Innovation and Manufacturing
Manufacturing provides nations with economic resilience and strengthens sovereign security. At its peak in the late 1950s and early 1960s, Australian manufacturing represented around 30 per cent of Australian GDP.
The Department of Industry, Innovation and Science has described Australia’s economic complexity “as an anomaly among advanced economies, with the economic complexity closer to that of a developing country”. 1
The COVID-19 crisis has demonstrated that the ongoing decline of Australian manufacturing represents an unacceptable risk to the Australian community and economy. This risk is exacerbated when critical global supply chains are disrupted.
Sovereign capability across vital industrial sectors, like chemistry, does more than guarantee the supply of essential goods to consumers and industries.
It underpins:
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a critical mass of broader manufacturing capability and scale, the retention of necessary skills and expertise
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the viability of critical infrastructure (e.g. ports and energy networks) and the availability of courses at universities
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TAFE and other vocational training.
As a nation representing less than 1% of the global economy, Australia must regain a minimum level of sovereign manufacturing capability to bolster its future growth and prosperity while the domestic capability still exists.
The crisis has also highlighted that Australian manufacturers are innovative and agile, stepping up to address many product shortages. Australia’s renewed focus on climate neutrality requires flexible and robust manufacturing and innovation capability. A systematic strengthening and leveraging of this strategic capability must now be a priority.
Innovation collaboration between industry, research and academia can accelerate commercial outcomes, help reduce emissions, create more circular economies and deliver job-ready graduates. Successful models exist that need to be further supported and expanded to build future capability and capacity.
1. Industry Insights, Globalising Australia 2/2018, June 2018
Immediate
- Extension of the patent box scheme to all sectors;
- A premium rate of R&D tax incentive for R&D expenditure involving collaboration between business and public research bodies, including universities and CSIRO.
Medium-term
- Industry policy that sets a long-term vision that fosters investment confidence among large, medium, and small manufacturing businesses. The policy should address:
– Diversification of our economy to tackle the longer-term risks and declining economic complexity;
– The attraction of capital and investment;
– Critical issues of national security and sovereign capability, including the need for ongoing refinery capability; and
– The inextricable link between innovation and manufacturing at scale. - Industry policy to drive energy policy;
- Support the circular economy by facilitating investment in mechanical and advanced recycling of plastics to meet the objectives of the National Waste Policy;
- Continued investment in Australian Research Centres and other targeted funding mechanisms to foster collaborative innovation and research to reduce emissions, improve energy efficiency and adapt to climate change.
