Federal Budget 2020-21: Manufacturing & Logistics

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As announced before the Budget, the Government has committed to a "Modern Manufacturing Strategy" designed to assist Australian manufacturers in identified priority areas and to address key supply chain concerns highlighted by COVID-19. There is also targeted support in respect of logistics.

As part of the Government's JobMaker initiative designed to grow the availability of jobs, funding is expected to be focused on projects that will lead to greater manufacturing scale, job growth and/or the upskilling of existing employees.

Modern Manufacturing Initiative

  • The headline initiative of the strategy, the Government has committed $1.3 billion in co-funding to manufacturing initiatives beginning in the first half of 2021 and spread over annual funding rounds for the next four years.
  • It will be based around the following six identified "National Manufacturing Priorities":


  • Resources technology and critical minerals processing



  • Food and beverages



  • Medical products



  • Recycling and clean energy



  • Defence



  • Space


  • Organised into three streams of funding support, the Government will co-invest to provide funding:
    • for very large projects that support business-to-business or business-to-research collaboration that will build economies of scale, with grants up to 1/3rd of the eligible costs (Manufacturing Collaboration Scheme);
    • for manufacturers to commercialise ideas, with grants of up to 50% of the eligible costs (Manufacturing Translation Scheme); and
    • for manufacturers to integrate into local and international supply chains and markets (Manufacturing Integration Scheme), with grants of up to 50% of the eligible costs.

Supply Chain Resilience Initiative

  • The Government has proposed to issue a set of Sovereign Manufacturing Capability Plans that will identify vulnerabilities in Australia's domestic and international supply chains, starting with health and medical products (and possibly also food and food services and chemical and plastics) and extending to other sectors.
  • From 1 July 2021, projects will then be able to apply for a share of $107.2m in funding over 4 years where they address an identified supply chain vulnerability

Manufacturing Modernisation Fund

  • Designed to address barriers to growth and innovation, round two of the Manufacturing Modernisation Fund will provide $52.8 million in funding to projects aligning with the National Manufacturing Priorities.
  • Also provided on a co-funding basis, it will provide grants of between $300k and $1 million on a 3-to-1 funding basis for transformative investments in technologies and processes.

Advanced Manufacturing Growth Centre Industry Growth Centres

  • The Government also announced an additional $50 million to support the existing Advanced Manufacturing Growth Centre in the 2021 financial year, and a further $20m to existing Industry Growth Centres for 2021-2022 in Advanced Manufacturing; Cyber Security; Food and Agribusiness; Medical Technologies and Pharmaceuticals; Mining Equipment, Technology and Services; and Oil, Gas and Energy Resources.
  • Funding of initiatives within these centres will need to align with the National Manufacturing Priorities.

Further details are available from the Modern Manufacturing Strategy website.


  • Continuing the International Freight Assistance Mechanism until 30 June 2021, to ensure key freight linkages (particularly overseas) remain available.
  • Further unspecified investment in the Australian Rail Track Corporation to deliver the Inland Rail project.
  • Significant investments in infrastructure upgrades (as outlined in our infrastructure section).
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