6. Focus areas
   1. As noted in Chapter 2, there is broad consensus that domestic industry support should be targeted based on:

• Australia’s existing competitive advantages, and therefore the feasibility of competing on export markets
• improving Australia’s sovereign capability and self-reliance to manufacture critical products.
  2. These two high-level criteria overlap for many of the priority industries identified by the current and previous government. For example, the current National Reconstruction Fund (NRF) priority areas and former Modern Manufacturing Strategy National Manufacturing Priorities (and other policies) reflect a national consensus that Australia should move up the value chain in resources, energy and food, expand our biomedical and pharmaceutical manufacturing capability and continue to strengthen our defence industries. Australia has an established export track record and trade relationships in these areas, and they are also critical for sovereign capability and supply chain resilience.
  3. The Committee heard many examples of globally successful inventions and manufacturing exports across the priority areas, as highlighted in this chapter. Inquiry participants considered the value of a sovereign manufacturing capability to be self-evident with respect to energy, health/medicine, food, defence and critical enabling technologies. The inquiry also heard that while the global trend towards re-shoring or friendly-shoring critical supply chains makes it harder to attract global capital and talent (see Chapters 2, 3 and 5), it also opens export opportunities to like-minded countries[1], as discussed further below.
  4. The remainder of this chapter summarises evidence heard by this inquiry on each of the NRF priority sectors. This evidence provides useful insight into sector-specific challenges and opportunities, which may help inform implementation of the NRF.
  5. However, participants warned against constraining access to finance and other support measures to rigid sectoral or technology silos, particularly for dual- and multi-use manufacturing capabilities and technologies. The inquiry heard that multi-use ‘platform technologies’ such as 3D printing, optical fibres and semiconductor chips may be the best strategic investments Australia can make.
  6. The chapter concludes with the observation that although some inquiry participants called for new sector- or technology-specific growth, workforce or supply chain strategies, many such roadmaps, strategies and growth plans already exist. There may be value researching and reflecting on recent capability mapping and strategic planning exercises to inform future efforts. There would also be value in better coordinating the burgeoning list of federal and state manufacturing strategies/programs, and assistance to small-to-medium enterprises (SMEs) to navigate these layers of support.

Evidence on the NRF priority areas

6.7The NRF was announced in the 2022–23 Budget and legislated in March 2023.[2] As outlined in the Department of Industry, Science and Resources consultation paper on the NRF, the priority areas will be 1) renewables and low-emissions technologies, 2) medical science, 3) transport, 4) value-add in the agriculture, forestry and fisheries sectors, 5) value-add in resources, 6) defence capability and 7) enabling capabilities.

Renewables and low-emissions technologies

6.8The NRF will target at least $3 billion to renewables and low-emissions technologies manufacturing, including:

• components for wind turbines
• production of batteries and solar panels
• new livestock feed to reduce methane emissions
• modernising steel and aluminium
• hydrogen electrolysers
• innovative packaging solutions to reduce waste.[3]
  9. Inquiry participants affirmed the environmental, economic and sovereign value to Australia of investment in this priority area. For example, hydrogen electrolyser manufacturer Hysata noted the emissions reductions and ‘hundreds of billions of dollars of value that technologies like green hydrogen can deliver’.[4] The Smart Energy Council cited various studies on the economic potential of the renewable energy transition in Australia, noting that ‘Deloitte Access Economics found Australia would grow its economy by $680 billion, increase GDP by 2.6 percent and add 250,000 jobs by 2070 by adopting a comprehensive [net zero] transition approach’.[5]

Renewable energy

6.10Previous chapters highlighted many of Australia’s natural advantages for exporting renewable energy; manufacturing products like solar panels, wind turbines and batteries; and helping domestic and global supply chain diversification and resilience. As expressed by Mr Vince Allen, Chief Executive Officer (CEO) of solar technology start-up SunDrive Solar:

If we seize the moment and get the policy settings right, Australia is uniquely positioned to be a global solar manufacturing superpower. Eighty-five per cent of all the world’s solar manufacturing is currently done in one country. However, compared to other economies, Australia has significant advantages to enable it to capture this advanced manufacturing opportunity and become a global leader.[6]

6.11The inquiry heard that the global transition to net zero and growing efforts to re-shore or friendly-shore energy supply chains present major export opportunities for Australia. The inquiry also heard how Australia’s own commitment to reach net zero by 2050[7] will require transformative upgrades to Australia’s electricity generation and transmission assets (as outlined and supported by the $20 billion Rewiring the Nationprogram and Powering Australiaplan[8]), as well as innovation to decarbonise existing heavy industry.

6.12These changes must be made quickly if Australia is to secure significant market share globally. For example, Hysata noted that of 132 industrial facilities considered to be leading the Fourth Industrial Revolution globally, including in sustainability[9], ‘zero are in Australia’:

Australia holds a massive competitive advantage in the development and manufacture of many of the technologies needed in the next century, such as green hydrogen and electrolysers, solar, green steel and aluminium, and critical minerals. Currently we are at risk of losing this competitive edge by providing our competitors with the time they need to equip themselves with the most advanced manufacturing facilities on the planet.[10]

6.13Sun Cable highlighted that supply chains, particularly relating to solar panels and batteries, are poorly diversified worldwide. China dominates solar panel production, with its share of global polysilicon, ingot and wafer production soon to reach 95 per cent. China also controls production of the majority of lithium-ion batteries.[16] Conversely, Australia has limited commercial-scale capacity to manufacture our own renewable energy equipment and infrastructure, including solar panels, batteries and high-voltage direct current cables (used to connect offshore windfarms to the mainland).[17]

6.14The Australian Steel Institute also drew attention to the opportunity to source more of the material and technology inputs for Australia’s transmission grid build-out locally. Institute Chief Executive Mr Mark Cain told the inquiry that decarbonising the electricity grid alone will require approximately 400,000 tonnes of steel-intensive infrastructure by 2030 (see Chapter 3).[18]

6.15The Western Australian Government reported that it was responding to this opportunity (and challenge) by:

… undertaking a full feasibility study as part of its $10 million Wind Turbine Manufacturing Initiative to investigate the prospect of manufacturing and maintaining wind turbines in the state. It builds on a pre-feasibility study commissioned by the WA Government and completed in 2020 which recommended actions to progress wind turbine manufacturing in WA, including developing a detailed approach for WA Government trading enterprises in the energy sector, and identified that government investment and financial assistance is critical to transition local businesses to wind turbine component manufacturing.[19]

6.16Similarly, noting Australia’s world-leading rooftop solar uptake rate, SunDrive drew attention to the opportunity to leverage the program architecture of the existing Renewable Energy Target to foster domestic solar panel manufacturing. SunDrive suggested that the rebates available for rooftop solar photovoltaic systems should be scaled based on the origin of the modules, with a greater rebate for locally manufactured solar modules.[20]

6.17The Australian Aluminium Council noted that aluminium is the second largest input into solar panel installations by weight, and ‘domestic extruders already have the capability to produce frame and rail for the sector.’[21]

6.18Sun Cable also discussed the potential of cross-border renewable energy trade as an export opportunity for Australia. Sun Cable’s ambitious Australia–Asia PowerLink project is intended to ‘provide Singapore and Darwin with dispatchable, reliable and renewable energy’ via a subsea high-voltage direct current cable.[22] It noted there could be opportunities for Australia in subsea cable manufacturing, as a high-value niche with growth potential in which safety and quality assurance are paramount.[23]

Batteries

6.19The inquiry heard that battery manufacturing, leveraging Australia’s critical minerals, cuts across both the ‘Renewables and low-emissions technologies’ and ‘Value-add in resources’ priority areas and has export growth potential. The Future Battery Industries Cooperative Research Centre (CRC) informed the inquiry:

We export ~50% of global battery minerals, are on track to produce 20% of global battery grade lithium hydroxide by 2027 and we have advanced materials manufacturers, cell and pack manufacturers, storage system manufacturers and recyclers. Australia has the second largest pipeline of energy storage projects globally behind China and our network of Free Trade Agreements, our domestic demand of 55-65GWh storage by 2030, and proximity to growing regional markets, places us in an excellent position relative to our global peers.

Australia is cost competitive across the value chain from refining through to battery manufacturing. Our estimates are that Australia is 8% lower cost in advanced materials than Indonesia and 3-5% lower cost than the US for battery and pack manufacturing.[24]

6.20Federal and state governments are responding to this potential. The Australian Government is developing a National Battery Strategy.[25] The Western Australian Government noted in its submission that it is funding a prefeasibility study to identify opportunities for Western Australia to move further up the value chain into battery manufacturing, assembly and recycling.[26]

6.21However, the Future Battery Industries CRC noted the need to respond to trade headwinds:

… tariffs, subsidies and technical barriers to trade are making it more difficult for Australia to export and attract global capital. India’s 15% tariff on lithium-ion batteries and production linked incentives; United States’ US$45/kWh subsidies on battery packs, 10% domestic production tax incentives and targeted concessional loan programs; Chinese quality schemes that favour domestic businesses; and European targets for 40% of mineral processing within the EU (amongst other measures) make it more difficult to attract investment to Australia and export to these markets.[27]

Hydrogen

6.22The inquiry also heard evidence corroborating the enormous export potential of low-emissions hydrogen, as recognised in the 2019 federal–state National Hydrogen Strategy.[28] The inquiry heard that Australia could become a key player in the global hydrogen market, as both a hydrogen exporter and electrolyser manufacturer.[29] The Australian Renewable Energy Agency has predicted hydrogen could be worth up to $10 billion a year to the Australian economy.[30] Other predictions anticipate that the global value of electrolysers will reach $1.7 trillion by 2050.[31] Notably, the International Energy Agency predicted Australia would become the world’s second-largest net exporter of low-emissions hydrogen by 2030, and the largest by 2050.[32]

6.23Hydrogen has attracted sustained policy support from federal and state governments under the National Hydrogen Strategy. For example, the Australian Government committed $2 billion to the Hydrogen Head Start program in the last Budget to provide support for large-scale renewable hydrogen projects.[33] Western Australia already publishes a Renewable Hydrogen Investment Prospectus to attract global capital.[34] Its submission to this inquiry reported that Western Australia has already succeeded in attracting multibillion-dollar hydrogen projects, demonstrating investor confidence in the region’s renewable energy capabilities.[35] Both the federal and state governments have invested in the Pilbara Hydrogen Hub.[36]

6.24However, inquiry participants were extremely concerned by the potential impact of the United States’ (US’s) Inflation Reduction Act of 2022 (IRA) on Australia’s nascent hydrogen industry. The federal–state Energy and Climate Change Ministerial Council’s decision to review the National Hydrogen Strategy in response to the IRA and the European Union’s Green Deal[38] was described as ‘critically important’ by Hysata.[39]

Heavy industries—decarbonisation and recycling

6.25Other submissions highlighted the necessity and opportunity of decarbonising Australia’s existing heavy industries. For example, the Australian Manufacturing Workers’ Union’s (AMWU’s) National Political Advisor, Dr Katie Hepworth, noted:

… a lot of the big companies, like car companies, are looking at their ‘whole of supply chain’ embodied energy and are starting to do deals direct with the mines to buy up the steel to ensure that green steel production is happening. This is a real opportunity for government to similarly create markets and similarly invest in those production processes, so we have a green manufacturing supply chain right from the mines onwards.[40]

6.26The submission by the Western Australian Government outlined other major policy initiatives in this space:

The WA Government is actively supporting the modernisation and decarbonisation of steel and aluminium production in the state. In October 2022, WA opened its $15 million Carbon Innovation Grants Program, to support WA’s heavy industries to transition to net zero emissions. This was followed by the launch of the $200 million Collie Industrial Transition Fund in November, which aims to, amongst other activities, encourage green metal manufacturing in WA’s industrial Collie region in the state’s South West.[41]

6.27As noted in recent Parliamentary Library papers, Australia’s exposure to ‘structural adjustment’ risk as export markets decarbonise is concentrated in the Pilbara (Western Australia), Hunter (New South Wales) and Central Queensland.[42] The Illawarra—a traditional steel manufacturing hub—and other centres of heavy industry face similar challenges as Australia pursues its own decarbonisation.

6.28The inquiry heard examples of initiatives supporting industry diversification and decarbonisation in these regions.

6.29Initiatives included the federal- and state-funded Pilbara Hydrogen Hub[43], the work of the University of Wollongong-based Steel Research Hub[44] (co-funded by the Australian Research Council and industry[45]) and the example of HunterNet[46], a grassroots innovation network operating since 1992 to help member businesses broker better access to talent and export opportunities, and pursue local strategic priorities for key industries.[47] HunterNet’s energy and resources cluster has a focus on ‘diversification rather than replacement in all areas of this emerging market, particularly hydrogen, solar, and offshore wind generation’[48], while its environment and sustainability cluster participated in the creation of the Hunter Hydrogen Technology cluster and made submissions to support New South Wales’ Decarbonisation Innovation Hubs.[49]

6.30The Australian Aluminium Council shared the example of a planned high-purity alumina (HPA) refinery in Gladstone, Queensland, set to utilise low-emissions extraction technologies and a circular economy approach:

Alpha HPA has announced its intention to construct what would potentially be the world’s largest HPA plant in Gladstone, with targeted production of 10,000 tonnes per annum. … The Alpha HPA process will use a precursor sourced from one of the alumina refineries in its ‘Smart SX’ (solvent extraction) low emissions refining technology. Alpha HPA also collaborates with other neighbouring manufacturers so that by-products from its extraction process can be recycled, making the project an almost zero discharge facility. The solvent extraction technology, combined with renewable energy, aims to generate a range of HPA products with a carbon footprint lowered by as much as 70% compared to the incumbent method of production.[50]

6.31However, the Committee also heard that despite widespread enthusiasm for the potential to decarbonise existing heavy industries, serious technological challenges remain. For example, the Australian Steel Institute’s Mr Cain explained:

There’s a lot of hype around green steel. … People will say, ‘We can do green steel.’ By and large, that means that they melt scrap. The world steel demand is … about 2.2 billion, and only 30 per cent of that can be met through scrap. There’s not enough scrap in the world to convert everything from the integrated process, like a blast furnace with [metallurgical or coking] coal and all that stuff. So you’re stuck with a situation where 70 per cent of the 2.2 billion is made by the integrated route. … Imagine converting that [existing steelworks], in all its complexity, to an entirely new process involving hydrogen, which is highly volatile. It’s quite challenging.[51]

6.32The Committee heard evidence on opportunities for Australia to pursue a circular economy approach in other areas of manufacturing—that is, designing products to be recycled and reused. Circular economy approaches can offer a competitive advantage in an investment climate increasingly sensitive to environmental, social and governance (ESG) concerns, as discussed in Chapter 2. For example, the Aluminium Council noted that ‘Global demand for recycled aluminium is growing rapidly’, driven by major customers’ ESG-informed purchasing criteria, and that ‘A circular industry policy could lower cost and risk for domestic pre- and post-consumer scrap reprocessing.’[52]

6.33The Australian Academy of Technological Sciences and Engineering suggested that improving our domestic recycling know-how and capacity could see Australia become a net importer of waste, like Sweden[53], and world-class recycler of electronics and batteries, which could provide a further source of critical materials for re-use.[54] It elaborated on roles for government:

Changing consumption and waste habits requires the overcoming of consumer inertia and market disincentives to develop new business models, led by consumer demand. Consumers must be confident in the quality of reused or remanufactured products to adopt these new habits. The Government can lead the way on this by developing standards for reused and remanufactured products manufactured in Australia and applying these standards to imported products. These standards should be supported by a grants and incentives scheme to help overcome the high initial costs of developing a circular manufacturing sector.[55]

6.34Current Australian Government support for recycling and circular economy approaches includes developing ‘a brand and labelling scheme for verified Australian made recycled content products—“ReMade in Australia”’[56] and investment in new and upgraded recycling infrastructure through the Recycling Modernisation Fund.[57]

Medical science

6.35The target $1.5 billion NRF investment in medical manufacturing will seek to ‘leverage Australia’s world-leading research to provide essential supplies such as medical devices, personal protective equipment, medicines and vaccines.’[58]

6.36The COVID-19 pandemic showed Australia’s healthcare supply chains are vulnerable to trade shocks.[59] The inquiry heard that sovereign capabilities in medical manufacturing will make the sector more resilient to future shocks, whatever the source[60], as discussed by Pathology Technology Australia CEO Mr Dean Whiting:

It doesn’t take a lot. A volcano in Iceland, two metres of snow in Boston, potentially geopolitical disturbances in the South China Sea—all of those will affect our ability to provide health care. We work on rapid turnaround cycles. For example, all blood transfusion blood in Australia is screened for hepatitis and HIV and a range of other things. We went within a week of not being able to screen our blood supply for HIV a year or so back, and that would have been catastrophic. … If we stopped the supply of these products within a week, three weeks later much of the health care system would collapse.[61]

6.37The Committee heard that freight disruptions continued to challenge local biomedical manufacturing operations, whose supply chains are very dependent on imports. Extraordinary measures to guarantee reliable transport were imposing costs on the industry. For example, AstraZeneca’s Executive Director and Head of Supply and Manufacturing, Mr William Downie, told the inquiry of the challenges of having a supply chain located in northern and eastern Europe:

In order to ensure that we secure these supply chains, we’ve gone to things like dedicated routes and dedicated shipment lanes. There’s an inherent cost of doing that. … We’re shipping directly from the port of Antwerp in Europe to Sydney, to Botany Bay. With those [other] lower cost routes we can’t guarantee we’ve [not] got boats getting tied up in port in Singapore and we’re losing weeks on delivery schedules.[62]

6.38In addition to medical manufacturing’s importance for sovereign capability, the sector also has strong export potential. Australia has a well-established though small-scale medical manufacturing industry, currently poised for further development. Companies with manufacturing operations in Australia include ResMed, CSL, Viatris, AstraZeneca, Sanofi and Moderna (all of which participated in this inquiry).

6.39The inquiry heard that governments and multinational medical manufacturers are cementing major capital commitments to Australian manufacturing operations, co-funding substantial investments in laboratory and factory infrastructure:

• Australia’s home-grown pharmaceuticals giant CSL has opened a $900 million state-of-the-art plasma fractionation facility at Broadmeadows, in outer northern Melbourne—the largest of its kind in the Southern Hemisphere—as part of its $2 billion-plus capital investment program in Australia. The program also includes a next-generation influenza vaccine manufacturing facility at Tullamarine (near Melbourne Airport) and new global headquarters and research and development (R&D) facilities in the Melbourne Biomedical Precinct at Parkville.[63]
• US biotech company Moderna and the Australian and Victorian governments finalised a partnership in 2022 to establish the first population-scale mRNA vaccine manufacturing facility in the Southern Hemisphere at Monash University in Melbourne’s Clayton manufacturing precinct[64]—Moderna’s first outside America.[65]
• Global healthcare company Sanofi is partnering with the Queensland Government, University of Queensland and Griffith University to establish a Translational Science Hub, for a total value of $280 million across the partnership.[66] The facility is intended to link Queensland researchers with Sanofi scientists in France and the US, and ‘will initially focus on the evaluation of a new generation of mRNA vaccines and the development of a world-first chlamydia vaccine.’[67]
  40. Australia has deep scientific and growing manufacturing know-how across vaccines, medicines, medical devices and other biomedical products. Its advantages also include a track record of notable successes developing world-first, life-changing medical products despite a shallow local capital pool and distance from major markets. These successes include the bionic ear (Cochlear implant) and the world’s first cervical cancer vaccine.[68]
  41. Inquiry participants shared many examples of Australian medical innovations that had or could transform patients’ lives worldwide.

6.42Inquiry participants noted that the small size of Australia’s domestic market meant producers needed to be supported to reach global export scale if they were to be commercially self-sustaining.

6.43For example, the Australian Academy of Health and Medical Sciences informed the Committee that it is not economically viable to invest in a manufacturing facility to produce medicines and vaccines for a local population of only 25 million.[70] The Academy therefore argued for government co-investment and other policy settings to incentivise the establishment of advanced manufacturing plants that can produce medicines and vaccines at scale for much larger global export markets.[71] Similarly, Research Australia argued:

Australia needs to set some clear and ambitious goals if we are to position ourselves for economic success. One such goal would be to become a net exporter of pharmaceuticals by 2035.

Achieving such a target will involve a focus on the Australian manufacture of new, high value medical products in Australia. It would significantly boost our terms of trade in a key world market and create high value jobs. It would also create an ecosystem which would further support new research and commercialisation of new products.[72]

6.44Many of the medical manufacturing sector’s obstacles to growth have been discussed elsewhere in this report, including: the need for a globally competitive tax environment to grow, attract and retain world-scale companies; efficient regulation aligned with leading practice in larger markets; and a local ecosystem with the critical mass to incentivise skilled migrants to relocate their families to Australia long term, not just one or two major companies that can sponsor visas.

6.45The inquiry also heard that the sector has unique requirements for transporting manufactured products—especially biologics that require cold storage—pointing to unmet needs and opportunities in the overlap between the ‘Medical science’ and ‘Transport’ NRF priority areas. AstraZeneca representatives elaborated on these issues at an inquiry hearing:

Certainly when you look at where we’re advancing technology into the biopharma sector and getting into biologics, they do require very specific conditions for transport and storage, and most of them are either as refrigerated or frozen. Certainly having the infrastructure support is going to become critical for both supply and distribution of those products within the Australian market.[78]

6.46Similarly, CSL’s Deputy Chief Financial Officer, Mr John Levy, noted that ‘Australia, unfortunately, suffers the tyranny of distance. If you have a cold chain distribution network it is harder to distribute products in northern hemisphere markets from Australia than it is from Europe.’[79] AstraZeneca’s submission also explained how cold chain storage requires expensive active and passive packaging solutions including data loggers and sensors.[80]

6.47The inquiry also heard how facilitating clinical trials—especially large, multi-centre clinical trials—could keep more stages of the medical commercialisation process on-shore (see Chapter 4). The Committee heard that clinical trials are often the stage when an inventor licenses their innovation for further development offshore, by larger companies with better facilities and greater expertise in regulatory compliance processes.

6.48Research Australia called for investment in common user clinical trial-scale manufacturing facilities to ‘help support Australia as a destination for clinical trials’ and ‘support Australian research which is reliant on access to clinical trial materials to be able to continue research into promising new therapies, with flow-on benefits for collaboration and commercialisation’:

There are currently very few facilities in Australia with the capacity to produce the volumes of materials required for later stage clinical trials. … We need alternative solutions. Readier access to manufacturing facilities to produce medical products for clinical trials could be key to keeping the further development of new medical products in Australia; and it could provide a base for establishing the full-scale manufacturing capability for medical products in Australia when the product is in the market and generating revenue.[81]

6.49The inquiry also heard that poor inter-state harmonisation of clinical trials regulation meant existing facilities across the country could not easily join efforts to perform large, multi-centre clinical trials. Medicines Australia noted:

While Australia is recognised as a global destination for clinical trials, more must be done to increase Australia’s international competitiveness. Delivering a multi-centre trial in Australia across state and territory borders continues to involve significant duplication of effort, complexity and inconsistency in approach. The National One Stop Shop is an initiative currently being considered for funding by the Government which would make it easier for patients, researchers, industry representatives and sponsors to find, conduct, participate and invest in high quality and ethical research in Australia. The National One Stop Shop is a rare opportunity to address Australia’s long-running lack of harmonisation in the clinical trials landscape, which would boost our international competitiveness and strengthen our life sciences ecosystem. A public investment in the National One Stop Shop would complement the objectives of the NRF.[82]

6.50In a similar vein, Research Australia called for joined-up policy across the NRF and the new Australian Centre for Disease Control (ACDC) through new supply chain resilience and workforce strategies for the sector:

The scope for the NRF and the ACDC to work together to support the supply chain for critical medicines in Australia is one example of why a whole of government approach to the ACDC is critical, and the role a National Medical Products Industry Plan can play.

A National Medical Products Industry Plan would complement and coordinate the work of the ACDC in identifying essential medical products and the role of the NRF in supporting the manufacture of essential supplies.[83]

6.51The inquiry also heard calls for regulatory reforms around multinational taxation and Australia’s patent regime, to align Australian settings with those in well-regulated competitor jurisdictions. Some of these proposals were discussed in Chapter 3. Additionally, global medicines manufacturer Viatris (locally based in Queensland) highlighted a feature of Australian patent law that blocks local manufacturing of many generic medicines for export. Its submission argued:

Currently, the existing Patents Act … prevents manufacturers like Viatris from manufacturing and exporting new generic medicines during the [Australian] patent protection period of the reference drug, even when the drugs are not patent protected in the country of destination. Let me repeat, Australian medicine manufacturers can be prevented by Australian law from exporting generic medicines to countries where the patent for a drug has expired. … This is not the situation in a number of comparative global jurisdictions. For instance, since February 2022 the European Union has a specific waiver system to allow European-based manufacturers to engage in these types of exports. Canada also has implemented this waiver.[84]

6.52As noted by Viatris, this problem was discussed in previous Australian Government and Productivity Commission reviews. In particular, Viatris drew to the Committee’s attention recommendations made in the Productivity Commission’s 2016 Inquiry into Intellectual Property Arrangements.

6.53The Commission recognised the case for reforming these arrangements around pharmaceuticals manufacturing for export, but concluded that the feasibility of such waivers was ‘clouded by ambiguous drafting within trade agreements’[85]—in particular the Australia–US Free Trade Agreement (FTA)[86] and the multilateral ‘TRIPS’ (the Agreement on Trade-Related Aspects of Intellectual Property Rights). The Commission recommended that allowances for manufacturing for export be included in subsequent trade agreement negotiations, and that Australia seek to review and reform existing FTAs via the World Trade Organization.

6.54The Committee notes that this issue remains unresolved, and the Australian Government should develop and pursue solutions via portfolio agencies with policy responsibility for intellectual property and trade.

Transport

6.55NRF transport investments are intended to develop ‘capabilities in transport manufacturing and supply chains including for cars, trains and shipbuilding.’[87]

6.56Inquiry participants’ comments on car manufacturing supply chains mostly mentioned opportunities tied to critical minerals for electric vehicle batteries, though the Tasmanian Government noted its state’s ‘specialised and heavy vehicle industry base servicing a global market’ in high-value niches, including manufacturing of ‘underground and surface mining support vehicles, ambulance and patient support—and most recently buses for the Tasmanian public transport network’. The submission also noted that Tasmanian businesses ‘also manufacture, fit out and retrofit equipment and machinery to make them usable in the harsh Antarctic environments’.[88]

6.57The inquiry heard of electric and hydrogen bus manufacturing projects locally and abroad. The Western Australian Government’s submission noted its ‘partnership with the Australian Government to deliver a local electric bus manufacturing facility in Perth’.[89] The Commonwealth Scientific and Industrial Research Organisation (CSIRO) noted its long track record applying battery R&D to transport electrification projects:

Since the year 2000, we have been using our battery development expertise on a number of transport electrification projects:

• the development of the first hybrid electric Holden, the ECOmmodore, in 2000
• a range of projects with the Australian Government’s Rail Manufacturing Cooperative Research Centre (now closed) and China Railway Rolling Stock Corporation to improve their world-first supercapacitor light rail which runs without any overhead wires.
• the first locally designed, locally built electric urban bus prototype which we developed with Bustech
• our recently announced partnership with Dovetail Electric Aviation to convert turbine-powered planes into fully electric aircraft.[90]
  58. The inquiry heard of several projects to prototype hydrogen-based or hybrid buses locally, by federally funded research collaborations, state governments and industry.[91] For example, Deakin University described the flagship project of its Hycel Technology Hub to transform the fleet of Warrnambool Bus Lines, a joint project with the CSIRO, Future Fuels CRC and Australian Hydrogen Council. In this project, Warrnambool Bus Lines aims to transition its urban route fleet of 12 buses to hydrogen fuel cell electric vehicles. This project aims to transition the entire operational fleet for the lifetime of the vehicles, and includes the complete hydrogen value chain activities of production, storage, refuelling, depot and maintenance.[92]
  59. Deakin University’s representatives outlined this project’s benefits for local jobs and skills development (see Chapter 5), and for demonstrating the feasibility of hydrogen-fuelled heavy vehicles for Australia’s long-haul trucking routes in future, particularly given the very long routes travelled by the Warrnambool fleet.[93]
  60. However, the inquiry also heard that Australia is behind the global curve on hydrogen transport. Deakin University’s Professor Bernard Rolfe, Associate Dean of Research for the Faculty of Science, Engineering and Built Environment, shared his observations from a federal government-sponsored CSIRO hydrogen industry delegation to the United Kingdom:

I went to the UK, which has been pushing on hydrogen. We went to Birmingham. They have a bus line that’s been converted to hydrogen already. They have for the past, I think, eight years—at least five years—had hydrogen training, and they’re now training people in Europe. We’re probably about five years behind. … [T]hey don’t have some of the federal-level issues [that is, navigating federal and state levels of government].[94]

6.61On rail manufacturing supply chains, the Australasian Railway Association highlighted Australian manufacturing successes in parts of the rail value chain, attributing success to a combination of:

• a premium on trust, quality and safety
• the potential to apply highly efficient advanced manufacturing methods
• the possibility for production at a commercially viable scale to initially be sustained by local market demand
• the presence of exportable technological know-how as a spillover from the high level of automation in our mining industry.[95]
  62. Its submission gave examples:

There are many examples of Australian manufacturing capabilities that have shown they can compete internationally. Pandrol, a manufacturer in Western Sydney is having success in exporting components to the Asian region, being competitive on cost, due to its manufacturing processes but also through its superior product design. Another example is Knorr-Bremse Australia, which is considered a regional Centre of Competence for HVAC (heating, ventilation, air-conditioning). The organisation has 35 engineers and a research and development centre with world class climate chambers located at Granville, NSW. Knorr-Bremse Australia is currently locally producing HVAC units for Melbourne (HCMT) and Perth (Metronet) in Melbourne and Perth, units for export to Dhaka at Granville, units for defence applications for domestic defence contractors, as well as units for mining and exporting to the US and Thailand. In addition, they are currently engineering, project managing and invoicing from Australia rail projects in Vancouver, Chicago, Hong Kong, Doha, Philadelphia and Baltimore using intercompany contract manufacturers. …

It is also worth noting that Australia has become a world leader in heavy haul rail technologies and heavy freight rail automation due to its large mining industry that requires efficient and reliable transportation of large amounts of minerals and resources[.] The freight rail network supporting Pilbara’s iron ore industry spans 3,664km and is home to the world’s first fully automated heavy haul rail network.[96]

Value-add in the agriculture, forestry and fisheries sectors

6.63The NRF will target $500 million in investment to ‘Unlock potential and value add to raw materials in sectors like food processing, textiles, clothing and footwear manufacturing and forestry products.’[97]

6.64This inquiry heard of Australia’s potential to build on existing reputational strengths and market share in agricultural exports and environmentally sustainable forest products by moving up the value chain. This includes exporting more sophisticated food and beverage products but extends to wider opportunities such as advanced biomanufacturing and agricultural technologies and platforms.[98]

6.65Opportunities for advanced manufacturing also include technologies for managing and assuring food provenance across supply chains. For example, Swinburne University of Technology noted that ‘Manufacturers are increasingly using blockchain to help with product provenance and traceability (particularly in the food and beverage sector); also enabling smart automated contracts across the supply chain.’[99]

6.66The Australian Forest Products Association (AFPA) also noted the forestry sector’s opportunities to deploy advanced manufacturing methods for existing production, as well as its potential to help Australia reach net zero:

The concepts, approaches and practices of advanced manufacturing apply equally to industries like forest products as they do [to] electronics and robotics… Hitting the national net zero target … requires full engagement with the land sector, with forestry currently the only industry that is actively sequestering carbon from the atmosphere at scale.[100]

6.67Other submissions stressed the food security advantages of onshore food manufacturing. The Australian Dairy Products Federation (ADPF) and La Trobe University called for a national food security plan[101], with La Trobe University noting the discrepancy between our thriving exports and potentially fragile local supply chains:

As a nation, Australia produces twice as much food as needs to be consumed locally. Statistics from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARE[S]) show that Australian agricultural exports are expected to reach a record of $75 billion in the 2022-2023 financial year. Despite the production rate, the Australian Security Leaders Climate Group ‘Food Fight’ report estimates that at any one time, Australia has just five days of perishable food and 30 days of nonperishable food in our supply chain.[102]

6.68Inquiry participants noted the importance of food, forestry and fisheries value chains specifically for regional and rural Australia. Deakin University noted that food and beverage manufacturing is the largest manufacturing sector in regional Australia, followed by mining, agriculture, transport and defence equipment manufacturing.[103] AFPA likewise noted wood processors’ central roles in their local industrial ecosystems:

Modern wood processing facilities, whether for sawn timber, engineered wood products, pulp, paper, fibre packaging or tissue, provide a critical mass of industrial capacity, skills, knowledge, infrastructure and logistics, strategically located in rural and regional areas. As established manufacturing centres they provide the core of an industrial ecosystem for each of the areas in which they operate.[104]

6.69The inquiry heard that such regional manufacturing businesses face systemic vulnerabilities not present in Australia’s cities, including higher energy costs, difficulty training, attracting and retaining skilled workers, lower wages and greater vulnerability to climate change, especially through natural disasters and drought.[105] Deakin University further observed that ‘regional manufacturing is behind metropolitan manufacturing’ in transitioning to ‘high-value production’.[106]

6.70Deakin further noted that regional and rural economies often have fewer options to diversify[107] due to their lower population density and high specialisation around a local ‘anchor’ industry (such as agriculture or mining), and that workers have fewer employment alternatives to choose from compared with metropolitan areas.[108]

6.71This tendency for rural economies to be highly specialised around supporting a key local industry means that measures to support rural manufacturing—such as regional university and TAFE (technical and further education) campuses/courses, or regional manufacturing precincts and common user facilities—must be customised to local conditions. Even among agricultural industries, key technologies, export opportunities and barriers to adopting advanced manufacturing methods differ between the dairy, meat, wool and horticulture industries and their associated value chains. As Deakin University observed:

It is critical to highlight that skills needs in advanced manufacturing will often be region-specific, reflective of the industrial opportunities and relative profile of the manufacturing-base of the region. As such, any response by government, industry, and key skills partners such as universities, must remain flexible and responsive to changing needs, requirements, and drivers.[109]

6.72For example, the ADPF highlighted an overlay of unique challenges and opportunities facing dairy processers, in addition to those faced by food and beverage manufacturers in general, such as skills shortages in automation and manufacturing optimisation techniques. It noted that dairy is ‘the agricultural commodity most exposed to energy costs’.[110] It also highlighted skills shortages in ‘Specific dairy foods processing knowledge to accommodate the unique chemistry and microbiology of milk, and the production process’ and the ‘Infrastructure that supports the pressure of a daily logistics cycle and time critical processing of a fragile, temperature sensitive raw material’.[111]

6.73The ADPF also noted that value-added dairy product exports are dependent on sufficient primary production of raw milk, with current production too low for Australia to capitalise on the global demand for dairy products.[112] It further noted that producers’ and processors’ confidence to invest in factory modernisation and product innovation were being hampered by the ‘retail oligopoly’[113] and current dependence on a low-margin, high-volume product market domestically:

Processing milk requires an ‘asset heavy’ business model that in turn requires significant capital, patience, and committed investors. … Without available raw milk, the dairy processing sector faces a number of realistic scenarios … [including that] processors will need to assess their manufacturing footprint that is no longer in step with the raw material that is needed to sustain it. Factories based in rural and regional Australia will inevitably close – as has been witnessed with Saputo closing the Maffra plant and downsizing its Leongatha and Mount Gambier operations.[114]

6.74AFPA flagged similar issues. It noted several forestry-specific innovation opportunities and skills needs—for example in nanocellulosics, wood-based 3D printing, wood fibre glass and using biomass for energy generation.[115] And like the ADPF (in relation to dairy), AFPA also noted growing world demand for timber and fibre products[116]—but constrained local opportunity to pursue value-added exports growth due to inadequate primary production of timber. It warned the industry faces a major timber shortage, and called on the Government to continue to implement its Billion Trees Planand to ‘support sustainable native forestry in Australia as the primary sources of timber and wood fibre for advanced, circular, climate-sensitive manufacturing’.[117] AFPA also flagged sector-specific decarbonisation challenges—namely the need for greener sources of industrial process heat for pulp and paper production.[118]

6.75The inquiry also heard that many of the manufacturing support measures described previously would also benefit agricultural and forestry value-adding—including industry–research sector collaboration, innovation precincts in food bowl regions and common user facilities tailored to agtech and food innovation. For example, La Trobe University called for the establishment of a research fund similar to the Medical Research Future Fund for the agri-food sector[119], and highlighted the advantages of its own close relationship with Victoria’s food bowl regions.[120]

6.76The Western Australian Government drew attention to its Food Innovation Precinct WA, which ‘provides local and global entrepreneurs, food companies, and agri-enterprises an environment to research, develop and commercialise new value-added food products’.[121] La Trobe similarly highlighted its Australian Food Innovation Centre initiative, to ‘leverage existing capability and investments to support both the agri-food sector and the advanced manufacturing sector through research innovation, the (re-)skilling of the agri-food sector future workforce and commercialisation and manufacturing.’[122]

Value-add in resources

6.77The announced $1 billion NRF investment target for ‘Value-add in resources’ is intended to ‘Expand Australia’s mining science technology, and ensure a greater share of raw materials extracted are processed domestically. For example, high-purity alumina from red mud in bauxite processing or lithium processing for batteries.’[123]

6.78Arguments in favour of greater onshore value-adding are similar to those covered in Chapters 1 and 2, addressing economic complexity and manufacturing self-sufficiency. Mr Barrie Finnin, Chief Technology Officer of 3D printing specialists Amaero, captured the essence of these arguments as follows:

The right long-term play for Australia is to value-add to our resources, rather than digging holes and shipping dirt.[124]

6.79Feedback to this inquiry suggests Australia must explore its options to increase both onshore minerals refining and the manufacturing of sophisticated end products. This inquiry repeatedly heard about the market opportunities created by global efforts to achieve net zero and to friendly-shore critical supply chains.

6.80This opportunity was especially raised in relation to Australia’s critical mineral reserves. For example, the global market for lithium-ion batteries is expected to reach $100 billion by 2025—due in large part to the increasing use of electric vehicles and household and utility-scale batteries for power storage.[125] Australia has significant reserves of high-quality lithium (see Chapter 2) but current production is exported in its raw form for value-adding overseas. In addition to the lost opportunities to capture more of this value chain domestically, this pattern also means that Australia currently imports 100 per cent of its lithium-ion cells.[126]

6.81Growing Australia’s critical minerals production, including downstream processing, was the focus of the first iteration of a national Critical Minerals Strategy in 2019[127], and the Australian Government’s Critical Minerals Office[128] was created to provide export market facilitation and development services and to lead federal policy development for the sector.[129] The refreshed Critical Minerals Strategy 2023–2030 builds on this base, with a greater focus on onshore value-adding, sovereign capability, supply chain resilience and working closely with trusted trade partners.[130]

6.82The ‘Renewables and low-emissions technologies’ section of this chapter discussed challenges and opportunities manufacturing complex end products with critical mineral inputs—such as solar panels and batteries. This inquiry also heard evidence on the challenges and opportunities further ‘upstream’, in relation to the viability of refining more of our minerals onshore. Inquiry participants stressed that Australia has an abundance of almost all the raw minerals required to manufacture modern renewable energy technologies. However, for Australia to best leverage this endowment, some submitters argued we need to refine more of our minerals production onshore. For example, the Future Battery Industries CRC noted:

Advanced battery materials are typically manufactured from a variety of high-grade inputs, meaning that in order to realise the true value of our mineral endowment, Australia must process minerals here, build an ecosystem of mineral refineries such as in a chemicals precinct, and leverage our minerals strength to manufacture valuable, highly advanced materials.[131]

6.83Such processing opportunities have been recognised and pursued by states with significant critical minerals reserves over recent years—in particular Western Australia, which noted in its submission:

Rare earth projects currently under development in the state include Iluka’s rare earths refinery at Eneabba which will be the first of its kind constructed in Australia and Lynas Rare Earth’s processing facility in Kalgoorlie to process the Rare Earth concentrate from its Mt Weld mine – which has one of the highest grade rare earth deposits in the world. Together this significant industry capability strategically positions WA to grow this opportunity for Australia. Furthermore, a greater focus on ethical and sustainable supply chains by the end users of technology products, concerns regarding security of supply, and the quality and consistency of production has resulted in increasing international interest in WA as a jurisdiction to establish critical mineral processing operations.[132]

6.84Transforming raw mineral ore to metal is a capital- and energy-intensive process—as noted by inquiry participants in Australia’s established steel and aluminium industries.[133] Existing aluminium and steel producers are confronting very substantial technological and capital hurdles to upgrade legacy equipment and facilities. For example, reflecting on barriers to increasing factory automation, the Australian Steel Institute noted that:

… many manufacturing sites have been in operation for a considerable time, with associated legacy constraints. This means that often the only way to automate is via a bespoke solution that isn’t commercially available, but instead requires significantly higher cost to design and implement.[134]

6.85New refineries may not face this challenge, but they still need substantial up-front capital. Mr Finnin of Amaero told the Committee that Amaero is ‘looking at trying to establish itself in a strong position with regard to the titanium supply chain’. The following exchange with Committee members highlights both the value proposition and huge capital requirements of onshore titanium refining:

Mr Finnin: …Titanium is one of the critical materials for the aviation, defence and space market. We’re … looking at establishing titanium melt and forge facilities. Ideally, I would like to see that happen in Australia, but that’s a really big investment. It may be possible that some of the resource companies have deep enough pockets to do it, but they’re not motivated to do it at the moment because they’re able to ship a very simple product, a commodity, at 400 bucks a tonne and make plenty of margin on that.

CHAIR: When you say ‘a really big investment’, what is that?

Mr Finnin: Probably starting at around $500 million. To establish a global-scale melt, forge and titanium ore reduction facility could cost $1½ billion.

CHAIR: How quickly would we get a return on that investment?

Mr Finnin: You won’t even have the plant operational for three years, so it won’t be a rapid return on investment.

CHAIR: This sets up a value-added industry, though.

Mr Finnin: That’s the point. The right long-term play for Australia is to value-add to our resources, rather than digging holes and shipping dirt. When we’re looking at the long-term plays, let’s make the right long-term plays, the ones that make sense both geopolitically and commercially. Titanium is one that stacks up. There are others. There’s been a lot of focus on the rare earths because of the emergence of the electric vehicle technology market. Of course, with anything for electric vehicles, like the lithium battery technology, and all of the resources that are required in that—that includes not just lithium but cobalt as well—there’s a real opportunity there. It’s a sustainable global market for you to be able to make a long-term play.

Mr REPACHOLI: With the titanium, say it’s $400 a tonne to get rid of it now. You then value-add to it. Speaking about rough numbers, what kind of numbers are we talking about, if we get that into a powderised form, ready to burn?

Mr Finnin: I buy titanium alloy powder to the aerospace specification for about $300,000 a tonne, and Australia’s ore is being shipped for about $400 a tonne.

Mr REPACHOLI: … That sounds like a genuine no-brainer.

Mr Finnin: It does. It’s the $500 million to 1½ billion that you’ve got to find. That is an entry barrier. It is.[135]

6.86Asked whether players in Australia’s existing mining industry had an interest pursuing such onshore value-adding themselves, Mr Demus King, General Manager of Trade, Investment and Investor Relations at the Minerals Council of Australia, reflected on the limited commercial incentives to undertake further processing in the case of copper, as an example:

… the difference in value between copper concentrate and metal is relatively small. The cost of energy and the cost of labour in Australia mean that you very quickly eat that margin. …There are a whole set of economic elements between where we are as miners and where we might be as miners, processors and manufacturers.[136]

6.87Inquiry participants also noted that minerals processing consumes large amounts of energy, and will thus require affordable low- or zero-emissions power and process heat to be viable. For example, the Aluminium Council noted that:

Australia is one of the very few countries which has bauxite mining, alumina refining, aluminium smelting and aluminium extrusion industries, making aluminium one of the few commodities in which the raw materials are mined and processed into … consumer products right here in Australia. … However, … while the existing aluminium industry in Australia is a successful example of vertical integration, it is far from being at capacity. The single biggest factor in determining the location of future refining, smelting and manufacturing locations is reliable, internationally competitive, low emissions energy. …

Alumina refineries will require technology changes to meet zero-emissions goals… However, this relies on not only the development of commercial and technological solutions for electrification of alumina refineries but also the development of sufficient competitively priced low emissions generation and storage, and transmission capacity at scale to match. … Decarbonisation of Australia’s electricity supply is the most significant opportunity and challenge in the transformation of Australia’s industry, in the biggest clean industrial and economic revolution this country has seen.[137]

6.88The Australian Steel Institute highlighted steel as another example where Australia has existing vertically integrated value chains onshore—from iron ore and metallurgical (coking) coal mining through to steel fabrication—but uncompetitive energy costs that limit expansion prospects.[138] The Institute also gave evidence on the significant technological hurdles involved in adapting an existing steelworks to produce ‘green steel’, noting that progressing from current bench-scale proofs-of-concept to industrial-scale implementation would demand a huge step change.[139]

6.89Overall, the inquiry heard cause for optimism, as well as a recognition that Australia is only just beginning to navigate the commercial realities of this journey. As the Minerals Council’s Mr King observed:

Miners are very good at mining. Manufacturers are very good at manufacturing. They’re two different industries. The question is how you get the value chain working together across those very different businesses, very different ways to use capital, very different ways to use technology and skills and the other inputs that you require—and people.[140]

6.90The CSIRO’s Director of Manufacturing, Dr Marcus Zipper, echoed this point in relation to battery manufacturing:

We are going to need our own battery storage, energy storage devices. But whether we go along the whole value chain is a question still to be considered. At the moment we mainly do the mining and a bit of the minerals processing. If we can move further up the value chain towards activator materials, cathodes and anodes, that would be an opportunity. We might continue all the way to battery manufacture.[141]

6.91Regional manufacturers also have opportunities to value-add to the existing mining industry through mining equipment, technology and services (METS) industries. Deakin University noted that mining, agriculture, transport and defence equipment manufacturing is the second-largest manufacturing activity in regional Australia, after food.[142] Amaero’s Mr Finnin advised, ‘I foresee in the future that some of the sustainment for supply chain for the METS sector, for example, will be regional. It will be close to the processing plants where the spare parts are needed.’[143]

6.92The inquiry also heard that Australia could seek to leverage its skills in mineral extraction to become a world leader in critical mineral recovery and re-manufacturing from waste streams, under a circular economy approach.[144] The global transition to low-carbon technologies demands increasingly large amounts of critical minerals. Increasing Australia’s recycling capabilities could provide an additional source of these materials, with potential to be more cost effective than traditional mining[145] as well as having a smaller environmental footprint.

Defence capability

6.93NRF investment in ‘Defence capability’ will seek to drive the ‘sourcing of requirements from Australian suppliers employing Australian workers, whether they be technology, infrastructure or skills.’[146] In practice, this priority area overlaps significantly with naval shipbuilding activities as outlined under the ‘Transport’ priority area, and with many ‘Enabling capabilities’.

6.94The value of a sovereign defence industry is not controversial and has been a priority of successive governments. As noted by the Department of Defence in its submission, the Australian Government recognises that ‘an internationally competitive Australian defence industry is a fundamental input to Defence capability’, and that ‘Without the support of industry, Defence does not have effective capabilities’.[147]

6.95Submarine construction and nuclear engineering capabilities will be a key focus for industry capability development due to AUKUS (the Australia, United Kingdom and United States trilateral security pact). Under this agreement, ‘Australia and the UK will deliver SSN-AUKUS, a new conventionally-armed nuclear-powered submarine, based on a UK design, incorporating cutting edge Australian, UK and US technologies’.[148] Described by the Prime Minister as ‘the most transformative industrial endeavour in Australian history’[149], the AUKUS submarine deal will demand a step-change in Australia’s nuclear science and engineering and advanced manufacturing capabilities. For example, the Department of Defence noted in its submission that:

Safely delivering and sustaining a fleet of nuclear-powered submarines in Australia will require a strategic uplift in our industrial capability, including in advanced manufacturing. The AUKUS partnering arrangement also introduces opportunities to develop new ways of working and manufacturing, and for export of Australian advanced manufacturing products to partner-nation supply chains.[150]

6.96The flagship 2018 Defence Industrial Capability Plan[151] and subsequent announcements identified the following additional ‘Sovereign Industrial Capability Priorities’:

• combat clothing survivability and signature reduction technologies
• munitions and small arms research, design, development and manufacture
• land combat and protected vehicles and technology upgrades
• aerospace platform deeper maintenance and structural integrity
• Collins class submarine maintenance and technology upgrade
• continuous shipbuilding program (including rolling submarine acquisition)
• enhanced active phased array and passive radar capability
• advanced signal processing capability
• surveillance and intelligence
• test, evaluation, certification and systems assurance
• robotics, autonomous systems and artificial intelligence
• precision guided munitions, hypersonic weapons, and integrated air and missile defence systems
• space
• information warfare and cyber capabilities.[152]
  97. Other defence industry initiatives have included the National Naval Shipbuilding Enterprise as outlined in the 2017 Naval Shipbuilding Plan[153],andthe 2019 Defence Industry Skilling and STEM strategy, which outlined strategies to enhance collaboration between government, industry and the education and training sectors to meet defence industry workforce requirements.[154]
  98. This inquiry heard that defence and space manufacturing are areas of strength for Australia, with an existing industrial base and skilled workforce to support export growth. The Department of Defence told the inquiry that the defence industry is already ‘at the vanguard of advanced manufacturing in Australia.’[155] The Western Australian Government argued ‘Australia is well placed to grow its naval shipbuilding sustainment and maintenance industry’[156], and the successful example of Western Australia’s Australian Marine Complex was discussed earlier in this report. South Australia’s world-leading Osborne shipyard is discussed below.
  99. The Department of Defence noted that advanced manufacturing techniques are already utilised in the local manufacturing of components for supersonic F-35A stealth fighters, and in the construction of new Hunter-class frigates to replace the Navy’s existing Anzac-class frigates. Defence stated that ‘In both cases, the use of advanced manufacturing techniques is lifting the skills of Australia’s workforce, creating secure, high-tech jobs that will contribute to Australia’s industrial base for generations to come.’[157]

6.100Inquiry research identified many other successful examples of local defence manufacturing for the domestic and global market:

• As described by Australian aerospace prime Lockheed Martin, ‘Australian businesses are supplying components for the entire [global] F-35 fleet, not just Australian aircraft. Every F-35 built contains some Australian parts and components’ and more than 70 Australian companies have won contracts for F-35 development, production and sustainment.[163] Countries with operational F-35 fleets include the US, UK, Italy, the Netherlands, Norway, Israel, Japan and South Korea, and more have ordered them.[164]
• The Bushmaster is an Australian-designed protected mobility vehicle manufactured in Bendigo, Victoria, by French defence multinational Thales.[165] The Bushmasters recently won attention for their value in Ukraine’s national defence campaign[166], with the Australian Government pledging to donate more.[167]
• One-hundred and twenty-nine Redback infantry fighting vehicles will be constructed by South Korean conglomerate Hanwha at its facilities in the Geelong region, subject to the conclusion of negotiations.[168]
  101. As discussed previously, export opportunities are growing in global value chains for sensitive technologies—particularly defence technologies used by trusted allies. For example, the Australian Institute of Machine Learning noted that the AUKUS security pact, and similar agreements, are an opportunity ‘to build a local industrial base around exports to countries such as the US and UK in more sensitive industries, such as autonomous vehicle and defence technology.’[169]
  102. Space technology—including satellites and the rockets to launch them—is an area closely related to both defence and ‘enabling’ capabilities, with value for both sovereign self-reliance and export growth to allied countries. For example, the Australian Strategic Policy Institute has argued:

A satellite in polar orbit providing services to Australians flies over almost every country in the world, every day. … As we’ve entered a more globalised, interconnected and interdependent world, Australia has become heavily reliant on space-based technologies for essential services our communities depend on. … Maintaining a full-spectrum space industry with capability to design, build, launch and operate satellites will ensure Australia’s unimpeded, rapid access to space, despite any supply-chain disruptions in the global market or other changing circumstances outside of Australia’s control.[170]

6.103In this inquiry, Gilmour Space founder and CEO Mr Adam Gilmour also drew attention to the value of satellites for bushfire detection:

… In the past, previously, the way our fire crews go out and fight fires is they get a morning briefing, and in the morning briefing, they’ll get whatever satellite was going overhead—a picture that could be as much as 24 hours ago. And then they spend the rest of the day fighting with that information. For not a lot of money, we can put up a satellite constellation so that they can get up-to-date information every five or 10 minutes. And very, very importantly, you can see a bushfire that starts in the middle of nowhere. We’ve got a very big country. Sometimes we don’t know a bushfire started for days after. If you can spot that in the first five or 10 minutes, you can take action on that and you can control it while it’s very small, before it gets into a massive fire front. This is a key technology that Australian companies have right now. We just need some money to put it together and send it to space.[171]

6.104The inquiry also heard that the development of a sovereign Australian space industry would help capture a larger share of the growing, multibillion-dollar global space sector.[172] The Advance Space: Australian Civil Space Strategy 2019-2028 set out the Australian Government’s plan to triple the size of the Australian space sector to $12 billion and create an additional 20,000 jobs by 2030[173], with 2021–2030 roadmaps for ‘Robotics and automation in space,’ ‘Earth observation from space’ and ‘Communications technology and services’. Although recent budget cuts have drawn criticism[174], Australian Space Agency head Mr Enrico Palermo has affirmed ‘the government is still committed to space, and we must use this moment as an opportunity to continue our growth we’ve seen in recent years and transition’.[175]

6.105Mr Gilmour of Gilmour Space argued that the Australian space industry has the potential to surpass the $12 billion target previously set by the Australian Government, and that the local industry is now sufficiently mature to achieve scale through government contracts rather than grants:

I don’t think where we are as an industry now we need a lot of grants anymore. I think we need contracts. We need business from the government. That’s how we’re going to leverage our companies and that’s how we’re going to get more international business as well. If you look around the world at the space industry—the local government is the traditional first customer of any kind of emerging space company. Once they give those companies business, then the international customers jump on board, and that’s what is required.[176]

6.106Mr Gilmour also questioned whether Australia’s FTAs were equitable, noting that carve-outs for critical sectors such as defence and space are very common among other countries but unavailable here:

The United States has laws and policies that mandate that the US government must launch and use US-owned companies for all of their missions. … All the other nations that launch into space have similar rules. Japan has a similar rule; Korea has a similar rule; the European Union has similar rules. … And we desperately need that, because if we had a situation where we freely invited foreign space companies to compete on our government business at the expense of us, then we’re not playing on a level playing field and we’re costing Australian jobs.[177]

Enabling capabilities

6.107Under the priority area ‘Enabling capabilities’, the NRF is intended to ‘Support key enabling capabilities across engineering, data science, software development – including in areas such as fintech, edtech, artificial intelligence, robotics and quantum.’ Although NRF arrangements are still under development, this may overlap with the $1 billion funding target for ‘critical technologies’ and the separate $1 billion target for ‘advanced manufacturing’.[178]

6.108While not a focus of this inquiry, the Committee heard that sovereign capabilities in relation to data, artificial intelligence (AI) and cyber security would be critical to Australia’s future security, stability and prosperity. For example, Science & Technology Australia argued:

Australia must develop stronger sovereign capability in machine learning, AI, robotics and automation. This is particularly crucial when these technologies are used in potentially sensitive applications, such as defence or health. Australia can not afford to rely on imported technologies in these critical areas. We must invest at a larger scale in areas crucial to our national needs.[179]

6.109The Australian Institute of Machine Learning explained the link between AI and the potentially sensitive customer data used to train and improve proprietary AI systems, with implications for Australia’s reliance on AI products developed and maintained by overseas companies:

A potentially significant barrier to growth of Australian advanced manufacturing is the reliance on AI technology created elsewhere, particularly for more sensitive applications. Companies that control AI systems end up learning a lot about their clients’ data, and probably gain greater insight into Australian businesses and their customers than the businesses would know themselves. This presents sovereign risks when applied to sectors such as defence industry, mining, agriculture, health and energy. Therefore, in more sensitive sectors there is a strong case for insisting on Australian owned and controlled AI for the core functioning of related digital systems and datasets.[180]

6.110The inquiry also heard that advanced manufacturing technologies such as 3D printing are powerful enablers across multiple industry manufacturing sectors, as are Industry 4.0 technologies such as sensors, robotics and cobotics. Their transformative potential has been discussed throughout this report, and particularly in Chapter 1.

6.111Inquiry participants were eager to ensure the NRF priorities framework—currently based on specific sectors or technologies—does not end up constraining funding opportunities for genuinely cross-cutting capabilities useful to many industries[181]—as these may be the most strategic long-term investments Australia can make. For example, defence industry R&D co-investment partnership DMTC Limited’s submission warned:

The early identification of seven priorities for the National Reconstruction Fund notwithstanding, it will be important for the NRF to take a cohesive rather than siloed approach in order to realise opportunities for developing dual-use and dual-purpose technologies and manufacturing capabilities (e.g. defence and civilian applications, or public and military health) that might genuinely sit in one or more of the theme areas, or have a natural home in one field but opportunities for adoption in another.[182]

6.112For example, it is not self-evident where cross-sector manufacturing technologies such as 3D printing, blockchain or the Industrial Internet of Things (noted as key opportunities by Swinburne University[183]) sit in the current NRF priorities framework, depending on their industry (or industries) of application. Science & Technology Australia elaborated on this point in relation to less well-known, high value-added, multi-use technologies:

Clever strategic investment in technologies with the potential to be applied in more than one sector will generate stronger returns on investment and boost job creation across the economy. Some examples of this include optical fibres used for high-speed internet also being used to create advanced probes to image human cells and organs for diagnosis. The same technology has been repurposed to grade the quality of meat to give Australia’s livestock producers rapid next-generation quality control tools. Similarly, recent advances in 3D printing are now being used in a wide array of diverse sectors. Techniques to print houses out of concrete; just-in-time joint replacements during surgery using titanium; and micro-needle arrays for vaccine delivery from polymers are diverse examples of how a single manufacturing platform can have multiple applications. Semiconductor manufacturing infrastructure is a similar cross-cutting multi-platform technology. Semiconductor chips are integral to every device we use from phones to parking meters, blood tests to MRIs, television to WiFi. Australian companies are designing some of the most advanced semiconductor chipsets, but with no local manufacturing or prototyping opportunities. These sorts of dual- or multi-use technologies will also significantly add to Australia’s economic complexity – and resilience.[184]

6.113Similarly, DMTC called for ‘deliberate investment in enabling or “platform” technologies’.[185] DMTC CEO Dr Mark Hodge highlighted the strategic sense behind this approach:

… if I were answering that question about where those efforts should be directed, I would say that they should be directed in areas that give you multiple launch-off points and where the value can be created along multiple pathways and multiple vectors. … [I]f you invest in a core capability from which you can launch multiple commercial products, you are spreading your risk a lot more and the rising tide floats all boats.[186]

6.114Space manufacturing and launch capabilities are another area potentially poorly served by traditional sectoral definitions of priority areas and technologies. Gilmour Space stated in its submission:

… it has been challenging to navigate through a system that has found us to be: ‘too risky,’ too early stage, too late stage, ineligible due to VC funding, out of scope, not in [a] priority area, not covered in policy, and not ‘new.’[187]

Sectoral strategies, plans and roadmaps

6.115As a final observation, several inquiry participants called for sector-specific strategies, plans or roadmaps to map and address supply chain, workforce or industry capability gaps:

• The AMWU argued ‘a root-and-branch industry profiling exercise is required to fully account for the future workforce needs of … advanced manufacturing in Australia.’[188]
• Research Australia called for a ‘National Medical Products Industry Plan’ including an ‘Advanced Manufacturing Workforce Strategy’.[189]
• La Trobe University recommended a ‘workforce plan to address the skills that will be required by the future agricultural and food processing workforce’.[190]
• The ADPF called for ‘A Government Workforce Strategy … that addresses the challenges of recruiting skilled dairy processing positions’.[191]
• Sun Cable called for ‘joint government-industry strategies for target industries’ akin to the federal–state National Hydrogen Strategy, but for a wider range of low-emissions technologies.[192]
  116. However there are dozens of overlapping strategies, plans and roadmaps already in existence, developed by federal and state governments, industry and the research sector. The following list is an illustrative sample just at the federal level:
• The Critical Minerals Strategy
• National Hydrogen Strategy (a federal–state collaboration)
• Defence Industry Skilling and STEM Strategy
• Australia’s Artificial Intelligence Action Plan
• Australian Cyber Security Strategy
• Australian Civil Space Strategy
• Delivering Ag30
• National Rail Action Plan
• List of Critical Technologies in the National Interest
• Critical Technologies Statement
• Statement of Principles on Australian Innovation Precincts
• Robotics and Automation on Earth and in Space Roadmap
• Earth Observation from Space Roadmap
• Communications Technologies and Services Roadmap
• Australia’s National Resources Workforce Strategy
• National Quantum Strategy
• Buy Australian Plan (under development)
• National Robotics Strategy (under development)
• National Rail Manufacturing Plan (under development)
• National Battery Strategy (under development)
  117. There are even more examples at state level and developed by industry and the research sector, listed in Appendix C to this report. Given the large number of strategies and plans, the persistence of calls for further workforce and capability mapping or strategic planning exercises is of concern. Lessons could perhaps be drawn from recent strategic planning initiatives to inform better approaches in the future. For example, Research Australia recommended ‘a renewed skills gap analysis based not just on existing gaps but forecast need’ for medical product manufacturing and addressing ‘the whole pipeline of skills required from initial discovery through product development, commercialisation and manufacturing’.[193]
  118. New South Wales’ Modern Manufacturing Commissioner, Ms Lisa Emerson, questioned whether national capabilities and gaps had been mapped effectively to date:

Capability mapping is spoken about a lot, but it is not something that I have seen done incredibly well in any area at this point in time. I think the country would benefit from sharing capability maps from across all states to have a national framework on capability mapping in Australia.[194]

6.119The AMWU’s Dr Hepworth argued that supply chain mapping exercises should be better joined up with government procurement policies:

It is crucial too that, when government are developing up their procurement strategy, they also look at where there might be gaps. They need to be forward-looking around the gaps that exist in the supply chain and understand how procurement can be used to build out the industry to address those gaps. One of the procurement policies which has been looking at how you do that and ratchet up is the New South Wales Renewable Energy Sector Board plan. It identifies that in some of these new renewable energy sectors we don’t have sovereign manufacturing capability across that whole supply chain. But we want to encourage that sovereign capability to be built out, so they have initial gateway targets and then a ratcheting target over time.[195]

6.120In Chapter 2, this report noted the frequent appeals by inquiry participants for a more joined-up, collaborative approach to industry and manufacturing policy nationally, across policy portfolios, the three levels of government (local, federal and state), and between the government, industry, research and education sectors overall.

6.121The strategic plans shown above and in Appendix C suggest that priorities are actually quite well aligned across such silos. However, the large and growing number of different frameworks, documents and support programs nationally may complicate governments’ efforts to align and optimise their policy and investment efforts. The layers of complexity may also make it harder for industry stakeholders—particularly the majority of manufacturers that are small businesses—to identify and navigate the guidance, funding and other supports available.

6.122‘Concierge’ services for manufacturing SMEs, as discussed in Chapters 2 and 3, could be a useful bridging mechanism for supporting the existing industry to access the growing menu of support—particularly if via a single shopfront across federal and state governments, industry peaks and research collaboration ‘anchors’ such as the CSIRO, CRCs and DMTC.

Committee comment

6.123The Committee notes the general approval of the priority areas set out in the NRF, and broad agreement that these areas fulfil the dual targets of playing to Australia’s existing competitive advantages, and improving Australia’s sovereign capability. The Committee was pleased to hear numerous success stories of innovation across a variety of industry sectors during this inquiry.

6.124Although this chapter is divided into focus sectors, the Committee is very aware of the risk of constraining support by sector or technology silos. It may be that the greatest value uplift occurs in enabling capabilities and multi-use platform technologies.

6.125The Committee does not make any recommendations regarding specific sectors or the general focus areas of the NRF. However, it notes submitters’ concerns regarding the quantum of support available.

Mr Rob Mitchell MP

Chair

Footnotes

[1]For example: Mr Demus King, General Manager, Trade, Investment and Investor Relations, Minerals Council of Australia, Committee Hansard, West Melbourne, 3 May 2023, p. 49.

[2]Department of Industry, Science and Resources (DISR), ‘National Reconstruction Fund Corporation Bill passes through Parliament’, Media Release, 30 March 2023, www.industry.gov.au/news/national-reconstruction-fund-corporation-bill-passes-through-parliament, viewed 12 October 2023.

[3]DISR, National Reconstruction Fund: Consultation Paper, November 2022, pages 2–3.

[4]Hysata, Submission 13, p. 1.

[5]Smart Energy Council, Submission 48, p. 7.

[6]Mr Vince Allen, Chief Executive Officer (CEO), SunDrive Solar, Committee Hansard, Sydney, 5 July 2023, p. 33.

[7]Climate Change Act 2022, pt 2, s. 10(1).

[8]Department of Climate Change, Energy, the Environment and Water (DCCEEW), Rewiring the Nation, www.dcceew.gov.au/energy/renewable/rewiring-the-nation, viewed 12 October 2023.

[9]As identified by the World Economic Forum’s Global Lighthouse Network: World Economic Forum, Global Lighthouse Network, initiatives.weforum.org/global-lighthouse-network/home, viewed 9 November 2023.

[10]Hysata, Submission 13, pages 3–4.

[11]SunDrive Solar, Submission 1, p. 2.

[12]Mr Allen, SunDrive Solar, Committee Hansard, Sydney, 5 July 2023, p. 33.

[13]Mr Allen, SunDrive Solar, Committee Hansard, Sydney, 5 July 2023, p. 33.

[14]Mr Allen, SunDrive Solar, Committee Hansard, Sydney, 5 July 2023, p. 34.

[15]SunDrive Solar, Submission 1, p. 2.

[16]Sun Cable, Submission 43, pages 7–8.

[17]Sun Cable, Submission 43, p. 5.

[18]Mr Mark Cain, Chief Executive, Australian Steel Institute, Committee Hansard, Sydney, 5 July 2023, p. 27.

[19]Government of Western Australia, Submission 51, p. 17.

[20]SunDrive, Submission 1, p. 14.

[21]Australian Aluminium Council, Submission 12, p. 4.

[22]Sun Cable, Submission 43, p. 1.

[23]Mr David Griffin, CEO, Sun Cable, Committee Hansard, Sydney, 5 July 2023, p. 41.

[24]Future Battery Industries Cooperative Research Centre (CRC), Submission 39, pages 1–3.

[25]DISR, ‘National Battery Strategy: have your say’, www.industry.gov.au/news/national-battery-strategy-have-your-say, viewed 12 October 2023.

[26]Government of Western Australia, Submission 51, p. 15.

[27]Future Battery Industries CRC, Submission 39, pages 2–3, 7.

[28]COAG (Council of Australian Governments) Energy Council, Australia’s National Hydrogen Strategy, July 2019, www.dcceew.gov.au/energy/publications/australias-national-hydrogen-strategy, viewed 12 October 2023.

[29]Hysata, Submission 13, p. 1; Smart Energy Council, Submission 48, p. 15; Government of Western Australia, Submission 51, p. 15.

[30]Australian Renewable Energy Agency, Hydrogen Energy, arena.gov.au/renewable-energy/hydrogen/, viewed 8 September 2023.

[31]Hysata, Submission 13, p. 1.

[32]International Energy Agency, World Energy Outlook 2022, October 2022, p. 396.

[33]DCCEEW, Hydrogen Headstart program, www.dcceew.gov.au/energy/hydrogen/hydrogen-headstart-program, viewed 8 September 2023.

[34]Government of Western Australia, Submission 51, p. 27.

[35]Government of Western Australia, Submission 51, p. 16.

[36]Pilbara Development Commission and Government of Western Australia, Pilbara Hydrogen Hub, www.pdc.wa.gov.au/our-focus/projects/pilbara-hydrogen-hub.aspx, viewed 12 October 2023; Government of Western Australia, Submission 51, p. 28.

[37]Hysata, Submission 13, p. 2.

[38]B How, ‘Hydrogen strategy will be reviewed in response to IRA’, InnovationAus.com, 26 February 2023, www.innovationaus.com/hydrogen-strategy-will-be-reviewed-in-response-to-ira/, viewed 12 October 2023.

[39]Hysata, Submission 13, p. 6.

[40]Dr Katie Hepworth, National Political Adviser, Australian Manufacturing Workers’ Union (AMWU), Committee Hansard, Sydney, 5 July 2023, p. 24.

[41]Government of Western Australia, Submission 51, pages 17–18.

[42]Parliamentary Library, ‘Coal, gas and decarbonisation – challenges and policy choices,’ Parliamentary Library Briefing Book: Key issues for the 47th Parliament, June 2022, p. 93.

[43]Pilbara Development Commission and Government of Western Australia, Pilbara Hydrogen Hub; Government of Western Australia, Submission 51, p. 28.

[44]University of Wollongong, Steel Research Hub, www.uow.edu.au/steel-research-hub/, viewed 12 October 2023; Australian Steel Institute, Submission 25, p. 6.

[45]Australian Steel Institute, Submission 25. p. 6.

[46]Business Council of Co-operatives and Mutuals, Submission 28, pages 15–16.

[47]Business Council of Co-operatives and Mutuals, Submission 28, pages 15–16.

[48]HunterNet, Energy & Resources, hunternet.com.au/key-industries/energy/, viewed 12 October 2023.

[49]HunterNet, Environment & Sustainability, hunternet.com.au/key-industries/environment/, viewed 12 October 2023.

[50]Australian Aluminium Council, Submission 12, p. 4.

[51]Mr Cain, Australian Steel Institute, Committee Hansard, Sydney, 5 July 2023, p. 30.

[52]Australian Aluminium Council, Submission 12, p. 4.

[53]A Bergquist, M Lindmark and N Petrusenko, ‘Creating Value Out of Waste: The Transformation of the Swedish Waste and Recycling Sector, 1970s-2010s’, Business History Review, Vol. 97, No. 1, Spring 2023, pages 3–31, doi.org/10.1017/S0007680522000745, viewed 12 October 2023.

[54]Australian Academy of Technological Sciences and Engineering, Submission 3, p. 3.

[55]Australian Academy of Technological Sciences and Engineering, Submission 3, p. 3.

[56]DCCEEW, Remade in Australia, www.dcceew.gov.au/environment/protection/waste/consumers/remade-in-australia, viewed 12 October 2023.

[57]DCCEEW, Investing in Australia’s waste and recycling infrastructure, www.dcceew.gov.au/environment/protection/waste/how-we-manage-waste/recycling-modernisation-fund, viewed 12 October 2023.

[58]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[59]Research Australia, Submission 29, p. 6; AstraZeneca, Submission 36, p. 1.

[60]Pathology Technology Australia, Submission 52, p. 2.

[61]Mr Dean Whiting, CEO, Pathology Technology Australia, Committee Hansard, Sydney, 5 July 2023, p. 18.

[62]Mr William (Bill) Downie, Executive Director and Head of Supply and Manufacturing, AstraZeneca, Committee Hansard, Sydney, 5 July 2023, p. 10.

[63]CSL, ‘CSL opens new Australian Plasma Fractionation Facility’, Media Release, 7 December 2022, www.cslbehring.com.au/news/2022/csl-opens-new-australian-plasma-fractionation-facility, viewed 9 November 2023.

[64]Moderna, Submission 61, p. 1.

[65]DISR, ‘mRNA vaccine manufacturing facility commences construction in Melbourne’, Media Release, 9 December 2022, www.industry.gov.au/news/mrna-vaccine-manufacturing-facility-commences-construction-melbourne, viewed 12 October 2023.

[66]Sanofi, Submission 11, p. 1.

[67]Department of State Development, Infrastructure, Local Government and Planning (Queensland), ‘Queensland Goes Global: how a new science hub will connect Queensland’s brightest minds to the world in the hunt for the next great vaccine’, Media Release, 5 December 2022, www.statedevelopment.qld.gov.au/news/queensland-goes-global-how-a-new-science-hub-will-connect-queenslands-brightest-minds-to-the-world-in-the-hunt-for-the-next-great-vaccine, viewed 12 October 2023.

[68]Austrade (Australian Trade and Investment Commission), Australian innovation behind life-changing medicines, 1 June 2022, www.austrade.gov.au/en/news-and-analysis/analysis/australian-innovation-behind-life-changing-medicines.html, viewed 12 October 2023.

[69]Mr Michael Junger, Senior Vice President of Advanced Technology, Vaxxas, Committee Hansard, Brisbane, 25 July 2023, p. 23; Vaxxas, About Vaxxas, www.vaxxas.com/about-vaxxas/, viewed 25 August 2023.

[70]Australian Academy of Health and Medical Sciences, Submission 19, p. 1.

[71]Australian Academy of Health and Medical Sciences, Submission 19, p. 2.

[72]Research Australia, Submission 29, p. 6.

[73]A Hooton, ‘Bali bombings hero Fiona Wood: the next frontier in burns treatment’, Sydney Morning Herald, 1 October 2022, www.smh.com.au/national/bali-bombings-hero-fiona-wood-the-next-frontier-in-burns-treatment-20220726-p5b4k5.html, viewed 12 October 2023.

[74]Fiona Wood Foundation, Fiona Wood, https://www.fionawoodfoundation.org.au/fiona-wood, viewed 12 October 2023.

[75]Australian Society of Plastic Surgeons, Winthrop Prof Fiona Wood, plasticsurgery.org.au/research/research-profiles/winthrop-prof-fiona-wood-am/, viewed 12 October 2023.

[76]BioScience Managers, Submission 62, p. 2.

[77]Business.gov,au, Biomedical Translation Fund, business.gov.au/grants-and-programs/biomedical-translation-fund, viewed 12 October.

[78]Mr Downie, AstraZeneca, Committee Hansard, Sydney, 5 July 2023, p. 10.

[79]Mr John Levy, Deputy Chief Financial Officer, CSL, Committee Hanasrd, West Melbourne, 3 May 2023, p. 13.

[80]AstraZeneca, Submission 36, p. 2.

[81]Research Australia, Submission 29, p. 8.

[82]Medicines Australia, Submission 50, p. 2.

[83]Research Australia, Submission 29, p. 7.

[84]Viatris, Supplementary Submission 7.1, pages 2–3.

[85]Productivity Commission, Intellectual Property Arrangements, Inquiry Report No. 78, 23 September 2016, p. 11; further discussion at pages 310–312 and pages 549–550. The issue was also noted in the November 2012 Pharmaceutical Patents Review Background and Suggested Issues Paper, and April 2013 Draft Report (pages v, xix, 40–54). The final report was released only after a Freedom of Information campaign. At the time of writing, it appears to be unavailable on IP Australia’s website, but can still be viewed at web.archive.org/web/20150327140432/http://www.ipaustralia.gov.au/pdfs/2013-05-27_PPR_Final_Report.pdf (see pages vi–vii, xx, 44–59). The report recommendations were substantively similar to the Productivity Commission’s, and focused on the need for a better approach to negotiating trade agreements.

[86]The Productivity Commission noted: ‘the TPP [Trans-Pacific Partnership] has yet to be signed. As such, the obligations in AUSFTA [the Australia–United States Free Trade Agreement] apply. A side letter (Vaile 2004) to that agreement appears to limit the possibility of manufacture for export by stating that: … Australia may permit the export by a third party of a pharmaceutical product covered by that patent, only for the purposes of meeting the marketing approval requirements of Australia or another territory. (p. 1)’—Productivity Commission, Intellectual Property Arrangements, p. 312. While the TPP has since been signed, it was never ratified by the US.

[87]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[88]Tasmanian Government, Submission 46, p. 4.

[89]Government of Western Australia, Submission 51, p. 27.

[90]Commonwealth Scientific and Industrial Research Organisation (CSIRO), Submission 23, p. 12.

[91]CSIRO, Manufacturing and Commercialisation of Hydrogen Buses, research.csiro.au/hyresource/manufacturing-and-commercialisation-of-hydrogen-buses/, viewed 12 October 2023; CSIRO, Warrnambool Hydrogen Mobility Project, research.csiro.au/hyresource/warrnambool-hydrogen-mobility-project/, viewed 12 October 2023; Department for Infrastructure and Transport (South Australia), ‘SA accelerates towards zero-emission public transport with train and bus trials’, Media Release, 30 July 2023, dit.sa.gov.au/news?a=1255225, viewed 12 October 2023; J Thompson, ‘AUS-first hydrogen and battery busses unveiled at Sydney expo’, Energy Magazine, 11 October 2022, www.energymagazine.com.au/aus-first-hydrogen-and-battery-buses-unveiled-at-sydney-expo/, viewed 12 October 2023.

[92]CSIRO, Warrnambool Hydrogen Mobility Project.

[93]Deakin University, Submission 10, p. 31.

[94]Professor Bernard Rolfe, Associate Dean, Research, Faculty of Science, Engineering and Built Environment, Deakin University, Committee Hansard, West Melbourne, 3 May 2023, p. 32.

[95]Australasian Railway Association, Submission 20.

[96]Australasian Railway Association, Submission 20, pages 14–15.

[97]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[98]CSIRO, Submission 23, pages 7–8.

[99]Swinburne University of Technology, Submission 56, p. 4.

[100]Australian Forest Products Association (AFPA), Submission 54, p. 2.

[101]Australian Dairy Products Federation (ADPF), Submission 49, p. 8; La Trobe University, Submission 44, p. 2.

[102]La Trobe University, Submission 44, p. 2.

[103]Deakin University, Submission 10, p. 5.

[104]AFPA, Submission 54, p. 4.

[105]For example: Deakin University, Submission 10, p. 5.

[106]Deakin University, Submission 10, p. 5.

[107]Deakin University, Submission 10, p. 5.

[108]Deakin University, Submission 10, p. 4.

[109]Deakin University, Submission 10, p. 9; Amaero made similar points in relation to siting 3D printing manufacturing facilities based on the location of workforces, the raw materials and in particular end customers: Mr Barrie Finnin, Chief Technology Officer, Amaero, Committee Hansard, West Melbourne, 3 May 2023, pages 45–46.

[110]ADPF, Submission 49, p. 11.

[111]ADPF, Submission 49, pages 4–5.

[112]ADPF, Submission 49, p. 7.

[113]ADPF, Submission 49, p. 11.

[114]ADPF, Submission 49, p. 8.

[115]AFPA, Submission 54, pages 3–4.

[116]AFPA, Submission 54, p. 4.

[117]AFPA, Submission 54, p. 3.

[118]AFPA, Submission 54, p. 8.

[119]La Trobe University, Submission 44, p. 1.

[120]La Trobe University, Submission 44, p. 2.

[121]Western Australian Government, Submission 51, p. 2.

[122]La Trobe University, Submission 44, p. 1.

[123]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[124]Mr Finnin, Amaero, Committee Hansard, West Melbourne, 3 May 2023, p. 46.

[125]Smart Energy Council, Submission 48, p. 14.

[126]Smart Energy Council, Submission 48, p. 14; CSIRO, Submission 23, p. 6.

[127]Department of Industry, Innovation and Science and Austrade, Australia’s critical mineral strategy, March 2019, apo.org.au/node/227646, viewed 12 October 2023.

[128]Formerly the Critical Minerals Facilitation Office.

[129]DISR, Critical Minerals Office, www.industry.gov.au/mining-oil-and-gas/minerals/critical-minerals/critical-minerals-office, viewed 12 October 2023.

[130]DISR, Critical Minerals Strategy 2023-2030, June 2023, www.industry.gov.au/publications/critical-minerals-strategy-2023-2030, viewed 12 October 2023.

[131]Future Battery Industries CRC, Submission 39, p. 4.

[132]Government of Western Australia, Submission 51, p. 21.

[133]Australian Aluminium Council, Submission 12; Australian Steel Institute, Submission 25.

[134]Australian Steel Institute, Submission 25, p. 7.

[135]Mr Finnin, Amaero, Committee Hansard, West Melbourne, 3 May 2023, p. 46.

[136]Mr King, Minerals Council of Australia, Committee Hansard, West Melbourne, 3 May 2023, pages 52–53.

[137]Australian Aluminium Council, Submission 12, pages 2 and 6.

[138]Australian Steel Institute, Submission 25, p. 6.

[139]Mr Cain, Australian Steel Institute, Committee Hansard, Sydney, 5 July 2023, p. 29.

[140]Mr King, Minerals Council of Australia, Committee Hansard, West Melbourne, 3 May 2023, p. 53.

[141]Dr Marcus Zipper, Director of Manufacturing, CSIRO, Committee Hansard, West Melbourne, 3 May 2023, pages 17–18.

[142]Deakin University, Submission 10, p. 5.

[143]Mr Finnin, Amaero, Committee Hansard, West Melbourne, 3 May 2023, p. 46.

[144]Australian Academy of Technological Sciences and Engineering, Submission 3, p. 1.

[145]Australian Academy of Technological Sciences and Engineering, Submission 3, p. 3.

[146]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[147]Department of Defence, 2016 Integrated Investment Program, February 2016, p. 10.

[148]Hon Anthony Albanese, Prime Minister; Hon Richard Marles MP, Deputy Prime Minister and Minister for Defence; Hon Pat Conroy MP, Minister for Defence Industry and Minister for International Development and the Pacific, ‘AUKUS Submarine Workforce and Industry Strategy’, Media Release, 14 March 2023.

[149]Hon Anthony Albanese and others, ‘AUKUS Submarine Workforce and Industry Strategy’, Media Release, 14 March 2023.

[150]Department of Defence, Submission 58, p. 2.

[151]Department of Defence, 2018Defence Industrial Capability Plan, April 2018.

[152]Department of Defence, Fact Sheet: Sovereign Industrial Capability Priorities, September 2021, www.defence.gov.au/sites/default/files/2021-09/Sovereign-Industrial-Capability-Priorities-Factsheet.pdf, viewed 12 October 2023.

[153]Department of Defence, National Naval Shipyard Enterprise, www.defence.gov.au/business-industry/naval-shipbuilding, viewed 12 October 2023.

[154]Department of Defence, Defence Industry Skilling and STEM strategy, March 2019, pages 2–3, www.defence.gov.au/business-industry/industry-capability-programs/defence-industry-skilling-stem-strategy, viewed 9 November 2023.

[155]Department of Defence, Submission 58, p. 2.

[156]Government of Western Australian, Submission 51, p. 23.

[157]Department of Defence, Submission 58, p. 2.

[158]BAE Systems Australia, Submission 35, p. 1.

[159]Department of Defence, 2016 Defence White Paper, February 2016, p. 113; Department of Defence, Naval Shipbuilding Plan, May 2017, p.16; Department of Defence, Force Structure Plan 2020, July 2020, p. 43.

[160]BAE Systems Australia, Submission 35, pages 1–2.

[161]BAE Systems Australia, Submission 35, p. 2.

[162]Flinders University, Line Zero, www.flinders.edu.au/research/articles/line-zero, viewed 12 October 2023.

[163]Lockheed Martin, 5th Generation Capability for Australia, www.f35.com/f35/global-enterprise/australia.html, viewed 7 September 2023.

[164]F Romaniello, ‘F-35: Which Countries Use The Aircraft?’, Forces.Net, 16 September 2020, www.forces.net/news/f-35-which-countries-use-aircraft, viewed 12 October 2023.

[165]Hon Pat Conroy MP, Minister for Defence Industry and Minister for International Development and the Pacific, ‘New Bushmasters for the Australian Defence Force’, Media Release, 17 May 2023.

[166]M Zelinsky, ‘“You will send more?” Ukrainians want Australia’s Bushmasters’, Australian Financial Review, 2 July 2023, www.afr.com/world/europe/you-will-send-more-ukrainians-want-australia-s-bushmasters-20230702-p5dl2n, viewed 12 October 2023.

[167]Hon Richard Marles MP, Deputy Prime Minister and Minister for Defence; Hon Anthony Albanese, Prime Minister; Hon Penny Wong, Leader of the Government in the Senate and Minister for Foreign Affairs, ‘Australia gifts further Bushmasters to Ukraine’, Media Release, 12 July 2023.

[168]Hon Pat Conroy MP, Minister for Defence Industry and Minister for International Development and the Pacific, ‘Delivering next generation infantry fighting vehicles for Australia’, Media Release, 27 July 2023.

[169]Australian Institute for Machine Learning, Submission 21, p. 3.

[170]L Damp, ‘A sovereign space-launch capability is crucial for Australia’s prosperity and security’, The Strategist, Australian Strategic Policy Institute, 31 March 2021, www.aspistrategist.org.au/a-sovereign-space-launch-capability-is-crucial-for-australias-prosperity-and-security/, viewed 8 September 2023.

[171]Mr Adam Gilmour, CEO, Gilmour Space, Committee Hansard, Brisbane, 25 July 2025, p. 4.

[172]Mr Gilmour, Gilmour Space, Committee Hansard, Brisbane, 25 July 2025, p. 1.

[173]Australian Space Agency, Advancing Space: Australian Civil Space Strategy 2019 – 2028, April 2019, p. III.

[174]J Nelson, ‘Space must “take perspective” on budget, says Palermo’, Space Connect, 17 May 2023, www.spaceconnectonline.com.au/industry/5890-space-sector-needs-to-seize-opportunities-following-federal-budget-cuts-says-palermo, viewed 12 October 2023.

[175]J Nelson, ‘Space must “take perspective” on budget, says Palermo’, Space Connect, 17 May 2023.

[176]Mr Gilmour, Gilmour Space, Committee Hansard, Brisbane, 25 July 2023, p. 2.

[177]Mr Gilmour, Gilmour Space, Committee Hansard, Brisbane, 25 July 2023, p. 2.

[178]DISR, National Reconstruction Fund: Consultation Paper, pages 2–3.

[179]Science & Technology Australia, Submission 41, p. 4.

[180]Australian Institute for Machine Learning, Submission 21, p. 4.

[181]For example: Dr Mark Hodge, CEO, DMTC Limited (formerly the Defence Materials Technology Centre), Committee Hansard, West Melbourne, 3 May 2023, pages 35–37; Science & Technology Australia, Submission 41, p. 3; Griffith University, Submission 2, p. 2; Government of Western Australia, Submission 51, pages 25–26.

[182]DMTC, Submission 32, p. 2.

[183]Swinburne University of Technology, Submission 56, p. 4.

[184]Science & Technology Australia, Submission 41, p. 2.

[185]DMTC, Submission 32, p. 1.

[186]Dr Hodge, DMTC, Committee Hansard, West Melbourne, 3 May 2023, pages 35–36.

[187]Gilmour Space, Submission 31, p. 2.

[188]AMWU, Submission 17, p. 9.

[189]Research Australia, Submission 29, p. 7, 14.

[190]La Trobe University, Submission 44, p. 1.

[191]ADPF, Submission 49, p. 15.

[192]Sun Cable, Submission 43, p. 11.

[193]Research Australia, Submission 29, p. 13.

[194]Ms Lisa Emerson, Modern Manufacturing Commissioner, Investment NSW, Committee Hansard, Canberra, 24 May 2023, p. 7.

[195]Dr Hepworth, AMWU, Committee Hansard, Sydney, 5 July 2023, p. 24.