Industry minister, Senator Kim Carr says the federal government can buy locally produced goods to support Australian jobs without breaking world trade rules, and supports the idea of government procurement to help the nation’s manufacturing industry.
“One area that I believe could benefit from some fresh thinking is government procurement,” the minister told the Society for Australian Industry and Employment conference in Melbourne on Tuesday.
“It comes as no surprise that the global downturn has prompted some to suggest we should be using government procurement to support Australian industry.
“This is an idea that appeals instinctively to many working Australians, but in public policy it is reason rather than instinct that should be our guide.”
Carr said World Trade Organisation rules did not prevent countries supporting their small and medium-sized businesses, including through government procurement.
“They permit local preference in the supply of certain goods and services, including research infrastructure.
“The same is true of our free trade agreements.”
Senator Carr said encouraging Australians to buy locally made products did not mean “shutting our trading partners out”.
“Australia exported $1.7 billion worth of iron and steel last year,” he said.
“We can’t afford to compromise that or any of our other manufacturing exports by ring-fencing the Australian economy.”
In response to the conference’s, theme “The Future of Australian Manufacturing: Is Innovation Enough?”, Carr said the answer to that is probably not.
“The economic settings also have to be right. The supply of skills has to be right. The provision of infrastructure has to be right. The attitude of governments has to be right.
“But if innovation isn’t the whole answer, it is certainly a large part of it. A willingness to innovate may not guarantee success unless other conditions are also met, but a refusal to innovate will certainly guarantee failure.
“There is a tendency to write manufacturing off — to dismiss it as a thing of the past.
“I believe all friends of manufacturing have a duty to resist that tendency. We have a duty to remind people that manufacturing still employs over a million Australians, that it still generates a tenth of our GDP, and that it is still a huge export earner.
“Australia has sophisticated manufacturing capabilities, and the sector contributes enormously to our economic and social well-being. It should never be underestimated.
“This is not to downplay the challenges our manufacturers face. They have been feeling the heat of competition from low-cost producers, and the global economic crisis has put them under even more pressure.
“The problems confronting the sector are very real, but I am convinced we can solve them,” Carr said.
“While there is already a strong local focus to our procurement activities, the question remains — can we do more?
“My personal view is that we should all buy Australian whenever we can. That’s why I wear Australian-made suits and drive an Australian-made car.
“I think every Australian household and business should do the same, but as a government we can’t make it compulsory. But that doesn’t mean we should just do nothing.
“We don’t have to choose between mandating local content and turning our back on Australian industry. This has always struck me as a simplistic and slightly disingenuous dichotomy.
“We can prefer local products and services without forcing anyone to use them. There is certainly nothing to stop us ensuring that everyone has access to government contracts — including Australian firms, and including SMEs.
“On the contrary, it would be incredibly irresponsible not to do that. We should be using government procurement to support local jobs and businesses wherever we reasonably can. We should also be using it to drive innovation.
“Which takes me back to where I began. Governments should certainly be investing in infrastructure. They should be investing in skills. They should act to support jobs and growth in good times and bad. They should also ensure that their procurement practices do not discriminate against local firms. The Australian Government is doing all of these things.
“However, these efforts will come to nothing if Australian industry isn’t creative and productive enough to hold its own against the world’s best. Innovation is still the main game,” Carr said.