The Morrison government has awarded $601 million in manufacturing grants in the last month alone, twice as much as it awarded in the preceding year and a half. Labor is claiming grants from the flagship pandemic recovery program have been deliberately delayed to “manufacture an electoral win”.
Shadow industry minister Ed Husic said the Coalition had deliberately delayed grant announcements to time them with state and federal elections, including $155 million in one week in South Australia in March for announcements accompanied by then-liberal-premier Steven Marshall.
“They made announcements there to help the South Australian Liberals – that didn’t work out the way they planned – and now in one month, $900 million being allocated is stunning and it is a slap in the face to Australian industry and to jobs,” Mr Husic told the ABC after the budget confirmed the program would be topped up.
The Coalition’s Modern Manufacturing Initiative (MMI) was announced in October 2020. It offers $1.3 billion in grants to Australian manufacturers in priority sectors to scale, collaborate and commercialise.
Grants are offered under three streams: Translation, Collaboration, and Integration. Collaboration is by far the largest stream with $800 million available, including individual grants up to $200 million for large projects involving business and research partnerships.
Applications for the Collaboration stream opened in August last year and closed less than a month later. But decisions on recipients were not announced until March, around six months later.
An expert panel makes recommendations on grant applicants, but the decision is ultimately made by Prime Minister Scott Morrison, who consulted with Industry Minister Angus Taylor and other members of cabinet on potential recipients.
Labor had warned this structure has “baked in” rorts to the flagship program following a series of other grant politicisation scandals under the Morison government, which has blocked the release of departmental briefing documents for the scheme.
In February, Industry department officials confirmed only $292 million had been executed from the flagship manufacturing program, with just $85 million actually making it to manufacturers, one year on from applications opening. At that point no money had been released from the major Collaboration stream, with ministers still weighing the department’s recommendations.
But in March a flurry of Collaboration stream funding announcements were made by Coalition ministers. These often including the local government member for the project’s electorate. The first three, worth $155 million, came in the first week of March with South Australia’s then-Premier Steven Marshall featured heavily in the announcement as he fought an ultimately unsuccessful election campaign.
Almost the entire Collaboration stream funding was announced in just 25 days, with eight grant announcements worth a combined $601 million, jumping the total funding commitments under the manufacturing program to $926 million.
More announcements are expected in the lead up to the May election, after the government fast tracked round two of both of the smaller streams late last year, still worth another $280 million combined. Manufacturers had only one month over the summer break to make applications because of the change, which brings round two announcements in line with the election campaign as well.
On Thursday, shadow minister for industry and innovation said the government had deliberately delayed the biggest announcements to maximise their political impact. He said this has damaged the sector, because jobs and investment – the grants require 2x co-investment — ultimately hinging on the decisions.
“It shouldn’t be spent right at the last moment to manufacture an electoral win for the Coalition,” Mr Husic said.
“We haven’t got a moment to lose to rebuild industry and they use it, the Coalition use it, to prop themselves up. And it’s just not good enough. Now that we’ve got all those jobs and Australian industry held up.”
Mr Husic has previously labelled the $1.3 billion manufacturing grants program an “election slush fund” that creates national security risks by delaying funding and projects.
He confirmed Labor would honour any signed Modern Manufacturing grant contracts but said he is concerned the program had been topped up again in the budget after the first allocations had not been made “properly”.
Labor is campaigning on a $15 National Reconstruction Fund it will raise with the private sector and direct to areas of strength and national priority. Industry Minister Angus Taylor’s office did not respond to questions about the sharp increase in manufacturing grants.
This article, including its headline, has been updated to correct the value of the grants awarded in 25 days under the collaboration stream to $601 million at the time of publication. An earlier version incorrectly reported this figure as $784 million. The latest totals are available from the Industry department here.
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