Can ScoMo match Albo’s $15bn industry building fund?

Daniel Andrews won the last Victorian state election on a plan to build Victoria. Now Anthony Albanese has announced that Labor will establish a $15 billion National Reconstruction Fund to rebuild Australia’s industrial capacity, including restarting the car industry, should the ALP win the next federal election.

If Labor can present a vision for Australian industry, cannot Prime Minister Scott Morrison also present a serious plan to reindustrialise Australia?

At the Labor 2021 National Conference, Albanese and his deputy, Richard Marles, between them announced that a Labor government would restart the car industry as part of a $15 billion National Reconstruction Fund (NRF) to invest in defence industries, rail, shipping, medical resources, agriculture, and food processing; and to enable sectors like robotics and advanced data storage and processing. It would have a focus on developing regional areas.

Albanese said the NRF would be legislated with an independent board and invest via a mix of loans and equity stakes. Labor’s platform adds a government-procurement policy incentive, given the government’s role as “a major purchaser of goods and services”.

He said this was necessary as the covid19 pandemic had “exposed serious deficiencies in Australia’s economy, in particular our ability to manufacture products”. Indeed, in relation to just one industry, pharmaceuticals, the Therapeutic Drug Administration began publicly listing drugs in short supply last year. Currently around 418 drugs are in short supply, 44 of those are in critically short supply, and 57 are expected to be short. Shortages of 228 drugs have been resolved.

Marles said that ending the car industry had led to the loss of the “most complex high-tech manufacturing in the country, … the biggest deindustrialisation in Australia’s history.”

Of course, if the full story be told, Labor needs to share the blame for the loss of the Australian car industry.

Labor’s policy announcement follows other moves towards a reindustrialisation policy program. The NCC has issued its White Paper, “Manufacturing: Double Production by 2035”, calling on the Government to rebuild the manufacturing sector and to declare industries as “strategic” to national security, so they are not in contravention of World Trade Organisation rules. The White Paper lists 14 policies for such a program to be successful.

The National Party’s development committee recently issued Australian Manufacturing 2035, with the aim of creating 800,000 new jobs by doubling industrial output over the next 15 years. At the recent NCC National Conference, Senator Matt Canavan, who was part of that committee, thanked the NCC for its White Paper’s contribution to the Nationals’ policy paper.

Then the parliamentary inquiry into the diversification of trade and investment, headed by Queensland LNP member George Christensen, recommended a development bank be established to bring about Australia’s reindustrialisation.

Today, for the first time in 50 years, there are political moves to reindustrialise Australia, however tentative. This will be a challenge. For those five decades, politicians have overseen the closing and moving of industries offshore, and seeing manufacturing shrink to 5.8 per cent of the economy, far below the levels of Turkey and Greece. This is has left the nation heavily dependent on imported manufactures and on exports of minerals, coal and agricultural products to pay for these imports.

So far, Morrison’s stimulus for manufacturing has been an underwhelming $1.5 billion.

His real challenge is to develop a serious policy platform and make it clear that the Government is going to pull out all the stops towards a 15-year target to build industries.

Businesses will only invest when the targets are clear and the enabling policies are in place, like government procurement of Australian products, tax incentives like those introduced during covid19, and policies to prevent foreign takeovers and undermining of their investments by foreign companies.

Albanese’s policy has its limitations, being heavily focused on low-emissions technologies, like electric cars, while still appearing committed to fundamentalist free trade worldview.

Australia is facing two external threats.

First, is Beijing’s growing belligerence and the punishing restrictions it is placing on a range of Australian exports. Reindustrialising is not about picking winners, but about establishing strategic industries necessary to protect our sovereignty. Morrison’s $1 billion to fast-track the creation of an Australian sovereign guided-weapons enterprise, creating a new military manufacturing industry, is one such strategic industry.

Second, the European Union and U.S. President Joe Biden are threatening to impose punitive environmental tariffs on Australian exports, even though there is nothing Australia can do to reduce carbon-dioxide emissions to make any difference globally. Last year, China alone built more than three times more new coal-fired power capacity than was built everywhere else in the world, and is planning more while promising to be carbon neutral by 2060. Really?

All the more reason for the Coalition and Labor to have a bipartisan manufacturing plan to ensure policy continuity so that industry can plan, invest, grow and supply secure well-paid jobs while protecting Australia’s sovereignty.