Investments in Australian industries deliver economic growth and prosperity that supports our high standard of living. Ambitious investment should be backed by suitably ambitious policy in the national interest.

Manufacturing investment underpins the supply of products and inputs, provides diverse employment opportunities, and supports a broad ecosystem for value-adding, knowledge and technology transfer, and collaboration.

Australian manufacturing investment continues to lag behind other OECD nations. Previous stimulus benefits have been eroded by higher energy and other input costs hindering Australia’s economic development.

Manufacturing's contribution to GDP is also in decline as Australia deindustrialises. This decline is reflected in Australia’s continuing fall on the Harvard Economic Complexity Index*.

*“Economic development requires the accumulation of productive knowledge and its use in both more and more complex industries. Harvard Growth Lab’s Country Rankings assess the current state of a country’s productive knowledge, through the Economic Complexity Index (ECI). Countries improve their ECI by increasing the number and complexity of the products they successfully export.”¹

Amidst a changing geopolitical landscape, we need to do better.

Meeting the challenges of transitioning to net zero and a circular economy while addressing the decline in Australia’s living standards, requires a more diverse and complex Australian manufacturing capability to simply keep pace with competing economies (in addition to what is needed to exploit our comparative and competitive opportunities).

The upsurge in manufacturing activities to deliver the energy transition is increasing demand for chemicals and materials globally and domestically.

It has been estimated that more than 75 per cent of all emissions reduction technologies needed to meet net-zero goals by 2050 depend on chemical industry support². Australia has a choice as to whether this demand will be met by domestic capacity or a greater reliance on imports.

Chemical manufacturing investment is vital for Australia's net zero and circular economy ambitions. However, we must accept that we cannot manufacture everything required to deliver these outcomes. We should play to our strengths in leveraging manufacturing investment, including adding value to our endowment of natural resources such as gas and minerals.

To maintain and attract strategic chemical manufacturing investment, Australia must provide an environment of certainty and overcome issues of scale by ensuring we have an internationally competitive operating environment.

A competitive Australia – the catalyst for chemical manufacturing investment

The keys to a competitive Australia are:

• Access to reliable and lowest-cost energy
• Addressing our declining productivity, the shortage of critical skills and inefficient regulation
• Provision of targeted tax incentives
• Support for industry to meet the challenges of the net zero transition and establishing a more circular economy

^{1 https://atlas.cid.harvard.edu/rankings
2 2024 Chemical Industry Outlook - The chemical industry should balance short- and long-term goals to weather the uncertainty in the current landscape and position itself for the future, Deloitte, 2023}