Budget 2020: Manufacturing a new economy

Scott Morrison’s manufacturing strategy will underpin the nation’s ‘future economy’ and build a new industrial capacity, driving down long-term unemployment

Scott Morrison in Canberra on Tuesday. Picture: Adam Taylor / PMO

Scott Morrison’s manufacturing strategy will underpin the nation’s “future economy” and build a new industrial capacity, driving down long-term unemployment via a multibillion-dollar blueprint boosting investment and skills across key growth sectors.

The Prime Minister on Tuesday said his advanced manufacturing strategy would work in tandem with the government’s gas-fired energy plan, commitment to slash red tape, refocusing Australia’s skills and training priorities and industrial relations reforms. “It’s all about three things – it’s about cushioning the blow, it’s about recovering what was lost, and it’s about building for the future,” Mr Morrison said.

On Monday, The Australian revealed Mr Morrison’s manufacturing strategy would form the centrepiece of the federal government’s five-year blueprint to create millions of “future jobs”.

Mr Morrison – who will deliver a major pre-budget address at the National Press Club on Thursday – will target his strategy on expanding the nation’s defence industries capacity and supporting growth across the medtech, biotech, ag-and-food tech, fin-tech and resources sectors.

CSIRO, the peak science and research agency, will also have its remit expanded to improve the commercialisation of research and support better collaboration between universities, governments and the private sector.

Ahead of Tuesday’s budget, Australia’s food, grocery and beverages sector is pushing for a three-year instant asset write-off and three-year investment allowance to boost capital expenditure.

Australian Food & Grocery Council chief executive Tanya Barden, representing one of the nation’s biggest manufacturing sectors, said to remain globally competitive the industry needed “ongoing investment in modern manufacturing technologies with increased levels of automation, intelligence and agility”.

“This promises greater efficiencies as well as flexibility in manufacturing, enabling companies to rapidly switch products in times like COVID. It would also allow companies to better respond to shifting consumer demands and preferences domestically or capture new markets overseas,” Ms Barden told The Australian.

“The focus will be on high-quality, high-value, highly differentiated products able to leverage Australia’s reputation as a (clean and green) food producer.

“Products will be tailor-made for individual markets particularly overseas so that no matter what the differentiation platform, the product will present strongly in the local context.”

The AFGC boss said while COVID-19 forced manufacturers to source new supply chains, the sector’s “ability to do so under longer or greater periods of strain requires ongoing investment in domestic manufacturing and supply chains”.

She said the sector had experienced “stagnant levels of capital investment” since before the global financial crisis, which had led to offshoring of manufacturing.

“Companies are wanting to invest in Australia, to support jobs in local economies, particularly in rural and regional areas, and to take advantage of Australia’s supply of clean agricultural inputs and strong food safety regulatory system,” she said. “However, the impact of a concentrated retail sector on industry revenues, as well as a high manufacturing cost base in Australia, hamper investment decisions. This is a long-term issue and, while COVID has led to some strengthening of sales in some channels, the underlying challenges remain.”

Ms Barden said with the right policy settings, the food and grocery sector would be well placed to boost investment and create jobs.

Opposition industry spokesman Brendan O’Connor said “we need to see greater investment in providing support to start-ups and indeed to sectors of our economy including manufacturing”.

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