14 hours ago.
Updated 1 hours ago
The open, rules-based global trading order that has served us well is fracturing. Conflict in the Middle East and Europe, weaponisation of supply chains and the steady retreat from multilateralism are not temporary disruptions to be waited out. They represent a fundamental shift in how the world economy works, and Australia needs to think seriously about what that means for our future.
For decades, our economic model rested on confidence in open markets – that they would reliably deliver what we needed, at competitive prices, from wherever in the world it could most efficiently be produced. We specialised, we imported, we exported our commodities and trusted that the global system would take care of the rest. For a long time, that trust was largely justified.
Covid was the first major test of those assumptions since World War II, and the results were sobering. Supply chains that had seemed invisible suddenly became fragile and exposed.
The lesson was clear: the efficiency gains from global specialisation come with concentration risks that are easy to ignore until they aren’t.
The Middle East conflict reinforces that lesson. It is now clear how reliant Australia has become on the Middle East for its fuel security and its fertiliser supply.
When conflict disrupts those supply chains – as is happening right now – our agricultural production is directly at risk. The nation that helps feed the world cannot guarantee the inputs its own farmers need. That risk was largely ignored in a globalising world. It is now clearly a vulnerability no prosperous, well-governed country should accept.
Fertiliser is one example among many. Australia has allowed several of its strategic industrial capabilities to erode over decades, on the reasonable assumption that global markets would always be there when we needed them. In a more fractured, regionalised world, that assumption no longer holds.
An opportunity
It would be a mistake, however, to read this moment only through the lens of vulnerability. The same forces that are disrupting established supply chains are also creating significant opportunities for countries that move with purpose and vision.
As governments and businesses around the world look to reshore or friend-shore strategic production – in critical minerals processing, in defence industry, in food, beverage and agricultural manufacturing, in advanced building materials – Australia is genuinely well positioned. We have the resources, geography, political stability, skilled workforce and the institutional foundations other nations envy.
But natural advantages are not destiny. They have to be leveraged in competition with others — and make no mistake, this is competition. The US, European Union, South Korea, Japan and Germany are actively deploying policy to attract and anchor exactly the manufacturing investment Australia needs. They are doing so unapologetically and without clinging to the idea that the multilateral free-trade world will rebound soon, if at all. Capital is mobile. It will go where the conditions are right. The question for Australia is whether we create those conditions or watch the opportunity pass.
That means getting serious on the settings that drive investment decisions: a skilled and available workforce; world-class infrastructure connecting production to markets; energy that is competitive in both price and reliability; a tax and regulatory environment that does not systematically disadvantage local producers, and; trade policy that actually delivers a level playing field rather than paying lip service to it while accepting structural disadvantage.
These are not aspirational talking points. They are the specific, practical requirements manufacturers weigh when deciding where to commit capital for the next 20 years. This is the context in which the federal government’s Future Made in Australia agenda should be understood and refined.
Properly designed and implemented, it is a recognition that the nations winning the competition for manufacturing investment are those with the clearest strategy and the most coherent policy settings to back it up.
The gas test
Nowhere is the challenge – and the opportunity – more immediate than energy. Gas in particular has been a persistent drag on Australian manufacturing competitiveness. Since 2015, domestic gas prices on the east coast have tripled, even as production doubled. The consequences – deferred investment, lost competitiveness, and in some cases outright closures – have been real and cumulative. The government’s decision late last year to pursue a national domestic gas reservation scheme is significant and welcome.
It is the most direct mechanism available to correct the structural failures of a market that has, for too long, been allowed to prioritise export returns over the needs of domestic industry and households. Getting the design right – ensuring the scheme genuinely reduces gas prices, not merely increases nominal supply – is the critical task of 2026.
Done well, affordable and reliable gas is not just a cost saving for manufacturers. It is a foundation for the broader industrial investment a Future Made in Australia agenda requires. The decarbonisation transition and growth of advanced manufacturing depend on energy that is competitive in price and secure in supply. Gas reservation, properly designed, can help secure that future.
The next generation
There is a generation of Australians who will inherit the economy we build over the next decade, in response to the changes before us.
They deserve a country with a diversified, resilient economic base; one not wholly dependent on commodity exports and more resilient to the inevitable disruptions ahead. Manufacturing is central to that vision. It provides well-paid, skilled employment in communities across the country. It drives innovation and productivity – an engine of broadbased, sustainable growth.
It anchors supply chains that support agriculture, construction, resources, defence, health and energy-intensive capabilities. And it provides the sovereign industrial capability that, as recent years have demonstrated, no wealthy nation can afford to be without.
The decisions made in 2026 – on gas, on energy transition, on investment and regulatory settings, on trade and approvals – will shape the trajectory of Australian industry for decades. They should be made with the seriousness and ambition the moment demands.
Ben Eade is chief executive of Manufacturing Australia.