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COVID-19 recovery: The Federal Government’s $1.5 billion manufacturing strategy

The Morrison Government announced a $1.5 billion manufacturing strategy on 1 October 2020 to support Australian manufacturers in an effort to recover and rebuild from the COVID-19 recession, forming another part of its broader JobMaker plan.

As part of the package, $1.3 billion is allocated to a Modern Manufacturing Initiative (MMI), delivering a co-funding model to drive lasting change for Australian manufacturers to scale-up, collaborate and commercialise.

The investment will focus on six priority areas – resources technology and critical minerals processing; food and beverage; medical products; recycling and clean energy; defence; and space.

Minister for Industry, Science and Technology Karen Andrews noted that these areas reflected Australia’s established competitive advantages or emerging areas of priority.

“This is about Australia playing to its strengths and the Government strategically investing in areas of manufacturing, where we know we have an edge and that can deliver the jobs we need,” Minister Andrews said.

The Morrison Government have committed to working with industry to set two, five, and 10 year “roadmaps” that identify the barriers and opportunities that may guide action and investment.

There are three streams of co-investment funding available:

Manufacturing collaboration stream

This will support business-to-business and business-to-research collaboration, with funding to develop economies of scale. The Commonwealth will fund up to a third of the project’s cost. Expressions of interest will be invited towards the middle of 2021.

Manufacturing translation stream

Funding will be provided to convert ideas into commercial outcomes. It will also encourage investment in non-R&D innovation. Commonwealth funding will be provided on a co-investment basis and will be up to 50 per cent of eligible project costs. There will be annual funding rounds, beginning in the first half of 2021.

Manufacturing integration stream

This will focus on the integration of manufacturers into local and international supply chains and markets. Funding of up to 50 per cent of the project’s cost will be available and the funding rounds will occur annually, with the first to begin in the first half of 2021.

The remaining funding will be allocated to:

  • The $52.8 million expansion of the Manufacturing Modernisation Fund to address the competitiveness among individual manufacturers in priority sectors, and barriers to growth and innovation;
  • The Government’s new Supply Chain Resilience Initiative to support projects that focus on supply chain vulnerabilities, which will receive $107.2 million; and
  • A $50 million investment in Green Growth Centres to continue fostering economic growth and development, while protecting key environmental values.