Nick Xenophon is Senator for South Australia and leader of the Nick Xenophon Team (NXT) party in the Federal Senate. He spoke to William Poole.

AMT: A prominent figure in South Australian politics, and a vocal advocate for manufacturing, what’s your view of the current situation for the industry in SA?

Nick Xenophon: Well, we’re in a state of transition. We’re at the crossroads here in SA, but it’s not just in SA, it is in the rest of the country. We’ve seen a shrinking of manufacturing in this country in the last decade, from about 12% of GDP to just over 6% of GDP. We’re now just bumping above Botswana and Rwanda, where as a percentage of their GDP, manufacturing accounts for 6% and 5% respectively. I mention Botswana and Rwanda not because I have any axe to grind against them, but because they are countries that never had a significant manufacturing base, whereas Australia did. I think we’ve lost our way in terms of advanced manufacturing policy. The closure of the automotive industry in Australia is posing a huge risk and challenge to manufacturing.

AMT: What do you see as the biggest challenges the sector is facing?

NX: Well, I think the Federal Government has made a mistake. It’s been holding onto this Automotive Transformation Scheme, worth $1.3bn. It needs to rejig that scheme and spend an appreciable portion of it to ensure that those industries that are emerging – advanced manufacturers that have real potential to grow – have the opportunity to get some injection of capital. Because by spending a bit of money now, we’ll be saving a lot of money now in terms of unemployment benefits, and in terms of dragging down the rest of the economy through all the supply chain and multiplier effects.

I think what we need to do is to encourage those emerging manufacturers that already have something to offer not just Australia but the rest of the world, in terms of products and innovation and ideas and intellectual property, and accelerate their development. Rather than those companies taking five or 10 years to grow to their potential, let’s accelerate their potential by opening up those markets sooner rather than later.

AMT: One issue we hear a lot about is a need for policy continuity, in particular concerns over the turnover of Federal Industry Ministers in recent years. How do you see that affecting the sector?

NX: Without continuity there’s no bipartisanship. I think we need to rethink the approach. I’m not against government involvement; I think we need to look at targeted assistance, with measurable outcomes, with co-investment from industry. In addition to that, we need to have a framework where there’s a strong anti-dumping regime – the steel industry’s been suffering badly because of that.

We also need strong procurement policy, and I’ve been chairing a committee working on getting procurement laws changed in Australia. The procurement laws changed on 1 March as a direct result of negotiations I had with Finance Minister Mathias Cormann, with big changes for Australian manufacturers who will now have a fighting chance to bid for about $59bn worth of Commonwealth work.

The other thing I should mention is that we must address the issue of power prices and energy certainty in Australia. It is a phenomenal failure of public policy. It is a tragic symptom of our toxic politics in this country, that we cannot have a bipartisan energy policy that would give security of supply and reduce our energy prices. And that’s why I’m a long-term advocate of an emissions intensity scheme, which I jointly advocated with Malcolm Turnbull back in 2009 when he was Opposition leader, and I still think that’s the best way forward to sort this out. Energy security and energy prices must be an absolute priority – we cannot wait for the latest battery storage technology, we need to get more thermal generators in the mix, particularly gas-fired generators, so they can deal with this crisis. Otherwise we will drive manufacturing out of this country.

AMT: You mentioned targeted assistance. What areas do you believe would merit such support?

NX: It would have to be those businesses that have a business case where they’ve got a product that the rest of Australia and the rest of the world want, which is an innovation, which can drive exports. I’ll give you an example, SupaShock, which is a company based here in South Australia. SupaShock has come up with a superb shock absorber system, which allows cars to handle much better, racing cars to win races – it’s got defence applications as well. It’s the sort of business that could go from 30 to 120 employees in the next couple of years, with new markets, expansion potential, through export grants opening up new markets for them.

I get very enthusiastic about companies like that. I’ll give you another example, which I think has got enormous potential. Too often in Australia’s history we have ignored companies and great innovations. There’s a company called Nu-Rock, which turns fly ash from power stations into bricks and bitumen products and concrete. It does so with 98% less energy than making conventional bricks. But they’ve had such a struggle to break through and get the grants to reach that critical mass. A few months ago, the Governor of Virginia came over to Sydney and met with them because he heard about these guys, and within ten minutes he got the concept and wanted them to set up their US head office because he could see enormous potential to solve environmental problems and produce bricks and pavers and building panels and road material much cheaper than anything currently available. Nu-Rock has been doing this for years and has Australian certification, but it struggles to get much support here, but then the Americans walk in with open arms. Why is it so hard in Australia to have an innovative product up and running?

AMT: So what can be done to prevent the benefits of Australian innovations like that slipping away from us and going overseas?

NX: We need to assist those companies, we need to nurture them. We need to say that they are valued, that we don’t want them going overseas and setting up manufacturing plants in China or Mexico or wherever. We want them to hold onto that intellectual property, to manufacture here, to be part of growing our national wealth.

You’ll be familiar with the Fraunhofer model in Germany, where they have innovation hubs that connect industry and government and innovation sites, to try and drive the development of new products. And that provides a base for their advanced manufacturing. Instead of our 6%, 22% of Germany’s GDP is based on manufacturing.

And we need to be going to Government – State and Federal – and saying “What are you guys doing? Why are you buying Chinese steel? Why are you buying stuff from overseas when you could be buying it locally? But now we’ve changed the procurement laws – I did that with the support of my colleagues – and these are big changes.

AMT: Why is manufacturing so crucial to a country like Australia and its future prosperity?

NX: Because we have a history of innovation, and manufacturing drives innovation. Not just directly in that industry, it drives greater productivity, it drives new products and processes, it drives exports, it drives well-paying jobs. One of the reasons why Donald Trump won the US presidency is that so many regions have been hollowed out, so many people have lost their jobs, so many parents see their children not being given a good trade and apprenticeship. Having a great hospitality industry is fantastic, but we also need to be making things as well.

AMT: Tell us about your political background and why you chose a political career.

NX: My background is I was trained as a lawyer. I got involved in politics because I was concerned about the impact of pokie machines, seeing it in my clients, and in my community. I ran for State Parliament in 1997, and got elected to the Upper House. I ran again and was re-elected in 2006. I then decided in 2007 to leave State politics and run for Federal politics, and was elected to the Senate. I ran again in 2013 and was re-elected. Then in last year’s double dissolution, I managed to get myself and two other colleagues (for the NXT party) to the Senate, as well as another colleague Rebekha Sharkie elected to the lower house. We’re also running more candidates in elections for the State Parliament this time round.

AMT: And what is the most rewarding part of the job?

NX: I’ll tell you what’s rewarding – it’s actually quite rewarding when I see businesses where we open doors for them and we push hard for them, and then they start thriving and succeeding. I mean, I had one business where I’ve said “What can we do for you?” and I said “All I want from you is the chance to shake the hands of the new workers that you put on.” And that to me sums it up.

And also, and this one is nothing to do with manufacturing, but to do with the criminal justice system. Just yesterday, the Federal Government announced that there would be very significant changes to the law in terms of child protection from online predators. It was in honour of a young girl, Carly Ryan, who was murdered 10 years ago as a 15-year-old by an internet predator. And after as a result of campaigning by Carly’s mum Sonya with my colleagues and myself, the Government agreed just yesterday to have the law changed to expand the class of offence to make it easier for police to intervene much earlier to protect children. And that’s a big deal. So things like that are the biggest perks of the job.