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

I present a ministerial statement in relation to manufacturing. I seek leave to move a motion in relation to the document.

Leave granted.

I move:

That the Senate take note of the statement.

Our nation is facing an historic shift, the like of which we have not seen in two generations. Australia is in the process of recreating itself, building a new society fit for the challenges of the 21st century.

  This is a transition we must embrace. This is our time to retool our industries, to reskill our people, to build a new economy on a new type of manufacturing.

Late in 2008, our industries were hit by the global financial crisis. The government took prompt action to safeguard the financial system and provided much-needed support through its own spending. It is now widely accepted that the combination of prompt government action and the underlying resilience of the Australia economy stood us in good stead. Unlike almost all developed countries, we avoided recession and we have a strong growth outlook.

Developing countries in our region like China and India were also able to negotiate the crisis. They too have resumed growth. Their rebound has been so strong that commodity prices have surged, bringing a dramatic increase to our national income and sparking a new investment boom.

Global investors like the Australian dollar, they like our growth prospects, they like our low levels of government debt and they like this government's record of economic management. All of this is of great net benefit to Australia but it has also brought challenges. Driven by the resources boom the real exchange rate has moved some 45 per cent in the space of two years. The speed and the duration of the climb have been unprecedented.

Many manufacturers have found the higher exchange rate extremely difficult to handle. The rate of change has been so rapid that many have simply not had the time to adjust their business models. On top of the exchange rate there are now growing concerns about the sustainability of the world recovery. There has been a sharp decline in equity markets around the world, prompted by debt concerns in Europe and growing doubts about the strength of the recovery in the United States.

Normally doubts about the world economy would lead to downward pressure on the Australian dollar but on this occasion the effect has been muted. Our strong economic outlook is simply out of kilter with the rest of the developed world. The cash rate in Australia now stands at 4.75 per cent. In the United States and Japan it is effectively zero.

The government has been urged to direct the Reserve Bank to intervene in the foreign exchange market or to remove its independence on monetary policy. We will not take that course.

What, then, are our choices? If we do nothing, we sacrifice the manufacturing capabilities of this country which have been built up over generations. We deal with distressed companies as best we can, using what fiscal flexibility is available. Or we could decide to transform our economy, firm by firm and region by region, through science and innovation.

The government has taken the third course, and I reaffirm our commitment to that path today. We are modernising the telecommunications system. We are rebuild­ing rail and port infrastructure. We are investing heavily in training and skills. We are strengthening and upholding anti­dumping protections. We are using the taxation system to stimulate business investment. We are leading the nation's transition to a clean energy future.

This is a comprehensive agenda for a new Australia: a nation that can generate jobs and opportunities for all. If we want to harness that potential, we need to change the way Australians do business. We need to put innovation at the heart of every firm.

As my department's Australian Innovation System Report 2011 makes clear, innovation-active businesses are much more likely to raise productivity, boost their profits and put new employees on the payroll. That is acknowledged by our competitors overseas.

The Chinese, for example, have made it clear that taking growth to the next level will require major investments in science and research. And that is exactly what they are doing. China's expenditure on R&D has multiplied by a factor of six in the space of a decade. China is doubling its R&D effort every five years.

And it is not just China that sees science and innovation as the driver of economic progress and prosperity. India and the EU are committed to major investments, with indi­vidual countries like Sweden and Germany embarking on extremely aggressive programs. Universities and research agencies have moved to the front line of the innovation battle being waged all over the world. Australia is ready to keep pace.

Since Labor came to office in 2007, we have been doing the work this nation needs to drive industry up the global value chain. I am proud that the government is now spending $9.4 billion on R&D and innovation, which is 43 per cent greater than the level we inherited when we came to office—and of that $9.4 billion, more than one-third finances our university research.

We are calling on Australia's universities and research agencies to be more responsive to the communities that sustain them. Their partnerships with industry are the key to the businesses and jobs of the new Australia.

But this is not a challenge we expect our people to shoulder alone, least of all in the current fiscal circumstances. We are here to back firms who are prepared to back themselves.

The taxation system is one of the most powerful levers we have to encourage innovative firms and we will harness it to the best possible effect.

The government's new R&D tax credit will give Australia a tax incentive for the 21st century. It will support more companies at a more generous rate, at a time when they need it most.

We will also strip the current deterrence for companies which wish to locate their intellectual property rights offshore, encouraging global investment in Australian research.

If we want to compete for global investment, we must have world class research precincts. Global innovation precincts have the critical mass needed to tackle complex problems. They are places with an exciting creative culture that bring out the very best in exceptional people.

Global scale innovation precincts can develop spontaneously, as they have done in some countries like the United States where they have large scale and deep research resources, but it does not happen as a rule. But for smaller countries like Australia it does not happen by chance. It happens by choice, and this is a choice that Australia has to make.

To illustrate our potential, we need look no further than the CSIRO, one of the top 10 applied research agencies in the world.

With the active support of the govern­ment, researchers and industry, the CSIRO has identified five innovation precincts of global scale in Australia. The CSIRO will co-locate with universities and other partners at these locations.

The CSIRO has also identified seven other national scale innovation centres with strong potential and it should be our shared objective to build them into global centres.

But it is not enough just to generate good ideas. We need to equip firms to take them forward and to deal with the inevitable difficulties that any business has to overcome if they are to expand. In this regard, I am proud of Enterprise Connect and Commercialisation Australia, two of the programs that the Labor government has set up to help small and medium sized business. We are building the capabilities and partnerships that industry needs to transform. We are making Australia a place where ideas become commercial realities. This is the platform on which the government will build Australia's Clean Energy Future. This is the next phase of our journey to a richer, fairer and greener economy, a journey Labor resolved to make when we first took office.

$1 billion will be invested through two new clean technology investment innovation programs to support innovation in the manufacturing industry for the future. At the same time the $10 billion Clean Energy Finance Corporation will provide a major stimulus to the commercialisation and deployment of renewable energy, energy efficiency and low-pollution technologies.

Together, these programs will galvanise Australia's innovation system with new investments and new momentum. That does not mean that change will be easy or swift. These are incredibly challenging times. The government stands shoulder to shoulder with companies like BlueScope Steel, working to restructure their businesses over a short pace of time. We will face these transitions together and we will emerge with a stronger economy, with a vibrant manufacturing sector able to create quality and secure jobs for the whole community.

This is the nation we choose to build, with and for the Australian people. I commend the statement to the chamber.