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Press the reset button on Australian Manufacturing

October 5, 2021

Amid the gloom and doom of COVID, the pandemic may actually be a chance for Australia to press the reset button to help provide quality, secure jobs for all Australians, with manufacturing at the core.

In a submission to the Senate Committee on Economics, the AWU highlights the precarious situation Australia has put itself in over the last several decades by offshoring critical sovereign manufacturing.

In a sign of how far we have fallen, Australia’s ability to develop and sell new products to the rest of the world is now below that of Senegal and Uganda, according to Harvard University.

But it doesn’t have to be this way.

The AWU submission says Australia must recognise the importance of manufacturing, and in doing so look to key issues including:
• reinforcing the nation’s weak supply chain;
• ensure continued supply of affordable gas for local industry;
• and, in the transition to a carbon-neutral world, look to new forms of power in the form of hydrogen and batteries.

The AWU is well placed to make talk manufacturing, covering as it does about 70,000 members nationally in a diverse range of industries including mining, energy, manufacturing, civil construction and agriculture, along with many others.

“One of the AWU submission’s key recommendations is for the Federal Government to stop talking and act,” AWU National Secretary Dan Walton says.

“The Government must move beyond policy announcements and urgently consult with industry to identify all parts of a resilient Australian supply chain.”

The AWU says a number of steps are needed to Australia’s sovereign capability from disruptions include: building its economic complexity by expanding the role Australian raw materials suppliers play in supply chains; looking at strategic procurement; and cooperating with regional partners to ensure continued supply during disruptions.

Mr Walton says early in the pandemic, the National COVID-19 Commission sought to move beyond short-term solutions to creating a longer-term view of value from manufacturing investment.

But the announcements have not turned into workable policy. The Government’s Productivity Commission was tasked with identifying vulnerable supply chains and managing risk associated with them, but failed to recognise a number of import-reliant critical sectors of the economy such as construction and manufacturing, saying that they were “nonessential”.

“Workers in construction and manufacturing are no less essential than those working in mines or on farms – and the Australian Government needs to take proactive measures to support their jobs and incomes.”

The union says the Government must urgently consult with industry to expand on the PC’s initial work to identify all parts of a resilient Australian supply chain, and take steps to ensure adequate supply in the face of disruptions such as a pandemic, or worse. These should include:

• Building Australia’s economic complexity by expanding the role Australian raw materials suppliers play in supply chains (for example, moving beyond simply exporting iron ore and lithium to refining them here).
• Strategic procurement to bolster demand for industries critical to Australia’s economy – with a long-term view to sustaining cost-competitive operations in Australia, not just filling gaps.
• Cooperating with regional partners who are less exposed to geopolitical risk to ensure a continued supply of goods that cannot be made in Australia during disruptions.

Affordable gas is a crucial element to encourage local industry, especially as we transition to a carbon free future.

Mr Walton says the AWU supports net zero emission by 2050: “But in pursuit of this goal, significant emphasis must be placed on measures that protect and encourage Australian jobs.

“This includes maintaining affordable and reliable energy supply for our manufacturing industry during the transition, and identifying opportunities for Australian industry to not just participate in renewable energy supply chains but to become a world leader.”

With this in mind the AWU submission says the Government must:
• Ensure continuing investment in extraction of gas from new sources, such as the Beetaloo basin and Narrabri.
• Improve cooperation between environment departments at the Commonwealth and State levels to improve regulatory approval hurdles and times.
• Implement a prospective domestic gas reservation, as has existed in Western Australia and Queensland, to ensure that new gas exploration benefits domestic manufacturers.

The AWU submission also notes there are big opportunities for the nation in a post-carbon world in the form of hydrogen and batteries.

It backs the ACTU’s push for the establishment of Cooperative Research Centres and Sustainable Manufacturing Clusters, to help clear the way for the use of hydrogen domestically.

And it calls on the Government to develop a National Battery Strategy, to coordinate the overlap of energy and industry policy.

“Hydrogen presents a massive opportunity for Australia to leverage its existing gas infrastructure to maintain a reliable and affordable energy supply while reducing emissions,” Mr Walton says.

“We have already become the world’s top LNG exporters in just 15 years – we can do it again for the next big energy revolution.

“Green hydrogen presents a significant opportunity to Australia, as we have abundant capacity for renewable energy, and green hydrogen is likely to be the most-sought-after option by our trade partners looking to decarbonise.”

Dan says that should carbon capture and storage eventually become available at commercial prices, zero-emissions “blue hydrogen” should also be supported, as a means for Australia to use its abundant gas resources in a decarbonising world.

The AWU also notes Australia was once at the cutting edge of solar panel manufacturing, but due to a lack of support, the domestic industry effectively exported its technology and human capital, eventually being swallowed whole by China.

But there is now a significant new manufacturing opportunity for which Australia is well-placed if it can take the right action: batteries.

Australia is resource rich, particularly in rare-earth minerals like nickel, vanadium, manganese alumina and lithium are abundant in Australia, yet most of its mining output is refined in China.

“The world’s ‘battery moment’ is taking place right now as options for dispatchable power are being investigated for power generation and for electric vehicles,” Mr Walton says.

“Batteries will play a crucial role in supporting the stability of the grid (alongside gas) as more variable forms of power generation become the dominant power source.

“But rather than putting serious efforts into establishing a battery supply chain in Australia, Australia still relies on countries like China to refine these minerals.”

The AWU says the opportunity for battery manufacturing has implications for domestic energy storage as well as the world export market.

While there are a number of nascent pilot projects in Australia for the assembly of batteries, or for large public battery arrays, there is a lack of coordination between project proprietors.

As a result, it says that just as the Government has created a national hydrogen strategy, it must develop a national battery strategy, to coordinate the multiple strands of energy and industry policy, and to complement the existing work of the states and territories.

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