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ADDRESS TO PER CAPITA A GLOBAL PANDEMIC, A DEEP RECESSION, AND A ROAD TO RECOVERY VIA ZOOM WEDNESDAY, 25 NOVEMBER 2020

November 25, 2020


Covid-19 has at a remarkable speed shaken up life as we once knew it.

While some societal norms have shifted demonstrably, such as the technological capability to work from home, the COVID-19 health and economic crisis has also exposed a number of core social and economic problems that have been bubbling along for a number of years.

This is something we have seen in the pre-pandemic rise of underemployment and insecure work, weak wages growth, and inequality.

We’ve also seen it in manufacturing. As an island nation, the impacts of the virus exposed Australia’s vulnerability to global supply chain shocks.

At the peak of the crisis, facial masks, gowns and hand sanitisers were in short supply.

We are now seeing limitations in Australia’s capacity to manufacture potential vaccines. We don’t have the capability or capacity to locally manufacture mRNA vaccines, limiting the amount initially available to Australians.

Strategic, tactical planning as part of a comprehensive industry policy will help Australia anticipate and be better prepared for such global challenges and changes.

The good news is, there is no need to reinvent the wheel.

But there is a pressing need to back our local manufacturing as key to recovery.


Australian Made - How Australia Fell Behind the Pack, and How We Get Back in Front

I would like to briefly run through a bit of recent history before looking at what we can achieve as a country in the future.

Some of you may well recall that in 2013, Prime Minister Julia Gillard released a comprehensive policy proposal called A Plan for Australian Jobs – The Australian Government’s Industry and Innovation Statement. It was arguably one of the most detailed and forward thinking plans to boost Australian manufacturing and jobs the country had seen.

Without being forced into action by a crisis, the plan acknowledged and addressed the structural changes in the Australian economy, and developed a plan for the future.

Australian Made wasn’t just a slogan, but a strength, and Australia had immense potential to grow manufacturing in an economically sensible and competitive way.

Some of the core policy elements of that plan focused on areas of comparative and competitive advantage for Australian manufacturing, such as advanced manufacturing and food manufacturing, Mining Equipment Technology and Services, Energy and Resources, Digital, Defence, Space, Sports Tech, Tropical Science, MedTech, and Pharmaceuticals.

If that sounds familiar to you that is because the government in October reintroduced a manufacturing plan, which had all the elements of that announced years earlier.

Abbott, Turnbull, Morrison: Reversals and Recasts

As I suspect all participants here today are aware, the Abbott Government’s Commission of Audit and the 2014 Budget lay clear the true colours of that Government.

During this period, Treasurer Joe Hockey goaded Holden to leave, which they did, and with it many of the high-skilled, well-paid manufacturing jobs.

Even according to research conducted for the Government, many of those workers have not found secure full time work since the plants were closed.

Some policies were recast and largely ignored. Abbott and Hockey also swung the Budget axe, and ushered in a period of manufacturing job losses - in the last 7 years, there has been 54,700 jobs lost in the manufacturing sector.

The government continued to attack research and development with its cuts with legislation that proposed a $1.8 billion cut to the Research and Development tax incentive which would overwhelmingly impact domestic manufacturers.

Such cuts would have been a disaster for manufacturing in Australia and would have exacerbated a pre-crisis trend too: seven years of neglect and a 30 per cent decline in business R&D in the years prior to the pandemic.

Thankfully the cuts to the RDTI were dropped in the October Budget.

The almighty backflip was accompanied by a so-called Modern Manufacturing Strategy worth $1.5 billion.

Which brings us back to the beginning – this strategy outlined six priority areas for investment - Resources Technology & Critical Minerals Processing, Food & Beverage, Medical Products, Recycling & Clean Energy, Defence, and Space.

All areas of investment, plus more, were identified seven years ago in Labor’s 2013 Plan for Australian Jobs.

Is the change real?

Labor welcomes the newly adopted focus on manufacturing, but it is incredibly frustrating to find ourselves with a Government begrudgingly being forced to adopt Labor’s 7-year old plan, dusted off from a departmental drawer, and then only because of advocacy of the Opposition and the realities of the Morrison-COVID recession.

We remain deeply concerned that the form of a Prime Minister that loves a photo op, not the follow up, will come to fruition in manufacturing too – something, I think, that was largely confirmed when Industry Minister Karen Andrews stated on Insiders in October that only $40 million of the total $1.5 billion of funding would be delivered this financial year.


What’s Next?

As the party of manufacturing it is incumbent on federal Labor to promote Australian made and provide an alternative industry policy for the nation.

In the lead up to the next election, Labor will be outlining its plan on what we think should be done.

National Coordination

It starts with national coordination. In the past 7 years, governments internationally – both to the left and right – have embraced modern manufacturing strategy.

As has been done in comparative countries, a prospective Labor Government needs to explain how the many levers of industry policy can be coordinated to avoid the ad hoc approach we’ve seen under this government.

The piecemeal approach is a sum of disparate measures and a government dragged to start talking about manufacturing because of a global crisis.

Industry policy expert, Professor Roy Green, has openly commented on the fragmentation and under-resourcing of Australia’s industry policy saying, “Funding for research and innovation is spread haphazardly over 13 portfolio areas and 150 budget line items.”

However, the Industry Minister’s approach appears to be just renaming Industry and Science Australia to Industry Innovation and Science Australia, who maintain their limited remit on advising on the ad hoc measures already noted, rather than considering and focusing upon a comprehensive oversight that a government showing true leadership would be undertaking.

Australia’s industry policy is crying out for coordination – a capability to draw upon research from industry, universities to drive innovation and productivity, exploit market opportunities and capitalise on major national and global issues and opportunities.

The UK has this in the form of “grand challenges” around AI and data, an ageing population, clean growth, and transport and mobility. They also have catapult centres that bring together cooperation and partnership between business, scientists, research and industry to drive productivity and innovation. Their strategy will be overseen by an independent Industrial Strategy Council.

Germany has coordination efforts in the form of Fraunhoffer Institutes - Institutes and Research Establishments – that work together under an umbrella for strategic goals.

In the US, President Obama created the interagency Advanced Manufacturing National Program Office to help coordinate all federal agencies involved with advanced manufacturing.

The European Union has done similar work in tandem with Germany, while Singapore and Canada have released a suite of industrial and manufacturing policies to help them through the recovery, and address underlining weaknesses in their approaches that existed before the pandemic.

It’s this type of big and coordinated thinking Australian Made requires.

A coordinator role to focus on developing new national priorities in consultation with industry sectors, aimed at growing future industries with new technologies and business models and guiding the existing priorities.

To prepare for national and global challenges and changes – improving society and productivity.

What Labor was outlining in 2013 has now become par for the course internationally.

In the last 7 years under the Liberals we’ve slid further towards the back of the pack, where the lead we were establishing is now the mainstream.

Fixing Australian Manufacturing requires more than the reactionary and piecemeal approaches of the current government.

I look forward to working on that comprehensive approach with yourselves and stakeholders, including, of course, Per Capita who I’ll thank again for hosting me today.

WE'LL PUT PEOPLE FIRST