What does Morrison’s industry co-investment look like? Manufacturing strategy provides some clues

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One of the headline messages from the 2020-21 federal budget was the government wants to change the way public servants interact with business, and we’re beginning to get a better idea of what that looks like.

The Department of Industry, Science and Energy and Resources (DISER) has been tasked with administering a $1.3 billion Modern Manufacturing Initiative in the coming years that will seek to move government from a passive subsidizer of industry to an active participant in market development.

The program, first flagged by Prime Minister Scott Morrison earlier this month, will include an $80 million investment in pulling together businesses, government and other organizations to collaborate on the development of future technologies.

As industry minister Karen Andrews has explained, the government hopes to take an active role in the process, rather than just throwing money at the private sector.

“Tinkering at the edges on manufacturing policy is not an option. It hasn’t worked in the past. Despite our world-class skills and incredible natural assets, manufacturing has been in decline for decade,” Andrews said in the foreword to the government’s manufacturing strategy.

“Now, driven by both imperative and opportunity, we are adopting a whole-of-government strategy that will see Australian manufacturers scale-up, become more competitive and more resilient.”

In addition to $80 million to support collaboration with government and other organizations, the department of finance says $4 million will be pumped into industry-led projects that translate collaborative research outcomes into new marketable products, while another $4 million will support businesses in connecting those products with global supply chains.

This three-stream structure will operate across priority manufacturing industries: Resources technology and critical minerals processing, food and beverage, medical products, recycling and clean energy, defence, and space.

Finance says these activities will be supported by bolstered private investment guidance published by the department in February, which outlines a series of policies for Commonwealth investments.

“The opportunities for investment on the Commonwealth balance sheet in support of economic and social outcomes as an alternative to grant funding has increased over the past 10 years,” the department said in a statement.

“…the Framework brings together policy and best practice guidance on different types of commercial investment and financing options and when they could be used by Government to enable the delivery of a project or policy over the life cycle of the investment.”

In the collaboration phase of the manufacturing initiative, the government will fund up to one-third of each eligible project cost.

There will be a two-stage application process for businesses looking to access the program, including a competitive selection stage.

Expressions of interest will open late in the first half of 2021, so probably around June next year.