$1.5bn to manufacturing to rebuild the economy

The federal government is launching a new era of Australian manufacturing with a $1.5 billion injection, as part of the JobMaker Plan to rebuild the economy, create jobs and recover from the COVID-19 recession.

Prime Minister Scott Morrison said the new funding will be invested over the next four years in the Modern Manufacturing Strategy to make Australian manufacturers more competitive, resilient and able to scale-up to take on the world.

“We make things in Australia. We do it well. We need to keep making things in Australia. And with this strategy, we will,” Morrison said.

“The COVID crisis opens a new chapter for Australian manufacturing as a revitalised source of high-wage jobs, valuable exports and national income.

He said that the Modern Manufacturing Strategy is at the heart of the JobMaker plan.

“It starts with creating a stable and competitive business environment to grow our all parts of our manufacturing sector, but it does not end there,” he said. “It will play to Australia’s strengths, improve collaboration and commercialisation, and create a sector that is modern, dynamic and highly skilled.

“Through this Strategy, we are determined to ensure government, industry and the research and education sectors are all working in the one direction to build scale in our manufacturing sector.”

He re-emphasised that manufacturing is “critical” to Australia’s economic future and to the prosperity of the regions and to the capabilities that underpin the success of many other industries.

Minister for Industry, Science and Technology Karen Andrews said this strategy reflects the lessons learned during the COVID-19 pandemic, as well as extensive work with industry before that.

“Our manufacturers have risen to the challenge to deliver during COVID-19 and now we’re unlocking their potential to deliver for our future,” Andrews said.

“By playing to our strengths, strategically investing and boosting the role of science and technology in industry, we can open up new markets and take more of our quality products to the world.

“This Strategy sends a clear signal that not only is Australia open for business, but we mean business.”

The centrepiece of the Strategy is the $1.3 billion Modern Manufacturing Initiative (MMI), which will see the Government strategically invest in projects that help manufacturers to scale up and create jobs.

The MMI will support projects within six National Manufacturing Priorities which reflect Australia’s established competitive advantages or emerging areas of priority:

  • Resources technology and critical minerals processing
  • Food and beverage
  • Medical products
  • Recycling and clean energy
  • Defence
  • Space

“This is about Australia playing to its strengths and the Government strategically investing in areas of manufacturing where we know we have an edge and that can deliver the jobs we need,” Andrews said.

Industry will be engaged to co-design tailored road maps for each of the priority sectors to set clear goals over the next two, five and 10 years, and identify the barriers and opportunities that will guide action and investment.

During an interview with the ABC, Shadow Minister for Employment and Industry, Brendan O’Connor, backed the six manufacturing priorities.

The Strategy will also address the competitiveness of individual manufacturers in our priority sectors, with a $52.8 million expansion of the Manufacturing Modernisation Fund.

The COVID-19 crisis has also highlighted the need to better understand and address our supply chain issues and opportunities. A $107.2 million Supply Chain Resilience Initiative will support projects that address an identified supply chain vulnerability.

“This is about incentivising industry to take advantage of opportunities to provide both domestic and global supply chains with critical products,”  Andrews said.

Innovation and Science Australia will be repurposed as Industry Innovation and Science Australia, to provide a long-term perspective on growing the manufacturing sector and strong industry advice to Government throughout the implementation of the Strategy.

The Government is also comprehensively reviewing existing industry programs to better align them with the strategy. “As part of this, we will provide an additional $50 million to the Industry Growth Centres initiative to support projects in the priority areas out until the end of June 2022,” Andrews said.

This strategy builds on the work across Government to improve economic conditions for business, including streamlining regulation, cutting red tape and cutting input costs. A key part of that will be cutting energy costs as outlined in the Gas-fired recovery statement on 15 September 2020.

Ai Group chief executive Innes Willox welcomed the announcement.

“It is gratifying that the Federal Government has clearly recognised the role of manufacturing in the economy and committed to creating the right conditions for industry growth through policy areas such as taxation, skills and training development, energy, innovation and deregulation,” he said.

Manufacturing employs around 860,000 Australians, and prior to the pandemic, generated more than $100 billion in value for the economy each year and over $50 billion in exports.

It is also a large driver of research and development. Manufacturing contributes around a quarter of total R&D investment in Australia, roughly four times its share of the economy.

Manufacturing is particularly important to regional economies, in places like the Hunter, north and central Queensland, Tasmania, regional Victoria.

Morrison said over time, Australian manufacturers have largely moved on from mass production of standardised goods.

“Long gone are the days of trying to compete with labour-intensive, low-cost manufacturing economies,” he said. “Gone too are any pretensions of protectionism as a viable strategy for domestic manufacturing. Manufacturing in Australia has been transformed and will continue to transform, today it is more agile, more dynamic and less monolithic.

“Today’s advanced manufacturing enterprise stretches from the labs doing the research and development, the skilled workers doing the design and engineering, through to sales, marketing and after-sale services.”