Economic Stimulus 2.0: What we know so far

Nov 07, 2020 by Mark Dingley

A lot has changed since March, when we posted this article about the Economic Stimulus Package. It was before COVID-19 hit the Australian economy – and manufacturers – hard. Before panic buying, face masks, and lockdowns. And before Australia entered its first recession in three decades.

It’s not surprise, then, that the Government has announced a new economic stimulus package for Australia.

Here’s what we know so far:

The Economic Stimulus Package In A Nutshell

Prime Minister Scott Morrison says Australia needs “to keep making things”. To that end, the Federal Government will pump close to $1.5 billion into Australia's manufacturing sector, with plans to bolster local production and strengthen supply chains.

The bulk of this is the $1.3 billion allocated for large “transformative projects” in the “Modern Manufacturing Initiative”. The goal is to help manufacturers scale up, collaborate and commercialise, while creating jobs in the process.

The plan will also focus $107.2 million on building “supply chain resilience”. This is a direct response to the pandemic, which exposed the risks of not having the ability or capacity to quickly produce large amounts of essential items, such as personal protective equipment or medical products, to meet demand. (We talked about the impact of coronavirus on the supply chain back in March). The funds will help the Government better understand supply chains, identify gaps and take action to address them.

Finally, there’s a $52.8 million investment for round two of the Manufacturing Modernisation Fund (MMF). This program supports transformative investments in manufacturing technologies and processes.


How The Modern Manufacturing Initiative Will Work

We don’t yet know all the details, but here’s what we can tell you.

They will only be offered to businesses in six priority areas: resources technology and critical minerals, food and beverage, medical products, recycling and clean energy, defence, and space.

The funding will be divided into three streams:

The Collaboration stream will have a two-stage application process due to the size and complexity of projects, while the Translation and Integration streams will have a one-stage application process.

Expressions of interest will open in the first half of 2021 and be allocated over four years.

Importantly, business will be required to match the funds in a co-investment scheme, with ratios differing depending on the stream.

How Manufacturing Modernisation Fund Round 2 Will Work

This scheme builds on round one of the MMF, which allocated $48.3 million in grants for 200 projects valued at more than $215 million.

Again, the full details of round two haven’t been released yet. But here’s what we know:

Applications for round two will open at the end of 2020. If you’re going to apply, it pays to be prepared – research shows the general market success rate of grants for the MMF was 8%.

Previous grant recipients include 4 Pines Brewing company for its automated packaging line with data capture and analytics, and Trumps Pty Ltd for auto-coding software and automatic labelling systems.

Does The Economic Stimulus Package Go Far Enough?

Some have been quick to point out that the plan doesn’t go far enough.

In an article for InnovationAus, Shadow Minister for Innovation, Technology and Future of Work Clare O’Neil argued that Artificial Intelligence doesn’t receive the attention it deserves. She points out that the US recently announced hundreds of millions more dollars towards AI, the EU has committed $2.3 billion, and South Korea has announced a $2.7 billion plan to strengthen R&D in AI, with plans to train 5,000 AI specialists per year by 2022.

However, in Australia, Morrison’s government has only found $20 million for funding AI research.

To put this into perspective, PWC estimates AI will deliver $22.9 trillion to the global economy by 2030.

Swinburne University professor and director of the Centre for Transformative Innovation Beth Webster told The New Daily that the money would only be effective at creating jobs and boosting the economy if it was given to the right projects.

Another criticism is around the timing. Minister for Industry, Science and Technology Karen Andrews admitted recently that, of the $1.5 billion, only $40 million will be spent to support the manufacturing industry this financial year.

That means the majority will be allocated after June 2021, arguably months after the investment is most needed.

On the other hand, Robert Giles, chief executive of food manufacturer SPC, told the Sydney Morning Herald the promised funding “couldn’t have come at a better time” and was a shot in the arm for manufacturing in Victoria and would help his company move towards its goal of becoming a global agribusiness.

"We have to evolve our product range and this will allow us to take the ideas that we have and commercialise them with some government assistance,” he said.


Thinking about automating in a post-COVID world? Read our tips on where smart manufacturers should invest in automation.