As industry policy is reconsidered around the world, Australia’s federal Opposition says it’s time to move on from “dogmatic” notions of not picking winners, promising to direct a $15 billion Reconstruction Fund to areas of strength and national priority.
Shadow minister for industry and innovation Ed Husic this week told Parliament that Australia needs to reconsider the industry policy that began under Labor governments in the 1980s and has dominated since.
In 1984, newly elected Prime Minister Bob Hawke declared that governments were not in the business of “picking winners” through industry policy. Successive governments have held to the same approach, typically opting for stability rather than bold bets.
Other countries have been less “dogmatic”, and it has paid off, Mr Husic said on Monday during a debate on research funding.
“Countries have thought about their strengths. Countries have thought about what they can do to mobilise resources to get things done,” he said.
“From our perspective, Labor have said, through the National Reconstruction Fund there would be a number of sectors we would think deeply about to ensure we see better industry outcomes.
“The pressure is on nations to think about industry policy in a new way, to think about how they can support sectors that are really important to their economy and, through the way, potentially, to ensure that the economic complexity of nations evolves as well. As has been observed, when you look at Australia’s economic complexity, we have a lot of work to do to ensure that we are not completely and utterly reliant on a few sectors alone.”
Mr Husic said a Labor government would channel a $15 billion National Reconstruction fund to “value-adding” in certain stronghold sectors, including agriculture and resources and mining, while also backing research and development in areas of comparative advantage like energy and renewables, and medical manufacturing in a did to diversify the economy.
The fund, unveiled nearly a year ago as part of Labor’s pandemic recovery plans, would also be used to invest in developing emerging technologies like artificial intelligence, quantum computing and robotics, with Mr Husic noting other countries have already developed national plans and rigorous development programs for them.
“All these things will be really important longer term. If, as a country, we want to be left behind, we only need to underinvest in some of those areas. Other nations get it. This is not just an issue of economic security but of national security as well,” he said.
The Opposition is confident there is an appetite for more government support of critical areas and developing more sovereign capability, with Mr Husic saying many in the public would be shocked to learn just how far Australia has fallen.
Australia is dead last in the OECD in manufacturing self-sufficiency, according to analysis by The Australia Institute, while gross domestic spending on R&D has been falling for more than a decade and is now well below the OECD average and less than half of global leaders.
Mr Husic said it was time to rebuild domestic manufacturing and to start “backing our brains” again.
“If we are not backing our brains, we will see ourselves short-changed in the longer term…we will only ever be a follower. We will be an importer. We will be basically leveraging off someone else’s brains and someone else’s ideas, and we will be a nation reliant on the imports of very sophisticated technology or product,” Mr Husic said.
“We’ve got to be able to do better. We have to have the faith to back our local brains. We cannot continue to have a situation where we see cuts in that investment.”
Mr Husic attacked the current Coalition government’s “piecemeal” approach to industry policy which is he said was not being matched with investment in research or part of a wider plan to catch up to other nations.
“We see the announcement of a patent box or a fintech sandbox here and there, or we see different initiatives rolled out during a Press Club speech and a bit of money put here and there, or we see this type of initiative put forward. We see the Coalition playing around with research as people reacted to the acting minister for education just before December deciding he would make a call on what research he valued and didn’t value,” he said.
“We don’t see any significant plan by the coalition to say: ‘Look, we are falling behind relative to other nations. This is bad for our longer term economic prospects, and here’s what we’ll do to fix it.’ There is none of that.”
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