Labor's Plan for Local Metals Manufacturing and Jobs

Being an advanced economy that can make things here at home means ensuring Australia’s strategic industries have a sustainable future.

To secure the long-term future of our local metal industries, we need to make smart use of the opportunities in front of us and build on Australia’s natural strengths.

That’s why Labor is committed to significant investments to build Australia’s human capital through our Your Child. Our Future schools reforms, our TAFE Funding Guarantee and comprehensive review of the National VET sector, our Positive Plan for Universities and plans for getting more Australians into STEM related jobs.

It’s also why we’ve announced a range of targeted innovation policies, like a Startup Year so students can develop their idea, get business knowhow and connect with finance; regional innovation hubs to ensure Australians in rural and regional Australia have more opportunities to turn their great ideas into new enterprises; and tax changes to encourage angel and early stage investment.

In addition to Labor’s existing commitments, a Shorten Labor Government will deliver a new plan to secure our strategically significant metals manufacturing industries, starting with Australia's steel industry.

Labor’s six-point Plan for Australian Metals Manufacturing and Jobs demonstrates Labor’s commitment to a strong future for Australia’s metal industries.

What’s the problem?

Australia’s local metal industries, particularly steel and aluminium, are now under significant pressure. Low international prices, high-cost raw materials, the dumping of products from overseas and weak domestic demand are all challenging their long-term viability.

Australia’s metal industries are not alone in facing these challenges. Global steel production has doubled since the early 2000s, and the OECD estimates this reached 2.2 billion metric tonnes in 2014. Global demand has been growing at a much slower rate, resulting in oversupply of almost 600 million metric tonnes in that year alone .[1]

Much of the steel and other metal products entering the global market does not meet Australian grade. The recent Senate inquiry into Australia's steel industry heard evidence that as much as 80 per cent of products imported from some manufacturers overseas do not meet Australian standards for things like safety and quality.[2]

In the United Kingdom, Germany and other advanced economies, governments are grappling with the question of how to sustain significant industries through these challenging times and help them grow stronger for the future.

Although Australia is a small player in the global market, metals production is crucial to our manufacturing capabilities and our ability to remain a diversified, advanced industrial economy.

Global headwinds are strong, but with the right business models, good policy settings from government and investment in new technologies, metals manufacturing in Australia will have a strong future.

The significance of Australian steel

According to the Australian Steel Institute, the combined Australian steel industry employs more than 100,000 people and has an annual turnover in excess of $35 billion.[3] More than 33,000 Australians are employed in the production of steel alone.[4]

Locally-produced steel is also a critical input for Australia’s advanced manufacturing industries and other sectors. Whether it is contributing to the local build of major defence projects like the Future Submarines and Future Frigates, supporting the development of big renewable energy projects, or reinforcing domestic construction, access to a high quality, competitive local steel supply underpins many of Australia’s growing industries.

In some parts of Australia, the local economies are built from steel. Australia’s two main steel producers, BlueScope and Arrium, together employ around 17,000 people and generate annual revenues of approximately $15 billion.[5]

The regions surrounding the companies’ steel operations in the Illawarra (BlueScope), Whyalla and Newcastle (Arrium) rely heavily on steel production for jobs, growth and prosperity.

Research conducted by the University of Wollongong suggests that more than 10,000 jobs in the Illawarra region directly depend on BlueScope’s plant in Port Kembla, while the manufacturing plant contributes more than $2 billion in sales to regional gross output.[6]

Similarly, the importance of the steelworks for workers and businesses in Whyalla, where other sources of employment are limited, cannot be underestimated.

The operations of these steel producers are part of a much wider value chain encompassing smaller producers like Bisalloy Steel – a manufacturer of speciality steel in NSW – through to downstream businesses, including steel fabricators and welders, engineers and design specialists, distribution channels, suppliers and contractors.

For all these reasons, securing the future for Australia’s steel industry through these challenging times is a nationwide priority demanding a comprehensive plan.

It requires a shared focus on industry innovation and sustainable market development from companies, their workforces and governments alike.  

The Victorian and South Australian Governments have acknowledged the strategic significance of a local steel industry and are working with industry on critical procurement requirements. 

It is time for the Federal Government to do the same.

Labor’s plan

Labor has a Plan for Australian Metals Manufacturing and Jobs to promote a sustainable future for Australia’s metals industry.  

Under our six-point plan, Labor will:

1. Ensure Australian standards are upheld in Federal Government funded projects

We will introduce new steel procurement regulations that require projects receiving government funding to use steel that meets Australian standards and certification requirements. These regulations will be developed in way that is consistent with our international obligations, and adherence to them will be verified and monitored with rigorous third party audits. Where there is currently no relevant Australian standard, these will be developed in consultation with industry and Standards Australia.   

Local steel producers will be assisted to meet the new certification standards through a small grants scheme to help cover the cost of inspection and accreditation under the National Structural Steelwork Compliance Scheme.

This will ensure that safety and quality is never compromised on federally-funded projects, while maintaining Australia’s compliance with our international trade agreements.

2. Seek to maximise the use of locally-produced steel in Federal Government funded projects

We will ensure local steel producers have the best opportunity to participate in federal projects, through the enhanced use of Australian Industry Participation Plans and the rigorous application of Australian standards.

We will develop a regular reporting system with the Australian Industry Participation (AIP) Authority and the National Steel Supplier Advocate, to track the use of Australian steel in federally-funded projects. This will help identify gaps in the market that local producers are not filling and provide an evidence base from which to build future industry initiatives.

Maximising the use of Australian steel will also help to support Labor’s key nation-building priority infrastructure projects, which include significant rail projects such as the Melbourne Metro, Cross River Rail, the Perth MetroNet, Gold Coast Light Rail, Badgerys Creek rail connection and the Gawler rail line.

Moreover, the Australian steel industry will be supporting Labor’s commitment to build, maintain and sustain the Future Submarines and Future Frigates projects in Australia.

3. Halve the thresholds for projects required to have an Australian Industry Participation Plan to drive more opportunities for local businesses

Under Labor’s Australian Jobs Act, major public and private projects with capital expenditure above certain thresholds must prepare and implement an Australian Industry Participation (AIP) plan. These plans ensure information about opportunities to bid for work on major projects is made available at all levels of the supply chain.

Labor will halve the threshold for private projects to prepare an AIP Plan from $500 million to $250 million. We will also halve the public sector threshold from $20 million to $10 million.

This will roughly double the number of projects that will need to have a participation plan in place, effectively doubling the number of opportunities for Australian businesses to participate in major bids.  

4. Double funding for the Australian Industry Participation Authority and appoint an Australian Industry Participation Board

Labor set up the AIP Authority to advise and assist those developing major projects in meeting their obligations under the Australian Jobs Act. The Authority’s role includes evaluating, approving and publishing summaries of Australian Industry Participation plans, as well as monitoring and reporting on the implementation of these plans.

The Liberals slashed funding for the AIP program in the 2014-15 Budget. Doubling the Authority’s funding will restore the resources it needs to better promote the new opportunities created by halving the AIP thresholds.

We will also appoint an AIP Board to provide leadership, and work with major project proponents and Australian small to medium enterprises to ensure the AIP process strikes the right balance in identifying opportunities and building more effective supply chains across local industries.

5. Ensure Australia’s anti-dumping system has the right powers and penalties in place

Labor will make sure Australia’s anti-dumping system is operating effectively and will work with the Anti-Dumping Commission to accelerate enhancements to the system.

In April this year the Anti-Dumping Commission provided Industry Minister Christopher Pyne with a report on how its current powers and penalties could be boosted to prevent the dumping of inferior products from overseas in the Australian market.

Minister Pyne has yet to act on the report’s recommendations. Labor will use the Commission’s findings to further tighten Australia’s anti-dumping rules. We will explore stronger penalties for businesses that ignore the Commission’s rulings, just as we have proposed tougher penalties for multinational companies that don’t meet their tax reporting obligations.      

6. Create a National Steel Supplier Advocate

The National Steel Supplier Advocate will work with Australian steel manufacturers to win major contracts. The Steel Supplier Advocate will particularly work with small and medium sized steel fabricators to generate the kind of consortia and co-production deals that will allow them to deliver products at scale and in more competitive ways.

In Government, Labor established a Supplier Advocates program to champion Australian industry in the marketplace and improve competitiveness. The program was among the many pro-employment initiatives cut in the Abbott-Turnbull Government’s unfair 2014 Budget.

Implementation

Labor will start delivering our Plan for Australian Metals Manufacturing and Jobs within 100 days of forming office, with the establishment of the Metals Manufacturing Innovation Council.

This advisory body will include representatives from industry, unions and governments, and will work closely with a Federal Labor Government to deliver this package. 

Although the policies in this package deal primarily with steel manufacturing, other metal industries face similar challenges. For example, Australia’s aluminium industry is also being squeezed by low international prices and significant industry restructuring. Labor has supported the aluminium industry through this period by getting the Government to agree to fully exempt it from the Renewable Energy Target (RET). These industries will also benefit from having a direct line to Government through the Metals Manufacturing Innovation Council.  

Labor has developed our plan by listening to industry and being willing to act on the practical challenges holding our metal industries back. We’re not just talking about keeping these industries strong for the future; we’re acting to make sure they can be.

Labor’s record

Labor stands for jobs. Protecting jobs and growing new ones has long been the focus of our innovation and industry policy.

That’s why, in Government, Labor:

  • Delivered the Steel Transformation Plan to support jobs and investment in Australia’s steel industry. The Liberals abolished this in their very first federal budget.
  • Put in place the Australian Jobs Act and the $1 billion Plan for Australian Jobs, including stronger Australian Industry Participation (AIP) measures to help more Australian businesses win work on private and public projects.  
  • Established the Anti-Dumping Commission and the International Trade Remedies Forum to ensure a level playing field for local and overseas businesses.
  • Boosted the capacity of the Industry Capability Network (ICN) to connect Australian businesses to major projects.
  • Appointed Industry Supplier Advocates, including a Steel Supplier Advocate, as part of the Buy Australian at Home and Abroad suite of measures.
  • Strengthened the Enhanced Project By-law Scheme, requiring large projects to do more to involve Australian businesses in their global supply chains to qualify for duty-free tariff concessions.

From Opposition, Labor has continued the fight to protect jobs. 

In November 2015, Labor established a wide-ranging Senate inquiry into the future of Australia’s steel industry and its supply chain. Through the inquiry we have talked directly with industry, workers and communities about making the successful transition to a sustainable future for the local metals industry.

We believe in backing local industries and the Australians they employ. We will not leave people to battle on their own against the global economic forces now putting pressure on our industries.  

The Liberals’ record

The Abbott-Turnbull Government has a terrible record on jobs.

They goaded the car industry into leaving Australia, and have refused to secure the future of our defence industry by prevaricating on building submarines in Australia and by sending the contract for supply ships offshore.

They also tried to gut the growing clean energy sector by drastically reducing Australia’s Renewable Energy Target which has seen jobs in that sector fall over the past two years while jobs globally in that sector have increased by over two million.

The Government has refused to lay out either a short-term plan to deal with the immediate challenges faced by producers such as Arrium, or a long-term strategy to secure the future of Australia’s metals industry.

Financial implications

Several of the items in this package are cost neutral or will be met through existing agency resources. The cost for measures with new spending is detailed below:

  2016-17 2017-18 2018-19 2019-20 Total[7]
Assist Australian steel producers to gain Australian Standards certification under the National Structural Steelwork Compliance Scheme. 0 -5.2 -5.2 -5.2 -$15.6
Double funding for the Australian Industry Participation Authority and appoint an AIP Board from 1 July 2017 0 -2.1 -2.3 -2.3 -6.7
Create a national Steel Supplier Advocate 0 -0.9 -0.9 -0.9 -2.7
Net impact   -8.2 -8.4 -8.4 -25.0

Labor’s Plan for Australian Metals Manufacturing and Jobs has been costed by the independent Parliamentary Budget Office. The proposals in the six-point plan will be funded from existing improvements to the Budget proposed by Labor including making multinational companies pay their fair share of tax, reforms to the taxation of multinational entities, reducing superannuation tax concessions for millionaires, increasing the changes to tobacco excise, ceasing the Emissions Reduction Fund, not proceeding with the Liberals’ new Baby Bonus and reforms to negative gearing and capital gains tax. 


[1] OECD, 2015, Excess capacity in the global steel industry and the implications of new investment projects

[2] Welding Institute of Australia, 2016, submission to the Senate Economics References Committee inquiry on the future of Australia’s steel industry

[3] Australian Steel Institute, 2016, submission to the Senate Economics References Committee inquiry on the future of Australia’s steel industry

[4] Department of Industry, 2016, submission to the Senate Economics References Committee inquiry on the future of Australia’s steel industry

[5] Bureau of Steel Manufacturers of Australia, 2016, submission to the Senate Economics References Committee inquiry on the future of Australia’s steel industry

[6] Australian Workers Union, 2016, submission to the Senate Economics References Committee inquiry on the future of Australia’s steel industry   

[7] Totals may not sum due to rounding


A printable PDF version of this fact sheet can be accessed by clicking here.