In his pitch for re-election in 2013, then Labor prime minister Kevin Rudd said, “I never want to be prime minister of a country that doesn’t make things any more.”

But according to the Intergenerational Report, Australian manufacturing as we once knew it is set to continue its decline, with the future of jobs over the next 40 years to lay in care, mining and renewable energy.

The Intergenerational Report, released this week by Treasurer Jim Chalmers, sets out the projected economic future for Australia over the next 40 years.

The report details how, what Dr Chalmers describes as “powerful forces”, will reshape the Australian economy in the years to come.

A changing industrial base

The report highlights the significant changes which have taken place within the Australian industrial landscape over the past 40 years, and how those changes are likely to continue to affect our economic future.

A shift towards an economy driven by the delivery and consumption of services has seen manufacturing decline as a percentage of total economic activity.

In the early 1980s, 26 per cent of Australian jobs were in manufacturing, agriculture and mining. That number has contracted significantly and now sits about 10 per cent – with 90 per cent of jobs in services – a trend that is projected to continue.

What did we make?

Forty years ago, Australia had a strong and vibrant local manufacturing industry. We made cars, whitegoods, building products and clothing.

We still manufacture some of these things, albeit on a scale that is dwarfed by what it once was, finding any of them made in Australia now is as rare as a rocking horse … you know.

What will we make?

The Intergenerational Report doesn’t clearly identify what types of manufacturing jobs will exist in the future Australia, but the industry will “continue to become more specialised and highly skilled”.

The areas with the highest manufacturing investment growth, it says, will be in IT, computers, and research and development.

It also predicts that firms will narrow their manufacturing focus on activities that can capitalise on “high skill, high value add areas consistent with Australia’s comparative advantage”, although in real terms it doesn’t seem clear what any of that amounts to.

And while the report also identifies the vulnerability of a supply chain fed by products manufactured overseas, as was made painfully clear during the COVID-19 pandemic, it doesn’t identify an increase in local manufacturing capacity as a solution to manage the risks of similar supply chain disruption in the future.

Rather, the focus appears to be on “deepening and diversifying supply chain links with emerging Asian economies”.

Where will all the jobs be?

As the now-infamous Productivity Commission said in its 1996 report The Changing of Australian Manufacturing, “a particular industry structure should not be seen as an end in itself – it is its capacity to deliver high and rising living standards that is important.” On that, I think, we would all agree.

So, despite that the fact that traditional manufacturing is gone and likely never coming back, there is some hope to be found in the Intergenerational Report.

According to the report, with an ageing population, a primary area of job growth will be in care, which includes aged care and health services.

Other high-paying and high-skilled job growth is predicted to be in the mining sector, but this time driven by different factors to the mining boom of the early 2000s, which was fuelled by China’s rapid increase in demand for natural resources to meet the needs of its own expanding economy.

The mining boom of the future will come about due to the global demand for green energy and the rare minerals required for the manufacture of green energy technology.

Australia has some of the world’s largest deposits of minerals like lithium, cobalt and manganese which are used for batteries, and other “rare earth elements” used in wind turbines and electric vehicle motors.

It is the mining and export of these materials that is projected to provide a substantial contribution to GDP and our future prosperity.

The light on the hill

Despite Kevin Rudd’s plea just a decade ago, we don’t really make many things any more, and that doesn’t seem likely to change if the projections of the Intergenerational Report are correct.

But despite the loss of skill and meaningful work that has resulted from the structural decline of Australian manufacturing, there is cause for some optimism.

Going forward, Australia looks well placed to benefit substantially from the global transition to renewable energy, both in the supply of raw minerals, and the export of clean energy produced cheaply here such as hydrogen and electricity.

Scott Riches is a former union official with the Electrical Trades Union Victorian branch, and a practising employment lawyer. He is also a volunteer in the employment clinic at the Fitzroy Legal Service