Last week’s Plan for Australian Jobs builds on some of the work undertaken last year by the Prime Minister’s Manufacturing Task Force and contains three core strategies of enhancing industry participation in major projects, boosting international competitiveness and growing the abilities of the nation’s small business sector.
The announcement was unfortunately crowded out by the media’s ongoing obsession with Kevin Rudd’s leadership ambitions and purported potential overthrow of yet another Labor Prime Minister.
Yet the plan seeks to address some very significant issues facing the future landscape of Australian industry, particularly our manufacturing sector and small firms.
The first of the core strategies is a set of measures designed to enhance Australian industry’s participation in major projects, such as the liquid natural gas (LNG) construction work taking place in Western Australia and the Northern Territory.
Among the most significant of resource projects fuelled by Australia’s mining boom have been the Gorgon and Wheatstone LNG developments in WA.
Sadly, much of the work in the construction phase of these projects has gone offshore. (Discussions I have had with key industry representatives suggest as much as 80% of Gorgon was sent outside Australia.) This is despite the presence of an Australian Industry Participation (AIP) National Framework, which has been in place since 2001.
An agreement between federal, state and territory governments, AIP seeks to build up the capacity of Australia’s local industry, help identify opportunities at an early stage, promote local industry capacity, and facilitate industry partnerships in such projects.
There are also related programs such as the Enhanced Project By-law Scheme (EPBS) that enables major project leaders to access tariff duty concessions on eligible goods for major projects if they can demonstrate commitment to AIP and “full, fair and reasonable” opportunities for local firms.
There is also the Supplier Access to Major Projects (SAMP) program that funds the state and territory based Industry Capability Network (ICN).
Established in 1997, SAMP assists Australian firms to secure contracts that might otherwise have gone offshore. Established in 1995, the ICN has offices nation-wide and also offices in New Zealand. It administers the SAMP and the online portal ICN Gateway.
There is also the Buy Australian at Home and Abroad initiative, worth $58.4 million with federal funding and commitments from major mining and energy firms.
These firms also publicly express commitments to AIP and employ AIP consultants to help facilitate a local supply chain network. So one might ask why is there still a problem with local firms getting a share of these projects.
The jobs plan would see the AIP scheme shift from an industry led initiative to a mandated one, requiring projects worth over $500 million to submit AIP Plans. Plus, owners of projects worth over $2 billion who apply under the EPBS for tariff concessions would need to have Australian government officials embedded in their global supply offices. There are also tougher anti-dumping provisions.
The apparent leakage of so much work offshore helps to explain what is behind the government’s initiatives. Yet what are likely to increase the level of local industry participation in major projects are less bureaucratic oversight of the project owners, and more support to get Australian firms, particularly SMEs, up to international best practice standards.
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