Senator REYNOLDS (Western Australia) (17:36): I too rise to speak on this motion. We have heard a lot of table thumping from some industrial and economic dinosaurs in the opposition who really want the government and taxpayers to keep indefinitely supporting uncompetitive industries which, instead of creating new national wealth, will continue to deplete it. In stark contrast to those opposite, I rise to say that manufacturing in Australia does have a future, but not as it has been done traditionally in many parts of this country where manufacturing methods have remained virtually unchanged for over 60 years, if not for over a century.

 

Globalisation and technical advances today are moving so fast. Our economy must continue to transform, to compete and to be productive. The automotive industry is an example of an industry that has failed to transform and adapt to meet contemporary economic circumstances. All states and territories must support, develop and understand their own competitive advantages. Every single state and territory has its own competitive advantages. The big difference in many states is that politicians, business and unions do not work together enough to take advantage of those competitive advantages and to implement the change needed to realise them.

 

I am extremely proud to be part of a government that is committed to supporting a strong and competitive Australian based manufacturing sector, not a sector that is based on subsidised, inefficient industries of the past. It is a government that is supporting innovative businesses and industries of the future to generate new national wealth and jobs and to provide the resources required for the standard of living that we all want and would like to see into the future. We are a party that does not just thump the table, as we have just heard from Senator Carr. We are a party that does not just talk, pontificate and screech about it endlessly. This is government that is acting, and it is acting responsibly.

 

Australian manufacturing can be innovative. It can be competitive and it can be a significant generator of jobs, investments and international exports, but not in the way that it is done in some of the states. However, a competitive manufacturing sector does need a government that creates the incentive for private sector investment and job creation and an environment in which industries can be productive, innovative and internationally competitive. But it does also require unions to work with employers and governments to adapt and reform so that economies evolve, so that industries do not die and so that the nation has the jobs and revenue to provide the standard of living and the life we all want here in Australia.

 

I am proud that the Australian government is helping manufacturing by abolishing the carbon tax, by cutting the company tax rate by 1.5 percentage points and by cutting around $2 billion in red tape, not to mention negotiating three new free trade agreements with some of our biggest trading partners. The coalition is also implementing the $50 million Manufacturing Transition Program, creating a level playing field for manufacturers by strengthening the antidumping regime, implementing a $155 million growth fund and pushing forward with its Industry Innovation and Competitiveness Agenda, including the industry growth centres.

 

Let’s have a look at the facts. We hear a lot of rhetoric and a lot of angry, old-style union verbiage from the last century. But the facts are that under the previous Labor government one manufacturing job was lost every 19 minutes. Where were those opposite then? Where were the trade unions then? We did not hear a peep from them. One manufacturing job was lost every 19 minutes. And nationally our average yearly growth over the last 14 years has sat at 0.4 per cent. That is why we were losing jobs.

 

However, in Western Australia, our average growth in manufacturing has been 4.8 per cent per annum for the last 14 years. Nationally, there has been 0.4 per cent growth in manufacturing jobs. In Western Australia, there has been 4.8 per cent growth, clearly demonstrating that high-end manufacturing and innovation of the future can be done in Australia, rather than the way in which manufacturing has been done in states like South Australia and Victoria.

 

The question in this current debate is: why? That is what I would like to share now with my colleagues in the Senate. What can we in Western Australia share with those other states that are still struggling to modernise their manufacturing industries? Endless task forces and interventions and subsidies were not the right answer— they were never going to be the right answer—but Labor and the unions stubbornly refused to accept this. Not only did they not order a single ship in six years of government—resulting in the current valley of death and the current unemployment for ship workers in South Australia and Victoria—but their policies resulted in the loss of one job every 19 minutes.

 

Over the last 14 years, WA manufacturing industries have grown by an average of 4.8 per cent per year. What does that mean? Total direct employment in Western Australia’s manufacturing industries increased from 75,000 in the early 1990s to just under 90,000 in 2014-15. That is 90,000 workers directly involved in competitive and productive manufacturing in our state of Western Australia. In addition to those employed directly, there are 8,900 employing businesses involved in manufacturing. I will say that again in case anyone misheard the numbers. Not only do we have over 90,000 workers directly employed in manufacturing in Western Australia, we also have 8,900 employing businesses involved in manufacturing, and most of those are small businesses manufacturing high-end, bespoke engineering products.

 

With that much manufacturing industry, what is the value of manufactured exports in Western Australia? Last financial year WA exported manufactured goods totalling $19.7 billion, which accounted for a full 18 per cent of the state’s total exports. I find that quite remarkable given the exponential growth of WA’s commodities over the past decade. Prior to this growth over the last decade, manufacturing exports from Western Australia accounted for over 20 per cent of the state’s total export earnings. Those figures alone demonstrate the fallacy of the arguments of those opposite that ongoing government subsidies and other protection measures are needed to be competitive in Australia today. WA has clearly, for the last 14 years and more, demonstrated that we can compete in a global market and that we can manufacture high-end complex and bespoke equipment, but just not in the way that has been done in the past.

 

As everybody in this chamber would know, over the past decade there has been a steep change in the size and scale of major resource projects in Western Australia. This has also generated a significant additional capacity in the management and execution of major manufacturing and development projects in what are some of the most technically challenging operating environments in the world. Over the last 10 years to 2013-14, business investment in Western Australia has totalled $484 billion. As of this June quarter, the top three projects by dollar value alone were the Gorgon LNG project, at $61 billion; the Wheatstone LNG project, at $29 billion; and the Prelude LNG project, at $12 billion—all largely constructed and built by Australian workers across Western Australia. From the Gorgon to the BHP Billiton and Rio Tinto expansions, Shell’s Prelude and Hancock’s Roy Hill, there is a significant pool of businesses and individuals who have been involved in multibilliondollar greenfield and brownfield projects which have significant manufacturing and construction elements. These activities include managing suppliers across different jurisdictions and time zones, following strict time schedules and being intimately involved in the transition to operational phase—which, again have large manufacturing and construction components. Despite an often simplistic view of the work we do in Western Australia to mine and export our natural resources, the reality is that these operations span logistic chains of hundreds of kilometres— and sometimes thousands of kilometres—employing the most technically innovative and sophisticated systems in the world. We also have the manufacturing hubs and the industrial hubs to support our high-end manufacturing to provide internationally competitive exports.

 

For example, the Australian Marine Complex at Henderson is a world-class centre for excellence in manufacturing, fabrication, assembly, maintenance and technological development. It services the marine, defence and resource industries. Since its opening in July 2003, the Australian Marine Complex has delivered 373 major infrastructure and manufacturing projects, worth in excess of $1.75 billion and generated directly, in Henderson alone, more than 26,000 jobs. Today, more than 150 businesses are located within the Australian Marine Complex, which is made up of four main precincts: maritime, technology, support industry and fabrication. Australian workers are doing work on internationally competitive projects every day. The common user facility at the Australian Marine Complex also includes a dredged, deepwater harbour, a state-of-the-art fabrication hall with 24-hour, all-weather access; a ready-to-use on-site project office; workers’ amenities; and 40 hectares of laydown and construction land. It also has five wharves—a load-out wharf and a marine services wharf with capacities of 3,000 and 15,000 tonnes respectively. And there is a newly developed marine wharf, a floating dock and all of the facilities required to build internationally competitive and cost-effective ships. In fact, as of today, more than 250 ships have been built and delivered at the Henderson facilities. Currently Austal, one of the shipbuilders on location, is not only building 15 per cent of the US naval fleet but also building naval vessels for overseas countries at Henderson facilities. They are doing it on time, on budget and with Australian workers. They are using Australian engineers and metal trade workers. But, again, we are doing it in a competitive way and not in the way that has been done, and that those opposite still pine for—for the workforce and work practices of the past.

 

For Western Australia, manufacturing represents an important opportunity to build on our established primary industries and to diversify our economy, just as it does nationally. There are opportunities for local manufacturers to meet the demands of emerging and established markets, particularly under the new free trade agreements and in emerging economies in our own region. While much has been made of the manufacturing sector being in decline nationally, this is not the case in Western Australia. Even though manufacturing is not the dominant
sector of the Western Australian economy, it is still a solid base and it is still growing strongly and has much greater capacity to grow—again, not to grow in a subsidised, old-style, table-thumping union style but to grow in a competitive and productive fashion where the unions, the businesses and the government are working together to make sure that the industries can flourish.

 

Again I will just remind people why it is an absolute fallacy that industries here need to be subsidised indefinitely and that they can just rest on their 50-, 100- or 200-year-old industrial relations and ways of doing business. In Western Australia, manufacturing accounts today for 17 per cent of our export earnings. Not only have we been manufacturing multibillion-dollar projects in Western Australia for Western Australian oil, gas and mining companies but also we have been exporting $21.9 billion every year worth of manufacturing exports. There are 8,900 employing businesses in manufacturing. Eighty-five per cent of those have an annual turnover of less than $2 million, but those that survive and thrive are innovative and productive to make themselves internationally competitive. The industry in Western Australia directly provides 91,000 specialist jobs, making manufacturing the state’s seventh largest employer, which is pretty amazing given all of the other pressures on the workforce in Western Australia. Manufacturing contributes 4.9 per cent of gross value to the Western Australian economy. But why is manufacturing so different in Western Australia from the rest of the country? Why have we been increasing nearly five per cent per annum over the last 14 years, when nationally it has been less than half a per cent?

 

To find the answer to that you really have to go to the history of Western Australia. Western Australia has always been a trade exposed economy and, right back to Federation, it never relied on the subsidies that eastern seaboard colonies received post-Federation for their already protected manufacturing industries. In Western Australia, it developed instead into industries geared towards primary industries and exports. From 1829, our economy focused on wool through to sandalwood, whaling, fishing, timber, pearling and gold; and, more recently, to nickel, iron ore, alumina and natural gas. These were all commodities that relied on sales on the open market internationally and not our domestic market, which was so much of the economies of the eastern seaboard colonies.

 

Western Australian manufacturing, as we recognise it today, began to develop and expand during World War II. After the end of the war, growth opportunities were limited and states such as Victoria and South Australia grew a heavy industry base servicing the domestic Australian market. Manufacturing represented a substantial component of our national economy and, by the late 1950s, it accounted for 29 per cent of Australian GDP. But this national industry policy affected WA manufacturing very differently. Due to the size of the nationwide manufacturing centres, national industry policy ended up focusing on areas where plants and employees were concentrated. This pattern of industry never arose in Western Australia. As I said, WA has always been trade and export focused.

 

While a large-scale manufacturing industry was not created in WA, as it was in the Eastern States—which are now in the process of adjusting and downsizing, and the subject of much hand wringing and eternal angst from those opposite with very few solutions on how to change it—the WA manufacturing industry emerged in the 1950s and 1960s as the agricultural and resources sector rapidly expanded. It was at this time that resource development was prioritised and important industrial hubs such as Kwinana emerged. These allowed for WA manufacturers to capitalise on support services and draw on the expertise concentrated within these local industrial and business hubs. Focusing on the requirements of WA primary industries encouraged other manufacturers to become more flexible and efficient in meeting the needs of niche industrial products, which is a trend that has continued today —again, not subsidised but innovating to meet not only the domestic requirements in Western Australia but the international market.

 

Despite the primary sector experiencing booms and busts during the second half of the 20th century, by the mid-20th century, a small but focused manufacturing sector had successfully adapted to major economic change while accommodating WA’s needs. While WA’s economy has flourished in recent years on the back of the significant expansion in the resources sector, it has provided a range of benefits for the wider community, including a world-class internationally competitive, export oriented manufacturing sector.

 

While ultimately it is the private sector that will determine manufacturing’s future in Australia, the government must create the best environment to foster success but they cannot do it alone. It requires the support of business and also the unions to make sure that we are able to make the changes, transform and make the hard decisions which some states clearly have not been able to do to date.

 

In summary, it is for these reasons and the example from Western Australia that I support this current program, the ATS; however, like any programs, it is a transition program. It is not a program that is there to be a hammock forever. It must finish so that the industries that it is helping to transition are able to stand on their own feet. The manufacturing sector, as I said at the beginning, has a very viable and bright future in Australia. It can provide skilled jobs and revenue for the long term for the Australian economy. Western Australia is living proof that it can, but complaining and continually seeking subsidies and refusing to take decisions will not deliver reform. (Time expired)