Budget 22/23 — is it enough for the manufacturing industry?

Last night (25 October 2022), Treasurer Jim Chalmers handed down an updated Australian Federal Budget with key economic forecasts. The first budget from the Australian Labor Government was designed to be a ‘sensible’ budget that would invest in industries that create secure, well-paid jobs and build a stronger, more resilient Australia.

It delivered on its commitments to the following:

• cheaper child care, and more paid parental leave;
• better access to health care, cheaper medicines, and a better standard of aged care;
• fee-free TAFE and more university places;
• cheaper and cleaner energy;
• more affordable housing, and a future made in Australia.

Food and beverage industry

The Australian Food and Grocery Council commended the federal government’s focus on budget repair and supporting Australian industry to strengthen the nation’s economy and sovereign capabilities.

AFGC CEO Tanya Barden said the Albanese government’s first budget shows a welcome focus on rebuilding Australian industry, which has faced extraordinary challenges in recent years from COVID-19, natural disasters and global supply chain disruptions.

“The Albanese government’s focus on investing in industry, regional growth and building the skilled workforce of the future is welcome,” Barden said.

“The government’s $15 billion National Reconstruction Fund is a recognition of the critical importance of domestic industry and sovereign manufacturing capacity to Australia.”

Barden said a number of measures in the budget will support a stronger manufacturing sector, including:

• $135.5 million over 4 years from 2022–23 to develop domestic manufacturing capabilities and skills, including $17.2 million for a pilot Food Manufacturing Innovation Hub in NSW;
• an increase in permanent migration levels from 160,000 to 195,000, which will help ease critical workforce and skills pressures currently confronting industry;
• support for regional skills by helping apprentices in regional and remote Australia under the Australian Apprenticeships Incentive System;
• supporting investment in regions, where 40% of the food and grocery manufacturing workforce is based.

Barden said: “We must invest in skills for the future, in a digitalised, advanced manufacturing industry that is resilient and internationally competitive.”

The wine industry was also pleased that the Wine Tourism and Cellar Door Grants program will continue.

“We are delighted that the government has shown its commitment to Australian grape and wine businesses during a very challenging period for the sector,” said Australian Grape & Wine’s Chief Executive, Tony Battaglene.

“This grant helps Australia’s grape and wine businesses to invest in their cellar door offerings and employ local people,” Battaglene said. “We know great cellar doors attract tourists to regional Australia and we also know these tourists tend to spend more money in regional communities when they visit, with benefits flowing from the vineyard through to the local pub and bakery.”

Under the Wine Tourism and Cellar Door Grants program, producers who meet the eligibility criteria in the preceding financial year can apply for a grant payment of 29% of the notional wholesale selling price of their eligible domestic cellar door sales (up to $100,000 [GST exclusive]). Total funding under the grant program is capped at $10 million each financial year.

The economy

“Our economy is expected to grow solidly this financial year, by 3 ¼ per cent — before slowing to 1 ½ per cent growth for 2023–24, a full percentage point lower than what was forecast in March,” Chalmers said.

Innes Willox, Chief Executive of the national employer association, Ai Group, said in a statement last night: “Today’s federal budget risks tinkering at the edges of Australia’s structural economic challenges at a time when the domestic and global economies are under significant stress.

“While there are welcome commitments around child care, parental leave, housing, migration, the energy transition, gas supply monitoring and trade facilitation, the budget’s contribution to the critical productivity agenda is limited to positive initiatives that, only over time, will boost our workforce and trades base.

“The government’s acknowledgement that low productivity has become entrenched calls for a bolder and broader policy agenda. The current Productivity Commission five-yearly review will provide the platform for a much more substantial and sorely needed policy response in the budget next May.

“Today’s budget lays bare our immediate challenges — declining growth, higher inflation, rising unemployment, lower employment growth, stagnant real incomes, declining business investment, falling household consumption, dramatically escalating electricity and gas prices and a deteriorating international environment. The likelihood is that we will be facing these challenges at a time of falling commodity export prices.

“The question is whether the budget does enough to fortify the economy against these structural challenges, by boosting productivity, curtailing spending and supporting business and household confidence. More could have been done to propel the economy through these challenging times.”

Image credit: iStock.com/FREDERICA ABAN