Key Issues

Industry Directory

ASI Groups

The issue

The issue

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The ASI and its members are extremely concerned about the amount of imported fabricated steel on major resource and infrastructure projects. The Australian steel industry is not opposed to mixed local and imported input, but rightly rejects the notion that Australian steel be effectively shut out of meaningful involvement on major projects developed here. 

Loss of vital skills

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WelderThe trend towards imported modular construction for key components of resource projects has meant that local industry has been excluded from significant participation. Many ASI member manufacturers and fabricators are running their companies at substantially lower production and employment levels compared to recent years with employment levels the lowest seen in 18 years. For instance, figures sourced and compiled by an independent consultant show that WA companies have undertaken less than 10 percent of the potential work available. If this trend continues, there is the danger of essential skills in the steel fabrication and heavy engineering sector being lost forever. These are important skills which will be required for ongoing maintenance and extensions to existing and new plant. This is not only in resources, but essential services areas like power, water, and basic infrastructure, and therefore it’s in the nation’s interest that this skill base is kept viable.

Skewed playing fields

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It has become more obvious that there is confusion in the market about what constitutes ‘open’ compared to a ‘level’ playing field – they are not the same thing. Australia has one of the most open economies in the world with low barriers to trade, a business environment the ASI has long supported. But the field would only be level if our trading partners each had similarly open economies and played by the same rules, but that is simply not the case. Many of the Australian industry’s main competitors in steel construction have Government export incentives and major competitor China has a well documented subsidised steel industry and under-valued currency, perhaps to the value of 30 percent. This is NOT a level playing field. Australian Government action is urgently required to level market conditions. Such measures that may include stipulating a proportion of fabricated steel that developers or EPCM contractors must procure within Australia, doubling the depreciation time against any imported item or discounting royalty payments to major project proponents for increased percentage of ‘contestable’ local content used.

Policy parity needed

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There are various State government local content policies in Australia that vary considerably and some haven’t been revised for five or six years and are loosely monitored for compliance. All state and federal governments need consistent and stronger policies with appropriate levels of monitoring. The ASI advocates stricter local content policies be applied to a variety of Government and private projects including, Public Private Partnerships (PPPs), major road, rail and port development, desalination and power plants, wind towers, and projects where Government has financial involvement, such as currently in Victoria where the 25 percent local content (for ‘contestable’ manufacturing) is mandated on publicly funded projects and those deemed of strategic importance.

Import concessions

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The Australian Government’s Enhanced Project By-law Scheme (EPBS) provides tax concessions to project proponents for importing materials not available locally, provided they commit to undertaking a Local Industry Participation Plan (AIPP). But tariff concessions should not be awarded to major project proponents unless their undertaking to maximise local participation is fully honoured, not just for token efforts such as pooling non-contestable with contestable steel sections. Any package for steel fabrication must not be eligible for tariff concession if the capability exists in Australia. AIPPs should be made public and fully transparent, including the various components required and the proponents’ procurement intentions. The ASI has contributed to the current EPBS Policy and Administrative guidelines review by Access Economics.

Government needs to view the substantial Australian steel industry as a strategic national requirement and seriously bring to bear effective measures to maintain it.