Executive Summary
Australian manufacturing has enormous untapped potential. Australians are buying more manufactured goods over time, not less. And manufacturing output is growing around the world, not shrinking. Manufacturing is not an “old” industry. It is in fact the most innovation-intensive sector in the whole economy — and no country can be an innovation leader without the ability to apply innovation in manufacturing. Manufactured goods account for over two-thirds of world merchandise trade. A country that cannot successfully export manufactures will be shut out of most trade.
If there is a global race in manufacturing, we are coming last. Manufacturing in Australia accounts for a smaller share of national employment in Australia (around 7%) than in any other OECD country. We also have the lowest level of manufacturing self-sufficiency of any of these countries.
Instead of tolerating and trying to “explain away” industrial decline, Australia needs to join the global manufacturing resurgence. If not, even more of this high-value work will move to other jurisdictions, and Australia’s status as an advanced industrial economy will be in jeopardy. Australia’s manufacturing downturn is partly the result of major policy errors by governments — which accepted too readily the idea that Australia doesn’t really need manufacturing. The costs of those errors will be long-lasting and broad (felt not just by displaced manufacturing workers, but by the whole national economy).
We also need ambition and vision. The Morrison Government’s 1.3bn Modern Manufacturing Initiative was announced a year ago, with three streams – one has paid $65m in grants (Translation stream), the second has paid 33m (Integration Stream) and the third is yet to spend a cent (Collaboration stream). While countries around the world are clamouring to grow their manufacturing industries and jobs and secure their supply chains, the Federal Government has announced a policy that falls well short of what is needed and then takes forever to roll it out.
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