Struggling industry gets $7 billion aid

AI group’s council: Innes Willox, Andrew Liveris, John Pollaers and Chris Roberts. Photo: Josh RobenstoneManufacturers are receiving more government assistance than any other sector in Australia, with more than $7 billion spent on helping the struggling industry in the past financial year.

Car makers and steel producers are the biggest beneficiaries of government assistance, with each sector getting more than $1 billion in subsidies, made up of tax concessions and direct funding.

Banks and insurers are also enjoying help from Canberra, with $845 million of tax concessions granted to the sector.

The figures are detailed in an annual review of government assistance to industry by the Productivity Commission. It revealed that electricity and gas companies benefited the most from budgetary assistance, which include tax concessions and grants but not tariff assistance.

The report comes as Canberra is grappling with a fall in tax receipts as a proportion of GDP. This shift since the financial crisis is making it tougher for the government to return to a budget surplus. The review also follows the Australian Industry Group launching a powerful new manufacturing lobby to drive policy change in the sector ahead of the federal election in September.

Speaking at the launch of the new Australian Advanced Manufacturing Council, AI Group’s chief executive, Innes Willox, said the new body would focus on what support the industry needed to compete globally.

“We’re not concerned about which party wins, what we’re concerned about is whether we get the right policy settings in place going to the end of this year and into next,” he said.

Andrew Liveris, the chief executive of US-based $60 billion global firm Dow Chemicals, is one of the CEOs heading the group. He also chairs President Barack Obama’s Advanced Manufacturing Partnership as an advocate of US manufacturing.

Mr Liveris said while Australia invested heavily in education, it was lacking a “risk-taking culture” and venture capital that could spur innovation.

“Typically, great Australian inventions get innovated and monetised overseas,” he said. “An innovation hub, like Silicon Valley, needs to be designed and built in Australia. It won’t happen by accident.”

Despite its focus on policy change, the group would not say what role it saw for government subsidies in Australia’s manufacturing future.

“The industry needs to be able to compete on its own merits. It also needs to have the platform in place so that it can compete,” Mr Willox said.

Productivity Commissioner Patricia Scott would not comment on the benefit of government assistance to particular industries, but said the numbers were revealing in terms of who got what.

“It’s true that assistance helps certain industries, but it’s also true that they often come at a cost to other industries, tax payers and consumers,” she said.

“There are a large number of programs, and it’s always good to look at each program to see if it’s still fulfilling its purpose.”

Research and development grants accounted for a third of total budgetary assistance.

Cochlear chief executive Chris Roberts and Pacific Brands CEO John Pollaers are also founding members of the new manufacturing council.

The original release of this article first appeared on the website of Hangzhou Night Net.

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