The Labor government review of its predecessor’s $1.3 billion manufacturing grants program has put “tens of thousands of jobs at risk” and undermined business certainty, deputy opposition leader Sussan Ley told employers on Tuesday.
Ms Ley, also the shadow minister for industry, skills and training, claimed the Albanese government is “poised to tear up commitments made to Australian manufacturing businesses” because it is reviewing the Coalition’s $1.3 billion Modern Manufacturing Initiative (MMI).
Labor has already committed not to interfere with any contracts signed under the program but is considering not honouring the verbal commitments the Coalition made, including a flurry of MMI grant announcements in the lead up to the May election.
The internal review by Industry department officials has confirmed former prime minister Scott Morrison took authority for several grant decisions from the largest “collaboration” stream of the program and announced the successful applicants in a spending blitz ahead of the election which the Coalition lost.
Analysis of the grant decisions involving Mr Morrison shows more than half the lucrative grants went to recipients located in Coalition held electorates and several others based in marginal Labor electorates that were being targeted in the election.
Industry minister Ed Husic has been critical of the involvement of the prime minister and the timing of the grant announcements, which he says had been held back for political gain at the expense of local manufacturers.
In one of his first moves in government, Mr Husic ordered a review of the grants, with Industry department officials checking hundreds of applications. He has so far declined to say how many of the grants are at risk, committing only to honour grants which have signed agreements.
This potentially jeopardises more than $800 million worth of manufacturing grants.
On Tuesday night, Ms Ley told the Australian Chamber of Commerce and Industry the review is putting jobs at risk and undermining confidence in the Australian government.
“Already we see the Albanese Government poised to tear up commitments made to Australian manufacturing businesses,” Ms Ley said.
“We are talking about boosting sovereign manufacturing capability on everything from defence, to health, to food security and construction… This indecision is putting tens of thousands of jobs at risk, threatening investment certainty, threatening productivity and jeopardizing the Australian Government’s reputation as a stable partner to do business with.
“Businesses are relying on the continuity of these commitments to hire apprentices and make investment decisions.”
Earlier this week, Mr Husic said the flurry of grant announcements had come as no surprise and the timings had ultimately hurt local manufacturers pandemic recovery.
He said he is still “working through” the review and would not rush final decisions on honouring the Coalition’s commitments.
“We don’t want to make any rash decisions that have a [negative] impact,” Mr Husic told InnovationAus.com
“I don’t want to do what the other government did, which was politicise the process. We want people to have confidence about the way that the decisions are being made. And I’m very aware that there is a jobs impact on some of these as well, and some of the ones that were announced were quite good.”
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Given the short (4 week) response time for applications and the significant co-investment required by industry partners (at least $1 million for a $2 million project) it would also be good to test the “additionality” of these grants: how many of these projects were already on the drawing board and would happen regardless of whether the grant is awarded or not?