Speech for November 30th 2015 End of Year Celebration
Parliament House, Canberra
Ladies and Gentlemen, Senators and Members – Welcome.
This has been an enormously significant year for advanced manufacturing – and for the AAMC.
More than three years ago, a series of meetings were held – under the auspices of the Australian Industry Group – to discuss the formation of a CEO-led group of advanced manufacturers.
The CEOs involved knew then that Australia’s industry policy did not reflect the needs of contemporary, globally competitive, manufacturing.
Our national responses did not reflect the fact that many Australian manufacturers had successfully evolved – and were world-leaders.
These manufacturers are not constrained by the domestic market. For them, the market is the world.
We knew that Australian manufacturing needed an image makeover. And we knew that government policies needed to shed old frameworks – frameworks that were no longer applicable. We wanted manufacturing policy to be about success not failure and about the neo natal unit not palliative care – about winning not about asking for handouts.
Policies needed to be relevant to the fast changing dynamics of high-value, knowledge-intensive global business. They needed to recognise that change and innovation were keys to success not threats.
Prior to the last election, two and a half years ago now – in June 2013 – we launched the Australian Advanced Manufacturing Council.
The aim was to build a consultative group of CEOs to drive new thinking, to showcase success, and to redefine manufacturing in the public imagination.
In November of that year, we held our first meeting with the then Minister for Industry, Ian Macfarlane, here in Parliament House.
We urged a greater understanding of the importance of research and industry collaboration, the importance of the three legs of the innovation tripod – industry/research/government – in building a stronger economy and ensuring future growth.
We urged policies that reflected and encouraged Australia’s comparative advantages; that promoted excellence (not dependence).
And we were pleased to see these thoughts and recommendations strongly reflected in the Government’s first innovation agenda – in the establishment of the Industry Growth Centres, in the promotion of greater industry-research links and in the focus on better commercialising our world class research.
Ian Macfarlane, as the architect of this work, deserves special mention.
Today, I can proudly say we have demonstrated the value of our high-level CEO coalition, a more coherent and dedicated group of industry leaders you would be hard pressed to find.
We are grateful to our lead partner, the Australian Industry Group, for their ongoing support – and also to the CSIRO. Both organisations have been pivotal.
Our members come from across industries – they represent the mining equipment, technology and services sector, the med-tech sector, aerospace and defence, high value engineering and technology, chemicals and agribusiness.
- Thanks to these companies joining forces, understanding has steadily grown that Advanced Manufacturing is more than just a sector – it is a series of capabilities – of enabling capabilities.
Please allow me this evening to give special thanks to two of our member companies – Siemens, our major sponsor for tonight’s festivities, and Northrop Grumman, our supporting sponsor.
LOOKING TO THE FUTURE
Looking to the future. We have focused, over this past year, on Australia’s innovation ecosystem – identifying gaps in the system and encouraging those with responsibility to step up:
- We looked at skill sets – and identified important areas needing support. STEM education continues to be a major focus – and aligning industry training programs with the Government’s science priorities.
- We urged a better understanding of how large government procurement programs can be leveraged to accelerate the uptake of technology across industry.
- We worked with Austrade to shift the trade promotion emphasis towards supporting SMEs gaining access to global supply chains.
- As a community we ultimately want to be actively involved in the production of many submarines worldwide – supplying the high value technology required – rather than arguing about content of a few partially locally-produced submarines.
I talked about the gaps in the ecosystem. One important gap we identified is our lack of international competitiveness in attracting and maintaining innovation activity.
The AAMC has initiated a study of “How Australia Compares” in terms of tax incentives for R&D and IP exploitation – to better understand how these encourage and support investment. We expect to deliver the full report in early December.
In the study, we assess Australia against a group of 12 comparable countries.
I want to give you a preview tonight of the headline findings:
- Australia is losing ground on R&D and innovation activity despite offering what many would argue is a globally competitive R&D tax incentive.
- Australia remains an outlier in terms of foreign investment through cross border M&A, due to the non tax deductibility of Goodwill. Ireland, Germany, USA, India and South Korea all provide deductions for the amortisation of intangible assets and goodwill acquired. Australian manufacturers making such investments are at a disadvantage to their international competitors.
- The introduction of the UK’s combined R&D tax relief and Patent Box for commercialising IP coincides with the UK recording three consistent years of growth in attracting Foreign Direct Investment.
- This performance is remarkable in the context of a 12% reduction in investment into Europe last year.
- Australia clearly needs an Intellectual Property (IP) related tax incentive to complement our competitive R&D Tax Credit system.
While the attractiveness of R&D and commercialisation of Intellectual Property (IP) is clearly reliant on a combination of tax and non-tax factors, there is no question an effective Australian program – well marketed – will create long-term value for both Australian business and our community.
It will create a growing number of high value jobs and greater industrial capacity.
The outlook for Australia is far brighter than it was three years ago.
There is a far better understanding of what must be done – and a far greater willingness to do it.
Prime Minister Malcolm Turnbull’s new Ministry has focused national – and international – attention squarely on Australia’s future, with unprecedented emphasis on Australian innovation, technology, and leveraging our research excellence to build a strong economy.
It is great to have a PM who is clearly passionate about innovation and deeply knowledgeable about advanced manufacturing and R & D.
I also want to warmly welcome Minister Pyne to the vital portfolio of Industry, Innovation and Science.
His impatience for the success of what we are doing is palpable. I know he has impressed many of our members with his accessibility, his keenness to get outcomes and his grasp of the need for global competitiveness as a touchstone in decision making.
He also brings to the position considerable experience and understanding of the linkages between education, innovation and industry through his previous successful role as Minister for Education.
On behalf of the members, I wish you all the very best in the portfolio and look forward to working closely with you.
Minister, thank you for joining us today.