MORE with a whimper than a bang, John Howard announced last month his government’s vision for the future of Australia’s manufacturing industry.
The problem is, following a year long wait and with industry’s expectations running high, the government’s Industry Statement has failed to get manufacturers very excited.
True the government has vowed to invest $1.4bn into manufacturing, but that is spread over 10 years.
True the Statement does contain many positive elements, but most will only apply to a relatively small number of companies and niche sectors.
Cynics suggest the Statement is as much about stepping up the fight with Kevin Rudd over a handful of marginal seats at this year’s federal election as assisting industry. Industrial areas around Adelaide in particular, where the coalition holds three seats on margins of 1% or less, are said to be the real targets.
One of the key planks of Howard’s industry blueprint is a new $254.1m Global Opportunities programme aimed at building the capacity of Australian SMEs to win overseas contracts.
By offering economies of scale through an increased marketplace, the programme has the potential to boost Australia’s exports and assist companies to fulfil their full potential.
Due to start July 1, the programme’s goal is to identify opportunities in other countries, facilitate trade missions and to place Australian industry experts in international procurement offices.
Industry minister, Ian Macfarlane, told me the programme will provide resources to investigate up to 33 projects a year, and to mount bids for up to 16 of these projects. Each project is expected to be worth at least $500m.
Information on major overseas projects will be available to prospective Australian bidders. They then will be able to identify potential Australian partners and, with government support, form teams to mount bids.
It’s interesting to note, the Government has committed $11m over two years to boost exports to the US under the US/FTA. Is this some form of recognition that the FTA was skewed in the US’s favour to begin with?
In a bid to boost companies’ productivity and competitiveness, the Government also announced $351.8m to establish Productivity Centres across Australia, starting in September.
Macfarlane says the centres will provide a full suite of business improvement services to assist manufacturers better understand and enhance their performance. The centres will provide a free business diagnostic service as well as matching funding of up to $20,000 to companies for tailored advisory services and technology and knowledge solutions.
He told me the centres will target around 50,000 companies, and expects around 2,500 of them to take advantage of the service each year.
He hopes to have five centres up and running by the end of the year and plans to co-locate them with AusIndustry offices.
There will be one in each mainland state, but the whole program will be a network of providers located in various types of organisations and geographic locations. And unlike some Government departments, the minister assures me manufacturers will be able to gain quick access to the programs announced, with minimal red tape. He said Commercial Ready Plus will provide a streamlined application process and fast access to funding for micro businesses conducting R&D, proof of concept and commercialisation activities.
However, the biggest spend is on R&D tax concessions, a whopping $500m plus. Howard suggests the tax changes will boost R&D spend by $1bn, but the changes only relate to the 175% tax concession and are aimed at the 300 or so Australian arms of multi-national enterprises. Access to the 125% concession and the R&D offset program remain unchanged.
Overall John Howard and Ian Macfarlane must be congratulated, it’s a positive move by the Government, and at least shows Canberra does recognise the importance of manufacturing in Australia, and its export potential. Of course we all would have liked for more money and resources, but the Statement will go someway to boosting Australia’s competitiveness.
As Howard said, “Australia’s export strength is not just built on mining. It’s not the only pebble on the beach”.