Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Hansard source

The answer to the senator’s question is no. The manufacturing sector is a significant employer. Its contribution to Australia’s economic growth is very significant indeed. It is a major export earner. It is true to say that manufacturing share of gross domestic product has fallen from 11.5 per cent in the period 1999-2000, to 10.1 per cent in the period 2007-08. Through the period of the previous government we saw a significant decline. It is, however, not so much that manufacturing itself is shrinking but rather that other sectors of the economy have in fact grown at a faster rate than manufacturing. For example, in 2007-08 the industry value-added and manufacturing sector was $104.7 billion in real terms—that is, a record high. In 2007-08 company profits, before income tax, were almost $29 billion, in current prices—also a record high—as were exports for the manufacturing sector, at $88.4 billion, in current prices.

Manufacturing is also the largest spender on research and development, accounting for some 31 per cent of all business expenditure on research and development over the period 2006-07. Almost 17 per cent, or $635 million, of this research and development was undertaken by motor vehicle manufacturers and of course the parts sector substantially contributed to that. I am sure the shadow minister will be only too well aware that the manufacturing sector employs almost 1.1 million Australians, and the employment level was in fact above where it was 12 months ago. But of course it has fallen in the last three months.

A recent industry survey suggests that manufacturing activity has contracted and remains subdued. Nonetheless, the proper policy settings and a commitment by the national government to work with industry should provide the policy framework in which manufacturing, over time, will strengthen its performance. It is my view that that is exactly what will happen. The Australian Industry Group-PricewaterhouseCoopers Performance of Manufacturing Index fell for the fifth consecutive month in October 2008. Nonetheless, that does not necessarily indicate what the position of manufacturing will be over the long term. We acknowledge the subdued activity as a result of, among other things, higher import costs and falling demand, which of course have to be seen in the context of a slowing economy.

I remain optimistic about the future of manufacturing in the face of these pressures. That optimism is based on what the government are doing to lift our education standards, to improve access to skills, to develop our national infrastructure and to support what we are providing to industry to enable them to innovate and meet the challenges head on. The government actually believe in manufacturing. We do not regard manufacturing as a dirty word. That stands in sharp contrast to the position that was taken by the previous government.