Pratt: tap super to fuel a manufacturing recovery

Rich lister Anthony Pratt says Australia should double down on specialist manufacturing and e-commerce in the wake of COVID-19, backed by investment from the $3 trillion superannuation savings pool.

The Visy boss and ally of US President Donald Trump said Australia had gone into the global downturn behind other nations in terms of manufacturing and needed to focus on its strategic advantages to boost the economic recovery, including food manufacture and production.

He praised Mr Trump and former president Barack Obama for lifting manufacturing in the US. The sector represents about 11 per cent of GDP in the US compared with about 6 per cent in Australia.

"I believe a big key to Australia's future is manufacturing," Mr Pratt told a discussion hosted by Advance.org and the Australian embassy in Washington DC on Wednesday.

He proposed food and associated products as a key growth area, backed by improvements to water infrastructure, changes to tax concessions, and better use of free trade agreements.

Mr Pratt told the online event that increased superannuation lending was needed to support jobs and economic growth.

"Superannuation funds can be an important part of the infrastructure of Australian manufacturing," he said.

"Australia's superannuation is $3 trillion today – which is twice the size of the Australian economy by the way – and by 2032 Australia's superannuation pool will be $7 trillion.

"Since 2014, if super funds had lent their money to corporate Australia, including to capital intensive manufacturing, they would have received the same returns as they would have in equities.

"But Australia, unfortunately, has the lowest rate of super fund investing in the OECD."

He says Visy had built five of its last six new paper mills in the US using 30-year bonds from US-based superannuation funds.

Prime Minister Scott Morrison this week called for an overhaul of vocational education to create a highly-skilled workforce that would support "a modern, competitive and advanced manufacturing sector".

Former Dow Chemicals boss Andrew Liveris supported calls for increased investment and expressed frustration that many politicians did not understand manufacturing. He nominated up to seven sectors of competitive advantage.

"What does the world need that is not happening right now that we can be a part of?" he asked.

"Space is a great example of that, rare earths is another great example of that. Why shouldn't we be thinking about lithium and batteries here in this country? What is stopping us?"

Tesla chair Robyn Denholm, a former chief financial officer at Telstra, said the virus downturn provided Australian businesses with a chance for huge growth.

"Australia can build a renewable energy industry to power itself and the world," she said.

"Australia currently exports many of the raw materials for production to other countries, so why couldn't Australia turn the tables and turn those raw materials into components or even finished products for environmental energy generation?"

Ms Denholm said Australia had one of the best education sectors in the world but needed more university-educated engineers, computer scientists and robotics experts.

Australia's ambassador to Washington, Arthur Sinodinos, said the country needed to use the "black swan" crisis to change its way of operating.

"When push came to shove, some of the biggest decisions didn't take very long.

"Our destiny is not written in the stars. Robert Kennedy said 'some people ask why, and I ask why not?' And he was right."