By statistical measures, Australian manufacturing started 2017 on a modest upswing. The Australian Industry Group’s Performance of Manufacturing Index for January was 51.2, marking a fourth consecutive month above 50 and so of expansion – though the index was down 4.2 points from December.
Such indicators are useful, but they don’t give the whole picture. In particular, they don’t illuminate the challenges facing manufacturers in the year ahead.
This will be a year of upheaval as the remaining two carmakers, Holden and Toyota, prepare to cease production in October. And even before the expected heavy job losses begin, the $155 million Growth Fund that is supposed to help supply-chain firms invest, diversify and grow has run out of cash.
The shutdown of the car industry, which has already begun with Ford’s closure late last year, will have ramifications for the wider manufacturing sector and across the economy. Modelling by the University of Adelaide indicates that up to 200,000 jobs are at risk, with a $29 billion hole ripped in GDP.
It is no secret that I believe this disaster need not have happened. The carmakers were goaded to leave. The question now, however, must be how we respond to the crisis.
The automotive industry in this country has always been the great reservoir of technological capabilities for Australian manufacturing, and a locus of innovation. How do we preserve those capabilities and attract new investment, so that the hundreds of supply-chain firms can diversify into other kinds of manufacturing? How do we preserve high-skill, high-wage jobs?
These questions can’t be answered unless the Government takes an active role in responding to the challenge. There is no invisible hand that will magically create new opportunities and shift people and skills into new industries.
So far, the Government’s response has been woefully inadequate. The two major elements in the Growth Fund – the Automotive Diversification Programme and the Next Gen Manufacturing Grants Programme – are already fully allocated. And the Next Gen Manufacturing Grants Programme, which was by far the largest element of the scheme, wasn’t available to most automotive supply chain firms in any case, because the guidelines stipulated that the vast majority of these firms were not eligible to apply.
The Growth Fund claims to include $30 million for worker retraining, but that is entirely made up of money set aside by Holden and Toyota. There is nothing from the Commonwealth.
This must change, and Labor is willing to work with the Government in doing everything possible to assist the manufacturing sector through this difficult time of transition.
The work that must be done is not only about the response to the immediate crisis.
Australian manufacturers know that surviving in a globalised marketplace means obtaining a competitive advantage by offering quality products that give customers value for money.
That is why we need a strong national innovation system, but the National Innovation and Science Agenda only restored a mere fraction of the $3 billion cut from science, research and innovation programmes in the 2014 budget. We must repair the innovation system, so that advanced manufacturing in Australia will continue to thrive.
Senator Kim Carr is the Shadow Ministry for Innovation, Industry, Science and Research.
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