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Interview - Paul Murray Live, Sky News

12 April 2020

Paul Murray

Subject: Australian manufacturing and supply chains.


Paul Murray: Karen Andrews is the Science and Industry Minister and she would like to see more manufacturing come back to Australia. Put simply, we can't have this scenario where China makes everything because when there is a virus that starts in China or anything happens in the world that cuts us off from China, we are where we are right now. Ninety per cent of medicines in Australia are imported, we need to make stuff here. I had a chance to talk to the Minister a bit earlier tonight.


Karen Andrews: Well, we’ve learned a lot from what's happened over the last couple of months. Certainly, that there's some manufacturing here that we need to ramp up to deal with the immediate crisis but also with the medium to the longer term. And there's been a couple of notable examples, and one was facemasks where we had one manufacturer in Australia producing about 7 million masks a year, that's not been sufficient for what we need now so we've needed to work with that business to get them to scale up, and they have and they've put in a tremendous effort. And they've gone from two production lines to three production lines and they're now working 24/7. So, they've done really well.

But what we also realised is that we need to make sure that we've got the supply chains in place because we were really very dependent on imports, whether it be from China or from India, and there are some critical things that we realised that we cannot be so heavily dependent on. Now, that doesn't mean we're going to walk away from buying goods from overseas because trade is very important to us. But we also need to know that particularly in a crisis - and we may well have another one and another one after this at some stage - we need to be in a position where we can support ourselves in some critical industries.

Paul Murray: Now, I know everything's on the table but let's try to tease some of this out. One of the reasons why stuff doesn't get made in Australia is we pay first world wages compared to other parts of the world where, for a fraction of it, you can get a bigger workforce who will work longer, doesn't have holidays, maybe don't even have the two day weekends. We can't compete on that. But, how do we make sure that a company makes stuff here as opposed to making it somewhere else for less money, because that, at the end of the day it's not that they don't want to make things here, it's that all companies are about making more money than they did last year? So, are we talking about no payroll tax? No company tax? Do we give incentives from the government if you're going to build a factory here? What do we do?

Karen Andrews: Well, I think there's a range of options. So, I think what we've realised is that we need support from consumers and we need support from businesses to rebuild the manufacturing sector here in Australia. Now, one of the most disappointing examples that I've had was a manufacturer who said that they normally buy from overseas, they're now buying from Australia for their own supply chain but once things return to normal they'll go back to buying from overseas - that's not the mindset that we want.

But also our manufacturers have to be very aware that we can't compete on cost. So, manufacturing has to change in Australia from manufacturing on cost to manufacturing on value. So, last year I was actually doing a lot of work with some of our big manufacturers, looking at what some of the options may well be and how we were going to manufacture in Australia in the future. That's now had a significant disruptor which has been COVID-19. So, we'll have to review that work and look at then what we're going to do in the future.

But it’s about a change in mindset from consumers and businesses who need goods manufactured in Australia because they've had a massive disruption where they’ve not been able to get the equipment, or the material, or the products that they’ve needed. So, it's not just about Government stepping up, it's about everyone stepping up.

Paul Murray: Now, I know that a lot of the past couple of months has been a complete reversal in the muscle memory of ideologies that people bring to the table - be it me talking about it or people like yourself in Government. I don't, again, I don't know what the answer is, but if 90 per cent of the medicines Australians take are being imported, is there not a scenario where the Government is going to have to build, or facilitate, or help financially rebalance that? That we are not in a time like this, fingers crossed, that there's enough epi pens that are coming in?

Karen Andrews: Look, they're all good questions. What I can say is that there's a couple of issues, one is that we have significant stockpiles of medicines - so in the vicinity of around six months. So we do make sure that we have stockpiles here. We are never going to be able to manufacture every medicine here in Australia, so what we need to do is make sure that we have good supplies of the essential medicines and that we have the capacity to pivot our manufacturing so if they need to look at a different medicine to manufacture here, they will be in a better position to do that.

Now, that sounds really quite easy - it's not easy, but it is still possible. So, TGA has to be involved, and there's a whole lot of regulations that need to be dealt with, but we do have a strong pharmaceutical manufacturing industry in Australia - it could be stronger, but let's look at what we can do so that we prepare for another COVID or another issue whatever that may be in the future.

[End of Excerpt]

Paul Murray: Karen Andrews making very good points, and look, we'll see where this goes in the next little while. We need to bring manufacturing back here.