Andrew McKellar interview with Brendan Arrow, ABC News Radio.  

16 Mar 2022 |

Event: Andrew McKellar interview with Brendan Arrow, ABC News Radio.

Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Brendan Arrow, host ABC News Radio.

Date: 16 March 2022.

Topics: Reaction to Prime Minister Morrison’s manufacturing announcement, building sovereign manufacturing capability, material shortages, supply chain diversification, trade relationship with China, COVID-19 winter preparedness, skills and training investment, VET, workforce participation.

E&OE 

Brendan Arrow, host ABC News Radio: Andrew McKellar is CEO of the Australian Chamber of Commerce and Industry and joins me now. Andrew, thank you very much for your time today.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Good morning.

Brendan: What do you make of this decision set to be announced by the prime minister?

Andrew: We think it’s a very positive initiative. I think it takes us in the right direction here. I mean, what we are doing is encouraging a stronger sovereign manufacturing capability. We’re building on some advantages that we already have. We have these raw materials, these rare earths and other materials that go into some of these advanced manufacturing capabilities. We need to be able to process that and value-add in Australia. So, I think it is a step in the right direction. It will help us to build our domestic manufacturing capability and diversify some of our markets that we’re currently relying on.

Brendan: Why does a mining industry worth hundreds of millions of dollars need more government support?

Andrew: Here it’s about co-investing, bringing that advanced manufacturing capability to the Australian market. And I think from that point of view, we are going to build more value. We’re going to create jobs which are sustainable for the future, and I think it will strengthen the Australian economy. These are the sorts of things that we need to look at doing. We need to diversify away from our reliance on markets, where there can be a greater level of risk, where we’re sending raw materials offshore without processing them and then buying them back at 10 times the price. So, I think it’s a step in the right direction. The other thing if I can say here, I think if we look at the situation Australian business is facing right now, we have one of the most critical materials shortages in nearly 50 years. So, I think building that extra capacity will help address in the longer term, those sorts of supply chain rigidities that we have at the moment.

Brendan: Is the funding all that’s needed from the government to get this industry up and running or is something else needed? I guess, what else do we need to use these rare earths and make production here once they’re all dug out of the ground?

Andrew: I think it’s a prudent investment by government. And the reality is around the world this is what governments are doing. This is smart industry policy. If we don’t do this, then the risk is that that investment won’t go ahead. So it’s a co-investment. There’s a significant risk by the private sector proponents in this case, but really this is helping to get it off the ground and it will build that capability for the Australian economy for the future.

Brendan: When it comes to the COVID-19 pandemic, it’s shown us about the issues with our supply chains. How big of a benefit is it now seen here in Australia to be making things within our own country?

Andrew: Oh, I think it’s very important that we don’t lose those capabilities. I think we have seen over a period of 30 years or more, there’s been a hollowing out of Australian manufacturing capability. We have to be smarter about policy in that regard. We don’t want to get into a situation where we are completely reliant on overseas economies. We’ve seen the extent of reliance that we have on an economy like China. And then when things turn a bit more sour in terms of the broader geopolitical landscape, we face a lot more risks. So here, I think we do have to build some domestic capability. And honestly, I think it is at small costs. When you look at the fact we’ve spent $300 billion plus over the past couple of years to boost the Australian economy to take it through the pandemic.  Here, we’re talking about a program which is $1.3 billion in total, $240 million here. I think it’s a small price to pay to really strengthen that domestic manufacturing capability and building greater resilience to deal with the sorts of crises that we’ve had to look at in the past couple of years.

Brendan: There are concerns another COVID wave is on the way here in Australia as the cooler months come. How are business owners you’re talking to going at the moment?

Andrew: I think from what we’re seeing, the economy has been growing in the March quarter.  We actually have managed to weather the Omicron surge reasonably well. It did dampen activity somewhat, but there are generally positive expectations about the coming months. Of course, there is still risk out there and I think there is an onus on governments, federal and state to coordinate extremely well ahead of any prospect of a winter resurgence. So we need to be prepared and we need to see a very clear winter preparedness plan that’s been developed by the federal and state governments. At the moment for business, the big pressures are really the supply chain pressures, access to materials, access to labour, that’s where a lot of focus has got to go on addressing those issues.

Brendan: And just finally, while I’ve got you, the Federal Budget it’s due to be handed down in just a little under two weeks, what’s on your wish list? What do you want to see?

Andrew: Well, I think coming back again to the issues of things like skills shortages, I think the number one priority that business would put in terms of the Federal Budget in two weeks is investment in skills, providing greater incentive to vocational education and training so that we can skill young Australians coming into the workforce to ensure that they are going to be job-ready to meet the requirements that the business has for the future. Things like apprenticeships, investing in apprenticeships, keeping those strong levels of take-up in apprenticeships going, encouraging more Australians to come back into the workforce with access to childcare and encouraging senior Australians to stay in the labour force. These are the things that will really help Australian business going forward.

Brendan: Andrew, thanks very much for your time today on ABC News Radio.

Andrew: Great. Thanks very much.

Brendan: That’s Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry.

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