Insight

$1.3b “modern manufacturing initiative”

The Government continues to flag milestone investments in the lead up to the milestone 2020 Federal Budget.

One of the largest investments – and in stark contrast to past investments – is the $1.5b manufacturing strategy, including a significant $1.3b “modern manufacturing initiative”.

Australia’s manufacturing sector will play a key role in our economic recovery. There are around 860,000 people employed by manufacturing. The sector is responsible for a huge amount of research and development, and it punches above its weight for the size of the sector.

The initiative commits to creating an environment that fosters manufacturing competitiveness, aligns resources to build scale where we have competitive strength and secures sovereign capability in areas of national interest.

Industries the Government wants to be firmly established in the next decade are: resources and critical minerals; food and beverages; medical products, recycling and clean energy; defence and; space. These are the areas the Government sees Australia already has a strong competitive advantage or is an emerging area of opportunity.

In this, Scott Morrison has pointed to the strategies employed in Singapore, the UK, Germany and Canada – leveraging home-grown manufacturing in specific areas of strength. The message to the Australian market is that it’s not about what we make, but how we make it and how we commercialise it.

It’s not just about a cash splash either. As part of the response to the pandemic and the recession, the Government is investing in skills and training, industrial relations and preferential trade deals which will open opportunities for growth in the manufacturing sector. Investments in lowering the cost of energy, lower taxes and less red tape will reduce the cost of doing business.

What's the plan:

  • $1.3b “modern manufacturing initiative” focused on supporting the scaling up of priority industries with grants open in the first quarter of next year.
  • $107.2m to identify “supply chain resilience” vulnerabilities with regard to critical goods and services such as medicines, food, chemicals and plastics. Options to address these include manufacturing domestically, underpinned by State and Federal procurement contracts, or identifying “like-minded partners” overseas to contract with.
  • $52.8m for the existing “Manufacturing Modernisation Fund” which gives grants to support investment in transformational technologies and processes.
  • Government and industry will partner to develop industry-led roadmaps to identify growth opportunities, barriers to scale and what is needed along the value chain in each area. These are to be prepared by April.