Coordinate policy, reorder priorities to boost manufacturing – Roy Green

The announcement by the Prime Minister Anthony Albanese of a Future Made in Australia Act has brought a chorus of negativism as well as support and advice from industry. Samantha Donovan interviewed industry policy leader Emeritus Professor Roy Green of UTS Sydney on ABC radio – his advice is to better coordinate policy, focus on skills and reorder funding from low priority areas.

Question: Roy Green, which products he believes Australia should be producing?

Roy Green: Well, we haven’t really done the work to determine what are the areas in which we can become most proficient.

For example, do we make batteries here? Can we become a serious competitor in battery manufacturing when China produces the most and the cheapest?

The answer to that is if we compete in the commodified space where it’s all based on low-cost competition, no, we can’t.

We don’t want to get into that, but where it comes to specialist skills, areas of niche competitive advantage which is supplied by superior R &D, which we can certainly carry out in Australia, we can find a place in battery manufacturing or in the entire value chain really from lithium right through to electric vehicles.

At the moment, we produce 50 percent of the world’s lithium, we export 90 percent and we capture only 0.53 percent of its final value. That is not the future of an advanced economy.

Question: So what role would you like to see the Government playing in transforming Australian industry?

Roy Green: I think one of the biggest contributions that the Government can make in which the Prime of Government approach a much more coordinated approach to the way we do innovation and industrial policy.

Question: You’ve advised a lot of Governments on that very issue both at the state and federal level. Where do Australian governments do a poor job of coordinating in that area?

Roy Green: If we look at business support programmes, for example, we’ve counted, it’s going to be hard for anyone to believe this, 712 programmes when we add up state and Commonwealth level.

So how on earth are SMEs going to determine which of the programmes that can give them support?

We just need a much more coherent, coordinated, inclusive approach across all levels of Government and within Government.

And this goes to the question as well of what kind of programmes we can jointly fund between the Commonwealth and the states.

One of the things that the Hawke Keating Government did well, and that was our last big period of reform, was develop joint funded programmes between the Commonwealth and the states.

We don’t have programmes of that kind, unless we count, for example, one of the Hawke programs that still exists, namely the industry capability network.

Everything else is chopped and changed with each new Government.

Ministers who like to put their names on new programmes, splice and dice them. And that’s something I hope that the Government can now address.

Question: Are you at all optimistic on that front, though, given all you’ve seen, can these programs be better coordinated and streamlined?

Roy Green: I’m always optimistic. And I think now is the best time because Australians do well, not necessarily at times of prosperity during, for example, during the commodity boom, when our standard of living went up about 15 percent in a six-year period, for us doing nothing except exporting commodities, particularly iron ore, at a higher price.

We took no steps to improve our productivity performance. In fact, it deteriorated dramatically behind the sugar hit that we got from the commodity boom.

But at times of adversity, we do rise up, and the last time was the Hawke heating period, and now we have another existential threat, which is climate change.

Question: Professor Green, you mentioned that Australia is quite good at research and development, but how big a problem is it going to be for us to get the workers with the right skills, tools and training to foster these industries?

Roy Green: Yeah, that’s a huge issue. And we’ve seen massive shortages of skills across Australia. They can’t all be supplied by immigration.

For example, right now we need 50,000 engineers and out of our universities, we graduate around 13,000 or 14,000 a year.

So there’s got to be a massive expansion of our education system, but it’s going to require investment. It’s going to require money.

It’s going to require a change in the way that we allocate our resources across this economy.

If I can give you an example, and this is really the benchmark for how serious a government can become.

We provide $7.9 billion a year to something called the diesel fuel tax rebate, which enables a handful of international mining companies to drive around their diesel trucks and have their electricity sometimes produced by diesel engines on their mining sites.

Is that really how we want to spend our money? That’s three quarters of the entire Commonwealth spend on research and innovation.

That’s the sort of expenditure that could be switched to skills development, to building up innovation capability and transforming our industries.

Picture: Roy Green