Federal Budget 2020: $1.5b for Australian manufacturing

Prime Minister Scott Morrison has unveiled a new billion-dollar plan to create jobs and grow Australia’s struggling economy.

Scott Morrison’s $1.5 billion pledge to turbocharge Australia’s manufacturing sector as the government seeks to rebuild its way out of the coronavirus recession has been welcomed by industry.

Mr Morrison unveiled the Federal Government’s new modern manufacturing initiative in a pre-budget speech at the National Press Club on Thursday.

Under the plan, $1.3 billion will be invested over four years in projects that will grow emerging technologies or where Australian manufacturers already have a competitive advantage.

“This is how you create jobs and recover from the COVID-19 recession,” Mr Morrison said.

“This is you build your economy back for the future.”

Business Council of Australia chief executive Jennifer Westacott said the move will make it easier for business to commercialise ideas, grow and create new highly-skilled jobs.

“The strength of the recovery will hinge on our ability to produce high value products and export them into lucrative markets as well as play a critical role in international supply chains,” she said.

Six manufacturing areas have been identified as a priority for investment.

They include space, defence, food and beverage manufacturing, medical products, recycling and clean energy projects as well as resources technologies.

Australian Industry Group chief executive Innes Willox welcomed the announcement but warned the priority areas should not come at the exclusion of other manufacturing or industry sectors.

“We caution against tilting the playing field against industries that have not been identified to date,” he said.

“Industrial success is full of surprises and it is critical that we do not disadvantage businesses from succeeding outside the selected areas.”

But Mr Morrison denied his government was picking winners saying they were setting priorities.

“All manufacturing businesses will be winners from dealing with industrial relations, getting energy costs down,” he said.

A further $107 million will also be invested in shoring up the domestic capability of manufacturers in supply chains found to be vulnerable – as seen with personal protective equipment during the pandemic.

Prime Minister Scott Morrison says the Federal Government is rebuilding Australia’s economy for the future through its JobMaker economic plan. Picture: Kelly Barnes/Getty Images

Mr Morrison said the next phase of the manufacturing plan would involve working with industry to co-design a path to boost capability over the next two, five and 10 years.

“These industry-led road maps will identify growth opportunities, barriers to scale and required actions along the entire value chain in each of our priority sectors,” he said.

The plans due in April 2021 will also guide future investment and action from both government and industry.

“Our government is determined to set a 10-year time horizon where all parties – industry, workforce including unions, governments at all levels, capital including superannuation funds and our scientific and research community – are pulling in the one direction,” Mr Morrison said.

Australian Manufacturing Workers’ Union secretary Steve Murphy said it was a “step in the right direction” but called for unions to be included in the development of the road maps.

The initiative is expected to create 80,000 direct jobs and thousands more indirect jobs over the decade.

Australian Academy of Sciences spokesman Prof David Day said it was imperative there was an opportunity to redeploy the early and mid-career university researchers losing their current positions.

“We have invested heavily in these people and they represent an opportunity to turbocharge the manufacturing sector with fresh people, ideas and innovation,” he said.

Manufacturing employs around 860,000 Australians and prior to the pandemic generated more than $100 billion in value for the economy annually.

Opposition leader Anthony Albanese, who wants Australia to build train carriages, said manufacturing would be “vital” to Australia’s economic recovery.

Mr Morrison said gas makes up between 20 to 40 per cent of many industries costs, and pointed to his government’s plan to lower gas prices.

“You can’t make plastic with wind, you can’t make plastic with solar,” he said

“You make it with gas. You can make it with hydrogen as well.

“If you’re not for gas, you’re not for jobs in our manufacturing and heavy industries.”

Mr Morrison said next week’s Federal Budget would be “one of the most important since the end of the Second World War”.

“The budget will confirm the strong plan we have to recover from the COVID-19 recession and to build our economy for the future,” he said.