation.
When it comes to manufacturing, we are determined to harness the lessons of our whole of government COVID-19 response in order to meet the economic imperative of creating jobs.
And underpinning it all is the core belief that this must be enterprise driven.
Australian businesses have demonstrated more than ever during COVID-19 an incredible resolve and adaptiveness.
Now our Strategy is about giving them a leadership role, ensuring we are creating the conditions and investing in the right policies to help them thrive.
That brings me to the first pillar of our Strategy – getting the economic conditions right.
Past manufacturing strategies have failed to recognise that getting the fundamentals of our economy right is essential for our manufacturers to compete.
Getting the economic conditions right includes:
- Expanding the instant asset write off;
- reforming and increasing investment in the R&D Tax Incentive;
- reducing energy costs and ensuring affordable and reliable gas,
- lowering business taxes and providing employment incentives,
- investing in skills and training to ensure a skilled pipeline of workers,
- simplifying trade and opening up new markets; and
- the ongoing deregulation agenda to cut red tape and make dealing with government easier.
And of course these build on the practical support, like JobKeeper, we’ve provided to help businesses weather the storm of COVID-19 restrictions.
A great example of how our support is helping business grow is Specialist Electrical Solutions in Queensland – which export specialist switchboards around the world.
Not only have they just taken on two new apprentices to expand their skilled workforce, but they’ve started a new arm of the business to produce component parts they previously bought from China and Thailand.
They say the instant asset write-off was the catalyst for bringing this process back to our shores and securing their supply chain.
These are the sorts of decisions that we want businesses to have the confidence to make.
But Mr Speaker, we know that if we’re going to create transformational change in manufacturing it requires more than just getting the economic conditions right.
We need a laser focus and that is where our Modern Manufacturing Strategy really comes to the fore.
We are making science and technology work for business, building resilience and focusing on areas of advantage.
Instead of trying to be all things to all people, we’re strategically investing in our National Manufacturing Priorities – those with the greatest potential to scale-up and create jobs, to make Australia secure and to grow our national income.
The six National Manufacturing Priorities we’ve identified are: Resources Technology & Critical Mineral Processing, Food & Beverage, Medical Products, Recycling & Clean Energy, Defence, and Space.
There should be no surprises in that list … because it was developed on the basis of solid evidence.
This is about setting priorities and aligning efforts so everyone is pulling in the one direction. We are signalling to the market where we as a government are focusing our efforts and where we want to mobilise efforts from industry, researchers and investors.
You cannot create scale in every area of manufacturing and we know that scale is key to creating the jobs that we need and want to see.
But it’s important to remember that as we grow these sectors, others in the supply chain will also benefit.
For example, if we look at Food and Beverage, an obvious beneficiary of growing this sector is our farmers and producers.
But a big component of food manufacturing is also transportation, meaning when we grow Food and Beverage manufacturing, transport companies also benefit.
Take Volvo in Wacol Brisbane for example – a very successful manufacturer of Australian-made trucks– 80% of them bespoke.
They directly employ over 500 people, including a team of 30 engineers … and they source their component parts from 90 different local manufacturers, meaning their factory holds Australian-made certification.
Volvo in Wacol competes on both cost and value and are local market leaders. So just making the truck that will transport food products is itself an amazing manufacturing story.
Demand for these bespoke trucks will grow as we grow Food and Beverage manufacturing.
Our tech sector, as a key enabler, is also part of the manufacturing story. Innovative tech companies stand to benefit by offering solutions and inputs that our manufacturers need.
Max Kelsen is a growing Aussie business that is offering cutting edge digital solutions to increase productivity through data science and AI. These are the sorts of companies that are crucial to manufacturing in a modern economy.
Moreover, these are the types of skills we’re good at and give Australia a competitive edge.
Australia has a track record in developing cutting edge science capability that delivers new and innovative products and services.
Dresden, a NSW based optical store, is a prime example and has started reinventing how eye glasses are made, and how they are used. Before Dresden came along, glasses were fragile, costly and they weren't recyclable.
The optical industry has a very particular supply chain, and it didn’t deliver on Dresden’s needs. So they went out and found brand new partners and ways of working.
With Federal Government support through a CRC-P grant, Dresden was able to assemble partners to work with recycled plastics to create glasses, at a time when virgin plastics were actually cheaper.
The university sector was important, especially the University of New South Wales, through its SMaRT Program. This collaboration between industry and researchers allowed Dresden to design and deliver a new product to their customers at the same time as making glasses on the spot, manufacturing them in Australia and not generating plastic waste.
Today Dresden manufactures 100 per cent recyclable, modular, strong, durable product that is made cheaper than any other country in the world – including China.
They are a fantastic example of what we can achieve when we make science and technology work for Industry.
But we need to make this story more common. We need to shift the focus of our research community from viewing the publication of their discoveries as the final step in their journey. We need to start defining success as commercialising those great ideas.
That’s why we are enlisting the CSIRO to engage even more closely with Industry – invoking the “I” in CSIRO, which, of course, stands for “Industrial”.
The CSIRO already does a remarkable job in helping businesses commercialise their products. This will be even more crucial as we look to grow scale.
The Budget provides close to an additional $460 million for the CSIRO to address the impact of COVID-19 on its commercial activities and ensure its scientific work can continue delivering for our economy.
Mr Speaker, we bring all these goals together with the centrepiece of our Strategy – our $1.3 billion Modern Manufacturing Initiative – which will help Australian manufacturers scale-up and create jobs.
The Initiative will unlock private sector investment and create the path for our manufacturers to deliver on the world stage.
It will provide co-funding for large manufacturing projects that have broad benefits across our priorities through three targeted streams:
- The Manufacturing Collaboration Stream will provide funding for very large projects that support business-to-business and business-to-research collaboration, in order to build economies of scale.
- The Manufacturing Translation Stream will help manufacturers translate good ideas into commercial outcomes and invest in non-R&D innovation.
- The Manufacturing Integration Stream will help manufacturers integrate into local and international supply chains and markets.
All streams will operate on a co-investment basis. This isn’t a hand out, it’s a partnership - and we make no apologies for only backing those projects that are able to attract private sector investment.
Importantly – how and where this funding is delivered will be informed by the Industry-led road map process, which is already underway.
The newly refocused and renamed Industry Innovation and Science Australia will play a critical role in these road maps. IISA has a new emphasis on Industry growth, with 5 new Industry leaders appointed to the Board last week.
The IISA will work with industry-led expert teams, together with key stakeholders, to co-design a 2, 5, and 10 year vision for each sector, with clear deliverables.
Each road map will identify opportunities for achieving scale. This is about strategic policy that will make a lasting difference for our nation. We are determined to get it right. Like our manufacturers we’re placing a premium on quality, and we will make every dollar count.
But we do very much recognise the urgency.
For those enterprises with shovel ready projects that will help to create jobs or help upskill workers, we have another round of the Manufacturing Modernisation Fund. This will be open before the end of the year and the Government will contribute 1 dollar for every 3 dollars the business is prepared to invest in itself.
This will get projects to revitalise the sector underway as soon as possible, and this builds on the 200 projects we announced earlier this year in the first round of the Fund.
One of those recipients is Marpac in Victoria with their Project Reclaim & Replace. This project is centred around upgrading and up-dating their manufacturing lines to replace both imports of steel and composite canisters, metal ends and current rigid plastic canisters with a more sustainable and environmentally friendly composite canister with a smaller carbon foot-print - to increase business sales and bring employment back to Australia.
More Aussie jobs resulting from Aussie ingenuity – with the benefit of being better for our environment.
Another vital component of the Modern Manufacturing Strategy is our focus on improving sovereign resilience, which has been in the spotlight during the COVID-19 pandemic. That’s why we’re investing $107.2 million, through the Supply Chain Resilience Initiative, to ensure Australia is best positioned to respond to any future crises.
We will consider a range of domestic and international supply options to address vulnerabilities, and assess their costs and benefits.
This could mean more domestic manufacturing, it could mean long-term contracting of international supply or it could involve broader activities to promote better information sharing and collaboration between industry and governments.
From mid next year, support will be available for businesses to establish or scale a capability that addresses a supply chain vulnerability.
We know that our supply chains have an impact on sovereign capability – for example, Bluescope helps produce oxygen needed for our hospitals at the Port Kembla Steelworks, and chemical feedstock production is vital for plastics and fertilizers.
More than ever, Australians understand and support this goal. We’ve seen a surge of interest in buying Australian Made.
Australians know that when our manufacturing sector thrives, our nation thrives.
Because, when you buy Australian Made, you’re not just supporting that manufacturer and its workers but Aussie businesses and workers right along the supply chain - from our farmers to our truckies to graphic designers.
For too long successive governments have tinkered at the edges when it comes to manufacturing policy.
Post-COVID we know we have to create the opportunities for more of our brightest minds and best companies to succeed here at home. Because that will create jobs. It’s that simple.
The naysayers who have talked down Australian manufacturing have been left red-faced … as we all pulled together and our manufacturers stepped up to the plate.
Old notions of what manufacturing is have been turned on their head. We know it is about so much more than just the production part in the middle. It’s also about the research and development, the design and engineering, and the post-sale services.
This is nothing like the protectionist, high-cost policies of the past.
This is about us taking on the world, competing on value, and winning in a market that is now primed for quality and reliability.
We know that Australian businesses have been looking for a strong signal from Government that we are going to back them in taking risks to invest in these uncertain times.
Our Modern Manufacturing strategy is exactly that – it’s a strong signal that not only are we open for business, but we mean business.
Let’s Make it Happen!