While state premiers bend the knee to China and Albo pretends to care about Chinese aggression by banning TikTok, Tony Shepherd is making more sense:
Now is the time for Australia to be bold. We must diversify, modernise and industrialise our economy while lifting our productivity and investing in modern manufacturing. This is both an economic and a strategic imperative.
…The Biden administration, with the Inflation Reduction Act, has announced a bold and massive science and technology program targeting the industries of the future with tax breaks, grants, co-investment, government procurement and subsidies.
…The Chips and Science Act adds to this technological resurgence. The US will accelerate private-sector investment in clean energy, strengthen supply chains across the board, and create new well-paid jobs and opportunities for people and businesses.
Aussie manufacturing has started to grow again after years of outright decline:
But the share of GDP is still falling:
That said, as you can see in the top chart, everything is a bit distorted by the COVID/Ukraine mining boom. Take that out and industry has stabilised at 6% for the past five years.
Is there any hope of it getting better? The Albanese Government has formed the $15bn National Reconstruction Fund and Australian Strategic Research Agency. But these are small beer. Shepherd also wants:
…an integrated national industrial policy framework with a strong commitment to research and innovation and incentives and encouragement for the private sector to invest and innovate. This framework should include government procurement and the program must be fully supported by the states and territories.
Which is great but it is still not enough.
As I have said before, if we want to make stuff then the key driver is competitiveness. This means getting macro settings right:
- quality, not quantity immigration;
- tax reform including higher for mining and lower for industry;
- further reform to channel capital away from house prices and toward productive investment
- other low AUD policies.
Without these, private industry will only boom where the government puts money before it.
