Australia’s manufacturing sector needs a tax system that encourages businesses to stay the course on digital transformation and incentives to ensure that homegrown smarts aren’t lost, according to Australian Advanced Manufacturing Council chairman John Pollaers.
Mr Pollaers, the former chief executive of Foster’s and Pacific Brands, added that the current definition of the small to medium business sector needed to be redefined.
“SMBs in Australia are really micro-enterprise and need very specific policies to help them grow,” he said.
According to Mr Pollaers, SMBs in international terms are businesses with between $50 million to $100m of turnover, while in Australia business with a turnover of between $2m and $10m are considered SMBs.
“Unless we can help these businesses scale-up we just won’t have the supply chain to support the larger businesses,” he warned.
Manufacturing in Australia has borne the brunt of increased global competition and with automation looming over the horizon, the future of the sector has until recently seen to be bleak. However, Mr Pollaers doesn’t buy that view.
Instead, he believes manufacturing does have a future as long as policymakers and the public understand that the rules of the game have changed.
“We have in the past looked at individual manufacturers employing lots of people, rather than thinking about ecosystems and supply chains,” he said.
“If we want a vibrant manufacturing sector in Australia we need our larger companies to be better hooked to the global supply chains.”
Mr Pollaers, who is delivering the keynote presentation at the first day of National Manufacturing Week in Melbourne today, said that policymakers needed to take a more nuanced and targeted approach to delivering the future framework of the Australian economy.
“I would argue that most advanced manufacturers in Australia are far less concerned about reduction in company tax and more interested in incentives for intellectual property retention, export capability and developing skills,” he said.
“There’s $9.5 billion of government investment in research and development every year.
“We don’t need more money, we need to better direct that money.”
The federal government’s Growth Centre Initiative is designed to deliver that outcome and Mr Pollaers would like to see the measures blossom into a national framework that translates strategies and investment into outcomes.
He cited defence procurement as a once-in-a-generation opportunity to retool the Australian manufacturing sector.
“We must mandate that all government procurement is seen through the lens of building Australian capability — if we can invest here we should,” he said.
“Sometimes you may pay more for the first contact but you may pay far less in the second contract as we built more capacity.
“My fear is that sometimes we are not even looking at home and historically I think we have been naively altruistic in wanting to be great examples of an open, global economy.”
According to Mr Pollaers, it’s incumbent on governments to look beyond chasing “jobs and growth” headlines and actually deliver tangible results.
“Be clear what we stand for, make sure you deliver and always ensure that you are outcomes focused,” he said.
“It’s not about having a vision, it’s about taking a stand.
“The big risk is if the US economy becomes self-reliant and the Chinese economy shifts gears, we will be left behind and there’s no excuse for that.”
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