ADDRESS TO THE SYDNEY INSTITUTE
SYDNEY
TUESDAY, 1 MARCH 2022
**CHECK AGAINST DELIVERY**
Introduction
Good afternoon everyone, I begin with acknowledging the traditional custodians of the lands on which we meet the Gadigal people of the Eora Nation and I pay my respects to elders, past, present and emerging, and thank them for their custodianship.
I also wish to acknowledge the electorate I am proud to represent — the seat of Chifley — sits on Darug land and is home to one of the largest urban based Aborignal communities in the country.
It personally means a lot to me, to have the chance to contribute here.
The Sydney Institute stands with just a handful of places in the country that have offered a platform to debate and champion ideas over such a long time. My bookshelf contains numerous editions of The Sydney Papers that document that.
Not only have I always respected what Anne and Gerard and others have built here, but value their steadfast belief in the value of the argumentative endeavour, contrasting viewpoints, testing ideas and positions.
We’re catching up today with major events dominating our attention — from the floods that have affected our fellow Australians from Queensland to New South Wales — to what is dramatically unfolding in Ukraine.
We feel deeply for people here and abroad affected by these varied yet awful circumstances.
It also forms a challenging backdrop for this address.
It’s a reminder that sudden events might combine in their own ways to affect how we access the critical goods we need, especially when supply lines are so powerfully affected.
One of the biggest points I’m keen to emphasise tonight is this: good industry policy isn’t just about economics — it helps build a sense of security as well.
In tough, challenging times it really is as much about national security as it is economic security.
As a nation we’ve always had to contend with continental isolation and physical global disconnectedness. We’ve always been conscious of the potential for disrupted supply lines and shortages.
From First Nations people to everyone who subsequently arrived, we’ve had to hold faith — improbable faith — in our wits, know-how and ingenuity.
Our abundance of resources and young talent would be stitched together in a way that would ensure we could make the things we needed locally. And in time, sell those things to people well beyond our shores.
Yet, generations later when COVID-19 first hit, we couldn’t get a hold of PPE, masks, ventilators, our grocery shelves left empty.
This stark image confronting what we imagine our modern country is capable of achieving.
The disconnect between our potential and our current self-sufficiency must be bridged.
Australia ranks dead last on manufacturing self-sufficiency compared to other OECD countries. We can and should be better than that.
Attitudes evolve
In December 2013, I — with many parliamentarians on my side of the political fence — sat with jaws agape as a Federal Treasurer thumped the despatch box daring one of our nation’s largest manufacturers to leave Australia and take their jobs with them. Stunning.
It was the Coalition’s Joe Hockey who — as Treasurer — was demanding clarity from Holden as to whether it would continue to manufacture cars here.
Like a ritual, public shaming on the floor of the House of Representatives was the place or way to do that.
The first Australian manufactured car rolled out in 1948, with then beaming Labor PM Ben Chifley inspecting it with an approving smile.
Besides Holden and Ford, others followed. Australia had the distinction of being the first country outside of Japan where Toyota decided to manufacture vehicles, turning its operations into an export springboard.
For instance, Toyota Australia ended up shipping seven out of every ten Camrys to the Middle East over the past 20 years.
It will be observed this was achieved largely by government support. That is true. Again, by 2017, the sector had been backed by more than approximately $5 billion in assistance over the previous ten years.
When publicly jawboning Holden, Joe Hockey pointed out that the car industry should have been grateful for the $200 million a year of assistance it was set to receive.
“There’s a hell of a lot of industries in Australia that would love to get the assistance the motor vehicle industry gets,” he yammered defiantly.
Yes, he was right. They would have. But that’s the point: other industries could only have dreamed about even being considered for such support, full stop.
Because this type of government assistance just couldn’t — wouldn’t — be countenanced within the orthodox thinking back then. Or even now.
I say that because it deeply rankled to see Joe Hockey so blithely dare this form of manufacturing out of the country.
Just like it was offensive seeing later Coalition figures such as then NSW Premier Gladys Berekjiklian with Transport Minister Andrew Constance declare Australian workers in local industry couldn’t make trains.
Remember Gladys Berejiklian backed by Andrew Constance uttering the words: “Australia and New South Wales are not good at building trains, that’s why we have to purchase them.”
Just waving away opportunity for thousands upon thousands of local workers who knew they could make trains that fit on tracks or ferries that could actually fit under our bridges.
Despite the fact that most nations did recognise that manufacturing was an important industry capability that required a co-investment mindset from within government.
Aside from the fact that the Coalition was so publicly trying to elbow industry, that decision gained approval by consent in different circles, not the least being our media.
I remember talking with journalists at the time who would tease Labor MPs for suggesting governments could afford to maintain handing out dollars to make local cars when our market was flooded with overseas competitors.
I don’t reference those private remarks and jibes by journalists about industry policy to score points — because that is not the point.
The thinking then was: industry had to stand on its own two feet, the market would sort things out. Governments don’t intervene.
Like “the market” worked in precisely the same way as a perfect carbon copy of “the market” in other countries. Or that other governments didn’t intervene — they do, like the US Government pitching in with over $500 million to help out a then little known firm called “Tesla”.
But by that moment in time, back in 2013, talk of industry policy via government intervention to back in capability wasn’t the done thing, not if you wanted to be taken seriously.
Since the 1980s — under Labor governments — we had begun the process of opening the economy. It was right at the time.
The Hawke-Keating governments were determined to put the nation on a long term growth path, to re-calibrate. Government spending, industrial relations, tariff structures, interventions all got a shake up.
It was around this time that the pejorative phrase “picking winners” — referring to the use of government funds to prop up or support industry — surfaced and then embedded itself in talk around industry policy.
Without doubt over time, local industry became more efficient, consumers had access to a broader range of goods that were much cheaper than before.
When you have all that play out over nearly thirty years, you can see why journalists and politicians would later scoff at industry assistance or government intervention.
Mind you, journalists would later also argue that government intervention was vital in preventing “the market” from pressuring them out of business in a digital era.
It’s right that governments selectively, thoughtfully act.
Both to protect the continuation of media as we know it — because that capability is vital to the country. Just as manufacturing capability is important for our economy.
This is not about the notion of governments swinging open the doors of the Treasury to back all industry comers, one and all. But it is a call to think, to shape policy for the times.
When we hail the growth of industries in other parts of the world as an example of what can be done here, just know that governments do act strategically, methodically to nurture and grow those industries.
Australia can be a place that makes things.
But it won’t just happen because we declare it so.
It takes hard work, an understanding of the moving parts that need to work together, backed by a preparedness to invest and cooperate.
Crucially threaded together by an iron-strong belief in the capability of Australian know-how and smarts, which I have seen first-hand over many years.
And please don’t bring me a Coalition politician who tells us that it’s too much to invest $200 million a year to back industry capability and jobs while spruiking commuter car parks for marginal seats. Or sports rorts. Or road rorts. That cost just as much — or much, much more.
What’s changed
So before our eyes, what was passé is now freshened up.
Industry policy is getting a makeover.
Not just here. Governments in other nations recognise the need for it.
Late last year, Boris Johnson’s government swung taxpayer funds behind the bailout of Britain’s seventh-biggest energy company.
US President Joe Biden has invested heavily in his Buy American program.
French President Emmanuel Macron declared the need for an “independence of France” in technology and industry.
Why?
Nations have been jolted into it, by a pandemic that highlighted the scarcity of the items it was believed would be readily available, delivered by efficient global supply chains.
And by a recognition that we’ve become chronically dependent on the concentration of supply of our products, where it’s estimated up to 80 per cent of the global production for some consumer products comes from one nation: China.
How easy will it be for Australia to replicate this?
In our own vernacular, “bloody hard”.
Look where we’re starting from.
As a nation we’re ranked last for manufacturing self-sufficiency in the OECD.
Not only are we so reliant on non-value-added raw material and food exports, but to add insult to injury, we’re the lowest producer of manufactured goods we consume within the OECD.
We import the bulk of what we need across key sectors — health, energy and infrastructure, defence and space, science, communications and technology, and advanced manufacturing.
Our capabilities have been run down.
It’s not like we weren’t aware of this threat.
Previous governments — especially my side — for years, knew we needed to invest in capability, build human capital, and reduce dependency on someone else’s technology.
It was Prime Minister Bob Hawke who declared:
“In this national task of mobilising our human resources, our scientists and researchers stand at the forefront. Australia must reduce its reliance on imported technology and borrowed research. We must become a leader in the production and export of ideas.”
Those words contained in Bob Hawke’s 1990 pitch for re-election, his campaign launch speech. Fast forward roughly 20 years.
Where once Bob Hawke pushed the nation to come up with its own ideas and pursue them, we now have Scott Morrison urging us to hurry up and embrace overseas developed technology:
“We’ve just got to be the best at adopting. Taking it on board. Making it work for us. And we’re really good at that.”
On coming to government in 2013, and obsessed by a belief that everything Labor governments built needed to be torn down, the Coalition got to work tearing apart our work.
Using a “Commission of Audit” as a guide, or more like a hammer, it smashed anything that it believed was a waste of government money.
In the space we are focussed on today, Australian industry, the parts of the broader machine — from research to industry assistance — all smashed, dented, trashed.
For example, what do we see when swathes are cut from government supported research? The figures show the stark result — research spending as a proportion of GDP contracting from 2.11 per cent in 2012 to 1.79 per cent in 2021.
Not surprisingly we’ve also recorded a 30 per cent decline in business R&D in the years prior to the pandemic.
You can’t be a nation that makes things into the future, if you’re not thinking about how to make them smarter, more efficiently, in different ways to your competition. That’s why research matters, especially basic research performed in our universities.
In my earlier remarks I reflected on what happened with the type of government backing of industries like the auto manufacturing sector.
But even the approach that Labor had to strategic industry intervention announced under the Rudd-Gillard governments was shelved by the Coalition. Only to see them resuscitated later, which I will come to.
I’m not saying that on their own these factors led to where we have arrived.
Global shifts, particularly over-dependence on one market for our goods (in a market where government intervention is never blinked at), have most definitely been a contributor.
But at the point where you find the tools required to respond have rusted due to neglect, it makes it hard to fashion a response.
Case in point: as the global race hits top gear to electrify, we have no scope to manufacture electric vehicles here. And it’s not like other nations are asleep at the wheel. The model of manufacture is devolving, less complex.
We have one of the world’s greatest sources of critical minerals and rare earths that go into batteries.
But how do we make our own electric vehicles now? Where is the aggressive ambition to lever off our strengths to make this happen?
Or take these points:
- Is it any wonder that our grocery shelves are barren despite promises that supply chains would be repaired?
- Is it any wonder an American is more able to buy an Australian manufactured Rapid Antigen Test than we are here?
- And should we be surprised that a Federal Health Department would open a tender to replenish its national stockpile without engaging with local industry?
What this points to is a total lack of genuine ambition for Australian industry within the Coalition, industry only turned into props for photo ops, not partners in rebuilding a pressured economy.
It’s not surprising when you consider the challenge of forming a cohesive, continuous view of industry within the Coalition when they rip through Industry Ministers at the rate they do.
Ian McFarlane, Christopher Pyne, Greg Hunt, Arthur Sinodinos, Michaelia Cash, Karen Andrews, Christian Porter and now Angus Taylor. Eight Coalition Industry Ministers in nine years, average shelf life: 382 days.
Given that, what confidence can we have that the Coalition will deliver better industry outcomes after Prime Minister Scott Morrison suddenly announced a $1.5 billion for a Modern Manufacturing Initiative (MMI) in October 2020?
An initiative that pretty much resuscitated — with its six key focus areas — what the previous Labor Government had focussed on and supported within its own 2012 manufacturing plans.
As we edge closer to the two year anniversary of that announcement, with everything we’ve been through, you’d think the Morrison Government would’ve made it a priority to get moving, invest in capability, allocate this money? You’d be wrong.
Since October 2020, the Morrison-Joyce Government has spent just $85.2 million of their $1.5 billion Strategy and unsurprisingly can’t point to a single job that has been created under this scheme.
Within this, just $3.2 million of the $107 million Supply Chain Resilience Initiative has been paid to businesses.
While industry is given mere weeks to make their applications to the initiatives, the Morrison Government drag their feet on announcing successful applicants.
More than two years later the government still hasn’t announced a single successful recipient of the $800 million collaboration stream within the MMI nor have they even indicated when to expect announcements. I think we can take a guess.
Flash announcement, delayed delivery, followed by suspicion — we’ve been landed with another election slush fund. The script: dangerously repetitive.
I deliberately say ‘dangerously’ because fixing the problems we have, the challenge of improving self-sufficiency and supply chain operations, at a time of such geo-political risk, simply cannot be made subservient to the crass political calculations of the Coalition.
Industry policy is as much a national security priority as it is an economic one.
The Morrison-Joyce Government sitting on funding decisions for the sake of a flash election announcement at the expense of industry re-growth and evolution presents us with a security risk.
We haven’t got time to lose if we need to diversify how — and from who — we source what we need or fix supply chains that don’t work the way they once did.
The pandemic delivered one of the greatest shocks to supply chains, underscoring the need to develop sovereign expertise and capability.
We can’t afford to wait until a crisis is again on our shores before government acts.
A recent report from Flinders University’s Australian Industrial Transformation Institute — commissioned for the Australian Sovereign Capability Alliance — argues Australia risks being independently unable to meet its essential needs in times of crisis.
The lazy addiction of this tired Coalition government to electoral stunts applied within the realm of industry policy is doing the nation a long term economic disservice and presents as a potential national security risk in the immediate moment. This must end for the nation’s sake.
Why? Being so dependent weakens at the point we need strength, vitality.
When we need to grow industry, creating long term, fulfilling full time work for our people. Having access to the products we need as consumers or businesses for a healthier, stronger economy.
Future capability
We’re not just in a race with other nation’s to rebuild possessed capability — we are rushing to develop and harness emerging critical technologies; in quantum computing, artificial intelligence and robotics.
Today I visited Sydney University to see first-hand the sharp minds being applied to the race to build quantum computers, which will fundamentally transform computing across the globe. And witness developments in additive manufacture through to potential breakthroughs in hydrogen energy generation.
They are Australians determined to see that our country leads the way — they deserve a government that is on their side.
For years, we have urged the Coalition to get its act together on Artificial Intelligence.
Artificial Intelligence is not only critical to future economies, it’s a vital springboard for the jobs of tomorrow.
The World Economic Forum’s Future of Jobs report ranked artificial intelligence specialists as the top role in the sector.
CSIRO’s Data61 estimated Australian industry will need up to 161,000 new specialist AI workers by 2030, with 20,000 additional workers per year.
It’s not just a technology for big business. Today I also visited a smaller manufacturer based in Marrickville — Packserv — who’ve teamed up with UTS to use AI to reimagine the way they scale up their production lines, crucial to their longer term viability, staving off competition.
Many other nations understand the importance of having a coherent, national approach to the application of AI to benefit their economies and societies.
As Kai-Fu Le points out in his book AI Super-Powers, PwC has already calculated that AI will add close to $16 trillion to the global economy by 2030.
“Seventy per cent of those gains are predicted to accrue to the United States and China”, he says. This is largely because they understood and invested in capability, looking to become AI Super-Powers.
Over a period of years, one nation after another announced how they would commit funds to a national AI investment program or strategy.
At the same time Singapore was investing $150 million into its AI plans, Australia dedicated $30 million over four years in the 2018 budget.
In 2021 the Coalition finally released in conjunction with the Budget an AI Action plan that would direct $124 million.
Yet in the last 24 hours it’s been revealed that despite setting aside over $22 million this financial year to initiate the plan’s four major measures, the Coalition has allocated only a third of this so far — all to CSIRO.
Embarrassingly it is yet to administer a single grant from either of the AI grant programmes it is running.
As the Australian Information Industry Association’s Simon Bush has warned, the pace and design of the plan is accelerating an AI talent exodus.
“Talent is scarce on the ground. We do have niche capability around AI and quantum talent and they are getting poached. They are going overseas…So there’s a real speed and agility required to execute.”
Thinking about the development of critical technologies does not mean we give up on existing industry capabilities or sectoral strengths.
We should look to pair this activity to strengthen the performance and growth of both.
And we should celebrate our local tech sector much more because despite conventional thinking, tech is the creator of jobs for many fellow Australians living in the outer suburbs of our major cities.
In my local government area of Blacktown, 20,000 people owe their jobs to the sector. Nearly 15,000 in Parramatta.
During the first wave of the pandemic, 65,000 tech jobs were created. They form part of the more than 861,000 Australians with jobs via the nation’s seventh largest employer.
That’s why having a clear plan on how to strengthen our tech sector will be important for jobs, the performance of our economy and the quality of life in our communities.
But the jobs that the tech industry delivers largely go under the radar in our national conversation.
What’s become clear in the aftermath of the pandemic is the renewed focus on the need for quality jobs that can withstand economic shocks, particularly in the tech sector.
Labor’s vision
The policy offerings that Federal Labor is taking to the next election set out a vision for a better future for all Australians.
As I’ve outlined today, for too long Australian industry has been treated as an afterthought or relegated to the role of a prop, with little concrete support by government.
Federal Labor is determined to change this, fundamentally.
That’s why a future Albanese Government will invest $15 billion in the National Reconstruction Fund, to help rebuild sovereign capability, creating more full-time, secure jobs for Australian workers, opening opportunity in regional Australia, and diversifying our nation’s economy.
Under the National Reconstruction Fund, we have announced that $3 billion would be dedicated initially to back in our Powering Australia plan that will work to develop low emissions technology and manufacturing.
After the horror Omicron affected summer where it was a race to find an available or affordable Rapid Antigen Test, we also announced we would give priority to Australian made medical technology for government purchases.
Shoring up our medical supplies like tests, masks, PPE and ventilators, means we’ll be better equipped for the next wave of the pandemic, rather than scrambling to fix a crisis.
Directing government purchasing power towards Australian businesses, Australian jobs and Australian families sends a clear message to both local industry and international competitors.
That we’re putting Australians first.
The Federal Government spent around $190 billion on government contracts over the last three financial years.
Imagine the impact that could have working with local industry to meet those needs.
That’s why a Labor Government will pursue a Buy Australian Plan, opening the door to more government work for more small and medium businesses by simplifying the procurement process.
I’ve spoken to so many local firms that want to keep manufacturing onshore but struggle to find the capital, eventually being lured overseas. We must act now to keep our best talent right here.
We’ll also create a Future Made in Australia Office, backed up by legislation that locks in key elements of Commonwealth Procurement Rules to actively support local industry.
Australia needs the very best talent to be driving innovation, unencumbered by logistical challenges and not afraid to take risks.
For many successful businesses, this process can start with the support of an accelerator program, especially those run by our universities.
Federal Labor’s Startup Year program will help them get there, aiming to create 2,000 new firms by using the HECS scheme to make low cost capital available to young, early stage innovators.
For some entrepreneurs, their ideas don’t get off the ground. Or they fall over half-way.
That’s all part of the process. The point is, we need young entrepreneurs who are aggressive in their ambitions, and a government that’s not afraid to back them.
We’re not looking to do everything.
What Federal Labor is looking to do is pursue policies that bolster our existing strengths and open opportunities in new industries.
From our National Reconstruction Fund to Rewiring the Nation and our National Rail Manufacture plan — Labor is committed to a future made in Australia.
If the pandemic has taught us anything, it’s that planning for a better future is the key to potentially safeguarding the country from the worst effects of future shocks. The key to building economic and social prosperity.
Conclusion
“The reason a lot of people do not recognise opportunity is because it usually goes around wearing overalls looking like hard work.”
Though it’s been more than 90 years since Thomas Edison first uttered these words, they still ring true today.
When it comes to the jobs and economic opportunities that Australian industries enable, this opportunity has been staring successive Coalition governments in the face for the past decade.
It’s no easy task to rebuild our manufacturing industries and aggressively drive towards the future industrial and economic activity. It will take time. It’ll take guts and hard work. Unlike the Coalition, that’s not something that Labor quiver at the sight of. We’ll take that task head on.
Australians know we can do better than the low expectations set by the Coalition.
And we shouldn’t be expected to apologise for wanting better.
While there’s a mountain of opportunity to capitalise on, it’ll also be a test of national determination.
There’s too much at stake, we simply can’t afford to be complacent, smug or return to a pre-pandemic normal. We can do better — and we must.
(ends)
