THE HON ANDREW HASTIE MP
SHADOW MINISTER FOR INDUSTRY AND SOVEREIGN CAPABILITY
FEDERAL MEMBER FOR CANNING

SPEECH
CENTRE FOR INDEPENDENT STUDIES CONSILIUM
GOLD COAST, QUEENSLAND

FRIDAY 16 OCTOBER 2026

Check against delivery

Thank you for having me, and congratulations to the Centre for Independent Studies on fifty years.

Last year, I stood next to a red 1969 XW Falcon GT.

And I made a video for social media.

Some of you may have caught it online because it sparked a massive reaction.

Many people loved it, but it rubbed some the wrong way.

One motoring website immediately rushed out a column headlined: 'No, Australia isn't going to make cars again.'

Another columnist delivered a scathing takedown with the heading: 'Bring back Aussie carmaking? Give us a brake, Mr Hastie.'

And Simon Cowan, who was research director here at the Centre, wrote a piece called: ‘Pump the brakes, Hastie.’

I was surprised by this: people reacted from the gut without listening to what I was saying.

It was a lesson in communications, and the lesson was that I hadn’t landed my point.

The car itself was a distraction.

Many thought I was making a nostalgic pitch to resurrect our dead car industry.

As many of you know, Coalition and Labor governments had spent billions of dollars to keep Ford, Holden, and Toyota alive.

But those foreign firms left anyway.

My point wasn’t about subsidies. Or tariffs. Or cars.

It was about ambition.

It was about sovereign capability.

That red Falcon was a reminder that we once had a strong advanced manufacturing capability.

Building something as complex as a car takes a massive industrial ecosystem.

It takes toolmakers and die-casters working hand-in-hand with engineers.

It means developing hundreds of suppliers, and building a skilled workforce that can fit thousands of moving parts together, at scale.

For decades, we had that expertise on the factory floors of Geelong, Broadmeadows, Altona, and Elizabeth; handed down from worker to worker, from generation to generation.

Next Tuesday, October 20, marks exactly nine years since the very last Holden rolled off the assembly line at Elizabeth.

Between 2016 and 2017, the giants of Australian car manufacturing fell: Holden, Ford, Toyota.

All gone.

And when they packed up and left, we lost the toolmakers, the die-casters, and the engineers.

Overnight, all that generational knowledge was lost, or absorbed back into other parts of the economy.

Every time I see a Ford or a Holden on the road that was made in Australia, I point it out to my kids.

Most of what they'll grow up driving will be made overseas—increasingly in China if the growing number of Chinese cars on our roads is a guide.

That's what the video was about.

I was lamenting a country that has stopped making things.

So — today — my pitch is very simple:

I’m here to argue that Australian industry policy should focus on growing advantageous industries.

What is an advantageous industry?

An advantageous industry is one where our natural gifts give us a cost edge others can’t compete with, and where the capability matters when our shipping lanes are closed, and we’re on our own.

A cost advantage. A critical capability.

Prosperity and security.

Let’s take prosperity first.

Advantageous industries tend to drive productivity and economic growth.

That – in turn – drives income growth which lifts the wealth and prosperity of workers throughout the economy.

Secondly, security.

Advantageous industries secure the nation by building sovereign capability that will protect us during a crisis or war.

Think of defence or medical advanced manufacturing.

Both are vital to Australia in a time of crisis.

Right now, Australia has flatlining productivity.

Flatlining real wage growth.

And we’re growing more and more dependent on other countries for high-value manufactured goods.

Our sovereign capability is shrinking.

But don’t just take my word for it.

There’s growing evidence of our shrinking industrial base, along with advantageous industries.

Harvard University's Growth Lab ranks the world's economies on the range and complexity of what they make and export.

Australia – shockingly – sits around 74th out of 145.

Among advanced economies, only Chile ranks lower.

Even New Zealand makes more complex things than we do.

By Harvard's assessment, Australia is less complex than it should be for a country of our income, and less complex than it was ten years ago.

Australia is a wealthy country.

But wealth from the export of raw commodities isn’t the same as being able to make what we need.

Before I go any further, a few caveats:

First, I believe in free-market capitalism as the best system for incentivising, growing, and managing human endeavour.

We are all creative people made in the image of God.

At the heart of that anthropology is free will and free choice.

We are at our best when we are exercising our creativity — as producers not consumers — making things of value that serve the common good.

Second, I believe in the nation-state and the role of government in shaping the direction of the economy.

It’s not a question of whether government should be involved or not – it’s a question of government getting it right.

That’s why we have fierce debates and disagreements over taxation, energy, family, and services policy.

Finally, I think governments do have a role in making strategic interventions for reasons of national prosperity and security.

That’s the whole point of industry policy: building sovereign capability where the free market can’t grow it on its own.

And advantageous industries are difficult to grow because of the long-time horizons, the pricing power of existing firms, the complex technology, the capital costs, and so on.

A debate around industry policy doesn’t have to swing between the cartoonish extremes of privatisation and nationalisation.

Rather I’m advocating for strategic interventions in the economy to build sovereign capability where the market won’t.

That’s not at odds with free-market capitalism; it’s simply prudential statecraft in a dangerous world.

In any case, we are already doing industry policy under the Albanese government with the Future Made in Australia and the Capacity Investment Scheme.

But rather than birthing Australian sovereign capability, we are playing midwife to a Chinese industrial boom with possibly the greatest misallocation of public capital in our nation’s history being pumped into the Net Zero economy.

Labor's plan is to close reliable coal and gas power and replace it with wind turbines, solar panels, and batteries made in China.

China makes more than 80 per cent of the world's solar panels.

It has around two-thirds of the world's wind turbine manufacturing, and it makes most of the world's batteries.

Labor is handing out taxpayer subsidies for rooftop panels, only for that cash to immediately flow overseas to our competitors.

Every renewable energy target Labor sets may as well be a direct invoice from a Chinese factory.

Labor calls this Future Made In Australia, when it’s a future made overseas.

The question is: Why are we propping up China’s industrial boom instead of backing in our own workers?

At the same time, our Australian manufacturers are paying twice.

They pay through higher power prices, which have made energy-intensive manufacturing nearly impossible to sustain.

And they pay through the Safeguard Mechanism, which puts millions of dollars of extra costs on the same smelters, refineries, and steelworks Labor claims it wants to save.

The Coalition will abolish the Safeguard Mechanism.

Australian manufacturers haven't been given a fair chance, and no amount of taxpayer subsidised bailouts have helped.

On September 14, the blast furnace at Whyalla was shut down for good and around 600 workers lost their jobs.

That came after a $2.4 billion support package.

At Mount Isa, the Commonwealth and Queensland governments are propping up Glencore with up to $600 million over three years to keep its copper smelter open.

Nyrstar was given $135 million to keep its smelters at Hobart and Port Pirie going.

There’s a familiar pattern here.

Labor drives up energy costs, then hands out money to the businesses that can't survive those costs.

It’s like going to your GP for poison, and then going back for the antidote.

And Industry Minister Tim Ayres calls each closure a sad day – and moves to the next one.

That’s not industry policy.

We need to build advantageous industries that drive productivity, fuel economic growth, and that give us resilience in a crisis.

Two American economists, Marc Fasteau and Ian Fletcher, recently wrote a book on how nations build industry.

It's called Industrial Policy for the United States, and it outlines the tools of industry policy.

I gave it an endorsement a few years ago.

Industry tools include: infant-industry protection – to tariffs – to incentives for foreign firms – to sovereign wealth funds – to fostering clusters – to supporting public research, and many more beside.

Most helpfully, it offers eight national case studies looking at Japan, Korea, China, Germany, France, Britain, India, and Argentina.

It’s a valuable read, as it reminds us that each nation must assess their own strengths and vulnerabilities.

That each nation has its own culture and politics that shape economic outcomes.

But successful industry policy seems to have a common theme.

For example, Japan, Germany, and Korea all built advantageous industries after the wars of the mid-twentieth century.

Look at what those countries had in common.

They had reliable energy.

They had stable laws and courts which protected investors.

They backed risk with capital and rewarded it through the tax system.

And their governments placed a premium on sovereign capability.

The failures of industrial policy, however, all have their own national characteristics.

France struggled with a cultural deep-seated hostility toward free-market capitalism.

India was crippled by weak social institutions, poor physical infrastructure, and systemic bureaucratic corruption.

Argentina weaponised tariffs and gradually isolated itself from the global economy.

And Britain – for a long time – was dominated by an upper class that openly disdained the grit of manufacturing, and a labour movement fundamentally hostile to the corporate world.

Even the successes don’t last forever.

Germany built Europe's strongest engineering economy on cheap energy.

Then it shut its nuclear power stations and bet its future on Russian gas.

German manufacturers are still paying for that decision.

And then there's China.

Fasteau and Fletcher describe China as "pursuing economic hegemony through mercantilism".

They note how China’s aggressive tactics, including industrial espionage, have alienated much of the rest of the world, and prompted growing resistance to Beijing’s ambition.

Australia doesn’t have a chapter in the book, but if we did, it may be: Rich, but not ambitious.

In some respects, ours is the strangest story of all, because we have so many advantages.

We possess some of the largest reserves of coal, gas, and uranium in the world, and we dig up huge amounts of iron ore, bauxite, lithium, and rare earths.

And we’ve proven that we can use this to our advantage before: in the 1980s, cheap, reliable power brought world-class aluminium smelters to Tomago, Boyne Island, and Portland.

With such a natural baseline of wealth, Australia should be the cheapest place in the developed world for advanced manufacturing.

Instead, we dig up the ore and ship out the gas – then buy back steel, aluminium, solar panels, and batteries forgoing the economic and security benefits of growing our own advantageous industries.

While other countries have seen their industrial bases wiped out by the harsh realities of war – we did this to ourselves, driven by bad policy.

And the policy doing the most damage today is Labor's radical Net Zero energy agenda.

So, what’s to be done?

Under Angus Taylor, we are pursuing an aggressive supply-side economic reform agenda.

We’ll cut taxes, deliver cheaper power, and get the economy firing again.

That includes repealing Labor’s Capital Gains Tax regime, and reforming the Research and Development Tax Incentive for industry.

We’ll also kill the Net Zero green grift and get power bills down.

But we’re also assessing how we can build and develop advantageous industries.

Here are some thoughts.

I think there are a couple of areas we can look at.

First, using Commonwealth investment vehicles to lengthen our Australian businesses’ time horizons to deliver low-cost, patient capital in the form of concessional loans.

And secondly, building strategic precincts where we can create and grow an industrial commons, keeping production and innovation co-located.

To the use of public investment funds…

The Commonwealth already owns most of what it needs.

In 2012 the Gillard Government, with the support of the Greens, set up the Clean Energy Finance Corporation.

It now has more than $30 billion in investment capacity.

The Clean Energy Finance Corporation is Net Zero's bank.

The law requires that every dollar it invests must go into clean energy technology.

That means that billions of dollars of Commonwealth capital are backing wind, solar, and battery projects that depend on Chinese supply chains.

That needs to change.

In my view, the Coalition should repurpose the Corporation to back the sovereign capabilities we need, such as defence industry, critical minerals processing, artificial intelligence, advanced manufacturing, and critical medicines.

Many of these advantageous industries have long time horizons that exhausts the patience of private capital before a return on investment.

Our most innovative local firms – the ones trying to build complex, high-value products – keep facing the same funding issues.

Just ask Cochlear, the manufacturer of the bionic ear.

Local venture capital is focused on quick results; while the big banks are cautious.

This lack of strategic capital creates a valley of death between a successful working prototype and a fully operational product.

And it’s a gap where too many brilliant Australian companies either go bust, sell out to foreign buyers, or head offshore – just to survive.

Why isn’t there a role for government here to bridge the funding gap?

We already use public capital to subsidise China’s Industrial Revolution.

Why not repurpose it towards Australian sovereign capability?

Finance is only part of the puzzle; location and the clustering of capability matters as well.

And, right now, Australian industry is spread out too thin.

The firms, the facilities, the skilled workers, the sites, and the customers are scattered across the country, without the massive benefits of operating side-by-side.

To make matters worse, critical levers like land allocation, grid connections, and planning approvals are bogged down between State governments, each running on their own priorities and timelines.

The result?

Australia builds isolated, vulnerable companies instead of powerful, industrial clusters.

We used to understand this instinctively.

When our car plants were running, component makers deliberately set up their firms around places like Geelong, Broadmeadows, and Elizabeth just to be near their clients.

Tradespeople moved fluidly between those firms, carrying their know-how with them.

And that’s why, when the car plants were forced to shut down, we lost far more than just the assembly lines themselves – we lost the entire ecosystems.

We need to establish strategic industrial precincts, and we must start with defence.

A dedicated precinct locks steady work, skilled talent, guaranteed baseload power, and shared infrastructure into one single hub – with the Commonwealth and the States working to fast-track land and planning approvals together.

Crucially, these hubs must be anchored around homegrown, small and medium Australian businesses, rather than just handballed to the big foreign defence primes.

Why start with defence?

Because the Commonwealth is already the customer.

Australia is locked in to spend hundreds of billions of dollars over the coming decades on submarines, surface ships, missiles, and the complex networks that support them.

That money will be spent.

And we’ve done this before.

During the Second World War, the Department of Aircraft Production built about 700 Beaufort bombers across Melbourne and Sydney.

Two decades later, that same organisation delivered the Air Force's first supersonic fighter.

On the November 16, 1963, Squadron Leader Bill Collings took the very first Australian-assembled Mirage fighter into the sky at Avalon.

With each subsequent batch of Mirage fighters that rolled off the line, the reliance on French parts diminished.

By the time the hundredth Mirage was delivered in December 1968, Australian workers were building them from the ground up – right here on Aussie soil.

The Mirage could fly at more than twice the speed of sound, and it remained our frontline defender for over two decades.

Years later, when structural cracks appeared in its wings, it was Australian scientists at the Aeronautical Research Laboratories who figured out how to fix it.

Sustained defence demand built those elite skills, and that capability enriched this country for a generation.

That’s exactly what defence procurement needs to do again.

It must forge dual-use capabilities that spill over into the wider economy.

Ultimately, Australian firms with the ambition to build complex, high-value things are being starved of two necessities: patient finance, and a dedicated place to build where the land, power, workforce, and customers are locked in together.

Let’s come back to that red Falcon.

I’m not asking Australia to turn back the clock and build the Falcon again.

I’m asking whether we have the courage to once again become the kind of country that could.

An Australia with vision, imagination and ambition.

A country that’s more productive, more wealthy, and more secure because we’ve built advantageous industries.

A country with a strong advanced manufacturing capability.

A country that can survive a naval blockade in war, or a large supply shock to our economy in peace.

A country that unlocks our energy abundance and becomes cost competitive again.

A country that invests our sovereign wealth into Australian firms, and builds strategic clusters of production and innovation across Australia.

Our national sovereignty hinges on our industrial capability.

We need to climb back up that Harvard Index of Economic Complexity.

It will take leadership. Tough choices. And grit.

Australians built incredibly complex things in this country for most of the last century.

Earlier generations forged supersonic fighter jets at Avalon and manufactured cars at Elizabeth with a fraction of the wealth and technology we have today.

They did it because they believed a strong, independent nation was worth building.

And so do I.

Can we make things again?

I believe we can.

[ENDS]