Hopes for the federal budget to revive Australia’s manufacturing sector

The government should prioritise building sovereign capability, argues Martin Ripple ahead of Tuesday night’s federal budget.

As we are awaiting the budget announcement, it is crucial that the federal government addresses the issue of sovereign capability in the country’s manufacturing industry. Australia has the highest dependency on manufactured imports and the lowest level of manufacturing self-sufficiency compared to other OECD countries. The COVID-19 pandemic has highlighted the vulnerabilities of relying on global supply chains and the importance of a strong local manufacturing industry to ensure Australia’s sovereign capability.

One example of the impact of offshoring our manufacturing capability is the global supply chain issues that arose during the pandemic. Australia’s high dependency on manufactured imports and low level of manufacturing self-sufficiency left us particularly susceptible to these issues. However, there are success stories in the Australian manufacturing landscape, such as ANCA, who formed part of a local consortium to build ventilators.

To ensure the growth and sustainability of Australia’s manufacturing sector, the government must prioritise building sovereign capabilities, increasing local content in national projects, and supporting research and development through tax incentives.

Encouraging the growth of advanced manufacturing by incentivising and sourcing from local suppliers, rather than relying solely on importing technology. This will require long-term investment and grants to boost confidence and capability in the manufacturing sector, and to support businesses in transitioning to carbon neutrality.

Moreover, promoting training and apprenticeships to develop a skilled workforce in the manufacturing sector is essential. The government must address the skills gap by providing more opportunities for talent development and experience-sharing. By investing in talent development, Australia can build a competitive edge in advanced manufacturing.

The Australian Defence Strategic Review provides a significant opportunity to revive the manufacturing sector, with the government committing billions of dollars in upgrading and re-arming Australia’s defence capabilities.

By mandating local manufacturing as part of the defence procurement process, the government can increase local content in national projects and provide Australian manufacturers with confidence to invest in scaling up Australia’s capabilities.

The National Reconstruction Fund is a positive step towards supporting local manufacturing. However, the government must provide clarity on how the fund will be distributed to ensure it makes a real impact.

In the lead-up to the budget announcement, it is imperative that the government takes these issues seriously and provides concrete plans to support the manufacturing industry. We cannot continue to rely on global supply chains and offshoring our manufacturing capability.

The government must prioritise building a strong local manufacturing industry that can provide Australia with the sovereign capability and resilience it needs. By doing so, we can create jobs, drive economic growth, and ensure the long-term sustainability of our country’s manufacturing sector.

Picture: credit ANCA Group

This article was originally published on Linkedin. It has been reproduced with permission.