Manufacturing largest recipient of govt assistance

Australia’s manufacturing sector receives more government assistance than any other industry, according to the Productivity Commission.

The Commission’s latest annual Trade and Assistance Review finds that, in 2013-14, manufacturing received about $7 billion in net assistance. This took the form of budgetary outlays, tax concessions and tariffs.

For the same period, the Australian Government spent $17 billion in gross assistance to all industries. This figure was about 17 per cent higher than assistance levels in 2012-13.

The Review finds that while tariff assistance today is much lower than it was – from as high as 125% in 1985 to a maximum of 5% today – on average each Australian taxpayer contributes about $150 to industry assistance per year.

In addition the review finds that manufacturing is not as important as traditional trade statistics suggest.

Manufacturing officially accounts for 36 per cent of exports but on a value-added basis much of this is composed of services. Consequently, services are more like 42 per cent of Australian trade; and manufactures accounts for only around 14 per cent.

Services receive much less assistance. In fact, industry assistance turns out to be a net burden for them. According to the Review, given that the assistance is partly designed to promote exports, this does not make sense.

Lastly, it said free trade agreements such as the Japan-Australia Economic Partnership Agreement are not being analysed and assessed well enough.

“Our 'gap analysis' of the Japan Australia Agreement shows today's assessment processes fall well short of what is needed before committing us to these agreements,” Commissioner Karen Chester said.

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