Local content requirements of money spend alone aren’t getting the results we need – it’s time to look at how we judge local content.
‘Build it here or jobs disappear’, the 1990s campaign slogan of the AMWU, was prophetic. Hundreds of thousands of jobs have since been lost in Australian manufacturing. In the meantime, Australian consumption of manufactured goods has climbed steadily – contributing not only to our trade deficit, but our complicity in exploitative supply chains and increasing our greenhouse emissions.
Currently we are seeing a renewed enthusiasm to ‘Buy Australian’, which we should embrace.
With their main opposition, free marketeers give us the greatest reason to support local content. They say that Australian companies can’t compete with international companies on cost because of the ‘red and green tape’; wages, environmental controls, quality control. The implication is that consumers should prefer to buy products made without these regulations.
Paradoxically the same industry voices often complain that Australian companies can’t compete against companies supported by their home governments (usually meaning China).
We should seek to be actively anti-racist when advocating for local content. As a minimum, challenge assumptions that products are lower quality simply because they are made elsewhere; that the workers are not as skilled; or that those workers would come to Australia ‘if they could’. Always remember the central role that both temporary and permanent migrants have made to Australian manufacturing.
But there is no solidarity in allowing an unregulated race to the bottom in an international market. By elevating the status of skilled work, and valuing its important role in Australian society, we can better help our sister unions do the same overseas.
The greatest hurdle to buying Australian is one that everyone can agree on: that capability has been worn down over the decades to the point where serious intervention is required if we are to rebuild it to the required level.
(This is not only the case for manufacturing but for local content requirement in arts and literature. The flourishing and dynamic arts community in Australia exists in spite of, not because of, government policy. It is a testament to the persistence of the industry).
Currently the most popular local content requirement is a minimum for contract value. This is not a bad start, but it often falls short of delivering the desired result of a) more jobs and b) industry development. Some local industry participation delivers greater benefits than others. For example, a high cost payment for delivery of equipment, financial services, or rental may count monetarily as local content, but employ very few people and foster very little secondary benefit. Any participation plans that use report using monetary value alone are of little benefit to fostering industry.
If the blunt tool of minimum threshold is preferred, other aspects of a project can be measured in a tender. A minimum threshold for ‘work hours’ or ‘training hours’ done locally might be incorporated. The NSW government has recently included this in its economic recovery plans, requiring that a certain amount of work be done by apprentices in key projects.
Beyond minimum thresholds, governments need a good understanding of what a large project will actually involve and tailor local content rules to the project. This will require procurement officers to consult with industry, and with unions. Unions can provide good advice on this front because they work across the industry, have good jobs as their main interest, and are not competing for the tender.
Government should assess what components of a project do the following:
require long-term involvement for tenderers, which encourages decisions for companies to locate close to the work, and to take on apprentices.
create opportunities for upskilling, such as working across different skills rather than doing one task repetitively.
will bring other smaller tenderers into the project, which creates more opportunities for local companies to get involved.
Once this is determined, any local content plan should prioritise these components.
There may not be a tenderer that can do this component holus-bolus. Then the hard policy work that pays dividend comes in. It is possible to divide the tenders into smaller, shareable pieces. This is currently being done to ‘share work around’ during coronavirus, demonstrating that when there is a will there is a way. If one large company can’t do it, but 2 mid-sized ones can, and by doing so are able to hire more people and expand, then perhaps down the track they will be able to compete against each other to do the work.
Alternatively, processes for encouraging joint ventures could be put in place. There is a larger question about why SMEs in Australia don’t participate as much in joint ventures as in comparative economies, and if this is holding back their ability to compete with larger companies. Consultation with industry about what those barriers are may reveal other ways to support local content.
This, like all things worth doing, takes time. But by being more patient now we can foster industry to return to a stage where Australia industry is in better position to tackle lots of big projects. (Also most people only know a project deadline because we put it on political advertising).
Why should we do this? Australia will never be entirely self-sufficient, and we should not aim to be. We can appeal across the political divide to do this on the current enthusiasm to have the skills to do essential work here in case of emergency. But as the Left, we should do this because it will lower our carbon footprint from transport, decrease our involvement in long exploitative supply chains, and create good jobs in an economy we can regulate.
Alex Cassie is the Political and Community Organiser of AMWU WA. She previously worked at DFAT, including in the Office of Trade Negotiations and in US Trade Policy. Twitter
Alex thanks Darcy Gunning for background research.