Chapter 2 - The Australian and international landscape

  1. The Australian and international landscape
    1. This chapter sets out the current state of Australian manufacturing, our unique advantages and disadvantages, and key international trends.
    2. Manufacturing’s share of the Australian economy has declined as services have gained ground, consistent with the experience of other rich, industrialised nations. However, this inquiry heard that home-grown manufacturers in market niches that play to their strengths have grown. Although the closure of automotive manufacturing represented a serious loss of national capability, exposure to global competition has spurred innovation and commercial success in other sectors of the manufacturing industry, with high-skilled and technology-intensive manufacturing export earnings rising sharply over the 2010s. Manufacturing remains a major employer, and a leading contributor of industrial research and development (R&D) expenditure.
    3. The strengths and weaknesses of the Australian manufacturing industry on competitive world markets are well known, and were repeated in the evidence heard by the Committee. Strengths include world-class research and higher education sectors, mineral wealth (particularly the critical minerals required for digital and renewable energy technologies), internationally well-regarded regulatory frameworks, and attractiveness as a destination for environmental, social and governance (ESG)-sensitive investment.
    4. Weaknesses include a small domestic market and geographical distance from major consumer markets overseas, high local operating costs, and under-developed collaboration and research commercialisation capabilities and culture. Australia’s performance relative to OECD (Organisation for Economic Co-operation and Development) averages is middling or poor on metrics of manufacturing self-sufficiency, innovation and industrial complexity. In common with overseas economies, Australian manufacturers are also struggling with skills and labour shortages.
    5. The Committee also heard evidence on the challenges raised by Australian manufacturing’s unusually high proportion of small-to-medium enterprises (SMEs)—and in fact small enterprises, with fewer than 20 employees. The Committee considers that this is one reason why past policies to drive innovation, digital transformation and collaboration in the sector have struggled to achieve a transformative systemic impact, despite the many individual success stories.
    6. Despite the challenges, submitters had a positive outlook, arguing that Australia can capitalise on the opportunities offered by advanced manufacturing technologies and the recalibration of global supply chains to revitalise our manufacturing industry. The Committee heard that Australia’s geographic location and higher local operating costs are less of a barrier in the context of low-volume, high-quality, specialised goods production.
    7. Australia’s political and economic stability, abundance of mineral and energy resources (especially critical minerals, solar and wind), world-class research and higher education sectors, and reputation for good ESG standards create a credible foundation for future advancement. Submitters also welcomed the reinvigorated government support for manufacturing at both federal and state levels over the past several years.
    8. However, industry is concerned about whether current policy supports for advanced manufacturing will suffice to prevent capital flight to jurisdictions offering more generous incentives—in particular the United States (US) through its Inflation Reduction Act of 2022, and the European Union through the European Green Deal. Submitters highlighted other jurisdictions—including India, China, Singapore and Japan in our Indo-Pacific region—as having manufacturing industry policies and programs more ambitious than Australia’s, and the challenge this posed for attracting international capital. And while Australia’s strong network of trade and diplomatic relationships was seen as a plus, some submitters expressed concern that Australia’s free trade agreements (FTAs) may advantage partner countries’ imports to Australia over our own exports into those markets.
    9. Given the international environment, the Committee considers that while Australia has significant opportunities in advanced manufacturing, it is important to have a continued clear focus on industry policy if these opportunities are to be realised.

Manufacturing in Australia

Key facts and figures

2.10Despite its historic decline, manufacturing remains a major industry in the Australian economy. In its submission to this inquiry, the Department of Industry, Science and Resources (DISR) noted that manufacturing is Australia’s eighth largest employer, with a 919,200-strong workforce (or 6.5 per cent of Australia’s employment as of December 2022). Manufacturing was also the sixth largest industry in terms of output, generating $130.3 billion in gross value added or 5.2 per cent of gross domestic product (GDP) in 2021–22.[1]

2.11Manufacturing earnings grew by $7.6 billion or 17.8 per cent in the 2021–22 financial year (based on current Australian Bureau of Statistics estimates)[2], and analysis by the Centre for Future Work at the Australia Institute found Australian manufacturers account for a share of exports more than four times greater than their share of GDP, worth $95 billion in 2019 (almost 25 per cent of total merchandise exports).[3]

Figure 2.1Key economic statistics for Australian manufacturing

Dollar value and share of the Australian total for Australian manufacturing sales, value-added, employment, wages and salaries, exports, R&D spending, and other metrics, based on 2019 Australian Bureau of Statistics data.

Source: J Stanford, A Fair Share for Australian Manufacturing: Manufacturing Renewal for the Post-COVID Economy, the Centre for Future Work at the Australia Institute, July 2020, p. 15.

2.12However, as noted, manufacturing’s economic footprint has been in a long-term decline in Australia, in both capital cities and the regions. In capital cities, manufacturing’s share of the economy has dropped to 5 per cent—a historic low.[4] In its 2021 submission to the Senate Economics References Committee’s Inquiry into the Australian Manufacturing Industry, the Productivity Commission noted that manufacturing value-added declined by $10 billion between 2010 and 2022, and the sector shed some 100,000 workers.[5] This trend is shown below in terms of manufacturing’s share of GDP.

Figure 2.2Manufacturing’s share of GDP has declined

A graph showing that manufacturing's share of GDP peaked in 1960 at around 30 per cent and has steadily declined since. At the same time, services' share of GDP increased from about 50 per cent in the 1950s to around 80 per cent by 2020. The graph also shows a steep decline in agriculture's share from 1950, and an increase in mining's share since 1970.

Source: Productivity Commission, Submission 78 to the Senate Economics References Committee Inquiry into the Australian Manufacturing Industry, September 2021, p. 5.

2.13The challenges for revitalising Australian manufacturing are further clarified by comparing our manufacturing sector against OECD peers. As noted by Deakin University in its submission:

Despite historic strengths as a manufacturing and industry-driven economy, at present Australia has a relatively weak international position in advanced manufacturing.[6]

2.14The 2020 Centre for Future Work report A Fair Share for Australian Manufacturing found that Australia has the lowest manufacturing self-sufficiency in the 38-member OECD.[7] This report found that Australia has a substantial trade deficit in manufactured goods. Of most concern was the imbalanced trade of ‘elaborately transformed’ goods, with the report arguing that Australia has an ‘extreme’ dependence on imports of ‘sophisticated and technology-intensive products’.[8]

2.15Australia has steadily declined on Harvard University’s Economic Complexity Index (ECI). Australia is currently ranked 93rd on the ECI (out of 133 countries), between Uganda and Pakistan, down from 60th at the turn of the millennium.[9]

2.16The ECI ranks countries’ industrial sophistication levels based on the diversity of their export baskets and the complexity of their exported goods. The ECI country profile for Australia reflects the unusual discrepancy between Australia’s wealth (very high) and its economic complexity (medium to low):

Australia is a high-income country, ranking as the 9th richest economy per capita out of 133 studied. … [However,] Australia ranks as the 93rd most complex country… Compared to a decade prior, Australia’s economy has become less complex, worsening 12 positions in the ECI ranking… driven by a lack of diversification of exports. … Australia is less complex than expected for its income level. As a result, its economy is projected to grow slowly.[10]

2.17Australian firms are also behind the global curve for adopting digital and Industry 4.0 technologies. The Australian Industry Group (Ai Group) provided data on Industry 4.0 and digital uptake collected in partnership with the Innovative Manufacturing Cooperative Research Centre, which suggested a large majority of Australian manufacturers have ‘no or low capability’ in key Industry 4.0 technologies, such as real-time production control systems.[11] The submission by DISR included the following chart comparing manufacturers’ adoption of select technologies across different OECD nations, showing very low Australian use of the Internet of Things (IoT), artificial intelligence (AI), 3D printing and cloud computing.

Figure 2.3Australian uptake of Industry 4.0 technologies compared internationally

Source: Department of Industry, Science and Resources, Submission 59, p. 10.

2.18The Committee heard evidence suggesting this may be due to the high proportion of SMEs in our manufacturing sector (discussed further below). As Swinburne University of Technology explained:

Many Australian Advanced Manufacturing SMEs do not have a detailed business strategy or associated business plan for Industry 4.0 or advanced digitisation adoption and lack the required systems and processes to pivot operations accordingly.[12]

2.19Inquiry participants repeatedly stressed the limited capacity of SMEs to rapidly absorb Industry 4.0 innovations unless they have access to appropriate supports.

Advantages and disadvantages

2.20The Committee heard evidence largely confirming prevailing views on the competitive advantages and disadvantages of Australian manufacturing.

Australia’s renewable energy and mineral endowments

2.21Australia’s ‘unrivalled access’[13] to mineral resources has been a longstanding economic advantage. Export earnings have been underpinned by iron ore, coal and natural gas over decades of strong economic growth. With the global shift to net zero, these sectors are highly exposed to downside risk[14]—but Australia also has large endowments of the minerals needed to support clean energy technologies. This mineral wealth, and plentiful solar and wind resources, represent a lucrative opportunity to power clean manufacturing at home and assist other countries’ decarbonisation efforts, for example through exports of green hydrogen or batteries.

2.22For example, DISR’s Resources and Energy Quarterly (REQ)[15]regularly reports on the growth opportunities for Australia in critical minerals, rare earths and battery metals/minerals. Such minerals include copper, nickel, lithium and cobalt, among others.[16] The December REQ noted that Australia is the largest lithium exporter in the world, ranks second in the world for copper resources, and holds 22 per cent of the world’s nickel resources.[17] Australia also has 20 per cent of the world’s cobalt reserves.[18]

2.23Most of Australia’s mineral production is currently exported overseas as raw product.[19] Participants in this inquiry noted the considerable scope for Australia to both expand critical minerals exports and capture a larger share of their economic value by value-adding before export.[20] Opportunities exist from the initial refining of these minerals through to the manufacturing of final goods such as lithium-ion batteries and solar panels. The Australian Manufacturing Workers’ Union (AMWU) argued:

If Australia were to commit to adding value to our minerals prior to exporting them, it has the potential to generate thousands of good manufacturing jobs and help insulate our economy from volatile global [commodities] markets.[21]

2.24Australia’s geography also offers advantages for decarbonising energy-intensive heavy industry, such as metals refining. Australia has the low population density, light vegetation, sunny climate and flat topography suitable for utility-scale solar and wind energy generation.[22] These renewable energy resources could provide zero-carbon, affordable energy for heavy manufacturing[23]—potentially a major international advantage in a global investment climate increasingly focused on ESG considerations, especially climate change.

2.25The Committee notes that the Australian Government has committed to an emissions reduction target of 43 per cent below 2005 levels by 2030, and net zero by 2050.[24] Specific funding programs, including Rewiring the Nation[25] and the National Reconstruction Fund[26], seek to further incentivise and enable renewable energy generation and advanced manufacturing for the renewable energy sector.

2.26State governments are also moving to capitalise on Australia’s advantages to support the decarbonisation of existing heavy industries. For example, the Western Australian Government noted in its submission:

With world-class renewable energy potential and as a leading exporter of iron ore, bauxite and other iron/aluminium related products, WA has a natural advantage to decarbonise, modernise existing metal manufacturing processes and establish new operations in WA.

The WA Government is actively supporting the modernisation and decarbonisation of steel and aluminium production in the state. In October 2022, WA opened its $15 million Carbon Innovation Grants Program, to support WA’s heavy industries to transition to net zero emissions. This was followed by the launch of the $200 million Collie Industrial Transition Fund in November, which aims to, amongst other activities, encourage green metal manufacturing in WA’s industrial Collie region in the state’s South West.[27]

2.27Similar initiatives may prove crucial for the many Australian workers in carbon-intensive industries as export partners decarbonise, particularly the workforces of New South Wales’ Hunter Valley, Central Queensland and the Pilbara in Western Australia[28] (discussed further in Chapter 6).

An expensive place to do business?

2.28Submitters noted how Australia’s small, geographically dispersed domestic market[29] limits both labour availability and access to consumer demand.[30] This encourages manufacturing operations that are small by global standards, which in turn makes it challenging to achieve an adequate return on investment from facility and process upgrades.[31] Australia’s geographic isolation is also linked with high transportation costs to access major export markets.

2.29Some submissions also highlighted Australia’s relatively high labour and energy costs. Recent increases in energy costs were particularly concerning to heavy industry sectors such as aluminium refining, and low-margin, high-volume sectors such as dairy processing[32], with the Australian Aluminium Council also noting the particular importance of electricity reliability.[33] The Aluminium Council and other stakeholders also stressed the importance of abundant green power to globally competitive minerals refining operations, as discussed in Chapter 6. Others reaffirmed the perception that Australia is just an expensive place to do business.[34]

2.30By contrast, Mr Adam Gilmour, Chief Executive Officer (CEO) of Gilmour Space, challenged the perception Australian-made offerings will always be more expensive than international alternatives because of structurally higher local costs:

It’s a common misconception that I’ve heard before from the Department of Defence that Australians are more expensive. I sat in front of some seniors, with three other CEOs of Australian defence companies, and we were told, ‘You guys are more expensive.’ We didn’t say anything at the time, but we went out and had a coffee and I said, ‘Are you more expensive?’ ‘No.’ ‘Are you more expensive?’ ‘No.’ ‘Are you?’ ‘No.’ I’m at least 50 per cent cheaper than any of the foreign launch companies. So we’ve got to get rid of that false idea as well.[35]

2.31Further examples of local manufacturers competing successfully on local and world markets—including on cost—are noted in Chapter 6.

Global investment environment

2.32As noted in the submission by the Future Battery Industries Cooperative Research Centre, ‘increasing international trade protection has resulted in greater headwinds’[36] to Australia’s re-industrialisation journey. In its September 2023 article ‘The New Era of Industrial Policy Is Here’, the Harvard Business Review summarised how the post World War II protection of national industries gave way to a focus on free trade and free markets, only to see a resurgence of economic nationalism over the past five years.[37]

2.33The Committee did not audit the hundreds of national industrial strategies and industry support packages now in place globally. As noted by the Western Australian Government in its submission:

More than 100 countries accounting for over 90% of the world’s GDP now have formal industrial strategies, according to a survey by the UN, with a particular frenzy of activity in recent years.[38]

2.34Participants in this inquiry particularly noted the United States’ Inflation Reduction Actof 2022, the European Green Deal (2020), Made in China2025 (2015) and India’s Production-Linked Incentive Scheme (2020). The Committee repeatedly heard that Australia must respond in some form to these large-scale incentive programs overseas, and find ways to increase local support beyond even the billions of dollars to be made available via the National Reconstruction Fund, in order to forestall capital flight to more attractive jurisdictions. These issues are discussed further in Chapter 3.

Commercialisation capability

2.35Australia struggles with research translation and commercialisation. The Australian research sector makes an outsized contribution to academic publishing, and Australia has many of the right settings to foster an innovative economy, including an educated population. However, these advantages are not presently translating into equal success creating and selling Australian-invented products and technologies.

2.36In 2023, Australia was ranked 24th out of 132 countries on the Global Innovation Index (GII)—an annual ranking of countries based on their capacity for and success in innovation, published by the World Intellectual Property Organisation.[39] This positions Australia well behind the top-ranking nations of Switzerland, Sweden, the US and the United Kingdom, as well as China (ranked 12th), Canada (15th) and Ireland (22nd)—although we have recently overtaken New Zealand (currently 27th).[40]

2.37The GII is based on two main components. The first measures the strengths of various ‘inputs’ into a country’s innovation system, such as quality institutions, human capital, R&D expenditure, mature communications and other infrastructure, effective capital markets, sophisticated workforces and businesses, and good linkages between the industrial, research and education sectors. The second component measures innovation ‘outputs’—such as patents, scientific papers, high-tech manufacturing, revenue from intellectual property and high-tech exports.[41]

2.38There is a large gap between Australia’s rank on the GII for innovation system inputs (16th, on par with OECD peers) and its rank on outputs (30th).[42] That is, Australia underperforms at the applied end of the innovation spectrum.

2.39Australia’s GII rank on innovation outputs would be lower still, but it is propped up by the inclusion of ‘Scientific and technical articles’ and ‘Citable documents H-index’[43] as outputs. Australia overperforms on these indicators (ranking 9th and 7th, respectively) thanks to a very high output of high-quality academic research papers. By contrast, Australia is ranked 72nd on ‘Knowledge diffusion’ outputs, which include things like intellectual property receipts and high-tech exports.

2.40These issues are discussed further in Chapter 4.

The skills system

2.41Notwithstanding skills shortages (discussed in Chapter 5), submitters to the inquiry identified Australia’s access to an educated and highly skilled existing manufacturing workforce as an asset.[44] As noted by the AMWU:

New models of advanced manufacturing naturally require large numbers of highly trained workers in all occupations: production workers, skilled trades people, technicians, and engineers. Despite having skills shortages in many of these areas, we nonetheless maintain a base of highly-skilled manufacturing workers which forms a base upon which an advanced manufacturing sector can be built.[45]

2.42Australia’s research and higher education sector is similarly well regarded—despite room for improvement in industry–research collaboration and research commercialisation capabilities (discussed in Chapter 4), and the need for more industry-suitable training models (see Chapter 5). Submitters also pointed to the need for better integration of the post-secondary education system, including continuing the revitalisation of Australia’s vocational education and training sector (see Chapter 5).

Political stability and joined-up government

2.43Multiple submitters noted that Australia has a stable political and economic environment, and that this raises its attractiveness as a destination for investment. For example, Medicines Australia noted that ‘Investments in advanced manufacturing are long-term and therefore require a stable and globally competitive policy environment. This includes political and economic stability.’[46]

2.44Similarly, Mr William Gibaud, Head of Government Relations for BAE Systems Australia, spoke of the importance of long-term government commitment, especially for large, capital-intensive manufacturing projects such as advanced naval shipbuilding:

… an overriding message would be that there has been a lot of investment by the federal government in Osborne shipyard—half a billion dollars, and rising. That’s why we are really pleased to see the commitment in the Defence Strategic Review around continuous naval shipbuilding. It’s that sense of, ‘You’ve made that investment; continue; keep going. This will set you up for AUKUS. Don’t stop-start it. You’ve made all of this advanced manufacturing investment. Keep going.’[47]

2.45Beyond a stable business environment at the macro level and the need for long-term certainty on manufacturing policy settings and finance, many participants noted the importance of joined-up industry policy—both within and between the federal and state governments.

2.46The Committee heard repeated appeals for a more joined-up approach to manufacturing industry support across relevant portfolio agencies (spanning industry, education, infrastructure, land use and planning, trade, tax and migration, among others) and between different levels of government.

  • Reflecting on Australian manufacturing’s decline as a share of the economy even compared with global peers, the AMWU asked: ‘What explains Australia’s comparative decline? Several observers—from unions, industry and academia—have argued that Australia has failed to develop a co-ordinated industry policy.’[48]
  • Science & Technology Australia submitted that ‘Policy levers and funding programs in education, research and development, commercialisation, entrepreneurship, and manufacturing will need to be better coordinated’ to realise Australia’s advanced manufacturing opportunity.[49]
  • Addressing food manufacturing, the CSIRO (Commonwealth Scientific and Industrial Research Organisation) advocated for ‘Taking a “Team Australia” approach in ecosystem development and collaboration—including access to national infrastructure, digital connectivity, cross-sectoral collaboration.’[50]
  • Accord Australasia (the peak body for manufacturers and marketers of hygiene and personal care products) submitted that ‘A further barrier relates to the fragmented nature of government interventions across our nation.’[51]
  • DMTC Limited (formerly the Defence Materials Technology Centre) argued the inquiry should consider addressing ‘… the myriad examples of unnecessary fragmentation and dislocation along State and Territory border lines, including in regard to workforce transferability, incompatible trade license regimes, gaps or differences in professional registration of engineers and other considerations.’[52]
  • The Australasian Railway Association called for state-based regulatory testing processes[53] and local content policies for procurement[54] to be harmonised nationally. It argued that inconsistent local content policies and the unnecessary duplication of manufacturing facilities across states undermined governments’ good intentions to strengthen national rail supply chains.
    1. Later chapters of this report discuss specific examples where national harmonisation would benefit advanced manufacturing growth—for example, harmonising inter-state clinical trials regulation for medicine manufacturers (discussed in Chapter 6), and improving coordination mechanisms for federal–state investment in innovation precincts and common user facilities (discussed in Chapter 4).

High proportion of small businesses

2.48Many participants in this inquiry drew attention to the high proportion of small businesses in Australian manufacturing. As noted by Deakin University, ‘Australia’s manufacturing sector is made up of a disproportionate number of small companies, with 87 per cent employing between one and 19 staff.’[55] Investment NSW’s inaugural Modern Manufacturing Commissioner, Ms Lisa Emerson, told the Committee:

If we take sole traders out of the picture, we probably have about 90 to 95 per cent of manufacturers of fewer than 20 employees or, more worryingly, 99 per cent of manufacturers having fewer than 200 employees. A lot of those manufacturers are quite small, focused on their day-to-day jobs and burdens and not necessarily looking up for opportunities to modernise.[56]

2.49The same pattern prevails in all states and territories—as noted in the 2019 PwC report Transforming Australian Manufacturing: Preparing Businesses and Workplaces for Industry 4.0 (see Figure 2.4 below).

Figure 2.4Australian manufacturers by size, across jurisdictions (2016)

Source: PwC (for Swinburne University of Technology), Transforming Australian Manufacturing: Preparing Businesses and Workplaces for Industry 4.0, May 2019, p. 15.

2.50As Swinburne University told this inquiry: ‘The lifeblood of Australian manufacturing is the SMEs, driven by hardworking, risk-taking entrepreneurs … inventive, resource-constrained, and time-poor.’[57]

2.51Many well-known manufacturing industry challenges—for example, difficulty securing access to finance, difficulty navigating Industry 4.0 technologies and difficulty collaborating with local R&D or educational institutions—are particularly acute challenges for small businesses. As the Tasmanian Government noted:

Limited human and financial resources experienced by many small businesses can make it challenging to invest in and adopt new technologies and practices necessary for growth and resilience …

Conversely, many small businesses are also often agile enough to be innovative and creative in product development and production practices when resources are available.[58]

2.52A small business lens informs several of the Committee’s recommendations aimed at improving the efficacy of existing and planned programs—such as ‘chaperone’ or ‘concierge’ services to guide SMEs through new funding and procurement opportunities. Most Australian manufacturers are small manufacturers. Close attention to their needs when implementing pro-manufacturing policies will improve those policies’ impact.

Trade relations

2.53Australia has strong global trade relationships and proximity to Asian markets.[59] Australia’s broad network of trade agreements includes 17 FTAs, including with China, the US, Korea, Japan and Singapore.[60]

2.54Ms Penny George, Director of Corporate Affairs at AstraZeneca, highlighted the importance of Australia’s trade relations, stating:

One of our greatest advantages and current opportunities is that we have strong trade relations and cultural ties within our region and a close proximity to rapidly expanding Asian markets.[61]

2.55However, Australia’s commitment to open global trade is not without disadvantages for local manufacturers, particularly in relation to a lack of preferential treatment in government procurement. This issue is discussed further in Chapters 3 and 6.

Reputational advantages

2.56Australian products have a global reputation for quality, safety and reliability.[62] For products where these characteristics are paramount, such as medicines, this reputation can give Australian manufacturers a competitive edge.[63]

2.57Trust in Australia’s regulatory regimes contributes to this reputation.[64] Submitters recognised that robust, well-regarded regulation was one of our competitive assets, but noted the need for a balancing act: regulation should not inhibit local manufacturers with unnecessarily cumbersome processes, or requirements disproportionate to the risks and in excess of those in peer markets. Accord highlighted the importance of ensuring that regulatory frameworks support innovation[65], and the Committee heard from multiple medical manufacturers that regulatory approval processes can take years—while also requiring significant upfront investment.[66] The Australian Academy of Technological Sciences and Engineering noted that regulatory complexity is a particular burden for SMEs and start-ups.[67]

2.58Similarly, Australia’s reputation for clean, green and ethical products also gives an edge in a global investment environment becoming increasingly sensitive to ESG concerns. Science & Technology Australia predicted that ‘Future global supply chains and trade relationships will have ever-higher sustainability standards—with strong environmental credentials becoming a mandatory component of trade partnerships.’[68]

2.59Other inquiry participants made similar observations.[69] For example, the submission by the Western Australian Government noted that global car manufacturer BMW ‘has identified WA as an ethical and sustainable producer of lithium and cobalt, and has negotiated supply contracts with local mineral companies directly to ensure its products are sourced responsibly’[70] for its electric vehicle manufacturing.

Committee comment

2.60Australia has the capacity to develop effective advanced manufacturing onshore by capitalising on its advantages. This was the position of all submitters to the inquiry, who were optimistic that with the right policy settings and support measures, Australia can become a global leader in advanced manufacturing—particularly in sectors or niches where we have a competitive advantage.[71] Conversely, the wrong policy choices at this point will diminish the industry’s prospects.[72]

2.61The evidence presented on Australia’s strengths and weaknesses in the current international environment suggests the following cross-cutting considerations for government policy.

2.62The Committee is of the firm view that in designing a manufacturing or industry support program, it is critical to bear in mind the high proportion of SMEs in Australian manufacturing. Onerous application processes, unclear guidance and long timeframes will have a disproportionate impact on the ability of time- and resource-poor small businesses to access government support.

2.63The cross-party and federal–state consensus on the policy goal of growing advanced manufacturing presents an opportunity to cement the long-term policy settings required for investor confidence and to attract private investment. However, this opportunity needs mature coordination mechanisms between portfolios and levels of government. Despite high-level policy consensus, the disjointed approach to delivery makes government support more challenging to navigate—particularly for the small businesses that make up most of the manufacturing sector. Unresolved challenges of regulatory harmonisation and simplification across states also operate against manufacturing policy objectives.

2.64To facilitate long-term national policy coordination on manufacturing as a whole, the Committee recommends the establishment of a federal-level National Advanced Manufacturing Commissioner.

Recommendation 1

2.65The Committee recommends that the Australian Government establish a federal-level National Advanced Manufacturing Commissioner to facilitate nationwide advanced manufacturing policy and program coordination. The Office of the National Advanced Manufacturing Commissioner could also serve as a single, high-profile ‘shopfront’ for federal and state government opportunities and support programs for manufacturers, and provide a concierge service to assist small manufacturers, in particular to identify and access suitable opportunities.

2.66This position would provide leadership, collaboration, coordination and evidence-based insights, ensuring that federal level policy is aligned to effectively support the development of advanced manufacturing in Australia. The position would also coordinate with state and territory governments, to improve the cohesiveness, transparency and coordination of national efforts to support advanced manufacturing.

2.67The Office of the National Advanced Manufacturing Commissioner could also provide a single national ‘shopfront’ and concierge service to assist manufacturers—particularly small businesses—to navigate the growing array of federal and state support programs, similar to the export facilitation services offered by Austrade (the Australian Trade and Investment Commission). The Office would be expected to work collaboratively with other federal entities providing business facilitation services, such as Austrade, Export Finance Australia and AusIndustry, and state counterparts.


[1]Department of Industry, Science and Resources (DISR), Submission 59, p. 1.

[2]Australian Bureau of Statistics, Australian Industry,, viewed 9 October 2023.

[3]J Stanford, A Fair Share for Australian Manufacturing: Manufacturing Renewal for the Post-COVID Economy, the Centre for Future Work at the Australia Institute, 2020, p. 12.

[4]Deakin University, Submission 10, p. 4.

[5]Productivity Commission, Submission 78 to the Senate Economics References Committee Inquiry into the Australian Manufacturing Industry, September 2021, p. 4.

[6]Deakin University, Submission 10, p. 3.

[7]J Stanford, A Fair Share for Australian Manufacturing, pages 62–63.

[8]J Stanford, A Fair Share for Australian Manufacturing, p. 29.

[9]The Harvard Growth Lab at Harvard University’s Kennedy School of Government, Country & Product Complexity Rankings,, viewed 13 October 2023.

[10]Harvard Growth Lab, Australia,, viewed 13 October 2023. There are nuances to this story. For example, the Economic Complexity Index (ECI) does not recognise complex processes behind many of Australia’s raw goods exports—iron ore from highly automated mines is just iron ore for ECI purposes. Further, predictions that a declining ECI ranking would hamper economic growth have not yet been realised—Australia has consistently grown faster than most of our more complex OECD (Organisation for Economic Co-operation and Development) peers. See Parliamentary Library, Bills Digest on the National Reconstruction Fund Corporation Bill 2022, Bills Digest No. 53 2022–23, 3 February 2023, pages 9–12.

[11]The Australian Industry Group (Ai Group), Submission 53, p. 12.

[12]Swinburne University of Technology, Submission 56, p. 8.

[13]Australian Manufacturing Workers’ Union (AMWU), Submission 17, p. 5.

[14]Parliamentary Library, ‘Coal, gas and decarbonisation—challenges and policy choices’, Parliamentary Library Briefing Book: Key issues for the 47th Parliament, June 2022, pages 91–99.

[15]DISR, Resources and Energy Quarterly series,, viewed 13 October 2023.

[16]R Pupazzoni, ‘Federal government urged to expand critical minerals list as clean energy transition drives global increase in demand’, ABC News, 10 October 2023,, viewed 13 October 2023.

[17]DISR, Resources and Energy Quarterly, December 2022,, viewed 2 November 2023, p. 122, 129, 145.

[18]DISR, Resources and Energy Quarterly, June 2023,, viewed 2 November 2023, p. 153.

[19]Smart Energy Council, Submission 48, p. 13.

[20]AMWU, Submission 17, p. 5; Smart Energy Council, Submission 48, p. 13; Amaero International Limited, Submission 42, p. 3.

[21]AMWU, Submission 17, p. 6.

[22]Sun Cable, Submission 43, p. 6.

[23]AMWU, Submission 17, p. 5.

[24]Climate Change Act 2022, pt 2, s. 10(1).

[25]Department of Climate Change, Energy, the Environment and Water, Rewiring the Nation,, viewed 2 November 2023. This was an October 2022–23 Budget measure.

[26]DISR, ‘National Reconstruction Fund: diversifying and transforming Australia’s industry and economy’, Media Release, 27 October 2022,, viewed 2 November 2023. This was an October 2022–23 Budget measure and legislated in the National Reconstruction Fund Corporation Act 2023.

[27]Government of Western Australia, Submission 51, p. 17.

[28]Parliamentary Library, ‘Coal, gas and decarbonisation—challenges and policy choices,’ Parliamentary Library Briefing Book, p. 93.

[29]Sanofi, Submission 11, p. 3.

[30]For example: Australian Forest Products Association, Submission 54, p. 8; CSL, Submission 37, p. 5.

[31]Australian Steel Institute, Submission 25, p. 7.

[32]Australian Dairy Products Federation (ADPF), Submission 49, p. 2.

[33]Australian Aluminium Council, Submission 12, p. 5.

[34]Mr Demus King, General Manager, Trade Investment and Investor Relations, Minerals Council of Australia, Committee Hansard, West Melbourne, 3 May 2023, p. 50.

[35]Mr Adam Gilmour, Chief Executive Officer (CEO), Gilmour Space, Committee Hansard, Brisbane, 25 July 2023, p. 3.

[36]Future Battery Industries Cooperative Research Centre (CRC), Submission 39, p. 1.

[37]WC Shih, ‘The New Era of Industrial Policy is Here’, Harvard Business Review, September–October 2023,, viewed 13 October 2023.

[38]Government of Western Australia, Submission 51, p. 9.

[39]World Intellectual Property Organisation (WIPO), ‘Global Innovation Index’,, viewed 13 October 2023.

[40]WIPO, Global Innovation Index 2023: Innovation in the Face of Uncertainty, September 2023, p. 19.

[41]This component also includes creative outputs, such as trademarks, global brand value, ‘cultural’ exports such as films and music, and contributions to ‘online creativity’ such as developing open source software or publishing mobile apps.

[42]WIPO, Global Innovation Index 2023, p. 85.

[43]The H-index is a way of estimating the quality of a scientist’s publications, named after its creator Jorge Hirsch. It depends on both the number of academic papers published, and the number of times these are cited by other academic papers: ‘An h index of 5 means that a scientist has published five papers that each have at least five citations’—L Bornmann and H-D Daniel, ‘The state of h index research: Is the h index the ideal way to measure research performance?’, EMBO Reports, Volume 10, Issue 1, 2009, pages 2–6,, viewed 2 November 2023. The GII uses a national aggregate H-index, but the concept is the same.

[44]Australian Academy of Health and Medical Sciences, Submission 19, p. 3.

[45]AMWU, Submission 17, p. 5.

[46]Medicines Australia, Submission 50, p. 2.

[47]Mr William Gibaud, Head of Government Relations, BAE Systems Australia, Committee Hansard, Canberra, 31 May 2023, p. 4.

[48]AMWU, Submission 17, p. 6.

[49]Science & Technology Australia, Submission 41, p. 2.

[50]CSIRO (Commonwealth Scientific and Industrial Research Organisation), Submission 23, p. 13.

[51]Accord Australasia, Submission 40, pages 3–5.

[52]DMTC Limited, Submission 32, p. 5.

[53]Australasian Rail Association, Submission 20, p. 10.

[54]Australasian Rail Association, Submission 20, p. 14.

[55]Deakin University, Submission 10, p. 5.

[56]Ms Lisa Emerson, Modern Manufacturing Commissioner, Investment NSW, Committee Hansard, Canberra, 24 May 2023, p. 7.

[57]Swinburne University, Submission 56, p. 2.

[58]Tasmanian Government, Submission 46, p. 6.

[59]Austrade (Australian Trade and Investment Commission), Why Australia Benchmark Report 2023, August 2023, pages 43–50.

[60]Austrade, Why Australia Benchmark Report 2023, p. 50.

[61]Ms Penny George, Director of Corporate Affairs, AstraZeneca, Committee Hansard, Sydney, 5 July 2023, p. 7.

[62]Sanofi, Submission 11, p. 2; CSIRO, Submission 23, p. 8.

[63]Engineers Australia, Submission 16, p. 5.

[64]AstraZeneca, Submission 36, p. 2.

[65]Accord Australasia, Submission 40, p. 4.

[66]Research Australia, Submission 29, pages 7–8; Mr Justin Meredith, Member Manager; Dr Brad Walsh, Member; and Mr Dean Whiting, CEO, Pathology Technology Australia, Committee Hansard, Sydney 5 July 2023, pages 15–16; Ms George, AstraZeneca, Committee Hansard, Sydney, 5 July 2023, p. 9; Mr Michael Junger, Senior Vice President of Advanced Technology, Vaxxas, Committee Hansard, Brisbane, 25 July 2023, pages 24, 26; Professor Andrew Cuthbertson, Fellow, Australian Academy of Health and Medical Sciences, Committee Hansard, Brisbane, 25 July 2023, p. 30.

[67]Australian Academy of Technological Sciences and Engineering, Submission 3, pages 2–3.

[68]Science & Technology Australia, Submission 41, p. 4.

[69]In particular: Future Battery Industries CRC, Submission 39; Minerals Council of Australia, Submission 45; Government of Western Australia, Submission 51; and Australian Forest Products Association, Submission 54. However, this appeared to be appreciated more broadly—for example, the Australian Dairy Products Federation (Submission 49) highlighted its industry’s sustainability framework and progress on emissions reduction.

[70]Government of Western Australia, Submission 51, p. 21.

[71]For example: Mr Vince Allen, CEO, SunDrive Solar, Committee Hansard, Sydney, 5 July 2023, p. 33; Jamestrong Packaging Australasia, Submission 5, p. 1; Cell Therapies Pty Ltd, Submission 27, p. 3; Future Battery Industries CRC, Submission 39, p. 1; Amaero, Submission 42, p. 1; Smart Energy Council, Submission 48, p. 7.

[72]For example: Cooperative Research Australia, Submission 30, p. 1; Dr Andrea Douglas, Vice President, Strategic Industry Engagement, CSL, Committee Hansard, West Melbourne, 3 May 2023, p. 8.