ELLEN FANNING, HOST: Do you remember when Australia used to make things, everything from cars to clothes to footwear? Well, for a generation now, a bit more actually, we've been told we're better off to focus on what we do well and competitively in this country and just import the rest. Well, today, the Federal Government will introduce a piece of legislation which will reverse that strategy. It's called The Future Made in Australia Act. At its heart is a massive plan to re-industrialise Australia, making things with clean energy and Australian resources. A lot of people in the West are doing it. Similar policies in the US, Canada, South Korea, the EU, trying to maximize economic and industrial benefits from this move to net zero. Senator Tim Ayres is the Assistant Minister for Manufacturing. He's on the line. Good morning. We haven't had manufacturing in a big way in this country for a generation. Why would we want to throw government money at it now?

SENATOR TIM AYRES, ASSISTANT MINISTER FOR TRADE AND MANUFACTURING: Well, it's a really big week for manufacturing, a really proud week for the Albanese Government to deliver on this Future Made in Australia agenda. It is, as you say, all about making sure that we capture the industrial advantages of the future and deliver good jobs in our regions and suburbs. As you indicated in your intro, Ellen, the world isn't sitting still. The world is moving fast on these issues, 97% of our trading partners with net zero targets themselves, and many of them, including the United States, adopting incentives to make sure that they secure the right investment for their economies. The Albanese Government is absolutely determined to make sure that we deliver on the industrial promise of Australia, but it won't happen by itself. It needs support and action from the government.

FANNING: Okay, but why? I mean, we have been told, as I said, for a generation, this is the way of the world, Minister. You do not make cars in this country, you do not make clothes. You do not make footwear. We'll just import that from China, and we’ll do what we do well. That is the economic orthodoxy we have been told we must accept. Why the sudden change?

AYRES: Well, it certainly has been. But the world is changing and Australia needs to adjust. The consequence of adopting that approach has been that our economic complexity has fallen. We have the lowest level of manufacturing self-sufficiency in the OECD. After a decade of stalled productivity growth (the lowest decade in our history) there are important economic and strategic reasons why Australia must re-industrialise our economy.

FANNING: This is a lot for people to get their head around, though, isn't it, right? If you look at the example of solar panels, let's just start there, and I want you to make the case; why would we subsidise industries in which Australia doesn't have a long-term comparative advantage when our market is flooded with cheap, well-made Chinese product?

AYRES: I'll give you three good reasons. Number one; solar panels. Solar PV [was] invented in Australia, not just the generation that consumers are using now, but the next generation of solar PV [has been] invented at the University of New South Wales and the Australian National University, [was] not successfully commercialized here. Secondly, nearly 90% of solar PV panels are made in one country. That's not a good outcome in terms of energy security and supply chain security for Australia or for the world. And thirdly, there are very significant commercial and industrial benefits from us participating in that global supply chain. So when the government announced - Anthony Albanese at the Liddell power station in the Hunter Valley - announced the Solar SunShot program on the same day, SunDrive solar (who are making the next generation of copper based solar PV products more efficient than any other product out there in the world, cheaper) announced that they will build a facility, a manufacturing facility at the Liddell Power Station that will employ more people at that site than have been employed there in living memory. So, we've got the capability to do it here. We've got the comparative advantage, but it's also in our national interest and our national energy security interest to make sure that we're participating in this supply chain.

FANNING: Senator Tim Ayres is my guest, Assistant Minister for Manufacturing. We're talking about the Future Made in Australia Act. This is a massive plan the Federal Government is going to introduce via legislation today to revive Australian manufacturing. I've got a couple of real quick questions. We've got about two- or three-minutes left. In Queensland, we often hear only the downside to the transition. We’re going to lose revenue from coal. We're going to lose coal jobs. Where are these jobs going to be? What are these jobs going to be, and are they going to be in Queensland?

AYRES: Well, the first thing is that, as I said before, 97% of our trading partners with net zero targets themselves. That means the Australian economy has to adjust or get left behind. There’s a binary choice here.

FANNING: But does that mean people in coal communities get left behind?

AYRES: Coal communities should be at the centre of this agenda. The Future Made in Australia agenda means that we're looking at regions that have got industrial capability, and those mining regions happen to be exactly where this Future Made in Australia investment will be. Absolutely central to that.

FANNING: What's it going to cost to us? I mean, the US have spent basically $1.2 trillion. Surely to goodness we're not going to spend that throwing money at industry.

AYRES: No, we can't spend the same amount of money as the United States economy. But we are offering very substantial production tax credits as part of the package. They are proportionate, but they will mean that in critical minerals, green iron, green steel, hydrogen, all these industries that matter for our future. At the moment, we export iron ore to the world. Australia can be at the centre of green iron and green steel for the world - those are jobs on the East Coast and the West Coast, very substantial industrial investments. But as I say, the world won't wait for Australia. We have to have a government that's prepared to lead and deliver a package - the Future Made in Australia package - secures that investment.

FANNING: We’ve got to go to Wimbledon and talk to them. But just one crucial question, right? If you're going to socialize the risks, right, by throwing government money at these industries, have you written in profit sharing provisions? You know, if they make an upside profit, can the taxpayer get some share of that? Just real quick.

AYRES: Two examples. Production tax credits [are] only paid on results when manufacturing happens here in Australia. It's a tax credit, so it just means slightly lower tax take from that company. That is a good outcome for Australia. National reconstruction fund is an investment or a loan. There is a return to the taxpayer from those funds. We are smart and rigorous when we're investing public money. These are investments, not grants like the like the Morrison government, dodgy grants.

FANNING: Senator Tim Ayres, I'm sure we're going to be talking about this for the rest of my working life. It's a big change to how our economy will work if it works. Thank you so much for sharing the details this morning.

AYRES: Thanks, Ellen, anytime.

FANNING: Senator Tim Ayres, the Assistant Minister for Manufacturing.

ENDS.