Modern Manufacturing programme struggles to get money out the door

By Joseph Brookes

Just $85 million has been released from the federal government’s flagship $1.5 billion Modern Manufacturing Strategy (MMS) program since it was announced in 2020.

The biggest grants are currently being held up by government ministers’ input on independent recommendations, and await a final decision by the Prime Minister, Scott Morrison to be announced in the run up to an election.

More than 16 months since launching, it is also unclear if the programme touted by Morison to create at least 80,000 jobs in the COVID-19 recovery has created a single one.

At a Senate Estimates hearing on Thursday, industry department officials revealed an underspend in the first year of the Modern Manufacturing Strategy (MMS) and what will likely be another this financial year.

Across both 2020/21 and 2021/22 the industry department has budgeted to spend nearly $550 million under the $1.5 billion MMS.

So far, only a little over half of this – $292 million – has been executed, with just $85 million of this actually making it to businesses.

The department’s chief economist told the hearing it was not possible to say if any of the support has directly resulted in any new manufacturing jobs because it was yet to receive reports on any projects directly funded by the MMS.

The $1.5 billion Modern Manufacturing Strategy was announced by Morison in October 2020 as the flagship Covid-19 economic recovery initiative.

Most of the funding is for a $1.3 billion Modern Manufacturing Initiative, designed to help Australian manufacturers in priority sectors to scale, collaborate and commercialise with co-funding grants.

The $800 million collaboration stream of the initiative is the largest, with individual grants between $20 million and $200 million available for large-scale manufacturing projects.

Applications for the collaboration stream opened in August last year and closed less than a month later. This means applications have now been considered for at least five months but a no decision has been made on which manufacturers will receive grants.

The industry department on Thursday confirmed it received 86 applications for collaboration stream funding and deemed 81 eligible, handing them to an independent panel of 40 industry experts for review and a merit ‘score’.

This panel has completed its review, effectively making its recommendations for recipients. But a decision will not be made until government ministers from relevant portfolios like health, defence, and environment provide input on the applications.

Department officials said the ministers had already received written advice on the recommended applicants from industry minister Angus Taylor but have not finalised their input, which officials acknowledged could change which applicants are awarded the large grants.

Prime Minister Scott Morrison will make the ultimate decision after discussing the applications with cabinet ministers, with his announcements expected to be made shortly before the election.

Labor has warned this structure has ‘baked in’ rorts to the $1.5 billion program following a series of other grant politicisation scandals under the Morrison government.

Industry department officials defended the timeframe and grant process, telling the hearing the large and complex nature of projects applying for collaboration grants meant a robust assessment process is needed and is occurring, while minister’s input is consistent with the grant guidelines.

Government senator Zed Seselja also said the process was rightly robust for the large grants. Asked if grants were being deliberately delayed to time announcements with an election, he replied ‘not to my knowledge, no’.

“What’s important is that we get the process right, and that’s what everyone is endeavouring to do,” Seselja said.

Round two of the smaller Integration and Translation streams were also brought forward late last year, with winners also now expected to be announced before the election. The government blocked the release of departmental briefing documents for these streams last year.

This story first appeared in InnovationAus


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