Viable alternative industry policy comes with baggage

Editorial comment piece from the July Issue of Manufacturers' Monthly.WITH the prospect of John Howard being re-elected now no certainty, manufacturers are starting to take Kevin Rudd and his team seriously, and are contemplating what life would be like with the ALP at Australia’s helm.

WITH the prospect of John Howard being re-elected now no certainty, manufacturers are starting to take Kevin Rudd and his team seriously, and are contemplating what life would be like with the ALP at Australia’s helm.

Believe me, our industrial world will change. The ALP’s conference back in April clearly highlighted the differences between the two parties.

While industrial relations made all the headlines, Kevin Rudd and shadow industry minister Senator Kim Carr announced ALP’s vision for Australia’s manufacturing industry with little fanfare.

Describing innovation policy as the 21st century’s industry policy, the ALP’s 28 page New Directions In Innovation Lifting Australias Productivity document highlights what manufacturers can expect if Rudd gets control.

The document is based around a ten point framework:

1. Build a culture of innovation and new ideas by strengthening investment in creativity and knowledge generation.

2. Focus incentives for business R&D to promote global competitiveness.

3. Accelerate the take up of new technology.

4. Make Australia’s innovation system truly international.

5. Use government procurement to support innovative Australian firms.

6. Strengthen publicly funded innovation and research infrastructure and develop multiple pathways for industry to link with universities.

7. Strengthen Australia’s skills base for innovation.

8. Develop and implement a set of national innovation priorities.

9. Strengthen the governance of the national innovation system to support higher expectations of government agencies and business.

10. Review the bewildering array of government innovation and industry assistance programs.

All very commendable aspirations, but will Carr be able to deliver?

Talking to the Senator last month, it is clear he has done his homework, and is expected to have the funds available to drive his policies forward.

Carr is proposing to establish ten Enterprise Connect innovation centres around Australia, to connect businesses with ‘ideas people’, with an investment of up to $200m over four years. These centres look very similar to the Government’s planned Industry Productivity Centres, but with extra funding.

Carr is also proposing a new department of innovation, industry, science and research, to be led by a chief scientist. His plan is to encourage a culture of innovation right through the business sector, to build connections between our best researchers and our best manufacturers.

When it comes to R&D spending, Carr remains coy on how he would increase Australia’s woeful business investment, but he is adamant he will.

He says there needs to be a stronger partnership between the private sector and government. As well as contemplating returning the basic R&D tax concession to 150%, Carr is looking at US models where government R&D is contracted to SMEs, and linking in with internationally-shared research platforms.

Carr is also a fan of the US’s ‘Buy American’ campaign. He says it’s important to encourage access for Australian manufacturers to government purchasing, “If the Americans can do it why can’t we?”

The US ensures that a certain percentage of its government purchasing budget actually goes to American SMEs.

When it comes to Australia’s car industry, Carr says he will be taking a close look at the present ACIS (Automotive Competitiveness Investment Scheme). Not to cut it back, but to look at ways of increasing its effectiveness.

While refusing to eliminate freezing tariffs as an option, Carr said all issues that affect competitiveness in the car industry are on the table.

Carr is also pushing the ALP’s environmental credentials through its Green Car Challenge.

A Labor government would set up a $500m fund for Australia’s car industry to develop and build green cars.

Open to all four local manufacturers and the component industry, the fund is on top of ACIS and not limited to any particular form of technology.

So far so good, but when it comes to Carr’s Industry Innovation Councils, the warning bells start to ring. The U word suddenly appears, subtly at first, but the union movement is clearly there.

History tells me, when unions get involved in wage negotiations, collective bargaining, it suddenly becomes an us and them debate, and working for a common cause goes out of the window.

Carr comes across as having a genuine passion for the manufacturing industry and displays all the attributes needed to make an excellent industry minister. But he comes with considerable baggage.

I, like most readers, can clearly remember the bitter disputes where major manufacturers were held to ransom at the whim of some belligerent union leader. I just hope history won’t repeat itself.