Sovereign capability in an industry doesn’t emerge out of a vacuum, nor does it grow on a tree.
It is just empty rhetoric to rely on the concept of natural advantage. Sovereign capability needs to be built, and then maintained, often over a long period of time. Acquiring this capability requires commitment and planning by governments.
Governments need to act to preserve jobs and skills in Australia, and to ensure that the necessary intellectual property can be transferred to manufacturers in this country.
At present the term sovereign capability is most often heard in debates about naval shipbuilding. But the plight of rail manufacturing is akin to that of shipbuilding.
Railways have long been at the heart of our national politics. Removing the difference between colonial rail gauges was one of the reasons the six colonies decided to federate as the Commonwealth of Australia.
But 116 years later we still haven’t resolved some of the differences between the states, especially over procurement.
Australia has 150 years of experience in the design, manufacture and maintenance of railways and rolling stock. But the rail manufacturing industry is facing a valley of death, similar to that which loomed for shipbuilding.
The industry employs 5000 workers, with another 7000 in the supply chain.
But 3000 jobs have gone in the past decade. And the job losses have been especially severe in regional Australia, in places like Ballarat, Bendigo, Newcastle, Rockhampton, Mackay, Townsville and Maryborough.
It is not that there are no contracts. Investment by the Commonwealth and the states in passenger and freight rail projects is expected to exceed $100 billion in the next two decades. That is greater than the Naval Shipbuilding Plan, a $90 billion spend over 30 years.
But rail manufacturing has become locked into a boom-and-bust cycle because of the procurement decisions made over many years by state and territory governments.
Too often, these governments have decided that it is better to spend taxpayers’ money on manufacturing industry in other countries. They made purchase decisions based on off-the-shelf prices, not on the whole-of-life costs of a contract. That is how sovereign capability is lost.
During the past year and a half, the Senate’s economics references committee has been conducting an inquiry into rail manufacturing in Australia.
The committee received 20 submissions, held three public hearings and heard from more than 30 witnesses. These included representatives from the industry, governments and the unions, including workers from the shop floor.
The witnesses overwhelmingly testified that action must be taken to preserve the strategic capabilities of Australian rail manufacturing.
The committee called for the Australian Government to develop a national rail manufacturing industry plan, to maximise the benefits of the investment expected in the next decade.
The Plan would include a mechanism to remove the peaks and troughs in market demand, to create certainty for manufacturers.
State and territory governments would need to actively engage with the plan and agree on methods of supporting and resourcing it. And, the plan would be complemented by a national rail procurement strategy.
The strategy would coordinate the procurement contracts of the states and territories and the development of capabilities in small and medium-sized enterprises.
Those capabilities would include local content in the manufacture of rolling stock, training programmes for apprentices and engineering cadets, and the harmonisation of safety standards.
The committee also recommended that the states and territories use the procurement strategy to invest in research and development, including engagement with universities and research agencies.
The national rail manufacturing plan and the procurement strategy would be overseen by a Commonwealth coordinating body.
This coordinating body would have terms of reference that allow it to work directly with supply-chain firms to develop rail-industry capabilities.
A supplier advocate would be appointed to promote the industry, and rail industry skills centres would be developed at TAFEs and colleges.
Together, these measures could ensure a future for rail manufacturing in Australia. But if the Commonwealth is not willing to provide national coordination of the industry, inefficiencies will continue and the valley of death will loom.
Just as we need a national plan for a continuous build and procurement in naval shipbuilding, we also need a national plan for the rail industry.
Senator Kim Carr is the Shadow Minister for Innovation, Industry, Science and Research.