Manufacturing News

Federal Budget – what it means for manufacturing

Manufacturers' Monthly

Treasurer Jim Chalmers announced a redirection of funds from the Modern Manufacturing Initiative and Modern Manufacturing Fund to establish $15 billion National Reconstruction Fund to diversify and transform Australia’s industry and economy.

Off the back of a Government spending audit, this year’s budget hopes to reprioritise existing funding to further strengthen Australia’s manufacturing ecosystem.

More broadly, the October 2022 Budget includes important initiatives to address structural challenges – such as energy transition, housing affordability, skills shortages, childcare and paid parental leave – while resisting short-term cost-of-living measures.

The Budget also includes Government commitments such as responsible cost-of-living relief which doesn’t put additional pressure on inflation; targeted investments to build a stronger, more resilient, and more modern economy; and the beginning the long-term task of Budget repair.

In his budget speech, Chalmers said, “The budget implements our commitments to the Australian people to deliver cheaper child care, fee-free TAFE, cleaner and cheaper energy, and a future made in Australia.

“No more sleepwalking… No more surrendering industries and jobs overseas. No more selling out our future, by clinging to the past.”

The deficit for 2022 – 23 is forecast at $36.9 billion, or 1.5 per cent of the gross domestic product (GDP) in the October Budget, down from $78 billion originally predicted at the March budget. GDP growth is predicted to be 3.25 per cent this fiscal year.

“Federal Treasurer Jim Chalmers is playing the long game in a Budget that’s positioned to help restore the economy to health, but there’s a lot of work to do between now and the May Budget,” said Amy Auster chief economist and insights officer at PwC Australia.

Manufacturing

Minister for Industry and Science, Ed Husic, said the Government is delivering the investments Australians voted for, beginning with rebuilding manufacturing capacity, with targeted support for businesses to ensure Australian workers have secure, well-paid jobs.

“We are delivering on the commitments we took to the Australian people to build a stronger and more resilient future,” Husic said.

“We want to be a country that makes more onshore – and that means backing the businesses that are making things here and supporting manufacturing in regional Australia.”

The Government is also working to establish the $15 billion National Reconstruction Fund to diversify and transform Australia’s industry and economy.

The National Reconstruction Fund will deliver targeted co-investments in independently assessed projects across seven priority areas: resources; agriculture, forestry and fisheries; transport; medical science; renewables and low emission technologies; defence capability; and enabling capabilities.

The Government will consult with industry, unions and stakeholders across the country to ensure the National Reconstruction Fund is appropriately designed and targeted to maximise the benefits of this $15 billion investment.

The Budget also includes $14.2 million to deliver on Labor’s election commitment to implement a National Rail Manufacturing Plan.

The plan will have oversight from the Assistant Minister for Trade and Manufacturing, Senator Tim Ayres. It will support the rail industry and skilled manufacturing jobs by ensuring more trains are built in Australia.

The Government’s commitments to support manufacturing include:

  • $50 million to upgrade the Nyrstar Hobart zinc smelter in Tasmania
  • $17.2 million to establish a pilot Food Manufacturing Innovation Hub on the Central Coast of New South Wales
  • $12.6 million to support Cytiva’s Springfield BioPark project in Ipswich, Queensland
  • $11.1 million to support upgrades to Ingham’s Sorell poultry facility in Tasmania
  • $10.1 million to support Flinders University’s Factory of the Future in South Australia
  • $6.1 million to upgrade the Waverley Wool Mill in Launceston, Tasmania
  • $2.1 million to support a feasibility study to replace the coal-fired boiler at the Norske Skog Boyer mill in Tasmania
  • $2.1 million to support an expansion of the Costa Group berry distribution centre in East Devonport, Tasmania

Renewable energy, electric vehicles and critical minerals

The Government also continues its push to expand Australia’s renewable energy sector, and has pledged a grid made up of 82 per cent renewables by 2030. The Budget’s approach to the net zero agenda includes $20 billion to upgrade Australia’s electricity grid, connecting it to renewable energy sources.

A $500 million Driving the Nation Fund aims to drive down transport emissions, including the construction of charging stations for electric cars at 117 highway sites around the country.

The Budget will also commit new funds to accelerate growth of Australia’s critical minerals resources and industries to support new clean-energy technologies. $150 million has been set aside to support critical minerals producers to “overcome technical and market access barriers” and establish a critical minerals research hub.

An overview of the Federal Budget as well as Budget documents for October 2022 – 23 can be found here.

Send this to a friend