Analysis and Commentary

Responding to the loss of sovereign ability to make plastics – by Shane West

Analysis and Commentary

While issues such as quantum computing attract political action, Australia is losing the sovereign ability to manufacture even basic products such as plastics and downstream products such as paint. According to Shane West, the closure of plastic raw material production by Qenos requires government intervention.

How to respond to the loss of Qenos – Australia needs to activate the National Reconstruction Fund to maintain production locally.

Plastics manufacturing for a circular economy in Australia is a compelling investment opportunity in the national best interest, which is the criteria for the National Reconstruction Fund.

But lack of competitive pricing by local manufacturing has lead to cost increases and supply chain vulnerability.

Lack of competition is espoused by the ACCC but not acted on.

Paints are good example for most consumers to consider. Have you noticed a four litre can of paint in many cases has doubled in price in the last five years, adding substantially to construction costs and the increasing the cost of living for the homeowner.

This is one example of what happens when you lose sovereign/local manufacturing and competitive pricing.

Quoting from Dulux Trade 2023: “The price increases have been driven primarily by upstream global supply chain events that have resulted in both significant supply constraints and more recently fuel levies resulting in increased freight costs.”

Now with the closure of raw material feedstock from Qenos’ plants at Altona and Botany – this supply chain and lack of local competitive pricing, is about to get worse.

The majority of paints sold in Australia are water based acrylic paints composed of particles of plastic acrylic resin suspended in water (acrylic polymer emulsion) and pigment.

Paint is a $1.5 billion per annum industry in Australia and plastics industry according to Qenos themselves quoted in their circular plastics media release two years ago that recycling of plastics would attract $680 billion of investment globally by 2050.

Yet the vast majority of paint brands you see on shelf today are now in foreign hands.

The paint manufacturers state that the price increases are due to unprecedented levels of raw material supply and transportation cost.

The price increases also continued quite quickly with Nippon’s takeover of Dulux – “Dear Customer…the decision around a price increase is not taken lightly however, this increase is the direct result of unprecedented increases in associated input costs within our business.

Dulux, British Paints, Berger, Porters Paints, Walpamur, Cabot’s, Intergrain and Feast Watson have all recently been bought by Nippon Holdings of Japan.

Furthermore, Solver, Wattyl, Taubmans, Bristol and White Knight Paints are all owned and controlled by foreign interests.

Why paint costs are rising

The reason for increased costs is twofold, firstly, we have not regulated our domestic gas reservation on the east coast to provide our manufacturers with affordable energy.

Secondly, lack of local production and competition has been achieved by horizontal takeovers, mergers and acquisitions not being contested by the Australian Competition and Consumer Commission.

The ACCC is a toothless tiger, allowing foreign ownership concentration to swallow the Australian paint industry.

In 1996 the ACCC filed proceedings in the Federal Court seeking to restrain the completion of an agreement by Wattyl to acquire of the architectural and decorative paint business of Taubmans, on the grounds that it would be likely to substantially lessen competition.

But where was the ACCC in 2021, when Nippon Paints took over the Australian ASX listed Dulux Group? Apparently there were no ACCC or FIRB concerns.

The lack of industry understanding and accountability by the Canberra bureaucracy is staggering.

The Productivity Commission, the ACCC, FIRB and general incompetence from Canberra bureaucrats that have serviced the Liberal and Labor politics for the last three decades, have reduced industrial capacity to five percent of the economy, reduced productivity and surrendered sovereignty.

Without government input now, we will have lost the vital circular economics for plastics production in Australia.

The importation of plastics from countries with lesser environmental and safety standards will further result in increased cost, transport and carbon emissions.

When property is more valued than manufacturing

Plastics News covered the closure of Qenos as a uniquely Australian issue.

Journalist Kate Tilley reported the story of the country’s only ethylene maker — and a major polyethylene producer — shutting down because its industrial properties are valued more highly than the materials it produced.

Australia now needs to be in step with our other major trading partners, to develop a government led consortium approach to maintain plastic production and develop a circular plastics recycling industry in Australia.

Time to revitalise and facilitate a new plastics industry in Australia utilising the National Reconstruction Fund.

Dr Shane West has been a director of Environmental Sciences Australia Pty Ltd for over 30 years. He has worked on major projects such as, the Sydney Olympics and was Head of the Unitec Applied Technology Institute, New Zealand. He was the ACT Government Professorial Chair of Building and Construction Management and Manager of the Sustainability Office at the Australian National University.

Picture: Dr Shane West

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