Direct grants for research collaboration and commercialisation will be on offer as part of the federal government’s new $1.5 billion manufacturing strategy, which is squarely targeted at specific priority sectors including space and critical minerals.
Prime Minister Scott Morrison will unveil the Modern Manufacturing Strategy at a pre-budget address to the National Press Club on Thursday afternoon, a plan he will say is aimed at making Australia manufacturers more competitive, resilient and able to scale.
The plan will be nearly entirely targeted as six areas of advantage identified by the Coalition: resources technology and critical minerals processing, food and beverage, medical products, recycling and clean energy, defence and space.
These sectors were selected based on research of Australia’s comparative strengths and focusing the funding on these areas is setting the strategic direction rather than picking winners, industry minister Karen Andrews said.
“This is now about industry leading the way. As a government we have said very clearly that these are the strengths, this is where we are leading Australia to develop manufacturing skills. We’re building on our strengths, we’re not going to continue to be all things to all people, but we are going to have very strong foundations and get the economic settings right,” Ms Andrews told ABC Radio National.
“There’s sound evidence of what our comparative and competitive strengths are and how we build on that, so if we’re going to create the jobs for the future we can’t be all things to all people. We have to provide a strong base and very clearly signal what our strengths are to build on that.”
There will be direct grants on offer to incentivise public-private collaboration and commercialisation and a targeted effort to improve Australia’s supply chain resilience and sovereign capability, specifically in medicine.
The strategy will be a key plank of the federal budget, to be unveiled next week. It will come just a week before the government is likely to confirm it will be going ahead with its planned changes to the research and development tax incentive, amounting to a $1.8 billion cut to the scheme.
These reforms have been widely criticised in the manufacturing sector and led to concerns that some companies will move some or all of their operations offshore.
The new strategy seems in part to be an attempt to waylay these concerns and provide more direct and targeted funding to specific areas of manufacturing, rather than the blanket approach of the RDTI.
“Our manufacturers have risen to the challenge to deliver during COVID-19 and now we’re unlocking their potential to deliver for our future. By playing to our strengths, strategically investing and boosting the role of science and technology in industry, we can open up new markets and take more of our quality products to the world,” Ms Andrews said.
“This strategy sends a clear signal that not only is Australia open for business, but we mean business.”
The large bulk of the new funding will be going towards the Modern Manufacturing Initiative, with $1.3 billion in co-investment grants on offer across three streams.
The Manufacturing Collaboration Stream will provide capital for very large research projects to support business-to-business and business-to-research collaboration, while the Manufacturing Translation Stream will look at commercialising and investment in non-R&D innovation.
The initiative is aimed at addressing Australia’s long-held and well-publicised struggles in commercialising its research locally and capitalising on the benefits of this.
The third stream is focused on assisting manufacturers integrate into local and international markets and supply chains.
All three streams will only be open to the six areas of priority that the government is focusing on.
The funding rounds will open once industry-led teams of experts have designed roadmaps for each priority area, expected in the first half of 2021. These roadmaps will include goals for the next two, five and 10 years.
Of the rest of the cash, $107.2 million will be going towards the Supply Chain Resilience Initiative, with the government to work with local industry to get a “comprehensive” understanding of critical goods and services and supply chain vulnerabilities, with an early focus on medicine and medical equipment.
The remaining $52.8 million will be going towards round two of the Manufacturing Modernisation Fund, with up to 150 businesses operating in the priority areas to access grants of between $100,000 and $1 million. These grants will have to be matched three-to-one by industry partners.
This funding round will be open by the end of the year.