Resilience and the Other Objectives: How Minister Ayres industrial reading of resilience works alongside productivity and competitiveness

John H. Howard, 21 August 2026

A specific reading of resilience

When Senator Tim Ayres speaks of resilience, he means something unusually specific. Security, he told the Australian British National Resilience Summit in June 2026, means little unless an economy can make the things it needs, when it needs them most (Ayres, 2026c).

At the National Press Club three months earlier, he gave the term a working definition: “the ability to keep functioning when the world does not cooperate”, resting on strong public institutions, social cohesion and a robust industrial base (Ayres, 2026a). The anchor is industrial continuity under shock, the capacity to make.

That reading now sits at the centre of the post-2020 turn in industrial policy, and it advances the national narrative. The task for innovation policy is to design resilience measures so they also lift productivity and strengthen competitiveness. This Insight examines how the three objectives can reinforce one another.

The post-2020 policy turn

The revival of industrial policy extends well beyond Australia. In May 2026, IMF staff described a marked change in motive. After 2008, governments intervened mainly for competitiveness and climate. Since 2020, they have intervened more often for supply chain resilience, national security and geopolitics, in what the IMF called a qualitatively different kind of industrial policy (International Monetary Fund, 2026).

Interventions in the year before that assessment ran at two and a half times the pre-pandemic average (International Monetary Fund, 2026). The OECD placed the same shift on the ministerial agenda in June 2026, treating industrial policy as a way to guide structural change, build technological capabilities and strengthen economic security (OECD, 2026).

The academic reconstruction is the new economics of industrial policy. Juhász, Lane and Rodrik (2024) define industrial policy as government action that explicitly targets the transformation of economic activity for a public goal. The goals now include climate, good jobs, supply chain resilience and national security. Their test is whether governments can let losers go.

Ayres's reading sits inside that turn. Resilience has joined the list of recognised objectives, and it now carries much of the policy energy. The design question is how to harness that energy so the other objectives advance with it.

Productivity depends on complements

Keeping a plant open differs from lifting output per hour. Productivity comes from the successful application of new ideas in firms, governments and communities, and from the survival of industrial assets when those assets keep learning. The complementarity principle supplies the discipline here (Howard, 2026b).

The effects of any enabling capability, whether a technology, a policy instrument or an institutional arrangement, depend on the complements it combines with. Where those complements are absent, the capability becomes rate limiting. Investment elsewhere will not unlock the promised return until the missing piece arrives (Howard, 2026b).

The leading complements in innovation ecosystems tend to sit in social capital, talent density, patient capital, governance capacity and market access. Successful places provide complements across placemaking, economics, business and governance, underpinned by infrastructure (Howard, 2026a). A resilience program that funds the smelter, and also the skills, management practice, data and downstream users, buys continuity and productivity together.

Ayres is alert to the digital layer. He has called artificial intelligence fundamentally a resilience challenge (Ayres, 2026c). The complementarity reading presses the point further. AI will lift Australian productivity where firms combine it with workflows, judgement, skills and real industrial problems, and building data centres onshore forms only one part of that combination.

A quieter implication follows. If policy builds resilience around foundation industries such as steel, aluminium, energy, fuel, fertiliser and food, the productivity question becomes whether those industries operate as platforms for application. A potline that stays open and becomes the offtaker, the skills anchor and the test bed for industrial AI delivers on both objectives.

Competitiveness reaches beyond self-sufficiency

Competitiveness, in the sense Mario Draghi restored to European debate, is the capacity to create and hold locally differentiated capabilities in an internationally competitive selection environment. Draghi (2024) treats rising energy costs, slowing productivity and the green and digital transitions as a single problem: Europe can no longer rely on the factors that once supported growth.

The OECD's first Supply Chain Resilience Review reached a complementary conclusion. Concentration has risen, and so have the risks of disruption, but re-localising production alone will not answer them. The stronger path diversifies sources, keeps markets open and makes supply chains more flexible (OECD, 2025).

Japan's economic security literature holds the same tension with care. Armstrong and Urata (2026) argue that Japan now seeks both strategic autonomy and strategic indispensability, and that the real trade-offs run among resilience, efficiency, fiscal cost and openness. Deep integration constrains coercion and makes prosperity itself a hedge.

Ayres leans toward autonomy: keep the smelter, keep the industrial base. A full competitiveness strategy adds the second Japanese element, remaining indispensable to others. A country strengthens both positions when the capability it keeps at home also differentiates it in international markets.

The IMF's caution belongs here as well. Product level competitiveness gains from industrial policy are often short lived, except where the target is a genuine market distortion or the green transition. Firm level subsidies raise capital investment more reliably than they raise productivity (International Monetary Fund, 2026). Resilience programs that retain the discipline to let losers go protect the competitiveness they set out to secure.

Holding the objectives together

The three objectives become natural partners when policy design treats them that way. Low cost, reliable energy is at once a resilience condition, a productivity input and a competitiveness variable. The Tomago arrangement, which Green (2026) describes as market shaping through a specialist investment vehicle rather than an ordinary bailout, shows how one intervention can serve all three.

Skills and management practice work in the same way. They function as complements for productivity and as the medium through which industrial capability spreads across firms and regions. Research and development, if match fit, feeds all three objectives at once.

Ayres has set four tasks: keeping the capability already onshore, securing low cost energy, making the research system match fit, and rebuilding statecraft (Ayres, 2026b). Each task carries a productivity payoff and a competitiveness payoff alongside its resilience purpose, which suggests the Minister already intends the objectives to travel together.

A political economy observation completes the picture. Juhász, Lane and Rodrik (2024) find that the hard part of industrial policy is letting losers go. Productivity requires application, and competitiveness requires comparison with others who are also learning. Resilience policy that keeps enough capacity for the country to function, while allowing weak activities to retire, keeps all three tests in view.

A working line

For Ayres, resilience is industrial statecraft. It means keeping, and then digitally upgrading, the capacity to make what the country cannot afford to import when the world turns unfriendly. That reading is now conventional among industrial policy practitioners, and it gives Australian innovation policy a clear forward direction.

The opportunity is to make the same vehicles carry more than one objective. Productivity gains arrive when resilience investments supply the complements that firms combine with new capability. Competitiveness strengthens when the capability kept at home also differentiates Australia abroad. Designed this way, resilience enlarges innovation policy and sharpens the focus of its companion objectives.

Dr John H. Howard is Executive Director of the Acton Institute for Policy Research and Innovation and Honorary Visiting Professor at the University of Technology Sydney. He is the author of The Handbook of Innovation Ecosystems (2025). Contact: john@actoninstitute.au.

References

Armstrong, S., & Urata, S. (2026). Economic security and the revival of industrial policy (RIETI Discussion Paper 26-E-054). Research Institute of Economy, Trade and Industry. https://www.rieti.go.jp/en/publications/nts/26e054.html

Ayres, T. (2026a, March 24). Smarter, stronger, safer and more resilient: A Future Made in Australia backed by research and development [Speech]. National Press Club, Canberra. https://www.minister.industry.gov.au/t-ayres/media/smarter-stronger-safer-and-more-resilient-future-made-australia-backed-research-and-development

Ayres, T. (2026b, April 30). Making Australia stronger: Industrial policy that's fit for our times [Speech]. Geelong Manufacturing Council. https://www.minister.industry.gov.au/t-ayres/media/making-australia-stronger-industrial-policy-thats-fit-our-times

Ayres, T. (2026c, June 16). The British connection and Australian resilience in the 21st century [Speech]. Australian British National Resilience Summit. https://www.minister.industry.gov.au/ministers/timayres/speeches/british-connection-and-australian-resilience-21st-century

Draghi, M. (2024). The future of European competitiveness. European Commission. https://commission.europa.eu/topics/competitiveness/draghi-report_en

Green, R. (2026, August 13). Why the $2.5 billion Tomago aluminium deal is no ordinary bailout. The Conversation. https://theconversation.com/why-the-2-5-billion-tomago-aluminium-deal-is-no-ordinary-bailout-289629

Howard, J. H. (2026a, February 10). The complementarity thesis and place-based innovation. Acton Institute for Policy Research and Innovation. https://www.actoninstitute.au/post/the-complementarity-thesis-and-place-based-innovation-why-technology-alone-is-never-enough

Howard, J. H. (2026b, March 17). Innovation ecosystems and the complementarity thesis. Acton Institute for Policy Research and Innovation. https://www.actoninstitute.au/post/innovation-ecosystems-and-the-complementarity-thesis-the-binding-constraints-that-theory-left-unexp

International Monetary Fund. (2026, May 28). Industrial policy is adapting to crises, but remains hard to implement effectively. IMF Blog. https://www.imf.org/en/blogs/articles/2026/05/28/industrial-policy-is-adapting-to-crises-but-remains-hard-to-implement-effectively

Juhász, R., Lane, N. J., & Rodrik, D. (2024). The new economics of industrial policy. Annual Review of Economics, 16. https://cepr.org/voxeu/columns/new-economics-industrial-policy

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OECD. (2026, June 3-4). Getting industrial policies right for open markets, growth and prosperity [Meeting of the Council at Ministerial Level]. OECD, Paris. https://www.oecd-events.org/e/meeting-of-the-council-at-ministerial-level-2026/en