On 6 October 2020, the Federal Budget was handed down. It was presented against the background of unprecedented levels of Government spending to ensure that the Australian economy is able to ride the COVID-19 wave(s).
As part of the Australia’s Economic Recovery Plan the Budget has provided some positive news for Australian manufacturers as part the overall goal to create jobs now and into the future. The magic number to come out of the Budget is $1.5 billion for the Modern Manufacturing Strategy to help Australian manufacturers upscale, be resilient and be able to compete globally.
The Government has identified the following priorities in the manufacturing sector as part of Australia’s economic recovery:
- Resources Technology and critical minerals processing;
- Food and beverage;
- Medical products
- Recycling and clean energy
These have been identified as ‘areas of advantage’ or in other words, we where we can, play to our strengths. The area of defence is particularly interesting with the Government as the customer being able to stimulate growth directly here with the requirement for materials and technology.
What will this look like?
The key areas of investment over the next few years will be:
- A $1.3 billion over 5 years to establish the Modern Manufacturing Initiative. The goal of this is to “support manufacturing projects focused on building long‑term business collaboration at scale, translating research into commercial outcomes and bringing new products to market, and integrating local firms to deliver products and services into global value chains”;
- A $107.2 million over 4 years for the new Supply Chain Resilience Initiative (to tackle identified supply chain weaknesses);
- A $52.8 million over three years for the Manufacturing Modernisation Fund (phase 2) which assist with investments that help manufacturers to upscale, upskill, create jobs and pursue new technologies.
The numbers sound good and are a promising investment for the manufacturing industry.
We also see in the Budget 2020-21, a commitment to specific manufacturing projects including:
- Having local manufacturing of a COVID-19 vaccine, when one becomes available (with CSL Limited/Seqirus Australia identified for such);
- $5 million towards an Advanced Manufacturing facility in South Australia for manufacturing and assembling of electric vehicles;
- $15 million in 2020-21 for an upgrade of steel processing and galvanising in Whyalla, South Australia (a boost to the region).
The commitment in the Budget 2020-21 is a positive boost to the manufacturing industry. It also brings with it a financial commitment for industry growth centres, including Advanced Manufacturing Growth Centre, Food Innovation Australia, METS Ignited and MTPConnect, which are an important source of guidance and support for those in the industry. So, all things being equal, the adversity of the current COVID-19 climate has brought a spurt of renewed support for an important industry in Australia. We look forward to the commercial outcomes of the Budget commitments.
Rebecca Hegarty is on the Board of the Cumberland Business Chamber and is a Principal Lawyer at Coleman Greig Lawyers.