PKN EXCLUSIVE: Australia’s growing dependence on imports is exposing critical weaknesses in its manufacturing base. Drawing parallels with past industry decline, Aleks Lajovic argues that without long-term policy support and a shift in perception, the nation risks losing sovereign capability in essential sectors such as plastics and packaging.
To understand where Australia is headed, it helps to look at where we’ve been.
There was a time when we proudly said Australia “rode on the sheep’s back”. In the years following World War II, wool dominated our economy, accounting for more than half of agricultural production by 1951. It wasn’t just an industry – it was part of our national identity, a symbol of prosperity.
Today, that story has changed dramatically. Wool production has shrunk to a fraction of its former significance. In Victoria, it now represents just 4 per cent of agricultural output. The decline didn’t happen overnight, but its causes offer a warning we have failed to heed.
The rise of synthetic fibres, cheaper petrochemical-based alternatives, and the drive for lower prices reshaped global markets. Australia, despite its vast reserves of oil and gas, failed to maintain the downstream industries needed to compete. Instead of turning resources into manufacturing strength, we chose a different path – importing cheaper goods and hollowing out domestic capability.
For more than three decades, we have traded resilience for convenience and lower prices, while burdening manufacturing and packaging businesses with increasing red tape and regulatory pressure.
What happened to the textile and clothing sector was not unique. The same pattern has played out across packaging, automotive, oil refining, food manufacturing, toolmaking and steel production. Industry after industry has weakened, leaving Australia increasingly dependent on global supply chains.
The cracks became impossible to ignore during the COVID-19 pandemic. When imports stalled, local manufacturers scrambled to fill the gaps. For a moment, it seemed like a turning point, with political will directed towards rebuilding sovereign capability.
But that moment passed. Six years later, we face the same stark reality.
Since the pandemic, the decline has not only continued – it has accelerated. Manufacturing and packaging businesses are closing or moving offshore. Few are opening new facilities in Australia.
Meanwhile, public attention remains fixed on fuel prices. From the 1970s to the early 2000s, Australia was largely self-sufficient, with refineries operating across the country. Today, only two remain – and both are under pressure.
The consequences are clear. Australia now imports more than 90 per cent of its fuel, up from just 24 per cent in the mid-1980s. This is not bad luck – it is the predictable outcome of policy choices.
The same vulnerabilities exist across the plastics and packaging supply chain. The closure of Qenos in 2024, Australia’s last polyethylene manufacturer, sent shockwaves through the industry. Its downfall, driven by high gas prices and feedstock shortages, triggered a domino effect.
The irony is hard to ignore. We are a country rich in oil and gas, yet unable to sustain our own basic manufacturing inputs. As plastic materials became a bedrock of modern society, we let the opportunity pass us by – failing to maintain sovereign capability in the very products whose invention helped buck us off the sheep’s back.
Plastics are often dismissed as trivial, but they are anything but. They are embedded in every aspect of modern life – from food and pharmaceutical packaging to the devices we use every day. Remove plastic, and entire systems begin to fail. Even clothing is rarely free of plastic content.
Today’s supply chain pressures resemble a second pandemic – “COVID 2.0”. Prices are volatile, supply is constrained, and delivery timelines are unreliable. Businesses are once again operating in uncertainty, often without clear information.
The manufacturing sector is now weaker than it was at the start of the pandemic. The supplier base has thinned. Investment is harder. Costs are rising. Skills shortages persist. Productivity gains are increasingly difficult to achieve. High government charges continue to erode international competitiveness.
The Federal Government says it understands the problem. Initiatives such as the Future Made in Australia plan, backed by $22 billion in funding, signal intent. But intent alone is not enough.
Australia has now had two clear warnings – the COVID-19 pandemic and the current global supply chain disruption. Both have exposed the same vulnerability: dependence on overseas supply chains and a lack of domestic capacity.
We are more exposed today than we were six years ago.
This is not an argument for reckless spending or poorly designed intervention. Australia does not need another short-term fix. It needs a coherent, long-term framework that extends beyond election cycles – policy that supports manufacturers willing to invest, innovate and build capability.
We also need a shift in public perception. Industries such as plastics and packaging are too often dismissed as low-value or environmentally problematic. In reality, they are essential. Australian-made products are produced under stricter environmental standards than many imports, yet consumers are often unwilling to pay the premium.
The question is no longer whether change is needed. It is whether we are willing to act.
If the pandemic and current supply chain disruption are not enough to prompt reform, what will be?
Australia cannot continue to drift towards greater import dependence and call it progress. The cost of inaction is already being felt across industry and society.
We are known as the “lucky country”. But if we continue on this path, our luck will eventually run out.
If not now, when?
