At The Australian:
Scott Morrison will pour $1.5bn into revitalising Australian manufacturing through the COVID-19 economic recovery and unveil a strategy to boost large-scale production, develop new products and expand access to global markets.
The Prime Minister will use a major pre-budget speech to announce a $1.3bn Modern Manufacturing Initiative that will see the government leverage co-investment across six priority areas where Australia is deemed to have competitive advantages.
Manufacturers in the resource technology, food and beverage, medical products, recycling and clean energy, defence and space fields stand to benefit under the new framework, with the sectors picked based on World Bank and OECD analysis.
The government will also sit down with industry leaders to sketch out, by next April, detailed and specific “road maps” for each sector spanning two, five and 10 years in a bid to maximise success.
Key benchmarks will gauge progress across a range of measures — including jobs, research and development as well as investment — with the road maps to be informed by experts through the Industry, Innovation and Science Australia Board.
Mr Morrison’s manufacturing strategy will be guided by three key principles — encouraging a more competitive business environment, better alignment of resources to play to Australia’s competitive advantages and the preservation of sovereign capabilities in “areas of national interest”.
He will also argue the plan will generate jobs and support rural communities, arguing manufacturing is “particularly important to regional economies in places like the Hunter region of NSW, north and central Queensland, Tasmania and regional Victoria”.
“We make things in Australia. We do it well. We need to keep making things in Australia. And under our plan we will,” Mr Morrison will say. “Manufacturing employs around 860,000 Australians, and prior to the pandemic it generated more than $100bn in value for our economy each year and over $50bn in exports.
“The overarching objective of our modern manufacturing strategy is to build scale and capture income in high-value areas of manufacturing where Australia has either established competitive strength or emerging priorities.”
You can’t fault his ability to manufacture bullshit. Forty years of hollowing out doctrine forgotten in a few sentences.
There is some good stuff here. The selected six sectors are strategic so fair enough. Co-investment is a good model too, helping overcome the Dutch disease capital drought.
Where the plan falls down is when Morrison shifts into wider forces, at the AFR:
Mr Morrison will stress that the focus on the six areas of advanced manufacturing will not come at the expense of already established industry and manufacturing.
These, he contends, will benefit in a general environment of low taxes, investment incentives, low energy costs and “flexible” industrial relations, all of which will be contained in the budget.
The budget will also contain enhanced R&D incentives and an investment allowance for business.
“Everyone gets a solid foundation,” said Industry Minister Karen Andrews, who was instrumental in the design of the strategy.
The Morrison gas unplan will lift energy costs, both gas and power. His plan for cheaper and endless credit will lift capex and opex costs. Both lift the Australian dollar.
As for labor, we need smarter not cheaper. The latter only ends up in capital shallowing and disinvestment.
When you put the macroeconomic failures together with what is decent industry policy what you get is a massive bust for competitiveness as we subsidise manufacturing directly. This leads to government support working against failed markets and ever more rent-seeking triggering ever less competition to drive innovation.
This will end up in the direct picking of specific company winners not just industry segments which will be less effective, more expensive and retard scale versus the alternative path of enabling markets.
A new Game of Mates, in other words. Just the way the Coalition likes it.
