Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change, Industry and Innovation) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill implements one of the pillars of the government's $1 billion Plan for Australian Jobs.

It will improve access for Australian businesses to work on major investment projects, placing them into global supply chains and growing Australian jobs.

Together with the establishment of 10 industry and innovation precincts and increased support for the growth of Australian small- and medium-sized businesses, the Plan for Australian Jobs will grow industry, grow business opportunities and grow jobs.

Australia's economy is resilient.

The Labor government's economic management and the hard work of all Australians have delivered impressive growth, low unemployment and low inflation through a period which has seen the biggest global economic downturn since the Great Depression.

We are well placed to look to the future with confidence and we have continued to make the reforms that will support a strong and diverse economy into the future.

While the economy broadly is doing well, the high Australian dollar and difficult international conditions are putting pressure on many of our industries, particularly manufacturing.

The government's industry and innovation statement entitled A Plan for Australian Jobs is a detailed set of policies which addresses these pressures. It will ensure Australian industry is able to access and take advantage of opportunities, improve competitiveness through innovation and adapt to new economic realities.

The plan will ensure that Australians continue to have high skilled, well paid jobs in the advanced manufacturing industries that will be the backbone of the modern economy.

As part of this package of reforms, the government has introduced this bill, which will invest $98.2 million to strengthen the ability of Australian businesses to win work on major investment projects. This reform will deliver more jobs for Australians from the massive investment projects underway in our economy.

Through consultations with industry and others, it has become apparent that the increased use of global engineering and procurement firms has led to an increased reliance on the use of established global supply chains by major project proponents.

In order for Australian industry to grow in a global economy, access to these supply chains is crucial.

That is why under this bill any domestic project worth $500 million or more must demonstrate how it will provide opportunities to local businesses through an Australian Industry Participation (AIP) plan.

Success in supplying to major projects in Australia is a crucial way for Australian businesses to integrate into global supply chains. Australian businesses are being denied opportunities to win work across a range of sectors.

As well as the use of established supply chains by proponents, there are a variety of reasons why this is occurring, including the size of tender packages, specification of foreign standards in project requirements and a simple lack of information about local capabilities.

Analysis of publically available information on major projects indicates that more than half of the current major projects are currently not subject to AIP requirements.

The total value of these projects without an AIP plan is approximately $32 billion. Without a comprehensive and consistent approach to AIP, Australian industry participation in major projects will continue to decline.

This bill will require major projects, both private and public, with a capital expenditure of $500 million or more to develop an AIP plan. An AIP plan outlines the actions a project proponent will take to provide Australian businesses with full, fair and reasonable opportunity to participate in a major project.

This goes beyond the Commonwealth's existing mechanisms for an AIP plan through the Enhanced Project By-law Scheme and Commonwealth grants, procurement and loan arrangements.

Under this bill, AIP plans will be applied to initial project construction and to the initial operational phase of major projects if they involve a new facility. For the first time, this bill specifies consequences for AIP non-compliance.

These consequences include adverse publicity notices, naming a relevant person and the ability for the authority to seek performance and restraining injunctions to force compliance with the legislation.

The bill requires an AIP plan to be prepared at an appropriately early stage of project approval, such as events during the early design and development of the project.

This increases the chances of Australian entities winning work as tender specifications can be developed with Australian capabilities in mind, rather than having to comply with pre-existing specifications drawn up with overseas suppliers and established supply chains in mind. Those making procurement decisions on behalf of the project will be required to keep themselves informed of industry capability and capacity in relation to the major project prior to tendering.

A mandatory element of AIP plans will be information on standards to be used in the project. Design specifications should take Australian industry capabilities and capacity and Australian and international standards into account so that Australian entities are not 'designed out' of the project.

In addressing this element, if the project proponent is not using Australian or international standards it will need to state why these standards are being used. The provision of information on standards will be material to AIP plan compliance.

The bill will apply to corporations and draw on the corporations power as defined in the Constitution to capture those organisations running major projects.

The bill is designed to apply to projects that are at an early stage of development and that reach a trigger point for the legislation after it comes into effect and from then on.

The bill also creates a new Australian Industry Participation Authority to administer the new AIP requirements.

The bill provides the authority with a sufficient range of powers to ensure compliance with the bill and to deliver a range of other initiatives aimed at building capability and capacity within local business and linking them with new opportunities.

To maximise coordination and focus, all Australian government requirements for AIP plans and the related support activities that boost industry capability and capacity will be delivered by the authority.

The authority will evaluate, approve AIP plans, publish AIP plan summaries, monitor and report on the AIP plan implementation and impose administrative consequences for noncompliance.

The authority will also take responsibility for delivering support arrangements to help our businesses develop the capabilities and connections needed to capture these opportunities.

The authority will improve coordination between the Buy Australian At Home and Abroad initiative and supplier advocates and other relevant parts of AusIndustry and Enterprise Connect. It will be a one-stop-shop for Australian entities seeking to build capability and capacity and link into new business opportunities.

The work of supplier advocates is to use their professional networks, business experience and access to decision makers to increase the competitiveness and capacity of SMEs, and help them connect with new business opportunities.

Advocates build on the activities of industry partners and government agencies, including Enterprise Connect, the Industry Capability Network Ltd, Austrade and the Export Finance and Insurance Corporation.

In addition to the recently announced Automotive Supplier Advocate, advocates currently work in the resources, rail, steel, information technology, clean technologies, water and textiles, clothing and footwear sectors.

This bill represents a determined approach to helping Australian businesses develop the capabilities, experience and connections needed to capture opportunities from major projects, grow their businesses, enter global supply chains and create jobs.

In effect, the bill provides Australian firms with the same fair and reasonable opportunities afforded to the global supply chain partners of major project proponents. AIP plans are consistent with trade obligations, consistent with our values and an open dynamic economy and promote, not stifle, competition.

It has been estimated that this bill could bring in extra work worth between $1.6 billion and $6.4 billion per annum for local businesses. Winning work on these major projects not only has immediate benefits for local companies and their employees.

It also allows them to gain experience, increase the scale of their operations and establish connections and commercial relationships with some of the largest multinational companies in the world.

This will improve the prospects for Australian companies to win more work in the global supply chains of the large project investors and developers.

In conclusion, the reforms contained within this bill will support the creation and retention of Australian jobs and will open up global supply chains so Australian business can access the opportunities that will underpin industry growth. I commend it to the House.

Debate adjourned.