Alongside cost-of-living relief, the Future Made in Australia theme pervaded this year’s Federal Budget, although the focus is more on clean energy, green technologies and critical minerals, and less on the manufacturing sector as a whole.
Treasurer Jim Chalmers set out the Federal Government’s agenda for the recently announced Future Made in Australia Act making clear the priority is to focus investment on transformational opportunities. Last year’s $15bn National Reconstruction Fund has been rolled into the Future Made in Australia policy, announced in April to mixed industry response. This will see a 51 per cent increase in the overall funding allocated to Future Made in Australia, totalling $22.7bn.
Chalmers said the Future Made in Australia agenda would be guided by a new National Interest Framework to “better align economic incentives with our national interests” under a Future Made in Australia Act. The framework will guide the government’s decision making when it comes to significant public investments, particularly those used to incentivise private investment at scale.
Criticisms are that the government is now intent on deciding which industries are given priority and investment funding, rather than letting the market decide. State support for uncompetitive business does not have a good track record.
The Treasurer was chuffed to be able to deliver back-to-back surpluses, the latest of some $9.3bn, a first in almost 20 years, but the sting-in-the-tail is the forecast of the following four – and probably 10 – years back in the red.
Commenting on the focus for funding, Australian Packaging & Processing Machinery Association (APPMA) CEO Michael Moran said, “We welcome, in principle, the Future Made in Australia Green Technology and Manufacturing platform which has been allocated $22.7 billion over the next 10 years. The manufacturing businesses associated with green transition, quantum computing and defence sectors will benefit from a funding and incentive perspective, however, support for industries outside the targeted sectors, and for SMEs, appears to be limited as evidenced by the restriction of the $20,000 instant asset write off to companies with annual turnover less than $10 million.”
Of the announcements made, a small beacon of light was the focus on skills development.
“It was pleasing to see the announcement of $500m for the tertiary sector to increase skills in manufacturing and clean energy, as well as the announcement of various initiatives to lift private investment and workforce skills, and boost local supply chains,” said Jessica Olivier national leader – Manufacturing Services, at financial services advisory company RSM Australia.
However, the detail on this investment as it pertains to the manufacturing sector was scant. Moran said, “The budget information relating to initiatives and investments aimed at addressing the historically high skills gap which is required to deliver the targeted outcomes in all manufacturing sectors was limited. We hope initiatives aimed at providing a sustainable highly skilled and motivated workforce to drive and support the innovation, technology and productivity improvements will be incorporated in the detail of the $22.7 million investment spend.”
A manufacturing industry of significant national importance is the food and grocery sector, and Tanya Barden, CEO of its peak representative body – Australian Food & Grocery Council (AFGC) – said it welcomed the proposed investment.
“Modernising the food and grocery manufacturing sector through new green technologies is in line with the goals of investing in a Future Made in Australia. This would help future-proof our sector, which supports over 270,000 jobs in Australia.
“Prioritising our food and grocery manufacturing sector through investment incentives would improve innovation, lower carbon emissions, help boost domestic production and grow international presence for Australian-made consumer goods.”
In terms of grants (both new and extended programs), RSM’s Olivier says it should have been a significant part of the new measures announced to bolster manufacturing, however, there was little specifically targeted at this sector.
Chalmers said the government would undertake an independent and strategic examination of Australia’s Research and Development system to strengthen its alignment with Australia’s priorities and improve innovation and research and development outcomes.
Olivier added, “It is welcome to see moves to both support and streamline regulatory approvals for the Future Made in Australia agenda, as well as allocating funding for international investment to encourage collaboration with industry, investors and major stakeholders. This should attract and facilitate major investment, which would be welcomed by manufacturers.”
Of the support offered to small business, they will receive a $325 energy rebate, which for packaging businesses is a drop in the ocean of surging energy costs.
Some $20.5m was allocated to the Fair Work Ombudsman to help small business employers comply with complex workplace laws and $10 million to assist smaller employers with administering the revised paid parental leave scheme.
There will be a $7.7m investment over two years to extend the funding for mental health support, through the New Access for Small Business Owners programme, created by Beyond Blue. There will also be $3.1m over two years for the Small Business Debt Hotline delivered by Financial Counselling Australia.
Charles Watson, GM of IR, Policy and Governance at print industry employers' group Visual Media Association (VMA) was underwhelmed, and said, “Given most of the measures in this year’s budget have previously been announced, last night offered few new announcements or surprises. On balance this budget does little to assist businesses outside the energy sector, or to push national productivity and growth generally.
“However, it appears clever enough to minimise the likelihood for this budget to increase inflation as a result of government spending, at least in the short term. As a result of this budget, it appears the government is resting its credentials, and its future at the polls, on inflation falling and a resulting interest rate cut, before next year’s election is announced. If this bet fails, they are going to have to own the result.”
On the Education and Skills related announcements in the budget Watson said, “The announced measures are welcomed, but in the short term they won’t address the underlying complex web of educational ecologies or the underfunding that created the current shortage of VET teachers, infrastructure, and apprentices. Any real and systemic improvements are still some years away and subject to any outcomes from the strategic review of the apprenticeship system that is currently underway.”
On the Future Made in Australia budgetary announcements Watson said, “Significant fuzziness on the exact nature of the governments Future Made in Australia programme remains, and greater specificity is required. After many years of Australia’s over-reliance on the importation of cheaply made and inferior quality goods, it seems government has recognised Australia needs sovereign manufacturing. However, let’s hope this is not a diversion of government funding away from other potentially more beneficial programmes for the Australian economy.”
