The federal government has chosen food and beverage as one of six manufacturing sectors to benefit from $1.5 billion in funding in the upcoming 2020 federal budget. The other sectors are resources and critical minerals processing; medical products; recycling and clean energy; defence; and space.
Snapshot:
- six sectors selected: resources and critical minerals processing; medical products; recycling and clean energy; defence; and space;
- $1.5bn Modern Manufacturing Strategy to be invested over next four years;
- $1.3bn of that goes to the Modern Manufacturing Initiative for specific project investment;
- $58.2m expansion of the Manufacturing Modernisation Fund;
- $107.2m for the Supply Chain Resilience Initiative for projects addressing supply chain vulnerabilities;
- additional $50 million to Industry Growth Centres initiative for projects out until the end of June 2022; and
- Innovation and Science Australia will be repurposed as Industry Innovation and Science Australia.
At the National Press Club (1 October), Prime Minister Scott Morrison said the government had identified the six sectors as major areas of “sovereign capability” within the next 10 years.
The funding will be invested over the next four years through the Modern Manufacturing Strategy, with a core $1.3 billion Modern Manufacturing Initiative for investments in specific projects that help manufacturers scale up and create jobs.
Morrison said the strategy was “at the heart” of the government’s JobMaker plan to help the country recover from the COVID-19 recession.
“We make things in Australia. We do it well. We need to keep making things in Australia. And with this strategy, we will,” Morrison said.
Federal Industry Minister Karen Andrews said it was boosting the role of science and technology in industry to open up new markets globally.
“This is about Australia playing to its strengths and the government strategically investing in areas of manufacturing where we know we have an edge and that can deliver the jobs we need,” Andrews said.
At his Press Club address, Morrison recognised Andrews, and acknowledged the strategy was “absolutely the product of her labours over many many months”.
Industry will be engaged to co-design tailored road maps for each of the priority sectors to set clear goals over the next two, five and 10 years, and identify the barriers and opportunities that will guide action and investment, the minister said.
The competitiveness of individual manufacturers in the priority sectors will be developed with a $52.8 million expansion of the Manufacturing Modernisation Fund.
Morrison and Andrews said COVID-19 had highlighted the need to resolve supply chain issues. A $107.2 million Supply Chain Resilience Initiative will support projects that address an identified supply chain vulnerability.
Andrews said it was to incentivise the industry to bolster domestic and global supply chains.
It was also announced that Innovation and Science Australia will be repurposed as Industry Innovation and Science Australia. It will be tasked with providing a long-term perspective on growing the manufacturing sector and industry advice to the government throughout the strategy’s implementation.
A review of existing industry programs to align them to the strategy will see an extra $50 million to the Industry Growth Centres initiative to support projects in the priority areas out until the end of June 2022.
At the Press Club Morrison said: “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.
“The reality is we cannot and should not seek to reach global scale in a large number of sectors.
“This is an important lesson from other small and medium-sized high-income economies which have leveraged home-grown manufacturing into global success, such as Singapore, the UK, Germany and Canada.
“Don’t try to do everything.”
He said the government will liaise with industry to draw up a plan for each sector by April 2021, which will include benchmarks for jobs created and R&D investment for the next two, five and 10 years.
In a statement with Shadow Assistant Minister for Manufacturing senator Louise Pratt, Shadow Industry Minister Brendan O’Connor said while the strategy was welcomed it was an “insult” to the industry after it had slashed $4 billion from R&D tax incentives.
The Manufacturing Modernisation Fund only contains $50 million of government funding with the majority of investment onus put back onto industry, O’Connor said.
In August, Dr Jim Stanford’s report for the Centre for Future Work highlighted alarming decline in Australia when it comes to investment in R&D and the uptake of automation. In 2017, Australia was eighteenth in the 36 industrial countries in the OECD. Its combined R&D spend (1.79 per cent of GDP) was a quarter lower than the OECD average (2.37 per cent). Since 2010, Australia had the third worst decline in R&D spending of all OECD countries.
CEO of SPC Robert Giles said the company had been speaking to all levels of government for “many months” about how manufacturing will help lead Australia’s economic recovery.
“We need big ideas like this if we want to see real change in our country. SPC has had the plans to become a global player in the global value-added food industry. Such strategic thinking and initiative are what is needed and welcomed to make these plans come into reality,” Giles said.
The Advanced Manufacturing Growth Centre has been researching and reporting extensively on roadblocks to manufacturing innovation and growth. Its managing director Dr Jens Goennemann said the government’s manufacturing focus was very welcome.
“What we must do now is encourage our capable and broad SME manufacturing base to advance, scale-up, look for their ability to compete on value not cost and compete globally. This will inevitably generate more jobs and prosperity,” Goennemann said.
Last month, CSIRO called for more science and technology to be utilised in high tech manufacturing and food and beverage.
The AiGroup said it was gratifying the federal government has recognised the role of manufacturing in the economy. “A strong, vibrant and diverse manufacturing sector is crucial to our national prosperity,” AiGroup chief executive Innes Willox said.
The Australian Food and Grocery Council (AFGC) CEO Tanya Barden said it was a “huge boost” for sector confidence. “We are keen to create a roadmap for the future of the sector, working with the Government to ensure that investment hits where it is needed, and roadblocks are removed,” Barden said.
“The strategy makes the most of the food and beverage sector’s natural competitiveness, which arises from being able to source quality agricultural inputs and process them to global best safety and quality standards.
“What this government investment demonstrates is that they know our sector is one of huge potential to scale up, particularly in export markets, which account for one third of the sector’s revenues.”
Simplot Australia executive director Innovation & Growth Angeline Achariya said the announcement was “a great call to action for industry, research and government to further collaborate and co-create game changing opportunities for Australian manufacturing to further value add”.
Achariya, also currently a member of the Emerging Industries Advisory Panel with AgriFutures Australia and former Monash Food Innovation chief operating and commercial officer at Monash University, said: “Within food and beverage, there is a tremendous opportunity to work more closely with agrifood to value add.
“To drive the value from such investment we need to ensure all actors in the sector are collectively aligned with a shared vision to drive the change to enable Australian manufacturing to be globally competitive to re-imagine the future of agrifood.”
Matthews Australia CEO and chair of the Australian Packaging and Processing Machinery Association Mark Dingley said he was happy to see the focus back on manufacturing and investment. “Food and beverage manufacturing in particular has been a bright spot this year and I look forward to seeing a deeper collaboration between industry and government to support innovation and growth into the future,” Dingley said.
Willox said there was “considerable” merit in backing the six selected areas, with clear opportunities as well as “runs on the board”.
“Specifically, in today’s announcement we applaud the recognition of and the commitment to building competitive manufacturing capabilities and building greater resilience into our supply chains. These capabilities, including those related to better supply-chain risk mitigation, have central roles to play as we rebuild the economy and uncover new areas of strength,” he said.
Willox was wary of excluding development in other parts of manufacturing not within the six priority areas. “We caution against tilting the playing field against industries that have not been identified to date. Industrial success is full of surprises and it is critical that we do not disadvantage businesses from succeeding outside the selected areas.
“Expanding our industrial capabilities will ensure we have more successful Australian exports of high value innovative products in our areas of natural advantage. One key will be building alliances and connections with universities and research institutions.”
Barden said she was pleased Morrison specifically said the strategy was designed so manufacturers could be more competitive, resilient and able to scale.
She said a step change was needed in capital investment, which had been stagnant for a number of years because of a concentrated retail setting and rising input and regulatory costs. The investment showed government recognition of how critical the food and beverage sector is and the need to “sure up and modernise” its capabilities.
Today’s announcement will encourage companies to invest in Australia, to support jobs in local economies, particularly in rural and regional areas, and to take advantage of Australia’s supply of clean agricultural inputs and strong food safety system,” Barden said.
“The AFGC has continually highlighted to Government that food and beverage manufacturing is an industry that not only ensures that the supermarket shelves are stocked but creates jobs and significantly contributes to local and national economies.
“Australians and our political leaders overwhelmingly want a local, value-adding food and beverage manufacturing industry. Today’s announcement is a strong acknowledgment that this sector will help get the economy back on track.”
