Tuesday, 27 October 2020
by leave—The world has changed in unthinkable ways this year. Industries that are normally sure bets for Australia, like tourism, have been amongst 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. 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 turbocharging 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. 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:
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 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 have identified are: resources technology and critical mineral processing, food and beverages, medical products, recycling and 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, obvious beneficiaries of growing this sector are 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 per cent 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 and 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.
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:
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 roadmap 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 five 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 two-, five-, and 10-year vision for each sector, with clear deliverables. Each roadmap 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 one dollar for every three 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 updating 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 that has a smaller carbon footprint. It will 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, and 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!
[by video link] Firstly, thank you to the Minister for Industry, Science and Technology for foreshadowing that there would be a statement today and for providing an opportunity for us to talk about a very significant sector to our economy—a sector that has diminished in recent years, a sector that has fallen as a proportion of our economy and our labour market, and needs greater levels of support from government.
It's true to say that the government elevated the rhetoric on manufacturing in the lead-up to the budget, particularly in terms of a manufacturing-led recovery strategy. But, whilst Labor have some criticisms, and I'll outline some of the concerns that we have with respect to the government's history on manufacturing and also in relation to the plans ahead, we want to discuss this sector. We want to see more support for our manufacturers to ensure that we make things in this country. Labor have a great record in partnering with manufacturing and ensuring that we see growth in high-skilled jobs and in innovation in order to ensure that we are part of supply chains around the world.
Now, after seven years of inaction, frankly, the government has finally realised the importance of Australian manufacturing due in no small part to the pivotal role that many of our manufacturers have played in adapting their processes to provide much-needed personal protective equipment—and I would like to thank all of the manufacturers that have been involved in that critical response to this health challenge. What was announced, however, was a timid attempt at a plan, a lot of rhetoric and a giant missed opportunity.
As the minister just outlined to the House, there should be no surprises in the government's six national manufacturing priorities list because it was developed on the basis of solid evidence. Well, that's correct. But let me make this clear: that solid evidence was developed years ago under a Labor government, with the announcement of the 2013 Plan for Australian Jobs. Let's be clear, these are Labor ideas. We're happy for the government to copy them; imitation is the sincerest form of flattery. However, what is a particularly galling and common practice of this government is that, when it formed government, it abolished Labor's plan, spent seven years doing nothing and waited until a global pandemic to rediscover the importance of manufacturing.
The minister claims this is about setting priorities and aligning efforts so everyone is pulling in the one direction. What a shame then that they've spent the last seven wasted years swimming in the opposite direction from Labor's 2013 plan. The priorities outlined in the proposed plan by the government are identical to some of those sectors that were identified seven years ago by a Labor government. If the Morrison government had stuck to Labor's plan, rather than abolishing it in the 2014 budget, manufacturing in this country would have been thriving; businesses would have been thriving, employing thousands more workers; and we would be better placed to deal with this global health and economic challenge.
The government's track record when it comes to Australian manufacturing is, quite frankly, appalling. Nothing would be more emblematic of their disregard for manufacturing than when this government ripped $500 million out of support for Holden and goaded the company to leave our shores, which they promptly did. They failed to deliver an energy policy after more than 20 attempts, which has provided no business or investment certainty and has led to energy costs for manufacturers going up and up and up. They presided over the depletion of critical skills, over 150,000 cuts to apprenticeships, the destruction of the viability of smaller manufacturers further down the supply chain and the withdrawal of priority capital from research and development. They have spent seven years attacking and undermining Australian manufacturing and now they want Australians to believe they support manufacturing. What a waste of years of economic growth and taxpayers' money.
In a stunning admission on ABC's Insiders program with David Speers on Sunday the minister admitted that in the depths of the Morrison recession, when it is now that support is needed, less than three per cent of the manufacturing funding will be available to manufacturers this financial year. With unemployment soaring in an economic recession, the first in 30 years, the government provides less than three per cent of the spend to manufacturers in this financial year—$40 million, it was conceded, out of $1,500 million that is supposed to be provided to this critical sector. That's not enough—too little, too late. But the Prime Minister and minister for industry continuously talk about the importance of medical technology and manufacturing as we deal with COVID-19 and the Morrison recession, begging the question: why won't this government provide greater support to Australian companies at the time they need it most? The government's lack of immediate action will mean the recession will be deeper and will be longer than is needed.
Let me put this into the context of the inadequacies of the government's Modern Manufacturing Initiative. According to the minister the biggest part of the government's manufacturing initiative is the collaboration strength, worth around $800 million. But the expectation is that there will probably be 10 projects that are supported. That is only 0.012 per cent of the Australian manufacturers who will benefit from the collaboration scheme. Invitations for expressions of interest won't open until late in the first half of next year. The Australian government has committed $52.8 million to the Manufacturing Modernisation Fund program. This second round builds on the first round of the program. As of 30 June last year, only 150 firms out of 85,000 will benefit. It is clear many of the jobs promised by the Morrison government are not worth the press release they've been written on. The manufacturing plan promised up to 80,000 direct jobs and up to 300,000 indirect jobs, but Treasury officials confirmed that neither figure was, 'used anywhere in the budget or any of the budget documents'. In reference to the claimed 130,000 jobs created by the government's technology roadmap, Treasury officials, in Senate estimates, confirmed that they were, 'not used in the budget', so, therefore, what can we conclude from that?
This is a figure that's in the minister's press release and in the Prime Minister's press release, and yet it is not in any of the budgetary documents or the budget itself, because this is a Prime Minister that chases headlines but not Australian jobs.
We also harbour concerns about the government's integrity when it comes to the distribution of funding. In June 2020, The Sydney Morning Herald reported on the first round of funding under the SME export hubs grant program. According to the industry department's business portal, the SME grant supports businesses developing local, regional and Indigenous brands. The first round saw $4.4 million spent over nine projects. Eight of those nine projects were in coalition electorates, with the ninth shared between a coalition and a Labor electorate. In the first round, 97 per cent of funding announced in March 2019, close to the election, was spent in the coalition's electorates—97 per cent. How many small businesses were overlooked because the Morrison government was solely focused on winning the election rather than on providing a strategic plan to grow businesses and regions regardless of whether they sit in a particular electorate?
The government says they are providing an extra $2 billion of funding for R&D tax incentives, but let's be honest: $1.8 billion was already existing and threatened to be cut. And of course they withdrew that bill from the parliament. But really, isn't that just a backflip? That is not new money. It's not new investment. In fact, at a time when higher education research and development is falling rapidly, the net result of R&D expenditure and investment in this country is in decline. So a measly $200 million over the forward estimates, in such an important area for government investment in the private sector, is woefully low.
The manufacturing industry is one of the biggest users of the RDTI scheme, and any underinvestment of R&D will jeopardise Australia's manufacturing future of highly skilled, well paid, secure jobs. Under the Morrison government, Australia's R&D investment is dismal and has fallen below two per cent of gross domestic product. Australia's investment levels are below those in countries such as South Korea, Israel, Sweden, Denmark, Finland, Iceland, Norway and Singapore.
As we emerge from this pandemic, opportunities will present themselves. A renewed national focus on a manufacturing future for Australia will give those who have lost their jobs and businesses throughout the pandemic encouragement that there are highly skilled, well-paying jobs in manufacturing in this country. It will encourage our young people in school to study STEM subjects in the knowledge that this study will provide them with a sturdy foundation for a long-term, reliable and rewarding career in manufacturing.
Investment in STEM courses and degrees is just that: an investment, not a cost. For every dollar we invest, we do much better as a social and economic dividend. Yet, in the government's recently passed higher education legislation, we saw a decrease in government investment in many STEM areas. Once again, we got the big announcement that fees for STEM students will be reduced, but the fact that the government contribution for these same students will also be reduced barely rated a mention, meaning our education institutions are expected to teach more students with fewer resources. For a student wanting to study science next year, this government will provide $3,010 less than they did this year. If the government is serious about turbocharging manufacturing, then action needs to match the rhetoric. You can't claim that STEM is critical and that we need to encourage more young people, particularly girls, to study STEM without putting your money where your mouth is. This government is all about announcements but lacks the substance to implement its promises.
Labor recently announced a very concrete plan to provide support for our manufacturing sector. As outlined in the Leader of the Opposition's budget reply speech, an Albanese Labor government will have new policies and a new direction that will build a lasting benefit. Importantly, we will build manufacturing in Australia through our National Rail Manufacturing Plan. By manufacturing trains here, Labor's plan would create up to 659 full-time jobs creating a rolling stock export industry and boost Australia's GDP by up to $5 billion. Liberal governments have consistently said we cannot build trains here, yet the ones they have bought from overseas have been too long for our stations, too narrow for our tracks or too tall for our tunnels. Australia has always been a nation that makes things, and we must put all our effort behind a push to ensure that continues. That National Rail Manufacturing Plan is a concrete proposal that will actually improve the sector, improve skills and capability, and provide jobs. That is a concrete plan. That is something the government should embrace. It's all very well for them to embrace all other Labor policies, but I would invite the minister and the government to consider this policy that has been put forward by the Labor leader, an important contribution, I believe, to this debate.
As I said, this government is all about announcements but lacks the substance to implement its policies. What we have witnessed is the failure of the government to understand the importance of the manufacturing sector as it waited for a pandemic to truly drive the message home. This is a government that abolished Labor's manufacturing strategy and then reintroduced it seven years later. They abolished Commercialisation Australia and now talk about the importance of commercialising Australian research and products. They abolished the instant asset tax write-off and brought it back. They abolished loss carry-back and have now brought that back.
Manufacturing is critical to Australia's economic future, to the prosperity of our regions, and to the capabilities that underpin the success of so many other industries. Labor has always been a great supporter of this sector. If you think back to the car plan of the Button years and the investment Labor has put in through the Rudd and Gillard governments, we are a political party that has always considered manufacturing to be a critical part of our economy, of our country and of creating well-paid jobs. That's what we would like to see.
If the rhetoric of the government is to be matched in any way, it has to stop making announcements and failing to deliver. To date, it has been all about spin and announcements. There have been no concrete plans. When there has been some taxpayers' money spent, too often it seems to be spent through the prism of political partisanship, as I outlined earlier, in terms of the money for export hubs. The government has to become serious about this sector. Manufacturing in this country has fallen as a proportion of our GDP faster than any OECD country in recent years. We need to reverse that. I think our manufacturers have managed to show how quick they can be to respond to significant economic challenges given their response in this recent global pandemic. That in itself should give us confidence that we can grow manufacturing. A future Labor government will partner the sector in order to provide those opportunities that we have seen on display in recent times. But it would appear that it has taken a pandemic to expose the failures of this government with respect to supporting this vital sector.
I've had a long personal history in this sector. My parents were factory workers. Manufacturing gave them jobs and livelihoods. The sector has transformed in recent years. There's no doubt the jobs that existed for many manufacturing workers 40 years ago have changed dramatically to jobs now that are higher skilled and that provide, I think, better opportunities and career paths. But what we have seen, unfortunately, in the last seven years under the Liberal-National government is a disregard for the importance of manufacturing, and, really, a lack of confidence and a lack of interest by subsequent ministers to ensure that we see this sector thrive.
We need to do better. Labor has plans to ensure that that can happen, and we will be announcing more plans in order to elevate this sector and in order to make it a priority well before the next election. That's something we can do. We just hope that the government would embark on an investment and decision-making process that would ensure that manufacturers in this country really feel that the government is partnering with them in order for them to be the sector that they can be.