A new deal plan for manufacturing - we learned we don't have an industry policy by Lance Worrall

A month into our campaign to crowd source a new deal plan for manufacturing, Lance Worrall finds we simply do not have an Australian industrial policy. But our new deal plan submissions show the way forward.

The fight against Covid 19 is a fight for our survival. If, as politicians are telling us, this is the equivalent of war, we would do well to recall what followed our last war for national survival.

‘On the other side’ of World War 11 came the commitment to full employment as an overriding national economic goal…including a degree of self-sufficiency.

And our new deal danufacturing imagery recalls the profound changes led by FDR that were to change fundamentally, and not go back to the past with the easing of the immediate crisis.

I have two contrasting takeaways from all the thoughtful contributions published here in the past month.

The first is about how much positivity and initiative is coming from so many committed organisations and individuals .

The second is the blunt recognition in many of the contributions that Australia finds itself not in a position of having to make changes to our national industry policy in light of the new world.

No, we find ourselves with a need to actually get a national industry policy.

The hollowing out of our manufacturing is substantially a function of the progressive hollowing out, and usually the outright and strident ideological repudiation of, the very idea of a national industry policy.

The neo-liberal ideological consensus is one of ‘small government’, almost totally flexible labour markets, service and infrastructure privatisation, and corporate tax cuts and financialisation.

It also says our economic structure should be determined by static comparative advantage based on our ‘endowments’, ideologically rejecting policy and public intervention to help create competitive advantage, as inevitably ‘distortionary’.

By contrast, a key function of industry policy is to influence and help steer the industry structure of a national or regional economy to focus on activities that have high returns to society.

It is true that the Covid crisis has exposed our vulnerability to global supply chains. More profoundly, it has shown that deindustrialisation is synonymous with the deskilling of our economy.

And it has highlighted that, ‘on the other side’ of this crisis, Australia needs to get a 21st century industry policy.

Today and what we find are exemplars of excellence – many of whom have contributed their ideas to the new deal for manufacturing.

We also find discrete initiatives (CRCs, Growth Centres) and programmes, often at modest scale.

We find some state governments doing their best. And a good number of these worthwhile initiatives are Commonwealth-funded.

But what we cannot find – the large defence sector procurement program notwithstanding -is an industry policy for the nation in the 21st century.

A 21st Century Industry Policy

‘On the other side’ of this crisis, a 21st century industry policy for Australia needs to be an active future-oriented strategy geared not just to the problems of, but also and critically, to the opportunities of the future.

Contributions to the new deal manufacturing policy have already discussed the key components or points of focus for a new industry policy.
The central strategic point is the call by Roy Green on day one for a National Industrial Strategy developed and promoted by National Industrial Strategy Commission.

This is the foundation for giving full effect to the many other important recommendations made for the new deal.

They range across better industry advisory and technology diffusion institutions (e.g., test labs), the revival of workplace skills and training, the diffusion of Industry 4.0, revamping government procurement to become advanced procurement for industry development, building value chains from our agricultural, resource and energy sectors, better translation from research to industry and application, better supporting our SMEs through extension, advisory and programme innovation, and many more of the strong ideas contributed.

The Strategy and the Commission need to be guided by key principles and approaches:

• Targeting economically complex, knowledge-intensive activities, sectors and sub sectors as drivers of long-term growth, using the various indicators of complexity (or its absence)

• Building a vision and a practical analysis of both the current and desired future industrial structure of our economy – where do we want to be, given current strengths and weaknesses, and what can we ambitiously strive for?

• Fore sighting future technologies and business models relevant to our industry, their likely trajectories, development and future applications – their relevance to what we have and what we want for the future

• Developing a future-oriented strategy to build our economic complexity, starting by analysing our existing technological, product-based and other competences, looking at critical capability gaps and potentials. A competitive advantage-based strategy taking in the industry sector and sub-sector levels, whole supply chains, and the promotion of industry clusters. What alignment do we now have to likely or targeted emerging future products, services, markets and technologies, and what new capabilities must we acquire?

Such processes help coordinate, accelerate and reduce the costs of exploring and opening up new opportunities. They should be an important part of the National Industry Strategy.

Lance Worrall has been a policy adviser to Mike Rann as both Opposition Leader and Premier of South Australia, delivering key economic policies and projects. He has held Chief Executive and Deputy CE roles in the SA government, and most recently worked on industrial transformation initiatives for the Innovative Manufacturing CRC and Flinders University.

Picture: Lance Worrall

@AuManufacturing’s new deal plan for manufacturing is brought to you with the support of Bosch Australia Manufacturing Solutions