Manufacturing needs a coordinated national policy approach

policy

Recently, New South Wales Premier Dominic Perrottet awarded a $70 million contract for the manufacture of electric buses to a western Sydney manufacturer. Custom Denning will manufacture 79 electric buses, as part of the NSW Government’s commitment for the state’s fleet of more than 8,000 buses to go green by 2030.

Weld Australia has long urged all state governments to support local manufacturers, welders, and fabricators in their procurement processes. Local procurement has the power to create thousands of jobs, a solid local supply chain, and an industry equipped to export world-class products all over the world.

Cornering the global market

There is a real opportunity for our governments to invest in creating a robust, resilient manufacturing industry that can compete on the world stage.

Over the years, Australians have been responsible for engineering and manufacturing some of the most ingenious inventions that have not only competed on the world stage but cornered the global market. For instance, in 1953, Melbourne-based Aeronautical Research Laboratory scientist David Warren invented the “black box”, forever changing the aviation industry.

In the 1920s, an Australian team, including Dr Mark Lidwill and physicist Edgar Booth, developed the pacemaker. Over three million people across the globe rely on pacemakers. In 1992, researchers at the CSIRO (who were originally looking for faint echoes of black holes) developed Wi-Fi technology. Today, Wi-Fi is used by billions of people.

As history clearly demonstrates, there is enormous potential in the Australian manufacturing industry. But this potential must be fostered by Federal and State Government procurement policies that support local manufacturers. This government support will go a long in ensuring that, while the engineering and ingenuity remain onshore, the manufacturing is not sent offshore. This government support will create thousands of jobs, supporting local economies in a post COVID-19 world – the NSW Government contract with Custom Denning is expected to result in the employment of 40 new apprentices, plus many more skilled tradesmen.

A coordinated national policy approach 

In addition to local procurement, one of the most effective ways in which our governments can support the manufacturing industry is a coordinated national policy approach.

Let’s use electric vehicles as an example. Global automotive manufacturing is rapidly transitioning to electric vehicle production in response to technological advancements and consumers’ growing demand for vehicles that respond to climate change.

According to The Australia Institute’s recent report, Rebuilding Vehicle Manufacturing in Australia, this transition presents an enormous opportunity for Australia to rebuild its vehicle manufacturing industry. It leverages Australia’s competitive strengths in renewable energy, extractive industries, manufacturing capabilities, and skilled workers.

Australia possesses many of the crucial elements for an electric vehicle manufacturing industry: rich mineral reserves, an advanced industrial base, a highly skilled workforce, and

consumer interest. But, according to The Australia Institute, what we lack is an overarching, coordinating and strategic national industry policy. Global experience shows that this is central to an electric vehicle industrial transformation. Australia can play an important role in global electric vehicle manufacturing industries but developing a strategy to realise this will require active government policy responses to both the challenges and opportunities at hand.

Australia already has a strong, proud history of automotive manufacturing – it was one of the key drivers of Australia’s economy for most of the 20th century. The 2013 report by the Allen Consulting Group, The Strategic Role of the Australian Automotive Manufacturing Industry, demonstrated that the automotive industry, supported with $500 million in government funding each year, increased the size of the Australian economy by $21.5 billion annually.

Unfortunately, the automotive industry folded in 2017 when the last Holden rolled off the production line at General Motors in South Australia. And, without a coordinated national policy approach for the transition of the automotive industry – and the skills and technology that it boasted – Australia now enters the electric vehicle race significantly behind its global competitors.

As The Australia Institute’s recent report contends, political decisions to accept, and even endorse, the end of automotive manufacturing in Australia were short-sighted. They were the polar opposite of strategic, long-term industry policy planning adopted by some of the world’s leading economies, including the United States, Germany, Japan, and China. In fact, in May 2021, the US President Biden agreed with local automakers to a US$174 billion plan to build electric vehicles in the US.

The Federal Government’s policies on electric vehicles, and climate change more broadly, have been described by The Australia Institute as the weakest of any advanced industrial country. The Federal Government’s signing of the Breakthrough Agenda on electric vehicles at COP26 Glasgow climate summit was largely symbolic. The electric vehicles strategy announced by the Federal Government at COP26 allocated just $250 million to deploy charging stations. There was no mention of tax incentives for electric vehicle uptake. No new emissions standards for combustion engine cars, and certainly no investment in either research or the advancement of the automotive manufacturing industry.

And, let’s not forget that the 2021-2022 Federal Budget contained no support for the development of the electric vehicle industry. Instead, the Federal Government announced a plan for a gas-fired recovery, committing a whopping $6 billion to the development of gas in Australia, in an economic strategy that is entirely contrary to the interests of the country.

The Federal Government’s reasoning is that electric vehicles are not simply not suited to the Australian market. The only problem: these claims have been entirely discredited, again and again. Production of an electric model of Australia’s most popular ute – the Ford F-150 – has doubled from a target of 40,000 units in 2022 to 80,000, given extraordinary demand for the electric version. And, Australia’s mining and agricultural industries are amongst the first industrial adopters.

With no clear Federal Government policy, the state government approach is fragmented, inconsistent and uncoordinated. Some states are nurturing electric vehicle manufacturing, while others have no strategy in place. This situation creates conflict and confusion between the states, which has flow-on effects for consumer sentiment and business confidence.

With a long-term, coordinated national electric vehicle policy approach that flows down to the state governments, Australian manufacturers will have the confidence to reinvest in their own capabilities, strengthening the industry from within. This type of business innovation strengthens businesses. It creates new and better jobs, which support a move to higher living standards. This strengthens the national economy.

The need for a national policy approach is not limited to electric vehicle manufacturing. It can be applied to all manner of manufacturing, from rail and defence, through to medical technology and major infrastructure.

Australian manufacturing needs strong leadership, the support of all levels of government, and investment in technology, education, and resources. It needs a commitment from government to foster the ingenuity of our inventors and engineers, as well as our manufacturers. Only then can Australian manufacturing return to its former prosperity and make a vital contribution to Australia’s economy, workforce, and future.