Leaders from all walks of industry united in Canberra to discuss the future of Australia’s manufacturing sector. Steven Impey reports from Parliament House.
During the winter solstice in the Australian capital – where many of the decisions that influence the future of the nation’s economy and infrastructure are made – the spotlight was shone on some burning issues.
Out from the cold and inside the modernistic Parliament House, which is sat on a high-security compound at the centre of Canberra, members of the manufacturing industry were welcomed to speak freely during a conference dubbed Manufacturing Matters while parliament was in session.
“I can’t claim that we planned it that way but the winter solstice is of course the shortest day of the year, which means, as of tomorrow, they will start getting longer,” said Jim Stanford, an economist at the Australia Institute, in his opening address.
“Somehow I think that is fitting for a conference on Australian manufacturing because anyone in the industry will tell you that it has been cold and dark for a few years.”
Manufacturing policy ‘key’
Co-authored by Stanford and Tom Swann, the Centre for Future Work at the Australia Institute has released a paper called Manufacturing: a moment of opportunity, which highlights two key dimensions it urges the industry to consider.
“One of course is the economic context for manufacturing in Australia,” Stanford said, “but there is a parallel opportunity to this, which is the political opportunity.
“Our polling results suggest that Australians – despite the doom and gloom of much of what they have been told about manufacturing over the last decade – retain a deep and gut-level confidence that manufacturing must be part of a prosperous national economy.”
The paper reviews the qualitative features as to why manufacturing is a “strategically important sector” and that it is not a “nostalgic” industry as some may portray it, but should be an “active target for policy” within Australia’s leadership.
Taking industry to the floor
Between speeches and Q&As, senators Arthur Sinodinos and Kim Carr – Australia’s respective industry and shadow industry ministers – were invited to join the conversation.
“My job as minister – and particularly in a portfolio like this one – is to reach out to all the people who have a common interest in promoting what I think is a great set of industries in Australia,” said Sinodinos.
“Let’s look at the record. The manufacturing industry survived the resources boom. Yes, there was job shedding and there were issues but it has survived and is still here today.
“In the last 12 months, employment has grown and the report you are putting out here is illustrating the way the sector is growing and that there are some really good prospects ahead.
“What that tells me is that the sector is resilient. It tells me that the sector sees a future and that, in the government, our role is to back the sector in doing it.”
He called the industry an “indispensible part of an innovation ecosystem” the nation is attempting to build for a future where smart manufacturing “gives us scale”.
“We can’t hold back the tide of change and we all have to adapt – we all know that,” Sinodinos added. “The world really is our oyster.”
Jobs increase recorded
According to the Australian Bureau of Statistics (ABS), 40,000 jobs were created in the sector in the last financial year.
Nick Xenophon, the South Australia senator, welcomed the figures but fired a warning that brought about a sense of perspective surrounding a challenging road ahead.
“There is something seriously wrong where in a country such as Australia – one of the most advanced, developed nations in the world – our manufacturing sector has shrunk from 12 per cent a decade ago to just over six per cent,” he said.
“The fact that employment, according to the [Australia Institute’s] paper, has increased in the past year and that manufacturing exports and profits are on the rise is very welcoming. But I am cautious whether we should consider these a trend.
“We need to be wary because ABS is not forecasting figures and are not looking at the pending job losses in the automotive sector and all of the follow-on effects of that, for which we are ill-prepared as a nation.”
The true cost of energy
Energy costs have become the manufacturing sector’s biggest challenge, Xenophon claimed
Most companies are facing long-term gas contracts of $15-20 per gigajoule up from only $5, which he believes will have “inevitable ramifications on business profits” and could “lead to job losses in the tens of thousands”.
Xenophon explained the paradox surrounding the energy intensity scheme he devised with Liberal leader Malcolm Turnbull, which he said has gone from “a mongrel to a top-dog” after a Labor U-turn to support the programme – only to see it scrapped by the existing coalition government.
Senator Lee Rhiannon, of the Australian Greens party, also spoke of how the steel industry can put manufacturing on course to become an “economically and environmentally sustainable economy”.
“A strong manufacturing sector is crucial to addressing global warming and possibilities of growth in the renewable energy industry,” she said.
“Bringing global procurement into how we manage steel production and imports will ensure that Australian steel is used to build the infrastructure – from new rail lines to the renewable energy projects – this country so urgently needs.”
In the federal budget, Xenophon admitted he would have liked to have seen more than the $100 million invested in the manufacturing sector but insisted that more dollars are on their way “once the government sees the good economic sense” investing in the industry can serve.
During the conference, the Australia Institute’s executive director Ben Oquist described manufacturing as the “process of adding value to natural resources”.
Among some of its greatest fiscal opportunities, it was also noted that the federal government’s $195 million investment into the defence industry is hoped to boost jobs, especially within naval shipbuilding in Adelaide and Perth.
“It’s not only economics”
Amid the era of digitalisation, senator Carr discussed the position held by the European Union and how the dawn of Industry 4.0 is being identified as an opportunity for industry expansion in Germany.
“It’s important to address questions about what sort of society we want to be,” Carr said.
“Questions in terms of the capacity of this country to develop as a prosperous, egalitarian, culturally-diverse and technologically advanced society.
“It’s not just about the economics. What about significant questions about standard of living, levels of investment and questions about our capacity to be independent on the fluctuations of global commodity prices?
“These are all important questions. Do we want to be more than just a quarry or a beach? For me, these matters should be central to our political debate and political conscious.”
Carr noted the downturn of Australia’s automotive assembly sector as the industry’s “most recent and egregious” failure; where “by political choice, we chose to drive an industry out of the country”.
“The ludicrous nature of the conversation is that somehow or another we say, ‘We must have an agriculture sector’ – no one questions that,” Carr continued.
“But there are some who say that we can get by without a manufacturing sector; that it is ‘someone else’s problem’.
“We have had to deal with this for quite a while and it is, of course, commentary we read in the media all too often, as if this is a sector that is inevitably going to decline.
“But we have choices to make. We know there are opportunities and we know there are risks – but politics is about making choices,” he concluded.