A new systemic industry strategy needed – SGS Economics

Economists at SGS Economics & Planning have gone public with a call for the development of a ‘new spatial industry strategy’.

In a newly published policy paper, SGS principal and partner Jeremy Gill said Australia had emerged from three years of the Covid-19 pandemic into a period of global disruption.

Within this, however, lay opportunity, particularly for economic diversification.

Gill said: Industry policy is crucial part of a refreshed approach to economic and social development.

“Governments use industry policy to direct, attract or grow targeted industries in a regional or national economy.”

Gill said decarbonisation and electrification were driving significant investment in renewable energy infrastructure.

And maturing technology sectors — from quantum computing to bio and med-tech — were driving investment and innovation here and overseas.

“Alongside these sectoral shifts is an increased focus on advanced manufacturing – reshaping the global supply chain.

“The pandemic, tied with recent global events, has questioned whether Australia’s continued shift away from domestic manufacturing capabilities is still valid or wise.

However, both from the standpoint of sovereign capability building and export diversification, Australia was well placed to capitalise on these opportunities.

Gill said: To do so effectively will need robust, considered, and co-ordinated policy settings at a national scale.

“Treasurer Jim Chalmers’ recent essay ‘Capitalism after the crises’, calls for a ‘values-based’ approach to capitalism – a situation where government has a clear role in identifying priorities, facilitating the flow of capital into ‘priority areas’ and look to co-invest and collaborate.”

This is where industry policy is crucial, he said.

“In Australia, the Commonwealth government directly promotes and advances certain industries or sectors of national importance, while states and territories shape the development of industries, often at a placed-based level.

“In Australia, national policy that prioritises industries has a predominately sectoral focus.

“However, unlike other countries, such as Canada and the United Kingdom, Australia lacks a truly systemic and spatial nationwide industry framework.”

Gill explores these issues in his recent paper “Sectoral, Systemic and Spatial: Rethinking Australia’s Approach to National Industry Policy”.

Picture: Jeremy Gill