An election-focused federal budget did nonetheless offer up several bright spots for the packaging industry, including additional funding to develop plastic recycling, and for regional manufacturing.
However, industry leaders viewed the 2022 budget as a missed opportunity, more concerned with wooing voters than doing what is in Australia’s best interests.
Budget highlights:
• $500m for new Regional Accelerator Stream of the Modern Manufacturing Initiative;
• $200m for new Regional Accelerator Stream of the Supply Chain Resilience Initiative;
• additional $83.1m for the $190m Recycling Modernisation Fund and the National Waste Policy Action Plan:
- $60.4m to develop new plastics recycling technology and advanced recycling solutions, and
- $18.2m recycling education campaign and ‘ReMade in Australia’ scheme;
• Additional $17.9bn for infrastructure projects as part of the government’s 10-year infrastructure pipeline:
- $3.1bn of that for two intermodal terminals in Melbourne, designed to get freight off trucks on roads and onto trains on rails;
• $557m for small businesses to deduct an additional 20% of expenses on training courses;
• $1bn to support small businesses to adopt new digital technology in their processes;
• $954m to support a new Australian Apprenticeships Incentive Scheme for priority occupations; and
• $52.8m to deliver an initiative – ReBoot – which will support up to 5000 disadvantaged people develop skills and provide a pathway to employment.
National employer association Ai Group played it cool saying the budget had measures for long-term economic strength and short-term cost of living relief.
The Australian Packaging and Processing Machinery Association (APPMA) welcomed the government's continued investment in the Modern Manufacturing Initiatives including the boost for regional development.
APPMA chairman Mark Dingley said the Covid pandemic highlighted the need for greater supply chain resilience and protection of the food, beverage, pharmaceutical and other essential service items, noting that the $200m increase to the Supply Chain Resilience Initiative and investment in cyber security defence programs form key components in helping address these challenges.
“Of course, the devil is in the detail and the APPMA remains committed to working with AMGC and other industry bodies to capitalise on these initiatives,” Dingley said.
Professionals Australia CEO Jill McCabe acknowledged increased investment in infrastructure, manufacturing and digital initiatives, but said there was still insufficient investment in the skills of engineers, scientists, ICT professionals, and other technical professions.
“Once again, this budget misses an extraordinary opportunity to build on Australia’s dynamic STEM sector, which already contributes $330bn to the national economy and could lock in long term growth and good quality jobs as Australia emerges from the pandemic’s economic downturn,” McCabe said.
Walter Kuhn, vice president of teh Printing & Visual Communications Association (PVCA) said, “There are no long-term benefits or even medium-term benefits. Even the $2.7bn in increased funding for apprentices is dependent on finding them first, which in an era of very low unemployment is not easy.
“Likewise the external training support is dependent on taking staff out of the workplace, which is not an attractive option for most small and medium sized print business. The government knows there will not be much take up.”
Kellie Northwood, CEO of The Real Media Collective said, “The immediate feedback on this budget is that it is not a business budget, rather a families budget in an election year, and we can see the big ticket items are one-off cash bonuses and individual benefits. In that we are discouraged as an employer group, and will need to work through the detail to determine how best to apply this for our industry and members.” She said the budget was a "6.5 out of 10."
Both Kuhn and Northwood were frustrated with the failure to increase migration levels, which they said would go some way to easing labour and skill shortages in industry.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said while there were some good initiatives, the government had missed an opportunity for significant reform to address chronic workforce shortages and lagging productivity.
“Regrettably, this year’s budget doesn’t address some of the more pressing challenges facing the Australian economy, including a far-reaching agenda for tax reform, stronger focus on innovation, and building business investment, supply chain capability and productivity. Presumably, these will have to wait until next year,” McKellar said.
Regional acceleration
The Australian Food & Grocery Council CEO Tanya Barden said the council welcomed the $2 billion Regional Accelerator Program (RAP), which would support regional food and grocery manufacturers, who employ 40 per cent of the $132bn industry’s workforce.
Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Barnaby Joyce said RAP would be delivered over the next five years, with a focus on developing regional jobs and in manufacturing, education, supply chains, export opportunities and defence industries.
“The past two years have underscored how critically important a strong, sovereign food and grocery manufacturing industry is for Australia. The support for regional manufacturers, who are major employers and providers of essential items, is a significant boost,” Barden said.
But little more detail was provided about how and where the $2bn will be spent.
Continued MMI investment
Frydenberg announced a further $328.3m for the Modern Manufacturing Initiative (announced in the 2020 Budget) over the next five years.
Barden said the addition was welcome but inadequate given the investment challenges faced by the food and grocery sector.
If the industry was to reach its potential of doubling by 2030, significant capital investment was required, she said.
The Northern Australia Infrastructure Facility was given an additional $2 billion, bringing its total funding to $7bn.
Write-offs cut off
The $27bn instant asset write-off tax break announced by the government in October 2020, allowing companies with turnover up to $5 billion to deduct the full cost of eligible capital assets has been cut. It was expanded in the 2021 Budget to cover 3.5 million businesses, and $200bn in investment.
Technology Investment Boost
The Government is providing $1bn for a new Technology Investment Boost to encourage small businesses to go digital. Small businesses with annual turnover less than $50m will be able to deduct a bonus 20 per cent of the cost of expenses and depreciating assets that support digital uptake, so claiming 120 per cent of the cost. This includes portable payment devices, cyber security systems or subscriptions to cloud-based services. The boost will apply to eligible expenditure of up to $100,000 per year, incurred from Budget night until 30 June 2023.
Small businesses will also have access to a new 20 per cent bonus deduction for eligible external training courses for upskilling employees. The Skills and Training Boost will apply to expenditure incurred from Budget night until 30 June 2024.
Australian Academy of Technology and Engineering (ATSE) CEO Kylie Walker said the budget was a missed opportunity, lacked a long-term holistic strategy, and exposed the country to workforce shortages and an unpredictable future.
“We welcome funding for green energy infrastructure and expanding the science, technology, engineering, and mathematics (STEM) workforce. However, this budget does not represent a comprehensive and evidence-based investment to decarbonise, or develop the essential foundational skills required for the aspirational technology-forward economy the government has envisaged,” Walker said.
