Manufacturing contributes about six per cent of Australia’s GDP and supports 862,200 jobs. It also punches above its weight in its contribution to R&D and is a growing contributor to our exports.
It played a critical role in supporting the health response to COVID-19, with our manufacturers able to pivot towards delivering Personal Protective Equipment (PPE) and essential medical equipment. However, Australian manufacturing has declined. While this is a common trend in other advanced economies, our share of manufacturing compares poorly — and we can and must do better.
This Strategy is a key part of the Government’s JobMaker plan, supporting our economic recovery by building innovative and high-value manufacturing in Australia. A clear vision for modern Australian manufacturing will promote the business confidence needed to hire new workers and invest for our recovery.
In the longer-term, the Strategy will support productivity growth, leading to more competitive businesses and higher wages. It is underpinned by whole-of-economy reforms in areas such as tax, industrial relations, energy, trade, expansion and diversification, innovation and skills.
A high-value path to recovery
Rapid industrialisation and population growth are leading to changes in consumer spending patterns and demand for manufactured products. Asian economies are leading the charge. By 2030, the Asia-Pacific will be home to an estimated 65 per cent of the world’s middle class. Customers are demanding greater variety of tailored products that reflect their needs and values.
In Australia, we are moving out of heavily protected production to specialised production. However, we have not yet evolved to a stage where production is geared towards more complex, high value-add manufacturing. Production will always be important but greater value can be gained from activities both pre and post-production. It is activities like R&D, design, logistics, sales and services that better play to our strengths.
Successful manufacturing businesses are specialising in the design or manufacture of intermediate goods, or are producing personalised products for consumers at scale. Digital technologies are helping firms achieve this by allowing customised solutions, enhanced precision and more efficient production. We must encourage more of our manufacturers to make this shift to high-value revenue streams.
The opportunity for Australia’s manufacturers
Australia has highly-skilled manufacturing capabilities that position us to compete on value rather than on cost alone. The key is getting our manufacturers to scale-up. We will focus our efforts in sectors of strategic and comparative advantage, such as resources and food.
Solidifying the role of Australian manufacturers in global supply chains will position Australia as a strategic partner in international markets. This will also provide the right environment for our businesses to capture export opportunities as global demand for high-quality Australian products increases.
Seizing upon this appetite for change, we can rebrand ourselves as a manufacturing nation and take the opportunity to clearly signal that Australia is open for business.
A new plan to build scale, create a competitive platform and boost supply chain resilience
The Strategy is the Australian Government’s action plan to make Australia a globally recognised, high-quality and sustainable manufacturing nation. We have a renewed focus on competitiveness and growth, and we are backing businesses to expand and create the jobs that will increase the earning power of all Australians.
We are putting industry in the driver’s seat to reignite Australian manufacturing. Government and industry are coming together to make bold changes that will create strong, resilient, thriving and internationally competitive manufacturing businesses.
We have looked at what we are good at and what we can be good at. We know we have advantages in resources and food. We can build on these to create strengths in sectors of strategic importance like medical products, recycling and clean energy, defence, and space. We are working with industry to identify and address opportunities.
We will drive growth by getting business conditions right. We will ensure science and technology work for industry by fostering the environment needed to improve collaboration, which includes boosting the role of the CSIRO. We will invest in priority areas to help manufacturers compete, scale-up their operations, access global markets and move into higher value manufacturing. We will work with industry to better understand our supply chains and how we can improve their resilience to external shocks. This will position Australia for success into the future.
We will take action to support short-term economic recovery, including having the right investment and advisory structures in place. In the next five years we will support a more industry-focused science and technology system to help boost productivity, scale and competitiveness. Within the next decade, Australian manufacturing will be characterised by productive and competitive firms that deliver high impact sectoral growth. We will continue to work with industry to ensure the Strategy evolves over its life. Partnering with industry, we will build a manufacturing capability that delivers positive economic outcomes and jobs for local communities, including in regional areas.
1. ABS Cat. no. 6291.0.55.003, Labour Force, Australia, Detailed, Quarterly, August 2020, EQ06, Employed persons by Industry group of main job (ANZSIC.) Seasonally adjusted. ↵