Advanced manufacturing and the federal election

The Australian Advanced Manufacturing Council calls on all parties to state their policies on driving success in Australian advanced manufacturing and to respond to where they stand on a range of important industry issues highlighted by the Council today.

Chairman of the AAMC, Mr John Pollaers, said today the Council was urging the major parties to respond to this call for clarity on their policy positions.

“It is important that we understand where all the major parties stand on these issues – all of which will impact the success or otherwise of advanced manufacturing in Australia,” he said.

“Australia’s economic future depends on stability, clarity and responsible stewardship of our high value industries and the creation of meaningful employment for the future.

“Our advanced manufacturers are among leaders in the world in their fields. Our policymakers must understand the imperatives of global business in order to maintain and grow these businesses here for future generations of Australians,” he said.

The AAMC asks all parties where they stand on the following issues:

  1. Where do you stand on continued support for the Industry Growth Centres?

This is our position:
We believe bipartisan commitment to core early stage innovation programs is fundamental to the success of advanced manufacturing in Australia.  Continuity must be maintained for the Growth Centres to be successful. Industry must have a degree of certainty in order to collaborate for future growth.

  1. Where do you stand on concentrating effort behind the competitiveness agenda outlined through the growth centres?

This is our position:
Australian Governments have attempted in recent years to invest in the development of programs to bridge the so-called “Valley of Death” between research and commercialisation, and to increase the global competitiveness of our industries.  The current Industry Growth Centre program aims to drive innovation, productivity and competitiveness in specific areas in which Australia has, or indeed can develop, a comparative advantage.

We believe the competitiveness agenda is important. The structure is established. In other words, we have invested in the “machines” for growth; we just need to give them petrol. A possible review and evaluation of direction may be required to ensure the program is on the right track and to ensure it will deliver real outcomes for industry. But we cannot keep ripping up the plants to see if they are growing.

  1. Where do you stand on the incentives around Intellectual Property (IP) development for manufacturing in Australia?

This is our position:

The AAMC’s study of “How Australia Compares” in terms of innovation tax incentives, found Australia lagging in 10th place out of 12 comparable nations studied.  Other advanced economies are attributing a higher value to knowledge industries than we do, with global competition for highly portable IP and capital intensifying.

Australia must introduce an advanced manufacturing innovation incentive scheme to attract and maintain high value manufacturing in Australia.  Applicants would be required to submit plans for substantive commitments in manufacturing or for expanding knowledge-rich activities or capabilities in Australia.

At the same time, Australia’s Research and Development (R & D) tax incentive must be maintained at current levels and protected against further cuts. See AAMC submission here.

  1. Where do you stand on follow through on defence contracts to ensure access for Australian industry to major global supply chains?

This is our position:

Comprehensive modelling has shown the value of building large defence projects in Australia exceeds the cash cost by at least 50 %.  Building in Australia, in other words, is more efficient and adds significantly more to the economy than building overseas – through job creation, innovation and technology diffusion (the adoption and integration of technologies broadly), and by raising Australia’s standing in the region as an advanced technology leader.

We urge all major parties to support the development of cutting edge technologies in Australia and to ensure Australia’s place among the advanced economies of the world by committing to a whole of government definition of ‘value for money’ that fully incorporates the benefits of developing and sustaining enduring in-country capabilities. The Australian defence industry is world class and globally competitive, and must gain full access to major global value chains. The recent First Principles Review process has set a new direction for Defence, while the Defence Industry Policy Statement has laid the foundation for a renewed defence-industry relationship, and real outcomes for Australian industry growth. These major reforms must be fully realised.

  1. Where do you stand on building small and medium sized enterprises so they are competing on equal terms with their counterparts in competitor nations?

This is our position:

While small businesses play a significant role in the Australian economy, they also face a unique set of operational challenges, and as a consequence typically have higher failure rates than those for larger businesses and companies.

The Australian Taxation Office (ATO) definition of small business is: an individual, partnership, trust or company with aggregated turnover less than $2 million.  By contrast, in the European Union, a small business is one with 50 employees or less and also an annual turnover of below $15 million (10 million Euros); in the US, a small business employs up to 500 employees.

We called for the threshold to be increased to $20 million to support scale and allow companies to operate on a more level playing field with their overseas competitors. Revising the definition to better reflect the reality of viability for a small business will help promote a stronger economy. It will ensure these entities gain full and reasonable benefit from ATO allowances for small business, and support their growth and continued viability into the future.

In the 2016 Budget, the Government announced this would be increased from July 1 to $10 million, a decision we applaud.

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