Budget ’08: What it means for the food industry
The Federal Budget was delivered on May 13 to a mixed response as the Government seeks to exhibit a fiscally conservative attitude to the Australian economy.
There was consequently a mix of good and bad news for members of the food industry amidst a budget which delivered a record surplus of $21.7 billion. Food producers and manufacturers were winners to some degree but it appears food retail were provided with minimal benefit from the budget.
Regional Food Producers Innovation and Productivity program
Food producers in regional Australia will benefit from a new $35 million over four years Regional Food Producers’ Innovation and Productivity program, of which $10 million will be set aside for the seafood industry. The program will boost productivity along the agri-food chain by supporting innovative new technologies and processes that will give the industry a competitive edge.
Minister for Agriculture, Fisheries and Forestry Tony Burke said the program was part of the Government’s commitment to encourage the growth of regional food industries and expand the use of new technology.
“Labor promised to assist Australia’s regional food producers in becoming more competitive through productivity and innovation improvements,” Mr Burke said. “This is about looking right along the production chain – not just in the paddock – to see where we can achieve the greatest productivity gains through innovation.
“With the growing global food crisis and a shrinking world, we must plan ahead to meet the challenges of the future and make our food industries more competitive.”
Tax Cuts
The Government’s promise of $46.7 billion in income tax cuts was realised and should be beneficial to food retailers as they will hopefully stimulate the stagnating demand and growth in the Australian economy caused by inflationary and interest rate pressures. The Australian Retailers Association said they hoped the tax cuts would “flow back into a stalled retail consumer economy”.
While Small Business Minister indicated they would be good news for small business operators.”Whether they are sole traders, in partnerships or receive wages or dividends from small businesses, tonight’s announcement is good news for business,” Small Business Minister Dr Emerson said. “Personal income tax cuts will benefit taxpayers at all levels of income. Most small business operators stand to benefit, as around 60 per cent of all businesses had a turnover of less than $200,000 in June 2006.”
However, tax cuts for business were non-existent and some groups have indicated that businesses have been neglected by the Government despite the fact that a lot of the surplus being attributed to businesses.
Promoting Quality Australian Produce
The Promoting Australian Produce initiative will see $5 million allocated over three years to assist agricultural and seafood industries develop their capacity to better promote and market the benefits of their produce to consumers.
“This program will help to increase demand for local produce and boost the competitiveness of our rural industries in local and international markets,” Mr Burke said.
The Government will invite proposals from rural and seafood industries seeking to undertake projects that will:
* enhance industry marketing and promotional capabilities
* develop new strategies for industry marketing, and
* tap consumer insights and strengthen links with domestic and
international markets.
Skills Shortage
Skilled migration is set to increase by 30% in 2008/09 and will assist in dealing with the looming skills shortage. The impact of this is most likely minimal in the short-term, according to economists, but will hopefully be beneficial to business in the long-term.
Manufacturers and Climate Change
Australian small and medium-sized manufacturers were provided with great incentives to go “green”. They will be able to apply for grants from $10,000 to $500,000 to support initiatives such as improving the energy-efficiency of their operations; investing in energy-efficient manufacturing tools; improving insulation and recovering waste heat; investing in small-scale cogeneration plants that capture waste energy and use it to produce electricity on site; and cutting water wastage, including through stormwater capture and improving water recycling. Small and medium-sized manufacturers will also be able to access expert advice on how to improve their energy-and water-efficiency through the Rudd Government’s $100 million national network of Manufacturing Centres – part of the Enterprise Connect initiative.
Larger manufacturing companies will be able to apply for grants under the Re-tooling for Climate Change initiative with funding to be considered on a case by case basis.
Summary
Ultimately, it appears food retailers have been offered little in this year’s budget, particularly in the short-term. Although, the greater commitment to productivity in food production should help keep food price inflation in-check in the long-term, and the skills shortage measures could also be of assistance long-term. Food manufacturers and producers, meanwhile, have been provided with incentives to become environmentally friendly and assistance with innovation in food production is a welcome proposal.
Ausfoodnews.com.au would welcome your opinions on the budget. Did it provide the necessary funds to the right areas or was it a missed opportunity?
The $35 million earmarked for food innovation fall short of the $52.4 million spent in 2004-2008 under the Food Innovation Grants. Two Centres of Excellence (Food Safety and Functional Foods) are no longer receiving funding. Furthermore, suppliers to the food industry and exporters have also been offered little, especially taking into account inflationary pressures and increased international competition.
I was pleased to see the climate change funds, but the food industry will have to compete strongly for these funds with other manufacturing industries.
Hopefully the National Innovation Review will bring much needed funds for the food industry. There is currently an impasse in grants and this is affecting small companies that are developing solutions for food manufacturers and producers. The faster funds start flowing, the better.