Manufacturing News

Australian manufacturers winners and losers in mining boom

Australian manufacturers look to be in a win-lose situation when it comes to the mining boom.

Yesterday, the Productivity Commission rejected the Coalition’s policy for assisting Australian companies in price disputes with their foreign competitors, the SMH reported.

The policy forms a key part of the Coalition’s plan to help local manufacturers and the rejection is a major knock back for struggling manufacturers who are looking to gain an advantage and maximise their opportunities in the resources boom.

Commission chairman Gary Banks said the policy was rejected because it fell “well short” of the balance required for allowable restrictions. The Coalition’s policy also risked adding extra costs to the domestic economy and hurting relations with key countries, including with China, Banks said in the report.

The Commission in addition, rejected the push for local content rules which forced resourcing companies to source more of their inputs from Australian suppliers.

The premise of the Coalition’s policy is to have local content rules that help local companies, including struggling Australian manufacturers, gain a greater advantage mining boom supply contracts. However, the push has attracted much criticism, largely that it is anti-competitive for industry.

‘‘When large firms operating here source inputs overseas, this will typically be because it makes financial sense for them to do so. In such cases, it will generally make sense for Australia’s economy too,” Banks said.

However, the Government’s push to share bring the benefits the mining boom to other local industry sectors is still.

Earlier this week, the Gillard Government announced that it was moving ahead with its plans to extend the operation of Australian Industry Participation (AIP) Plans opening up the plans for public comment.

The AIP plans are geared at encouraging greater participation in major industry projects and extending that plan is expected to create more opportunities for industry, especially ahead of major resource projects being rolled in the next few years.

The Prime Minister announced the measures at the Jobs Forum held in October and the Government is now seeking public input on its plans to extend the AIP.

“The changes extend the requirement for Australian Industry Participation plans to be lodged for projects involving government grants over $20 million and require AIP Plans and their outcomes to be published,” said Minister for Innovation Senator Kim Carr.

“The changes mean that Australian businesses will get a fair opportunity to compete on level terms when contracts for government supported work are let.”

The changes proposed and outlined in the Measures to extend Australian Industry Participation report also include some that will require companies to provide more evidence of opportunities made available to Australian industry for projects under the Enhanced Project By-law Scheme.

A working group comprising representatives from industry, unions and federal and state governments has been appointed to advise the Government on implementing the new measures.

The working group will also consider submissions made by the public. All submissions need to be lodged by Monday 12 December 2011.

The Measures to extend Australian Industry Participation is a consultation paper that proposes key changes to extend access for Australian businesses to supply to major projects and make processes more transparent.

More information, including a copy of the consultation paper, is available at www.aip.gov.au

Members of the Working Group include:

  • Mike Lawson, Head of Manufacturing Division, Department of Innovation, Industry, Science and Research (Chair) 
  • Innes Willox, Director International and Government Relations, Australian Industry Group 
  • Nixon Apple, Industry and Economics Advisor, Australian Manufacturing Workers Union 
  • Murray Motroni, Customs and International Trade Adviser, Woodside Petroleum Limited, nominated by the Australian Petroleum Production and Exploration Association
  • Stephen Grocott, General Manager, Industry Participation Branch, Western Australian Department of Commerce 
  • A senior representative from the Department of Foreign Affairs and Trade

 

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