A Labor senator says a mandated percentage of Australian steel use in government projects sounds tempting but “doesn’t match the realities” of the industry.
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Just days after the federal budget contained little mention of steel industry assistance – besides the potential use of Australian steel in the government’s naval shipbuilding plan – Kim Carr has penned an opinion piece for the Mercury.
(Scroll down to read the full op-ed)
“If we want Australia to be a country that makes things, a country that generates the high‐skill, high-wage jobs of the future, we cannot afford to let the steel industry in Wollongong and Whyalla die,” Senator Carr, the party’s innovation and industry spokesman, said.
“No other advanced economy has allowed that to happen, because it is understood everywhere that steelmaking is a strategically significant industry.
“The question is not whether Australia should be making its own steel. Of course we must. The question is what policies will secure our local industry’s long term future.”
The question is not whether Australia should be making its own steel. Of course we must. The question is what policies will secure our local industry’s long term future.
- Senator Kim Carr
The senator said the world was “awash with cheap, and often substandard, steel dumped onto the market”, which had prompted calls for mandated steel-use targets.
“The usual suggestion is that there should be a minimum of 90 per cent local product. A solution like this may seem tempting, but it doesn’t match the realities of an industry serving a complex global market,” he said.
“This is not to say that we shouldn’t aim to use as much local content as possible. We can, and should – the capacity of local companies like Bisalloy, which makes high‐tensile and abrasion‐ resistant steel, must be recognised and supported in the process.”
Senator Carr, who was on the committee that oversaw the recent Senate inquiry into the steel industry, also hit out at Industry Minister Christopher Pyne for having “not even bothered” to visit Wollongong to talk steel.
He also couldn’t resist reminding the government of the “very big proposal” Mr Pyne’s predecessor Ian Macfarlane hinted at during steel talks in September.
OP-ED: Labor's stance on steel
If we want Australia to be a country that makes things, a country that generates the high‐skill, high-wage jobs of the future, we cannot afford to let the steel industry in Wollongong and Whyalla die.
No other advanced economy has allowed that to happen, because it is understood everywhere that steelmaking is a strategically significant industry.
Steelmaking, like aluminium production, provides raw material that makes other forms of manufacturing possible.
The question is not whether Australia should be making its own steel. Of course we must. The question is what policies will secure our local industry’s long term future.
Industry Minister Christopher Pyne has not even bothered to visit Wollongong to talk about the steel industry, instead choosing to summon business and community leaders to Sydney.
Despite Pyne’s predecessor, Ian Macfarlane promising in September last year that he was working on “a very big proposal” that would “make a massive difference to the region”, to date the Liberals still do not have a steel policy.
As I have seen from visits to Bluescope in Wollongong and Arrium in Whyalla they, like steel producers in many other countries, are fighting against unfair global competition.
The world is awash with cheap, and often substandard, steel dumped on to the market by high volume producers in China and elsewhere.
Because of the crisis caused by the glut of cheap imported steel, there have been calls for Australian governments to set mandated targets for the use of local steel in public projects.
The usual suggestion is that there should be a minimum of 90 per cent local product.
A solution like this may seem tempting, but it doesn’t match the realities of an industry serving a complex global market.
For example, some of the defence manufacturing projects that Australia will undertake in the next decade may require varieties of steel and steel products that are not made here.
This is not to say that we shouldn’t aim to use as much local content as possible. We can, and should – the capacity of local companies like Bisalloy, which makes high‐tensile and abrasion‐resistant steel, must be recognised and supported in the process.
And governments must talk to industry as early as possible in the procurement process to see what can be done to help local businesses win more government contracts.
This is not just a matter of backing local industries and jobs. It’s also about quality and public safety.
The Senate inquiry into the future of the steel industry has heard expert evidence about the increasing use in building and construction projects of imported steel that does not comply with Australian standards.
This is making Australian bridges, buildings and other structures less safe, while putting the livelihoods of Australia’s steelmakers at risk.
To secure Australian jobs, build our industrial capabilities and ensure public safety, we do not have to rely on a one‐size‐fits‐all solution.
Labor has proposed a six‐point plan to secure the future of steelmaking in Australia.
A Shorten Labor Government would:
- Ensure that steel used in federally funded projects complies with Australian standards.
- Ensure that anti‐dumping regulators have the necessary powers to do their job effectively.
- Create a National Steel Supplier Advocate.
- Seek to maximise the use of locally produced steel in federally funded projects, and put in place regular reporting of usage levels.
- Halve the spending thresholds for Australian Industry Participation Plans.
- Double the funding for the Australian Industry Participation Authority.
Labor would start delivering this plan within 100 days of taking office, by establishing a Metals Manufacturing Innovation Council with representatives of industry, unions and governments.
Although Labor’s plan deals primarily with the steel industry, other metals industries face similar challenges. Aluminium production, for example, is also being squeezed by low global prices.
The Innovation Council would help coordinate Australia’s response to problems across the sector.
How can we be sure that this suite of measures would be effective? Again, evidence presented to the Senate inquiry points the way.
The inquiry heard from Ian Nightingale, the Industry Participation Advocate for the Department of State Development in South Australia.
Mr Nightingale works across all forms of industry in his state, but his role is broadly the same as that of the National Steel Supplier Advocate who would be appointed for the steel industry under Labor.
He monitors the level of local product used and the jobs created by public projects, which are evaluated according to their economic benefit to the state.
He has helped in the negotiation of contracts that allowed the use of local product to be maximised.
For the steel industry, Mr Nightingale was able to negotiate outcomes that did just that.
In one project, steel intended for use in the O‐Bahn transport project was produced initially in Whyalla, sent to Victoria to be converted into reinforced steel, and then sent back to South Australia to be used in the project.
Coordinating and facilitating major projects in that way is a far more flexible and effective means of supporting local industry than setting a mandatory target.
The proof of that effectiveness can be measured in the reporting of contracts by South Australian Government agencies.
In 2012‐13, the proportion of contracts from state government procurement that went to local businesses was 51 per cent. By 2014‐15, it has risen to 91 per cent.
In building and construction projects, the direct labour hire was between 89 and 90 per cent of South Australian residents.
All this happened because the South Australian Government appointed an advocate whose role was to make sure that contractors found the best local suppliers.
And so it could be nationally for the steel industry, if we have an advocate backed up by the other measures Labor has proposed, like compliance with Australian standards.
We do not need mandatory targets. What we need is a change of government and a fast roll out of smart, innovative policies and programs that tackle the real problems in front of us – just like Labor’s plan does.
- Senator Kim Carr is Labor’s spokesman for innovation and industry.