Smart Strategy Will Build A Better Future

In this article, published in the Australian newspaper, Bill Shorten argues that we need an industry policy that encourages manufacture in the 21st century.

"Why don't we make anything in Australia any more?"

IF I had a dollar for every time I've been asked that question in recent years, I could single-handedly secure the future of the Australian car industry. Of course, we still make a great many things in this country, but with Holden shedding hundreds more jobs and Blundstone packing up and moving offshore, Australians are right to feel uneasy. Making things is critical to our future. Manufacturing is the second largest industry sector in the economy, with more than one million workers. It contributes about one-fifth of our exports.

But it's in trouble. Since the Howard Government took office in 1996, the industry has lost about 145,000 jobs, not just in textiles and clothing but also in relatively hi-tech, high-skilled areas. Growth in exports of elaborately transformed manufactures is at an all-time low and we lag when it comes to investing in the skills, research, technology and infrastructure needed to move into new areas of manufacturing.

The vital importance of manufacturing will be highlighted at the upcoming Australian Labor Party national conference and my union has been consulting widely with industry leaders ahead of it. Federal Opposition Leader Kevin Rudd is a big believer in Australian manufacturing, and I'm encouraged by his initial policy announcements, with his industry spokesman Kim Carr, such as the Green Car Innovation Fund.

Just mentioning industry and policy in the same sentence incites disapproval from some about tariffs, protection and government intervention. But modern industry policy isn't about protecting inefficient, uncompetitive industries; it's about ensuring Australia's global competitiveness.

The notion that governments have no role in backing an effective and competitive manufacturing sector is ridiculously outdated. While the "no policy is good policy" crowd burbles away, the rest of us are talking about regulatory reform, state-of-the-art infrastructure and investment in skills, science and technology. We're talking about what governments can do to build Australia's long-term, globally competitive advantage.

It's not that the Howard Government doesn't have an industry policy. But it's untargeted and ineffective, a mishmash of programs, grants and subsidies with no coherent national focus, and no strong commitment to the manufacturing sector.

After 10 years in office and all those Australian jobs gone, the Howard Government says it's releasing a new industry policy. Given its poor record, don't hold your breath. But there are several areas my union believes should be pursued.

Australia's national strategic investment attraction process is moribund. The states have picked up the ball -- Victoria, for example, has attracted $8.7 billion in additional investment during the past seven years -- but the national process needs urgent attention. An investment co-ordinator should be appointed, a dedicated investment fund to attract important projects established (as recommended by the Government's Mortimer report) and a clear plan set to attract footloose global investment.

Investment in research and development and innovation must be improved through tax and regulatory reform if we're to boost industry competitiveness and our declining productivity. Australia has gone from third to ninth in the Organisation for Economic Co-operation and Development rankings of government R&D expenditure. Business R&D expenditure is just more than half the OECD average as a percentage of gross domestic product. To be globally competitive, Australian businesses have to take up and apply new technologies quickly and effectively. A national industry advisory service would help smaller firms to do this.

Access to international supply chains is critical. The Government must develop an effective support program for Australian firms to enter and stay in these supply chains, and to collaboratively bid for significant international contracts. The $50 million being splurged on promoting Work Choices would be much better spent developing a Buy Australian campaign here and abroad.

Australians accept that we won't make many of the mass-produced items we did in the past. Our manufacturing future lies elsewhere: in innovative and competitive companies, in our design and engineering skills, in our ability to use new technologies and processes, and in our capacity to adapt.

When people ask me why we don't make things any more, I want to be able to say: "We do. Our high quality, innovative products are in demand across the globe." I want to say our manufacturing industry is one of the reasons Australia still thrives in this highly competitive world. I will be able to say these things, but only if we're smart. That's what a 21st-century industry policy is all about and it's what Australia urgently needs.