Last week, Labor Party leader Anthony
Albanese promised $A15 billion dollars toward advanced manufacturing.
Assuming, of course, that Labor wins the next election, who would be
entitled to grants and loans? Medical science, low emission
technologies, engineering and space. Car, train and ship manufacturers.
Food and beverage processing and transport. Lithium battery
manufacturers, rare earth miners and even resources and agricultural
Albanese's plan to reinvent Australian manufacturing is remarkably
ambitious. And while Labor's $15 billion over 5 years may sound like a
lot of money, let's put things in perspective: this year, China will
spend more than $A500 billion on R&D alone.
On the other side, as announced in October, "Scott Morrison has selected
six priority areas for support in a $A1.5 billion manufacturing plan:
resources technology and critical minerals processing, food and
beverage, medical products, recycling and clean energy, defence, and
space." Ironically, Albo's $15 billion is 10 times more than Morrison's
pitiful $1.5 billion. (And while we're talking money, Australian
gambling 'industry' revenue last year was $55 billion!)
For a small, Australian, advanced manufacturing start up business like
ours, voting Labor may sound like a good strategy. Yet, I am still to be
convinced that throwing money at manufacturers will make any
significant difference. Advanced manufacturing is a tricky business.
While substantial investment in equipment is a prerequisite, investment
in skilled people is far more important. If the government is serious
about restarting and revitalising Australian manufacturing, then their
priority should be creating a healthy environment where each and every
business has an equal opportunity to grow and succeed.
Here is my shortlist of suggestions that would make a difference quickly:
1. Slash corporate tax rates to zero for the first 10 years. With
no tax burden, manufacturing businesses would reinvest every dollar
back into their plants and equipment. For the same reason a parent
cannot charge boarding to their 7 year old child, the government should
not tax an advanced manufacturing start up.
2. Wage subsidies. Turning an apprentice into a
highly-skilled machinist takes time and money. Why should a business
bear the full cost of training, when it is the government who eventually
benefits from this highly skilled worker? It is the business that
employs, trains and pays employee's wages. It is the government that
collects tax on wages. If the government's desire is to advance
manufacturing and grow employment, then it is only logical that there
should be a wage subsidy. Let's partner together— how about a 50 per
cent wage subsidy for the first 5 years for each employee?
3. Government guarantees. One more time: we are happy
to partner with the government. If our business wants to import a
cutting-edge piece of equipment worth $A1 million, then how about
splitting the investment equally? If I am to mortgage my house for $500K
then the government should provide a guarantee on an interest free loan
for the same amount. I mortgage my house, you mortgage yours. I trust
you, you trust me. I work hard for Australia, Australia works hard for
4. We make, you buy. If a pig farmer in a developing
country can negotiate a Government’s buy back guarantee on pork bellies,
then it is only reasonable that an advanced Australian manufacturer
(who is prepared to risk it all!) should expect a preferential deal with
their government. We are shocked by how casually and commonly
Australian institutions do business with Chinese manufacturers. Lured by
"cheap prices", they are happy to outsource the last screw and last PCB
board. Australian businesses cannot compete with China. The government
needs to make up its mind: either it starts supporting Australian made
and pays the price, or it continues to buy from China. We can't have
both national sufficiency and domestic production AND low prices. If the
Japanese Prime Minister wears Seiko, why do Australian politicians wear
Apple watches made in China?
And once again, emotions aside, the reality check: here is the actual
amount of money that Morrison’s government granted to Advanced
Manufacturing for states of Victoria and South Australia last year:
0.046 billion dollars.
Forty six million- the amount of money the Australian gambling industry collects in just 7 hours.
We are at the fork. As a country, we can either get serious about
investing in domestic manufacturing, or we can remain a dirt-exporting
colony. We have a choice to make: to train and employ Australians, or to
export jobs to China; to work hard, plan carefully, prioritise and hope
to succeed, or simply give up and invest in other industries that
require less investment and unskilled labor.
As always, only time will tell . . .
2021 China’s research and development spending: $A 500 billion
2020 Australian gambling revenue: $A 55 billion
2022? Labor investment in Advanced manufacturing: $A 15 billion
2020? Liberal investment in Advanced manufacturing: $A 1.5 billion
2020 Actual Liberal government investment in Advanced manufacturing for Vic and SA: $A 0.046 billion