Government Investment – Out of Manufacturing and into Tech and Innovation

 

With the recent news of Toyota Australia’s demise, it’s fair to say goodbye to traditional Australian manufacturing as we know it and herald a change in the nature of business in Australia.

Let’s face it. The Australian manufacturing industry has struggled for years to compete with Asian economies of scale. Yes – manufacturing has made an important contribution to our economic development since the days of British settlement. Investments in industrial capability throughout the 20th century resulted in a Golden Era of manufacturing, and by the late 1950s, the Industrial Age was in full swing. But by the 70s, our manufacturing sector was in decline.

Forty years on, manufacturing accounts for less than 10% of our GDP.

Let it go. Times have changed.

An article in The Australian claimed that economists believe, “The damage caused by the demise of car manufacturing in Australia has been overstated, … with the benefits of cheaper cars and fewer subsidies outweighing short-term costs.”

Elizabeth Knight, a Business Columnist for the Sydney Morning Herald, was a little more candid. Following Toyota’s recent announcement, “Our future lies in innovation – not propping up an industry that serves no purpose other than an antiquated sovereign status symbol.”

Bring on the Digital Age. Technology-driven transformation is happening all around us.

I realise the need for replacement jobs for those who are employed in the manufacturing industry. However, there remain companies throughout Australia, NZ and the world providing thousands of jobs to workers, as well as improving the efficiency of other businesses who use their services.

And whilst the Australian tech sector is currently relatively small, there is great potential for growth. With support from entrepreneurs, educators, the government and corporate Australia, the tech start-up sector alone could contribute 4% of Australian GDP by 2033 and directly employ approximately 540,000 people.

I acknowledge the value in hand-outs and investment into manufacturing over the last ten years, however given the facts and figures now on show, this would have better been used in keeping the companies trading, whilst re-training employees and giving them skills which will put Australia at the front of modern industry.

In fact, if half the money spent on propping outdated industries (who have struggled to compete with Asia for years) was put into technology and developing industries, ANZ could become a hub for tech and start up around the world, just as Silicon Valley did in the 1980s-90s and Palo Alto in the 21st century.

Industry Minister Ian Macfarlane said manufacturing in Australia “would never be the same again. There’s a future for industry in Australia but it is a different future, which we have been trending towards for some time.”

So it’s time to move on.

With good skills programs and forward planning, Australia can become an innovation hub, leading the world in development and leaving production to those countries better suited to it.

 

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