Jobs Bill hopes to get Australian manufacturers into the big projects

Even in the context of the high Australian dollar's effect on manufacturing in the last few years, the March quarter employment figures from were particularly bad – 30,800 jobs lost.

Last year the federal government assembled a team of experts – the PM's taskforce, in shorthand – to deliver a set of recommendations on what could be done to overcome the sector's difficulties, which get trotted out, along with the pronouncements that Australian manufacturing's decline is terminal, every time a factory closes.

The government's big response to the taskforce's report – delivered last August – was announced in February: the Industry and Innovation Statement, A Plan For Australian Jobs. Though the title didn't specify it, the jobs targeted were manufacturing ones.

"It addresses a very serious issue for the Australian community," Australian Made's CEO, Ian Harrison, told Manufacturers' Monthly not long after the statement was released.  

"And that issue is the enormous challenges facing the manufacturing and processing industries in Australia. 

"The ongoing strength of the Australian dollar… is creating significant challenges for the manufacturing and processing industries. We have become a high-cost country and the strength of the currency is compounding that problem."

Harrison's organisation's logo featured in coverage of the announcement, due to the bill – part of the three planks of the government's strategy – and its encouragement for those undertaking major projects to use Australian content.

"That was the context that the AFR used it and it gets used widely as  a pictorial representation of manufacturing in Australia – making things, growing, processing in Australia," said Harrison.  

"Nearly 99 per cent of Australians in a recent survey recognised that symbol as immensely powerful."

Submissions icommenting on the draft Australian Jobs Bill (the other major parts of Gillard's announcement  involved a network of ten innovation precincts and $350 million in funding for the Innovation Investment Fund – with measures such as an extension of the Enterprise Connect program) closed on April 12.  

Under the bill, scheduled to be introduced to Parliament mid-year and – if passed – take effect at the beginning of 2014, projects with a capital expenditure of $500 million or more must submit an Australian Industry Participation Plan to prove that adequate consideration was given to local firms to provide goods and services. A new body, the Australian Industry Participation Authority, would oversee this.

Projects worth $2 billion or more will have to include Australian Industry Opportunity Officers "embedded in the procurement teams of individual companies."  

Mining companies, the main parties affected by the Jobs Bill, are unimpressed by it.

The Queensland Resource Council's CEO Michael Roche was immediately dismissive, commenting: "I think the last time we had such sort of embedment was in Soviet Russia with the commissars."

Mitch Hooke, CEO of the NSW Minerals Council, said that mining companies already sourced more than 80 per cent of their goods and services locally.  

A submission to the Industry department on the draft bill by the Minerals Council of Australia, which represents heavyweights including BHP Billiton and Rio Tinto, claimed that jobs would actually be threatened, and that its commercially sensitive details about its members' operations would be revealed in Australian Industry Participation Plans.

"Rather than supporting the creation and retention of Australian jobs, the draft bill threatens jobs by tying up projects in red tape and reducing competitiveness," its submission read. Submitting participation plans would also, they claimed reveal details of projects before "proper due-diligence and fiduciary responsibility requirements."

Simon Cowan, a research fellow at the pro-free-market Centre For Independent Studies, also sees potential problems with the bill designed to protect Australian manufacturing jobs.  

"I think the most obvious problem is that it really is adding a significant amount of red tape to businesses, who are already facing quite a lot of red tape," he told Manufacturers' Monthly.

Cowan compared the Participation Plan to similar programs implemented in the Defence department, where more paperwork though no benefit were the outcomes.

"In Defence they're called Australian Industry Capability Plans rather than Australian Industry Participation Arrangements," he said. "The short answer is that they haven't been particularly successful in increasing the amount of work going to Australian companies.

"The idea behind that was allowing competitive Australian industry to bid for Defence contracts. The problem being, of course, that companies that looking to bid for large Defence contracts in Australia were already looking for Australian suppliers who could do things more efficiently and cheaper than their existing suppliers.  

"So whatever happened was you were really sort of forcing people to do what they would be naturally doing anyway."

Though the Plan For Australian Jobs has numerous advocates, and organisations including the Australian Industry Group ("The importance of full and fair access for local producers to large domestic projects… cannot be overstated"), Australian Chamber of Commerce and Industry ("the government announcement deserves support, not nit-picking") and unions spoke out in favour of it, some of its supporters say improvements could be made.

Harrison, for example, believes the well-established Industry Capability Network, a business network which helps link suppliers to project managers, could help local manufacturers win more work on major projects, and deserves a little more help.

"We've had the ICN in place probably over 30 years," he explained.

"So that's the established resource for helping with major projects, helping major contractors source Australian components and products. So it's there, and it's involved in this package, the ICN is mentioned.  You bolster that up rather than replicate it."

 

 

Images: http://www.australianmade.com.au and  http://www.powersmsf.com.au