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Kim Beazley, Carmen Lawrence - Labor's Better Plan For Industry

http://www.alp.org.au//media/1101/kbclmsind081101.html Monday, 19 November 2001

ALP News Statements

Labor's Better Plan For Industry Kim Beazley, Leader of the Opposition, and Carmen Lawrence, Shadow Minister for Industry, Innovation and Technology

Joint Media Statement - 8 November 2001

Australian industry, particularly manufacturing, provides a significant part of our National GDP and total employment, and is crucial to enabling other sectors of the economy to develop and export products and generate jobs.

Our industry base is rapidly being transformed by technological and social change, and the Federal Government has a key role in leading our nation through the challenges posed by these changes, and in ensuring the development and maintenance of the knowledge and skills required for Australia to compete successfully with our trading partners.

Highlights Of Labor's Industry Policy

Government Procurement

Properly managed, government purchasing can stimulate industry development, including the achievement of sector specific employment goals and general improvements in competitiveness and economic growth.

Labor will develop a strategic approach to Government procurement by linking industry development to purchasing in key industry areas such as information technology, defence and renewable technology.

A long term plan for Australian manufacturing

Labor will review assistance and tariff arrangements for the TCF and Automotive industries well before the cessation of existing industry assistance schemes and the planned reduction in tariffs in 2005.

Labor will establish an Australian Manufacturing Council, with an appropriately staffed and funded secretariat.

The Council will negotiate with State and Territory governments a national approach to developing the capabilities of Australian manufacturing firms. It will also assist Australian manufacturers to participate in the online economy and to utilise information technology to enhance the productivity performance of Australian manufacturing firms.

Labor will commit itself to long term funding for trade and industry programs. Through a strategic review conducted early in its first term, Labor will develop the framework for a 10 year plan for the future of Australia's manufacturing industry.

Returning entrepreneurs

Labor will establish a fund to encourage expatriate technologists to return to Australia to establish new enterprises here.

The Fund will provide early stage seed capital funding to highly skilled overseas-based Australians to set up new business enterprises in Australia. It will assist 10 new high potential start-ups with up to $100,000 each in seed capital, in return for an equity stake.

Energy

The reliable supply of well-priced energy underpins all economic development in Australia and a coordinated approach is needed that takes into account the reform of energy generation practices and the use of new technology. Labor's commitment to reducing greenhouse emissions will be reflected in reforms that encourage the adoption of sustainable energy generation.

Labor will use the COAG process to develop a national accord on energy policy including resource management, sustainable energy generation, infrastructure, present and future supply and pricing and market issues.

Mutual industry assistance arrangements

When particularly substantial contributions are made to industry by Australian taxpayers, it is reasonable for Government to require commitments from successful recipients to facilitate specified industry development objectives, including employment targets, increased R&D, value adding and skills development.

Companies and industries that receive assistance from government in the form of research and development grants, infrastructure support and other forms of funding will be required to enter agreements to meet performance targets in return.

Labor will require that industry assistance be based on mutual arrangements that trigger graduated obligations, including employment creation targets, from the organisations receiving support.

Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.

  Australian Labor Party   National ALP   Back

Kim Beazley's Plan for Industry http://www.alp.org.au//policy/employment/industry.html Monday, 19 November 2001

Kim Beazley's Plan for Industry

Overview ● The Howard Government's Failures Wrong About Innovation ❍ The Decline of Research and Development ❍

Wrong About Industry Policy ❍ Wrong About Industry Assistance ❍ The Diminution of DISR ❍ The Decline of Manufacturing ❍

The Automotive Sector ❍ The TCF Sector ❍ The Steel Industry ❍ Wrong About Industry Infrastructure ❍

Training and Skills ❍ Wrong About the Impact of the GST on Industry ❍ Housing and Construction ❍ Automotive Sales ❍

●

Kim Beazley's Plan For Industry A National Foresight Process ❍ Leverage Government Purchasing ❍ Developing Joint Industry Agreements ❍

A National Approach to Investment ❍ Stimulating Investment in Research and Development ❍ Enhancing Australia's Manufacturing Capability ❍ Australian Manufacturing Council ❍

Returning Entrepreneurs' Fund ❍ Trade and Tariffs ❍

●

Energy ❍ Costing ●

Overview

It is a time of great change in Australia's industrial environment. Along with much of the world, we face the twin challenges of harnessing new and emerging technologies to our advantage and grasping opportunities to strengthen our existing industrial base.

We need to modernise and strengthen our existing industries as well as develop new industries to enhance our national economic and social wellbeing.

In particular, a strong and growing manufacturing base is essential for the success of emerging industries.

A lively culture of innovation, a highly skilled workforce and an attractive investment climate are crucial to fuel economic growth and deliver social benefits to all Australians.

Labor will ensure that there is a coordinated national response as more of our industry shifts to the knowledge economy. Dealing with such change requires cooperation between industry and the broader community. The Howard Government has underestimated the extent of change, mismanaged the development of an appropriate strategy and mishandled the implementation of the measures it has adopted.

Labor will also act to make the new technologies freely available to the whole community, ensuring that we all have the necessary skills to exploit the new opportunities presented for both new and existing industries.

Australia cannot afford to be left behind - we need urgent action to generate high wage, high skilled and secure jobs for our people. Strong government action is essential if we are to take advantage of the opportunities offered to well-educated, innovative countries. It is essential that Australia participate in the global knowledge economy on its terms, not on terms forced on us through the complacency and inaction of the Howard Government.

The Howard Government's Failures

Wrong About Innovation

Government support for innovation is critical to Australia's future. There is no doubt that innovation is one of the key drivers of economic growth and the community's prosperity. International recognition of the importance of innovation has produced clear policy responses from governments seeking to maximise their national competitive advantage. Our own Government is almost alone in the developed world in its tardy and haphazard response to these competitive pressures.

The Howard Government's policy record in these areas is abysmal. Cuts to government schools' funding, reduction in the government's contribution to higher education and TAFE, reductions in research funding generally, including research infrastructure, cuts in funding to the CSIRO, and reductions in tax concessions to business for research and development (R&D) mean that Australia has begun to fall

behind comparable nations in the OECD.

Critical to success is a national innovation system and a "vibrant research base" if we are to compete successfully for industry development which produces high wage, high skill and secure jobs.

In a joint statement late last year, senior members of the business, higher education and science communities argued that:

If Australia is to sustain growth, increase the number of jobs and improve living standards, we have to develop and implement urgently an innovation action plan to underpin growth in existing and emerging industries and be a "knowledge-based society".

●

Instead, John Howard has presided over an ad hoc approach lacking strategy and the appropriate sense of urgency. The Government's belated Innovation action plan, announced earlier this year, is likely to do little more than partially repair the damage created by their own actions and will do little to develop the sort of momentum and commitment so clear in other nations with whom we compete.

It is now clear that the failure to spend more on research is stifling innovation and dragging down the economy. The Government does not appear to understand that future industries are built on today's research.

The Decline Of Research And Development

Under the Howard Government, investment in innovation has declined sharply, with a combination of cuts to R&D tax concessions and cuts to public funding of our universities, TAFEs and public research agencies including the CSIRO. The Government is reducing our national innovation infrastructure at a time when our competitors are investing huge sums in their knowledge capacity.

Business Expenditure on Research and Development (BERD) has been systematically undermined by the Howard Government. Australia's BERD as a per centage of GDP fell to 0.64 per cent in 1999-2000, following on from successive decreases in the previous three years. The falls followed significant increases in the five years before the high of 0.86 per cent under Labor in 1995-96.

The substantial falls in R&D expenditure and employment by Australian businesses recorded since 1996 pose a significant threat to Australian innovation performance - particularly as R&D is widely considered an essential input to the innovation process.

Wrong About Industry Policy

In contrast to what is needed for our future prosperity, the Howard Government has implemented ad-hoc and poorly resourced industry support programs which do not enjoy the wholehearted commitment of the responsible Minister or the Government.

Their responses to industry needs have oscillated between indifference and panic. For example, savage cuts to R&D tax incentives in 1996 produced an immediate, sharp decline in business R&D, but it took five years before the government took any action to attempt to restore such investment.

On the other hand, generous support for some individual firms has been provided following public pressure without any clear justification.

Over the last three years there have been massive job losses resulting from the collapse of major corporations- HIH, One.Tel and Ansett being the largest and most spectacular. In each case, the Howard Government, in the role of regulator, was in a position to anticipate the collapses and to intervene to prevent them. It did nothing.

The Howard Government has also mismanaged the process of the adoption of new technologies. Many individuals and businesses have been left without access to the new information and communications technologies and the skills necessary to exploit them. Many workers have been displaced without any serious attempt by government to provide support and retraining.

Wrong About Industry Assistance

The Howard government has consistently failed to enunciate a coherent industry development policy with clear objectives and measurable outcomes.

The Government spends a significant amount on industry assistance every year - approximately $9 billion annually - on support for agriculture, the motor vehicle industry, the textile clothing and footwear industry and the shipbuilding industry, to name just a few, and yet time and again the government has failed to act despite early warning of imminent problems in Australian industry.

When the Howard government has provided industry assistance, their decisions have been ad hoc, opportunistic and inconsistent and delivered without any clear rationale apart from political expediency -as the spectacular mismanagement of the TCF SIPS scheme amply demonstrated.

No serious attempts have been made by the Howard Government to harness government purchasing for industry development objectives.

Where "partnerships" were negotiated as part of the scandalous IT outsourcing saga, they were poorly managed and failed to achieve any significant benefits for local industry.

Funding for major projects, such as the Darwin to Alice Springs rail line, has been provided under the Howard Government without any effective mechanisms to produce opportunities for local firms.

Even the tenders finally called to replace the Fremantle Class patrol vessels for the Navy do not contain any conditions to ensure Australian shipbuilders get the work.

The Diminution Of DISR

There has been serious criticism from industry of the current structure of the Federal Department of Industry, Science and Resources and its lack of influence with the Howard Government.

It is clear that the Government regards industry support and investment attraction programs as "business welfare" and fails to see that they are critical for future economic growth and the provision of more high-wage, high-skill jobs. Without careful analysis, the Howard Government separated research and policy functions from program delivery.

This change has proved disastrous. It has resulted in important government industry support programs being based on poor intelligence and a limited understanding of the true state of various industry sectors. This may have led directly to company closures. For example, several recent, well-publicised closures in

the textiles sector could have been averted by the early application of available funds for that sector had policy and program delivery been better integrated.

The Decline Of Manufacturing

Manufacturing has suffered the most of all industry sectors under the Howard Government. Since the mid-1990s, the Australian economy has grown by approximately 3.4 per cent annually, while manufacturing has languished at a growth rate of around 1.2 per cent annually. In some parts of the manufacturing sector, most notably in high-technology manufacturing and textiles, clothing and footwear, growth has turned to contraction, with annual recorded falls as low as -1.6 per cent.

The Growth Of Australia's ETM Trade Imbalance - 1996-2000

Source: ABS 5602 National Accounts, 2001

On assuming office, the Howard Government promised to create 200,000 new manufacturing jobs by the year 2000. Instead we have seen 87,900 jobs in the sector disappear since February 1997 - a decline in employment of 9.4%, as the following chart shows.

Year Total wage and salary earners - Manufacturing

Feb 97 935900

Feb 98 928300

Feb 99 911100

Feb 00 881900

Feb 01 848000

Source: ABS 6248 wage and salary earners in manufacturing (seas. adj)

While the manufacturing sector still accounts for 13% of Australia's GDP and employment and about one fifth of our exports. This is a relatively low proportion compared with many other OECD countries.

The sector is continuing to shrink and there is a real risk that the limited manufacturing base and the related complementary assets (eg sales and marketing) will be inadequate to support the commercialisation of new products and processes which result from innovation activity and service sector growth.

The Automotive Sector

Only after substantial pressure from the Labor party and the union movement did the Government agree to adopt Labor's policy of a tariff freeze from 2000 to 2005.

However, it failed to commit to a review of the industry assistance arrangements ahead of the move to a further tariff reduction in 2005. This has created great uncertainty in the motor vehicle industry.

Nor did the Government hold any consultations with the industry before committing to pursue a free trade agreement with the United States, although their own research indicated that local production, especially of automotive parts, would decline.

The TCF Sector

Labor has relentlessly pursued the Government over their failure to actively assist what is one of Australia's significant manufacturing sectors - textiles, clothing and footwear.

Despite succumbing to Labor's pressure to freeze tariffs and implement a new textiles industry assistance package, the Howard Government did not develop a firm, funded proposal for the sector until the 2000-2001 budget (the SIPS program).

There continues to be a high level of uncertainty over the future of jobs for workers employed by some TCF companies, as Australian firms face greater international competition than ever before. The Government's announcement that it will cut TCF tariffs before reviewing the impact on the industry adds to that uncertainty.

Despite the availability of SIPS funding, the Government stood by and watched as several of Australia's best-known textiles manufacturers went to the wall, even when it was proved that the scheme as it stood was flawed.

Earlier this year, during Senate Estimates hearings, Department of Industry, Science and Resources confirmed that firms that were not originally intended to receive TCF SIPS funds may be eligible for grants on the basis of the loose definition of TCF industries incorporated in the scheme.

This has reduced the funds available to those firms for whom the package was originally intended, and it was at this time that some of Australia's foremost textiles companies announced that they were entering receivership.

During the second term of the Howard Government, Australia lost companies that were outlaying some of the highest expenditures on research and product innovation of any comparable Australian textile company - a fact that the Government has been very quiet about.

The Steel Industry

The Steel industry has been neglected and ignored by the Howard Government. In fact, when BHP announced the closure of its steel plant in Newcastle the Howard Government was caught napping, as has often been the case with major industry closures and job losses.

The Industry Minister at the time, John Moore, decided to attend the Crown Casino opening rather than a meeting of steelworkers and their families in Newcastle. The Prime Minister said there was nothing he could do. Before he found time to meet the Newcastle steelworkers he did find time to fly to London to see the cricket at Lords.

Since that time, the Government has entirely ignored the Steel Industry, failing to deliver on even the modest promises it made to reduce the impact of the closure on the Newcastle community.

Wrong About Industry Infrastructure

Energy is a key component of Australia's national industrial infrastructure.

After successive summer black-outs, the growing number of reports that predict a further breakdown in the power networks of Victoria and South Australia are causing enormous concern for businesses and industries that rely on a constant supply of electricity to operate in a competitive environment.

Australian businesses and industry have already felt the sting of electricity price hikes, the full impact of which are still being calculated. It is extraordinary that John Howard's Minister for Industry, Senator Minchin can blithely write off the power problem as "one for the States to work out."

As Australia's Energy Users Group has said in the past:

We have a Commonwealth Government which really has vacated this field. And they really need to get back into it and get back into it fast because we need some national responses to some of these issues and we don't have a national policy on energy reform any more.

●

Having finally and reluctantly agreed to review the national electricity market in conjunction with the States, the Minister appointed a former failed Minister, Mr Parer, with a clear conflict of interest to chair the review, and then deferred the review indefinitely.

Training And Skills

In Australia, training hours per employee have fallen approximately 19 per cent since 1996 (ABS figures, 2000). This is a serious concern if we are to make a successful transition to a competitive "new" economy. A whole new set of skills and experience is needed to compete internationally against our major trading partners.

Firms in the IT sector, in particular, consistently report skill shortages in both software and engineering. The government's solution is to increase the number of migrants with these skills, while under-funding Australia's universities and TAFE colleges.

A recent investigation of the quality of management skills in Australia concluded that Australian managers overestimated their own competencies and achievements. This is especially a problem in new and emerging industries.

Wrong About The Impact Of The GST On Industry

The introduction of the GST had the effect of weakening business confidence in Australia's manufacturing sector, with some manufacturers reporting serious declines in their use of capacity, declining exports, and a slump in manufacturing employment.

Earlier this year it was reported in the Australian Chamber of Commerce and Industry/Westpac Banking Corporation survey of industrial trends that some manufacturers' orders have fallen so dramatically that the majority of manufacturers now operate at below normal capacity.

In some sectors, demand trends have fallen as low as -25%, a clear demand slump that the Treasurer seems happy to ignore while crowing about "booming" export levels that really only result from the plummeting value of the Australian dollar.

And despite the increase in some export sectors, manufacturing export trends further deteriorated during the Howard Government's second term, with a significant impact on employment levels.

Housing And Construction

In March this year, after the full impact of the GST had started to be felt across the Australian economy, the Australian Bureau of Statistics reported that the housing construction industry experienced its largest decline in building approvals since at least 1984, with a seasonally adjusted year-on-year drop of 40%.

The housing industry also claims that Treasury underestimated the impact of the GST on new home prices by almost 100%, forcing the Government to extend the New Home Owners scheme to repair the enormous damage caused to this sector by the unfair, poorly formulated, and poorly executed Goods and Service Tax.

Automotive Sales

Auto sales under a GST, particularly those for fleet vehicles, have experienced a roller-coaster ride. GST reporting and compliance costs badly affected the smaller automotive supply sector, and the extra cost of some vehicles under the GST substantially reduced demand.

The Government was forced to take extraordinary action to try to ameliorate the worst affects of the GST. In the 2001 budget, the Government had to bring forward the full tax credit arrangements for fleet vehicles in an attempt to improve flagging sales.

Kim Beazley's Plan For Industry

A National Foresight Process

A Labor Government will establish a national planning process to identify Australia's priority areas for industry development. In a process that parallels similar national planning exercises in Germany, France, the UK, the Netherlands and New Zealand, a series of expert panels will be established to advise the government. The panels will be drawn from all industry sectors and will include scientists, researchers, policy makers, industry leaders, professional bodies and trade unions. They will identify the areas of

strategic research and emerging technologies that represent the greatest potential economic and social benefit to Australia. These will guide priority setting for investment in research and development and the critical decisions needed to convert them into economic growth.

Labor will establish a Bureau of Industry Economics within the Department of Industry, Science and Resources to provide analysis and advice on industry issues to Government.

This will allow the progress of specialist research into Australian industry, with a focus on strategies for industrial development and a flow of consistent, industry focused economic advice to government.

Labor will also ensure that funding of research and development is directed to supporting national priorities.

Selection of priorities for R&D will be a major step in implementing a commercialisation strategy aimed at industry areas requiring rapid investment to fuel employment growth.

Leverage Government Purchasing

The Commonwealth is a major economic player in its own right as a consumer of goods. Government procurement has a substantial impact on the domestic economy, and therefore also on employment. The Productivity Commission estimated that in 1999-2000 expenditure by all levels of government on goods and services accounted for between 10% and 15% of the national Gross Domestic Product - a figure between $63 billion and $95 billion per year.

It is imperative that such massive purchasing power be mobilised to maximise the benefits to Australian industry, and in particular, to maximise opportunities for employment creation and growth.

Properly managed, government purchasing can stimulate industry development, including the achievement of sector specific employment goals and general improvements in competitiveness and economic growth.

Labor will develop a strategic approach to Government procurement by linking industry development to purchasing in key industry areas such as information technology, defence and renewable technology.

Under this plan, the Commonwealth will align its industry development objectives and processes in relation to procurement with the States to increase coordinated buying and obtain greater leverage.

Industry development targets will be set and monitored for Commonwealth agencies and the adoption of electronic procurement stimulated across government, in cooperation with the States.

Opportunities for small to medium enterprises (SMEs) to participate in government purchasing will be created and ISONET will be used to a greater extent to encourage the use of local industry.

Developing Joint Industry Agreements

In addition to their significant purchasing power, governments provide substantial funding for infrastructure and industry assistance. Generally speaking, they require little in return from the companies that benefit. Just as individuals who receive Government assistance enter mutual obligation agreements, it is reasonable to expect that organisations, including corporations, that receive assistance also agree to obligatory activity.

When particularly substantial contributions are made to industry by Australian taxpayers, it is reasonable for Government to require commitments from successful recipients to facilitate specified industry development objectives, including employment targets, increased R&D, value adding and skills development.

Companies and industries that receive assistance from government in the form of research and development grants, infrastructure support and other forms of funding will be required to enter agreements to meet performance targets in return.

Labor will require that industry assistance be based on mutual arrangements that trigger graduated obligations, including employment creation targets, from the organisations receiving support.

Where appropriate, companies receiving government assistance will also be required to enter agreements with the government to meet suitable targets in other areas such as:

value adding and skill development, ● local content, particularly in regional areas, ● exports, and ● R&D investment. ●

There will be agreed penalties if these targets are not reached.

Action Agendas that set out agreed levels of government support for industries will seek greater commitment from those sectors to agreed development targets, including job targets. Strategic assistance will be provided only under agreements that are tripartite, ensuring close cooperation between industry, government and labour groups, and new agreements will be negotiated and framed for industries not yet covered by existing Action Agendas, with a greater focus on employment stimulation and growth.

Labor will retain, strengthen and expand existing Industry Action Agendas, and will develop new Action Agendas with a focus on employment stimulation and growth for industries not yet covered by the existing Agendas.

A National Approach To Investment

While Commonwealth, State and Territory governments currently provide assistance to industry valued at approximately $15 billion per year, there has been little assessment of the effectiveness of such assistance or of the total cost to taxpayers.

While there are valid arguments for industry assistance programs which support innovation and skills formation, modernisation and technology diffusion, networking and clustering initiatives, it is harder to justify support which poaches employment opportunities away from other states or regions.

Such "bidding wars" are costly to taxpayers and unlikely to produce any additional net benefits to the nation. Work by the Productivity Commission 1997 found that no net increase in employment resulted from such assistance.

To avoid states and regions being pitted against one another, we need to develop a more strategic, informed and genuinely national approach to investment attraction.

Labor will undertake a comprehensive evaluation of the effectiveness of various government industry assistance programs and packages, particularly in relation to the findings of the Productivity Commission regarding null employment creation.

Labor will work with State and Territory Governments through the Council of Australian Governments (COAG) to develop a National Industry Development Accord. This will allow governments to:

Evaluate the effectiveness of existing industry assistance programs; ● Develop agreed processes for targeting, monitoring and evaluating such programs in terms of their net social and economic benefits; and ●

Develop national protocols and enforceable agreements to prevent bidding wars and ensure transparency and accountability for any assistance provided. ●

Such protocols will include:

Full disclosure of subsidies provided; ● Agreed criteria for awarding subsidies, including the generation of net increases in employment and investment and continued operation for an agreed period; and ●

A requirement that subsidy agreements with firms include regular reports on agreed outcomes. ●

Stimulating Investment In Research And Development

John Howard has presided over dramatic declines in Business Expenditure on Research and Development - the direct result of his cuts to innovation incentives. The Government's belated innovation action plan, announced earlier this year, is likely to do little more than partially repair the damage created by its own actions and will do little to develop the sort of momentum and commitment so clear in other nations with whom we compete.

Closer links are necessary between public and private sector research institutions if Australia is to focus effectively on developing national priority areas. In addition to greater exchange of commercial and technical skills between public and private sectors, increased investment in business and enterprise R&D in public research agencies is necessary.

Labor will therefore provide a premium tax concession of 200 per cent for additional investment in facilities and projects in public research institutions by the private sector. This may range from outsourcing R&D to CSIRO, the Cooperative Research Centres and to universities, to making seed investments in public research. This will be an investment of $179 million over five years, over and above existing R&D incentives.

Labor will also retain the full suite of existing R&D tax concessions in addition to the new 200 per cent premium rate.

Labor will adopt measures that encourage greater investment in the development of knowledge and skills in commercialising ideas, by developing a commercialisation strategy matched to existing commercialisation funds.

Over 5 years, $5 million will be provided to encourage expatriate technologists to return to Australia to establish new enterprises here. A similar scheme has been adopted in Eire and will provide early-stage seed capital funding to up to 10 start-up companies, in return for equity.

Enhancing Australia's Manufacturing Capability

The existence of a high value added manufacturing industry in Australia underwrites the potential of other sectors of the economy to develop and export products. Manufacturing is being transformed by new technologies and techniques. The Government has a role in ensuring the development and maintenance of the knowledge and skills required for Australia to compete. Assistance arrangements in the automotive and TCF industries also need to be assessed before the tariff regime is changed.

A Labor government will establish the mechanisms and consultative processes necessary to implement a trade and industry policy agenda to complement Labor's plan to develop a Knowledge Nation.

Labor will establish an Institute of Manufacturing to develop innovative education programs and collaborative research with industry.

It will support the development of an integrated approach to manufacturing, embracing marketing, design, production, distribution and services. It will:

conduct innovative education programs to increase the number of able people in manufacturing; ● undertake collaborative research with industry to influence a shift towards high value added manufacturing activity; and ●

enhance the economic and public profile of manufacturing through targeted networking and dissemination. ●

Labor will retain the automotive industry adjustment package (ACIS) and the TCF assistance package (SIIPS).

Labor will review assistance and tariff arrangements for the TCF and Automotive industries well before the cessation of existing industry assistance schemes and the planned reduction in tariffs in 2005.

The review will include examination of the state of the existing local industries, the level of and rate of change of tariff and non-tariff barriers in competing nations, the state of local industries and the likely effects of further tariff reductions on local firms.

Australian Manufacturing Council

Labor will establish an Australian Manufacturing Council, with an appropriately staffed and funded secretariat.

The Council will negotiate with State and Territory governments to develop the capabilities of Australian manufacturing firms. It will also assist Australian manufacturers to participate in the online economy and to utilise information technology to enhance the productivity performance of Australian manufacturing firms.

The Council will also be responsible for considering, among other things:

Measures to encourage superannuation funds to invest more of their total funds in the venture capital market, noting that while some large funds invest up to two per cent of their portfolios in development capital, the level of investment is only one per cent across all funds, compared to three to four per cent in the USA and the UK;

●

Incentives to encourage growth in the availability of venture capital seed funding for development projects and start-up companies, including the possibility of developing a Qualified Private Equity Fund to seed small unlisted Australian firms; and

●

Consulting with industry with a view to establishing new Innovation Investment Funds (IIFs) that match government with private sector funding for early stage investment, targeted at specific industry sectors that reflect national priorities such as biotechnology, environmental management and advanced manufacturing.

●

Labor, if elected, will commit itself to long term funding for trade and industry programs. Through a strategic review conducted early in its first term, Labor will develop the framework for a 10 year plan for the future of Australia's manufacturing industry.

Central to this plan and Labor's industry development agenda will be strategies to tackle Australia's $60 billion trade deficit in elaborately transformed manufacturing.

Returning Entrepreneurs' Fund

Labor will establish a fund to encourage expatriate technologists to return to Australia to establish new enterprises here.

The Fund will provide early stage seed capital funding to highly skilled overseas-based Australians to set up new business enterprises in Australia. It will assist 10 new high potential start-ups with up to $100,000 each in seed capital, in return for an equity stake.

Recipients of this seed capital will be required to:

be an Australian who is resident overseas at the time of making the application, having lived and worked overseas for at least 3 out of the 5 years prior to application; ●

be willing to return to Australia to set up in either a manufacturing or service based technology-based business; ●

have a high technology business proposal with high growth potential; and ● have a strong achievement in careers to date in an international business environment, with strong experience in the specific industry sector or in a related industry. ●

An independent Board with representatives from government, business and unions will be established to determine successful applicants under the program.

Trade And Tariffs

A number of key industry sectors would be disadvantaged by the premature removal of tariffs and incentives that do not result in significant price falls.

Labor will retain the existing five per cent tariff.

The Australian shipbuilding industry in particular needs to be covered by continuing arrangements in the absence of appropriate international agreements.

Labor will retain the existing shipbuilding bounty (now called the Shipbuilding Innovation Scheme).

Australian shipbuilding has adopted technology that is leading edge in world terms and a unilateral removal of the innovation program would jeopardise its status as a market leader.

Energy

The reliable supply of well-priced energy underpins all economic development in Australia and a coordinated approach is needed that takes into account the reform of energy generation practices and the use of new technology. Labor's commitment to reducing greenhouse emissions will be reflected in reforms that encourage the adoption of sustainable energy generation.

Labor will use the COAG process to develop a national accord on energy policy including resource management, sustainable energy generation, infrastructure, present and future supply and pricing and market issues.

Initial steps have been taken to bring the States into closer cooperation through an accord that analyses energy use by state and sector and a national audit of energy resources.

Current arrangements that sanction a parallel market in renewable energy with the national energy market do not provide sufficient incentives for reform. Labor will link reforms of the renewable energy scheme to the development of a national energy accord, in accordance with Labor's greenhouse policy framework.

Costing

  01-02 02-03 03-04 04-05 Total

National Foresight Process (1) 1.0 0.0 0.0 0.0 1.0

Government Procurement Policy (1) 0.4 0.4 0.4 0.4 1.6

National Industry Development Accord (1) 0.0 0.0 0.0 0.0 0.0

200 per cent premium R&D tax concession (1) 0.0 -45.0 50.0 90.0 95.0

Institute of Manufacturing (2) 3.2 3.2 1.2 1.2 8.8

Australian Manufacturing Council 2.0 1.0 1.0 1.0 5.0

Returning Entrepreneurs' Fund (1) 1.0 1.0 1.0 1.0 4.0

Review of TCF/automotive industry tariff arrangements 0.0 0.0 0.0 0.0 0.0

Retention of the existing 5 per cent trade tariff regime 0.0 0.0 0.0 0.0 0.0

Retention Shipbuilding Innovation Scheme 0.0 0.0 0.0 0.0 0.0

Develop a National Energy Accord 0.0 0.0 0.0 0.0 0.0

TOTAL ($m) 7.6 -39.4 53.6 93.6 115.4

(1) These initiatives were announced in Kim Beazley's Plan for the Knowledge Nation on 31 October 2001.

(2) This initiative was announced in Kim Beazley's Plan for South Australia on 15 October 2001.

(3) The costing table above reflects the full four year value of the initiatives announced today. The net impact on the

Budget of today's announcements is:

($m) 2001-02 2002-03 2003-04 2004-05 Total

Net impact 2.0 1.0 1.0 1.0 5.0

Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.

The Growth Of Australia's ETM Trade Imbalance - 1996-2000

Copyright © 2001 the Australian Labor Party