Alannah Mactiernan (Perth, Australian Labor Party) Share this | Hansard source

Australia is a trading nation and we are fierce advocates for tearing down trade barriers. Standard economic theory tells us that that is how we maximise the efficiencies of production. But I believe that this is a very simplistic position that underestimates the need to nurture core competencies to provide a feedstock for innovation and the emergence of new industries. If we look at the dilemma that Greece is in today, as a classic example, its entrance into the EU led to a total erosion of their manufacturing sector and it has become a highly vulnerable economy. My home state of Western Australia experienced this. It was not until the 1890s, with the gold rush period, that we started to develop a manufacturing sector. But Federation, which followed shortly thereafter, led to a massive dumping of eastern states' goods, which swamped and crippled our fledgling manufacturing industry.

So, government procurement, and particularly Defence procurement, is a critical mechanism for fostering a baseload of production. We are not talking about propping up inefficient industries, but about recognising that if we are going to give our relatively small population, which is located a long way from export markets, the ability to keep in the game, we need to leverage off government procurement. The government in WA that I was a part of introduced a similar provision in 2002.

It is a wrong move for us to become surrender monkeys in the cause of Australian manufacturing. I refer you to a report by McKinsey Global, in 2012, which stated:

Manufacturing makes outsized contributions to trade, research and development (R&D), and productivity …

Picking up this theme of how essential this is to drive new industries, it says:

The role of manufacturing in the economy changes over time.

  …   …   …

As economies mature—

as in Australia—

manufacturing becomes more important for other attributes, such as its ability to drive productivity growth, innovation and trade. Manufacturing also plays a critical role in tackling societal challenges, such as reducing energy and resource consumption and limiting greenhouse gas emissions.

So we need to work very hard in Australia to make sure that we do have, particularly, an advanced manufacturing sector.

In 2013-14, the Defence Materiel Organisation and the Department of Defence, received a combined total of almost $30 billion. When we do an analysis of that procurement data it says that whilst most of the government sources of services were local, the vast majority of goods, including heavy and advanced manufacturing items, came from overseas. In fact, around $3.6 billion was handed to overseas contractors for the manufacturing of Defence items. Of course, there is always going to be a component of this, but we need to embrace this much more seriously. In terms of our submarines, we need to make sure that we have them built locally and that we do that local procurement. In relation to the offshore patrol vessels, we must make sure that the best Australian manufacturer has the opportunity to produce these. We are very disappointed that the Prime Minister seems to have unilaterally ruled out Western Australia being the provider of those, notwithstanding our clear history in that area. This is not about making Australia into a sheltered workshop, but it is about recognising that we have to have an advanced manufacturing industry if we are going to drive innovation and productivity in the emerging 21st century industries in this country.

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