The Restless Portfolio: How Australia's Bureaucratic Reshuffling Reveals a Crisis of Industrial Vision

John Howard, 3 June 2025

Australia's approach to industry policy over the past six decades tells a story of remarkable institutional restlessness. Between 1963 and 2025, the federal industry portfolio has been reorganised approximately 20 times—a major restructure roughly every three years.

This extraordinary pattern of bureaucratic instability reveals far more than administrative tinkering; it exposes a fundamental crisis in how Australia conceptualises its industrial future and the role of government in shaping it.

The Architecture of Uncertainty

The chronology of Australia's industry-related portfolios reads like a case study in institutional confusion. What began as the straightforward Department of Trade and Industry in 1963 has morphed through iterations, including Secondary Industry, Manufacturing Industry, Industry and Commerce, Industry Technology and Commerce, and most recently, Industry Science and Resources. Each restructure represents a different theory about where industry policy belongs in the machinery of government and what it should achieve.

This pattern stands in stark contrast to more stable government functions in other areas. Foreign Affairs has maintained a consistent institutional architecture since 1987, whilst Treasury has remained largely unchanged for decades. The industry portfolio's constant metamorphosis suggests that successive governments have been fundamentally uncertain about what industrial strategy and innovation policy should accomplish and how they relate to other areas of economic management.

The bundling patterns are particularly revealing. The Industry Department has been variously tied to trade (emphasising competitiveness), science (emphasising innovation), resources (emphasising extraction), and tourism (emphasising services). Science itself experienced similar instability, wandering from education to consumer affairs to environment before finding an apparently permanent home within industry portfolios since 1994. Each pairing reflects a different strategic emphasis, but the constant changing suggests none has provided a satisfactory framework for long-term development.

The Innovation Paradox

The 1987 dissolution of the Department of Science represents one of the most dramatic examples of bureaucratic failure in Australian administrative history. Rather than being merged with another portfolio, science functions were scattered across five different departments: Antarctic territories went to Arts, Sport, Environment, Tourism and Territories; marine science to Primary Industries and Energy; research policy and grants to Employment, Education and Training; meteorology and laboratory services to Administrative Services; and patents and space programs to Industry, Technology and Commerce.

This extraordinary fragmentation likely reflected the Hawke Government's frustration with Barry Jones, the Minister for Science, whose transition from television quiz show celebrity and science communicator to an effective political administrator proved problematic. Jones's intellectual brilliance and encyclopaedic knowledge made him a compelling public advocate for science, but his struggles with the political dimensions of ministerial responsibility—budget negotiations, bureaucratic management, and coalition-building within cabinet—may have convinced his colleagues that science policy required integration within more established portfolios rather than standalone institutional status.

The dispersal decision effectively signalled that science was not important enough to warrant dedicated ministerial attention or bureaucratic coherence. This institutional vandalism took years to repair.

Howard’s Way

Prime Minister John Howard's creation of the Department of Education, Science and Training in 2001, headed by Brendan Nelson, represented a deliberate attempt to forge stronger links between education and science policy, echoing the 1960s pairing under John Gorton. This configuration reflected ongoing debates about whether science belonged to education (emphasising research and human capital development) or industry (emphasising commercial application and economic outcomes).

The Howard Government's approach may also suggest a view that Australia's science policy had suffered from its subordination within industry portfolios, where commercial imperatives might overshadow fundamental research and scientific education. It is of interest in the 2025 AAO that the Minister for Science is a separately designated ministerial appointment––concurrently held by the  Minister for Industry and Innovation.

By linking science with education and training, Howard's arrangement reflected a view that scientific capability depends fundamentally on educational foundations and research infrastructure, not merely on industry applications––a predominant view in the academic community.

This experiment lasted only until 2007, when science migrated back to industry portfolios under a dramatically expanded configuration. Investment in research and science infrastructure through NCRIS still largely remains with the Department of Education

Carr’s Mega Department

Kim Carr's appointment as Minister for Innovation, Industry, Science and Research (2007-2011) represented an ambitious attempt to create a comprehensive innovation ecosystem within a single portfolio. The later expansion to include Tertiary Education (2011-2013) created what might be considered a "mega-department", spanning the entire innovation pipeline from university research to commercial application. This reflected the Rudd-Gillard government's view that effective innovation policy required coordination across traditional bureaucratic boundaries.

The mega-department experiment may have proved too unwieldy to manage effectively within traditional departmental structures. The Abbott Government's immediate reversion to a stripped-down Department of Industry (2013-2014) suggested that the comprehensive approach had created coordination problems rather than solving them. The subsequent gradual rebuilding—adding Science (2014-2015), then Energy and Resources (2015-2022)—reveals a pattern of institutional learning through trial and error.

Conservative Tinkering

This restlessness continued even within seemingly stable arrangements. The Department of Industry, Innovation and Science, created in December 2014, was reorganised into a portfolio arrangement with the Department of Jobs and Small Business in December 2017—lasting barely two years as a standalone entity. The Jobs and Innovation portfolio reflected yet another theory about optimal institutional design, bundling technology and innovation functions with employment policy before being transformed again into the Department of Industry, Science, Energy and Resources in 2020.

The current Department of Industry, Science and Resources (2022-2025) represents a more modest but potentially sustainable configuration. Combining industry with science and resources is a contemporary political acknowledgement of Australia's economic realities, whilst maintaining innovation capabilities. Removing "Energy" as a separate function reflects the transfer of climate policy to other portfolios, but it also suggests a more focused approach to the department's core responsibilities.

Many would see a much better pairing between Industry and Trade, as in the McEwan era, to reflect the importance of exports and foreign investment attraction in building industry capability, with resources re-linked with energy. This would also enable a valuable partnership between Austrade and AusIndustry from the perspective of growing companies with export goals.

Ongoing challenges

These paradoxes reflect a deeper challenge facing advanced economies: maintaining industrial capability whilst transitioning from resource-based to knowledge-based economic structures. Australia's bureaucratic restlessness mirrors similar struggles in comparable economies like Canada and Norway, where resource wealth has created opportunities and dependencies that complicate industrial diversification.

The tenure patterns of individual ministers provide additional insight. Long-serving ministers like John Button (1983-1993) and Ian Macfarlane (multiple stints over a decade) coincided with significant policy development—Button's automotive and textiles plans and Macfarlane's resources sector reforms. These examples suggest that continuity of leadership can overcome institutional instability, but they also highlight how rare such continuity has been.

The costs of instability

This institutional restlessness contrasts sharply with the stability of research funding in medical science and research, which operates largely through the National Health and Medical Research Council (NHMRC) established over a century ago and consistently housed within the health portfolio.

Medical research enjoys remarkable institutional continuity, with long-established institutes connected to universities, substantial state government support, and significant philanthropic funding. This parallel system demonstrates that Australia can maintain stable, effective research institutions when there is a clear sectoral identity and sustained political commitment. The NHMRC's longevity and effectiveness highlight the costs of the constant reorganisation afflicting other science and innovation policy areas.

The broader implications of this institutional instability may extend beyond government into management practice. The 2008 Management Matters report, later incorporated into Nick Bloom's 2009 World Management Survey, found that the area where Australia fell furthest behind world best practice was "instilling a talent mindset." This finding suggests that Australia's challenges with innovation policy may reflect deeper cultural and organisational patterns that value short-term adaptation over long-term capability building—patterns that appear to characterise both public sector institutional design and private sector management approaches.

Strategic Drift and International Comparisons

The timing of major reorganisations reveals how Australia's industrial policy has been reactive rather than strategic. The creation of separate Secondary Industry and Manufacturing Industry departments during the 1970s oil shocks reflected crisis-driven concerns about domestic production capacity. The 1980s mergers with trade and commerce coincided with economic liberalisation and the shift towards market-oriented policies. The pairing with resources during the 2000s mining boom acknowledged the sector's dominance of Australia's industrial base, and this relationship has largely continued through to the present day.

This reactive pattern indicates that Australia has consistently allowed external shocks and ideological shifts to drive institutional change rather than maintaining a coherent long-term vision of industrial development. The institutional restlessness reflects a broader challenge facing middle powers in the global economy. Unlike large economies that can maintain diverse industrial bases through domestic demand or small economies that can specialise in particular niches, middle powers must balance scale, scope, and specialisation in ways that defy simple policy prescriptions.

The constant bundling and unbundling of the industry portfolio reveals this tension. Pairing industry with trade emphasises international competitiveness but may neglect domestic capability building. Combining it with science highlights innovation but can divorce research from commercial application. Linking it with resources acknowledges Australia's comparative advantages but risks entrenching dependence on commodity cycles.

This dilemma is particularly acute for countries like Australia, Canada, and Norway, where resource wealth provides opportunities and constraints. Resource revenues can fund industrial development, but they can also crowd out manufacturing through Dutch disease effects and reduce incentives for diversification.

Australia's approach contrasts sharply with countries that have maintained more stable institutional frameworks for industrial policy. Germany's Federal Ministry for Economic Affairs and Climate Action has provided continuity since 1949, enabling long-term programmes like the Industrie 4.0 initiative. South Korea's Ministry of Trade, Industry and Energy has driven consistent industrial upgrading since the 1960s, supporting the transformation from light manufacturing to advanced technology sectors.

Even closer comparisons are instructive. Canada's Industry department has undergone reorganisations, but less frequently and with greater continuity of function. Despite its smaller size, New Zealand has maintained more consistent institutional arrangements for industry and innovation policy. These comparisons suggest that institutional stability, whilst not sufficient for effective industrial policy, may be necessary for building the long-term relationships and capabilities that successful industrial development requires.

The Innovation System Implications

The bureaucratic instability documented in this chronology has had major implications for Australia's innovation system. Effective innovation policy requires sustained relationships between government, universities, and industry. It demands institutional memory about what works and what doesn't. It needs consistent signals to private sector investors about government priorities and commitments.

Australia's pattern of constant reorganisation has undermined all of these requirements. Each restructure disrupts established relationships, disperses accumulated expertise, and creates uncertainty about future directions. The institutional treatment of science exemplifies this problem—having been shuffled through multiple configurations before being subsumed within industry portfolios, science policy lost the dedicated advocacy and strategic focus that standalone arrangements might have provided.

When faced with constantly changing institutional arrangements, private sector actors may reasonably conclude that government commitment to particular policies is temporary and contingent.

This has particular relevance for emerging technologies where government coordination is essential. Areas like quantum computing, advanced manufacturing, and clean energy require sustained public investment and regulatory frameworks that span multiple electoral cycles. Australia's institutional restlessness creates risks that the next bureaucratic reorganisation will disrupt such long-term commitments.

Towards Institutional Maturity

The challenge facing Australia's policymakers is whether the current configuration represents genuine institutional maturity or merely another chapter in the cycle of bureaucratic restlessness. Several indicators point in different directions.

The sustained pairing of industry with resources since 2015 marks the longest period of structural stability in decades. This suggests recognising Australia's genuine industrial strengths and the reality that resources remain central to the national economy. Unlike previous reorganisations driven by crisis or ideology, this pairing appears grounded in economic logic—mining and energy drive significant downstream activity from processing to advanced manufacturing.

However, this stability may entrench commodity dependence rather than enable diversification. By institutionally linking industry to resources, Australia risks creating bureaucratic incentives that favour resource-adjacent activities over breakthrough innovations in unrelated sectors.

The elevation of innovation and digital economy functions through dedicated assistant minister roles acknowledges that technological disruption requires specialised attention. This represents significant policy evolution beyond treating innovation as an adjunct to traditional industry concerns.

The test of institutional maturity will be whether these structures survive future political changes. Previous promising configurations were disrupted by incoming governments seeking symbolic reorganisation. True institutional maturity requires arrangements robust enough to endure political cycles whilst flexible enough to adapt to technological change.

Australia's industrial future depends partly on resolving this institutional restlessness. Effective industrial policy requires patient capital, sustained relationships, and consistent signals. The constant reorganisation of government machinery has hindered all three. Whether Australia can break this pattern and develop more mature institutional arrangements for industrial policy may determine its success in navigating the technological and environmental transitions that will define the coming decades.

A Case for Institutional Entrenchment?

Australia’s pattern of frequent departmental reorganisations raises a critical question: should we legislate departmental structures, as is the case in the United States? Under the Westminster system, portfolio configurations can be altered at will through Administrative Arrangements Orders. By contrast, US federal departments require Congressional approval to establish or disband, providing a higher threshold for change.

The US model offers clear benefits. Departments like Commerce, established in 1913, have maintained institutional identity and continuity. This has enabled the accumulation of expertise, durable industry relationships, and sustained programme delivery across administrations.

Yet paradoxically, while US structures are more stable, leadership is less so. Thousands of senior officials change with each administration under the spoils system. In contrast, Australia’s departmental structures are in flux, but secretaries often serve across governments, preserving continuity and institutional memory. Senior public servants have successfully stewarded policy through successive restructures—from Industry and Commerce to Industry, Science and Tourism—maintaining coherence despite shifting labels.

This resilience masks a deeper fragility. Structural churn, driven more by political branding than strategic considerations, occurs without a clear rationale or scrutiny. Legislated departments—or at least formal conventions—could impose a discipline of justification and consultation, reducing symbolic reshuffles.

However, flexibility remains a virtue. Swift adaptations, such as elevating cybersecurity, may be harder under a rigid model. The US experience also warns that legislative entrenchment doesn’t guarantee coherence: industrial policy remains fragmented, and leadership turnover undermines continuity.

A hybrid approach may be best. Australia could adopt soft conventions or procedural hurdles to ensure changes are strategic, not symbolic. Such an approach would balance executive agility with institutional memory and policy consistency, preserving what works while resisting disruption for its own sake.

.