ABC News Radio with Sarah Macdonald

03 July 2024


SARAH MACDONALD, HOST: The new Future Made in Australia Act is, at its heart, a $23 billion plan to revitalise Australian manufacturing by making more things here with clean energy and Australian resources. To learn more about this, Senator Tim Ayres is the Assistant Manufacturing Minister, and he joins me now. Hi, Senator.


MACDONALD: Yeah, great to chat to you. Can you start by explaining what sort of things, some real examples, are we going to start building here in Australia?

AYERS: I'll give you a concrete example of the kind of opportunity that exists for us. We are currently, in our top three exported goods overseas is iron ore, largely exported to one jurisdiction. We have an opportunity (because of our vast reserves of solar, our space and our industrial capability) to be in there processing iron ore to turn it into green iron and green steel for global production processes. That would be a win-win for Australia, going up the global value chain. So, capturing more of the value of our resources here, creating good jobs in regional Australia. So, in the northwest, Western Australia, and the Illawarra, Whyalla, Newcastle, potentially Central Queensland. But it would also be very good in terms of working with our trading partners to reduce their own carbon emissions. You see, 97% of our trading partners have net zero obligations themselves. They are looking to trading partners who can deliver on what they need, which is low emissions, high efficiency, high quality goods. And we have one, you know, this is a once in a lifetime opportunity for Australia. This is a train that leaves the station once, and we are determined to act to capture that opportunity.

MACDONALD: To get on that train, so to speak. So, that's one example you've given there. My understanding is that any projects that fall under this new strategy will need to be green in nature. Is that right?

AYERS: Well, there's three sets of criteria that are driving the national interest framework - rigorous criteria. The projects are either key to our net zero transformation, or where Australia could have a genuine comparative advantage, or where there's an economic or national security imperative, driving the government decision making here. There's three baskets - separate baskets. Of course, there is some overlap in the minerals processing area. The example I just gave you straddles all three of those criteria. But that's what it's all about, capturing the advantage as the world undergoes the biggest industrial transformation since the Industrial Revolution, making sure we deliver those jobs here, making sure that we're acting to capture comparative advantage in Australia, to compete in what is a new global trading environment. But thirdly, of course, there are economic and national security considerations here that we must act on in the national interest.

MACDONALD: So, would that mean - you've given your example there - but would it be things like manufacturing solar panels? Would that be another one that would fall under this?

AYERS: Yeah, solar panels is a good example. We invented solar PV in Australia. Over the decades we have failed to capture the commercialisation advantages here. And the first generation of solar PV invented in Australia, largely made in one country overseas, approaching 90% of global solar panels are made in China. That is not good in terms of supply chain diversity, supply chain security and energy security. The next generation of solar PV cells, again invented here in Australia at the University of NSW and ANU, in particular are critical. We have the Solar Sunshot program, a billion dollars, all related to this package. When that was announced - at the same time, SunDrive Solar, one of our solar manufacturers and an inventor of new copper solar technology - announced that it would build a facility at the Liddell Power Station that will employ more people than have been employed in living memory at that site. That is the kind of, you know, it is cheaper, more efficient in energy terms and really advanced manufacturing for Australia, only captured if the Government acts to provide the right policy framework and the right incentives to deliver investment here.

MACDONALD: Taking that solar example, can we be competitive, say, with China? Their product is abundant and it's cheap and it can flood our market. How do we compete with that when we have such different, for instance, workplace laws and workplace rates of pay?

AYERS: We certainly shouldn't compete by producing bad jobs. We're going to produce good quality jobs as part of this process. We can compete because our product is more efficient. The production processes engage much higher levels of efficiency, and the product, the intellectual property around the product invented here in Australia, can be manufactured here. It is a more efficient product, this next generation of solar. It provides real opportunities for Australia. In the end, these kind of investments will stand on their own two feet. We are a large market for solar products, of course, sitting on the edge of Australia, sitting on the edge of the fastest growing region of the world in human history, big markets across our region, and we want to see Australian manufacturers growing in our domestic context, but contributing to global supply chains. And as I said before, it's not good in energy security terms to have just one source of solar panels for the world. That's something that's not in anybody in the region's interest. And Australia can make a contribution because it's our invention, our product, and it's going to make a big difference for Australia and the region.

MACDONALD: You mentioned investment there. Let's talk about this. The Government's put aside $23 billion for this plan. How's that money going to be spent or allocated in terms of, will you distribute it via subsidies and tax breaks, and what will people have to do to win those grants, so to speak?

AYERS: Well, a large part of this is production tax credits, and that is a no regrets strategy, where a tax credit, so a slightly lower tax rate effectively is applied to these projects when they manufacture in Australia. So, it's not largely grants and subsidies provided in the hope of investment. It is a tax subsidy that is provided when manufacturing occurs. So, by the tonne of processed lithium or some other critical mineral or green iron or hydrogen. This is a no-regrets approach. It is, in fiscal terms, sound. It's spread over ten years and it's designed to send a really clear message to the global investment community, have a head-turning effect in boardrooms, so that those big investors and big manufacturers understand that it is competitive to manufacture in Australia. And I can tell you, in my trade role, meeting with investors here and around the world, this package is having a big head-turning effect for Australia. It is sending a clear message that we are open for business. The only threat, of course, to this is the sovereign risk that Peter Dutton and David Littleproud and the Liberals engage. This sort of negativity about Australia's future and our capability and a refusal to engage seriously with what is required here in the national interest, sends a terrible message to investors. So, we're going to - that's one of the reasons we're taking this through the Parliament - is to send a really clear message here.

MACDONALD: You are getting that through the Parliament, or you are trying to get that through the Parliament. Just very quickly, last question for you; who's going to decide who gets these tax breaks? Is it a politician, is it a bureaucrat who's making that decision?

AYERS: Well, it'll be very similar to, I think, a parallel process, that works very well as the Foreign Investment Review Board. So, it'll be made - decisions made - in Treasury, it won't be made by politicians. These won't be the old dodgy grant schemes that the Morrison Government, in particular, had, where there's political considerations about pork barrelling and marginal seats. There is a very clear, rigorous set of national interest considerations here just the same as the National Reconstruction Fund, additional $15 billion there, or Export Finance Australia and their investment capability are engaged in an independent way in the national interest.

MACDONALD: Well, Senator, no doubt people like the ABC and many others will be keeping a close eye on that to make sure that is the case. No pork barrelling. It's been great to chat to you. Thanks for your time.

AYERS: Really good to talk to you, Sarah. Thank you.

MACDONALD: Senator Tim Ayres there, the Assistant Manufacturing Minister.