Our colleagues at the Institute for Integrated Economic Research Australia Ltd worked with Global Access Partners Pty Ltd and Gravity iLabs, DMTC Limited 2021 on a series of workshops defining key questions for a way forward for Australia in the post world. -COVID 19.

A key element in shaping a transition is the question of the scope and nature of Australia’s industrial sovereignty.

Their latest report deals with this topic and was published in May 2021.

The summary of the report highlighted their findings.

This report reflects discussions of the Institute for Integrated Economic Research Australia (IIER-A) Working Group on Australia’s Sovereign Industry Capacity. The group included a wide range of experts and stakeholders with diverse interests and opinions, and therefore not all participants would agree with all of the ideas outlined in this document.

The group argued that the COVID-19 pandemic has exposed long-term gaps in Australia’s domestic production capacity and that reliance on overseas supply chains has made the nation vulnerable to a range of future political, economic and environmental contingencies.

The report calls for a broad survey of Australia’s manufacturing base to highlight areas of sovereign importance that could be strengthened and expanded through a series of government measures. This approach, which has already been adopted to some extent in the 2020-2021 federal budget, could also generate a range of employment and environmental benefits, as well as support resilience efforts in human resources, social cohesion, disaster planning and other key sectors.

As Australia will continue to depend on mining, agriculture and services for the bulk of its economic activity, lessons can be learned from Australia’s history, from the national defense sector and approaches taken by international peers such as New Zealand and Scotland, to inform the creation of coherent and effective industrial policy.

Although the development of high-tech sectors, as indicated by the government in the 2020-2021 budget, is important, it must be part of a larger strategy to strengthen Australia’s manufacturing base, develop manufacturing industries. low-tech, support small and medium-sized enterprises (SMEs) and build or protect strategically important manufacturing capabilities.

A series of related measures aimed at improving the resilience of the Australian manufacturing sector, and therefore the national resilience as a whole, should be undertaken as part of this comprehensive approach, ranging from improving cybersecurity and training the workforce -work for urban planning and modernization of energy supply. .

Pursuing an integrated resilience policy, in which economic policy plays an important role, would help protect Australia from future threats. Viewing economic policy in isolation from international political issues, environmental threats and social consequences is no longer tenable, given the deteriorating international situation and the experience of COVID-19.

The establishment of an independent national resilience institute would facilitate a thorough and continuous examination of these issues, helping to inform the political debate and ensure that it remains on the political agenda beyond the current pandemic.

A revival of domestic manufacturing is a necessary, but not sufficient, part of enhancing national resilience, and therefore this report should be understood in conjunction with those produced by other IIER / GAP working groups.

The report deserves careful reading and an e-book version of the report can be found at the end of this article.

But an issue that clearly interests not only Australia is the issue of setting up secure supply chains as a result of negotiating with the Chinese and their comprehensive approach.

Here’s how the report’s authors frame this problem:

Wuhan has become the international infamy as the epicenter of the global pandemic, but its role in international supply chains is just as instructive. The city produces a tenth of China’s rapidly growing auto industry and hosts more than 100 suppliers of Honda parts alone. The late-imposed lockdown on Hubei province quickly spread around the world, and the global supply chains that now dominate the world’s interdependent economy have been significantly disrupted. Shortages of consumer goods, exacerbated by just-in-time ordering systems as well as panic buying, have become commonplace, as a scramble for scarce medical supplies has exposed the world’s dependence on a handful of suppliers on the market. long chains of dubious provenance.

No sane commentator is suggesting that Australia could or should produce all the products it needs. Many products are not vital to national operations, while others could not be produced at a reasonable cost. Even a growing manufacturing sector would depend on a plethora of raw materials or components sourced from abroad. Regional and global supply chains have undeniably helped fuel an unprecedented increase in the world’s prosperity over the past 30 years, but the concentration of cheaper products from questionable sources has quietly increased the risks faced. consumers, businesses, workers and the nation, and taking action to rebalance the ledger is clearly both possible and desirable, given current and likely future circumstances.

Improving national capacities in essential manufactures and diversified supply chains would appear to be a prudent combination. A national policy to strengthen trade ties with long-standing allies, for example, will not only encourage mutual economic recovery while reducing China’s influence, but will strengthen the cultural and security ties necessary to contain growth and China’s ambitions.

Other nations are already taking this approach. As of May, the Japanese government has allocated 243.5 billion yen (AU $ 3.6 billion) of its COVID-19 support to move supply chains from China to Japan or Southeast Asia. Is. The admittedly chaotic response from the United States has included executive orders and multi-party bills to reduce its reliance on Chinese pharmaceuticals, while senior members of the Australian government have at least recognized the need to review the national economic sovereignty.

Australia will stay in tune with its allies if it develops supply chains with trusted partners and ramps up domestic industrial production, rather than parting ways. The election of Donald Trump, Britain’s exit from the EU, widespread concerns over immigration and fears of a tightening of China’s grip were already pushing a more skeptical agenda in many democracies Western. COVID-19 has accelerated the trend away from unhindered globalization and the divorce of private profit from all other considerations towards a new balance of national capacities and mutually supportive political and trade alliances in the democratic world.

Each nation would continue to build on its strengths in this new scenario. Australia could expand its potentially lucrative rare earth industry to harness its mining expertise, while British engineering, US production capacity and Southeast Asian pharmaceuticals could reduce the need for Chinese products. Scandinavia could take the lead in mobile communications, while Germany could continue to develop its advanced manufacturing sector. Such specialization would reap the benefits of comparative economic advantage while reducing the political and security risks of depending on China, although government support may be needed to counter state-subsidized Chinese companies.

Efforts to diversify Australia’s supply chains and create verifiable and reliable networks around the world would therefore complement, rather than contradict, an expansion of domestic manufacturing. European and other countries might struggle to identify Australia’s contribution to global trade beyond coal, iron ore and wheat and a sunny destination for an overseas vacation, and hence the development of manufacturing capacity and closer trade links with countries that buy from us can help increase the volume of foreign trade, rather than decrease it.

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