From the Ministry – Building a stronger manufacturing sector

Industry is a perfect fit with my other responsibilities of Energy and Emissions Reduction. As Minister, I am building on the work of my predecessors to ensure we have a strong local manufacturing sector that is growing and creating more jobs.

The Morrison Government’s $1.5bn Modern Manufacturing Strategy is at the heart of our efforts. It is helping to build manufacturing scale, strength and sovereign capabilities, while expanding market opportunities. It is a key part of our National Plan to rebuild the economy and create jobs as we recover from COVID-19.

The nation’s manufacturing capability is already strong, but we want to make it much stronger in key areas where Australia has a comparative advantage. In particular our focus is on the six National Manufacturing Priority areas: resources technology and critical minerals processing; food and beverage; medical products; recycling and clean energy; defence; and space.

Through an industry-led approach to manufacturing development, we are on track to be internationally recognised as a high-quality and sustainable manufacturing nation, competing on value, quality and product differentiation.

There’s more to do, but we are already seeing results. There are now over one million Australians employed in our manufacturing sector. This is the first-time manufacturing employment has been above one million jobs since 2009. More than 91,000 manufacturing jobs have been created in the last three months, and 80,000 more jobs in manufacturing than there was at the start of the COVID-19 pandemic. This strong result for the quarter takes manufacturing jobs above pre-COVID levels.

But we need this momentum to continue. To support continued growth in our manufacturing sector we need to ensure a strong supply of affordable, reliable energy into the decades ahead. Central to this is the Government’s gas-fired recovery, which complements our Modern Manufacturing Strategy. Delivering lower energy costs is a key part of the strategy.

Australia’s competitive advantage has always been based on affordable, reliable energy and a reliable gas supply is an essential part of that energy mix. Gas is a key provider of energy and electricity to Australian industry and homes. It is also an essential input in the production of many goods, such as plastics for personal protective equipment (PPE) and fertiliser for food production.

The manufacturing sector depends on gas, which made up 42% of its total energy use in 2019-20, according to the latest Australian Energy Statistics. Australia is blessed with plentiful reserves of natural gas, but action is needed to increase production or we will be faced with higher prices, disruptions in supply and unplanned outages.

We have seen recently in the United Kingdom that reliance on gas imports, constrained gas supplies and a prolonged wind drought has caused an energy crisis. Australia’s gas-fired recovery plan aims to deliver more gas where it is needed at an internationally competitive price.

This does not come at the expense of renewable energy or reductions in emissions. Gas complements the use of renewables, firming up energy supply when the wind doesn’t blow and the sun doesn’t shine.

Existing gas pipeline infrastructure will also be key in the roll-out of low-emissions technoologies, such as clean hydrogen and biomethane. Alongside other technologies such as batteries and pumped hydro, gas will help Australia to reach its emissions reductions targets, while keeping the lights on and electricity prices low.

The Government is continuing to strongly support the rollout of renewable energy and the development of new energy technologies, as the Prime Minister and I have outlined in Australia’s Long Term Emissions Reduction Plan. Since 2017 over $35bn has been invested in the renewable energy sector – 7,000 megawatts of new renewable energy capacity was installed in 2020 alone.

As at 30 June 2021, through ARENA and the Clean Energy Finance Corporation, the government has invested more than $11.2bn into 822 clean energy projects with a total value exceeding $39bn.

But renewable energy is variable – we must have on-demand, dispatchable power to back it up.

The Australian Energy Market Operator last year projected that up to 19,000 megawatts of new dispatchable generation would be needed by 2040 to complement and firm increasing levels of variable renewables.

The Government has implemented major new measures to build reliable supply. At the heart of our endeavours is our $1.38bn investment in Snowy Hydro’s 2,000 megawatt Snowy 2.0 pumped hydro project, which is on track to deliver the largest electricity storage facility in Australia. The Government has complemented this with a $600m investment in Snowy Hydro’s Hunter Power Project, a new 660 MW gas power station at Kurri Kurri in New South Wales.

These strategic and targeted investments are designed to fill gaps in the market and ensure there is sufficient dispatchable capacity available when and where it is needed, while creating jobs and opportunities for the region.

On 28 September this year it was five years since the state-wide blackout in South Australia. It caused widespread disruption and shut down 80% of businesses. The blackout was a stark reminder of how much we rely upon a stable electricity supply and how important it is that the system is maintained as it absorbs increasing levels of variable renewable energy.

The Government’s approach will keep the lights on across Australia. Our Modern Manufacturing Strategy, complemented by our gas-fired recovery and our balanced and sensible approach to renewables and reliable, affordable power will continue to deliver economic benefits for Australian businesses and manufacturers.

I am very pleased to be part of these efforts and look forward to meeting the challenges ahead so we can build a stronger economy, create more jobs, and take more of our quality products to the world.