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President Ross McCann, remarks to PACIA Interface Meeting 2012

   


The fourth annual PACIA Interface Meeting 2012 was held at Parliament House in Canberra on Tuesday 20th March. The event was strongly attended by approximately one hundred senior representatives from industry, government, opposition and the Commonwealth Parliament.

The Hon Bill Shorten, Minister for Employment & Workplace Relations and Minister for Financial Services and Superannuation, addressed the assembled audience regarding the Gillard Labor Government’s plan for the future of manufacturing and workplace relations. PACIA President Ross McCann, Executive Chairman of Qenos, gave the below remarks on behalf of the Australian chemistry industry.

Parliament House Canberra, Tuesday 20th March, 2012

Ladies and Gentlemen welcome to the PACIA Interface Meeting at Parliament House. What a great opportunity this is for leaders from industry to again meet with senior political and departmental decision makers and to discuss important issues for our industry and Australia.

As President of PACIA and Executive Chairman of Qenos I’d like to add my welcome to our many special guests. I would like to especially welcome The Hon Bill Shorten, Minister for Employment & Workplace Relations; and Minister for Financial Services and Superannuation.

I’d like to also welcome the many Members and Senators that have agreed to join us, from government and the opposition. Finally, I’d like to welcome the very strong senior representation from key government departments. Thank you all for coming.

From Industry - here tonight - we have senior representatives from more than twenty significant companies including; chemicals manufacturers, raw material suppliers, plastic product manufacturers, importers and distributors, transport and logistics companies; and service providers to industry.

As the peak industry body, PACIA’s focus is on ‘the business of chemistry’ in Australia; covering primarily the chemicals and plastics sectors. Our aim as an organisation is to highlight the strategic importance of the industry and ensure that its significant contribution is properly recognised by government, the media and the community.

The businesses we represent cover Australia’s third largest manufacturing industry with an annual turnover of more than $33.6bn; and employing some 83,000 Australians - many in Small to Medium sized Enterprises.

We have consistently promoted the industry as central to the Australian economy and supply chain, given that more than 85% of the industry’s outputs feed directly into almost every other sector. The industry provides essential products and services to: agriculture, mining, automotive, defence, construction, health, education, consumer goods and many other important areas.

A manufacturing industry under pressure:

Tonight I’d like to talk to you about the challenges confronting Australian manufacturing, with particular focus on chemicals and plastics.

There are those things that we acknowledge it is difficult for governments or industry to do much about; such as the high Australian dollar, increasing foreign competition – in part off the back of lower labour rates - and the often uneven playing field of the global marketplace.

Then there are those things that we can do something about. They include high regulatory costs, increasing cost of energy, carbon pricing, access to skilled labour, lack of investment in key infrastructure and other elements of the cumulative burden on productive industries that make it more and more difficult to do business in this country.

To put it bluntly, our industry is under pressure.

What does all this mean for competitiveness? I am afraid the answer is not one you will want to hear, because it is bleak. Not only is it bleak for manufacturing, but for all the downstream industries that rely more heavily than you might realize on a vibrant and productive supply-chain of chemicals and plastics.

Building blocks of a modern economy

This is because chemicals and plastics are quite literally the building blocks of a modern economy. For example without the ammonium nitrate explosives and the associated services provided by our sector, the mining industry could not operate. The same is true for the fertilisers that enrich our crops and help make our agricultural sector one of the most efficient and productive in the world.

Without chlorine and other processing products, water treatment would not be possible, and the supply of safe and reliable drinking water compromised. Without our industry, there would be no industrial gases for refrigeration or medical gases for use in hospitals. Even the beer you drink would have no bubbles…

Without polyethylene, polypropylene and other plastic raw material providers and fabricators, the automotive industry could not make cars, let alone light-weight them and make them more efficient.

We must not forget the ‘clean’ economy. You cannot make solar panels or wind turbines without our product and service solutions.  Nor do you have any chance of capturing and storing carbon.

The list goes on and on, and I am sure you get the idea that just as chemistry is central to production, the local industry is central to the Australian economy.

A value adding industry

Most significantly, we are a value-adding industry.

Our industry takes feedstocks such as natural gas and oil and turns them into a range of value added chemicals and plastics. We then further transform those into specialty chemicals and consumer products.

This has a significant multiplier effect for the economy at every stage of the supply chain.  It creates jobs.  It provides enormous financial resources to governments and provides a marketplace for Australia’s world-class research and development.

The numbers paint a compelling picture:

  • Every job created at a chemical facility creates up to five more jobs across the rest of the economy.
  • When used as a chemical feedstock, natural gas creates additional value as much as eight times the value of the gas itself, far exceeding the value generated by simply selling the gas as LNG.
  • The data coming out of the US shows us that every $1 of manufacturing output creates a total of $2.30 in total output in the economy. That is something worth hanging on to.

The economic recovery in the US is occurring on the back of a renaissance in manufacturing, supported by the opening up of the shale gas industry and its supply into the chemicals industry.  Yet in Australia, we only seem to want to ship it offshore as LNG.

When the mining boom ends – and it will end - what will Australia have to show for it?  We need to encourage the use of Australia’s natural resources for value-adding industries such as manufacturing. 

We need leadership on two fronts:

Firstly - from government. As I outlined from this podium at this time last year we must make Australia an easier and more efficient  place to invest and do business.

We must work with government to slash red-tape and other barriers to better productivity and innovation. These are weights around the neck of industry and the community.

The best way to progress this is to accelerate the chemicals and plastics COAG reform process.

Secondly - from industry.  We must work with government to create a sector-based national business plan that both outlines a comprehensive long-term vision for Australian manufacturing and what is required to achieve it.

A vision for the future of manufacturing

We know that competition for limited global capital is fierce and that governments across the world are actively pursuing it.

That capital will not come to this country if we do not join that race by making Australia a more attractive destination for investment. To do that we call on the Federal Government to:

  • As before, continue to work with industry to develop a long-term vision for Australian manufacturing. We have high-hopes for the Prime Minister’s Taskforce on Manufacturing.
  • Better understand Australia’s critical supply chain relationships, the benefits they provide and our industry’s strategic position within them.
  • Encourage and support domestic value-adding to Australia’s natural resources; and
  • Make long overdue investments in critical infrastructure, including restoring Australia’s competitive advantage in the provision of low-cost energy.

I am confident that by doing these things we can turn around the trend and build a stronger manufacturing industry and a more productive economy, for the benefit of all Australians and our future generations.

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