Industry and innovation package

Budget Review 2013–14 Index

Eugenia Karanikolas

The 2013–14 Budget includes several measures to implement the Government’s ‘A plan for Australian jobs’ package. The plan was announced on 17 February 2013 and is largely a response to the Report of non-Government members of the Prime Minister’s Manufacturing Taskforce.  Following are some of the measures funded through this year’s budget.  

  • Enterprise Solutions Program: $29.4 million provided over five years to assist small to medium enterprises (SMEs) in becoming more competitive when applying for government tenders. This measure responds to concerns about the barriers facing SMEs, in particular, in terms of access to finance and skills. 
  • Industry Innovation Precincts: $238.4 million provided over five years to build ten industry hubs focusing on increasing collaboration between research institutes and industries with high export growth potential.
  • Australian Industry Participation: $98.2 million provided over five years which includes funding for the Industry Capability Network and the establishment of a new Australian Industry Participation authority. This measure responds to the calls to increase the opportunities for Australian businesses to compete for large private projects and government procurement in Australia.
  • Services Leaders Group: $5.6 million over five years for the establishment of a group of service industry representatives to provide advice to government on issues facing the sector. This measure responds to concerns raised by the industry that Australia’s largest sector was losing its competitiveness because of the government’s reluctance to move towards a knowledge-based economy.[1]
  • Venture Australia: $378.6 million in further funding for the Venture Australia program to support innovative businesses.[2] This program was reviewed in 2012. The review found that it was difficult to evaluate its effectiveness given the relatively short time it has been operating. The review, however, recommended that the program continue because it has the support of stakeholders.[3]
  • Anti-Dumping and Countervailing System reforms: this is a related measure to the jobs plan package (it is administered by the Attorney General’s portfolio). Funding of up to $27.7 million is provided over four years. The cost of establishing a new Anti-Dumping Commission[4] as recommended in the Brumby review is included in the funding.

The cost of the jobs plan measures in this year’s Budget is estimated to be around $798 million. The above measures are to be funded, in part, through the $1 billion savings realised by the cessation of the R&D tax breaks for large companies.[5]

The measure that has attracted the most attention is the establishment of the industry innovation precincts.  The first manufacturing precincts will be in Melbourne and Adelaide. The Melbourne manufacturing precinct will focus on advanced manufacturing, biological engineering and renewable energy whilst the Adelaide precinct will focus on manufacturing for the defence industry.[6] The measure has been broadly welcomed but concerns have been raised, with the Australian Chamber of Commerce and Industry arguing that such a policy is ineffective and reminiscent of policies in the 1970s.[7]

The changes to the Australian Industry Participation Plan have also attracted attention. Short of mandating local content, the Government is introducing legislative changes which will affect projects of $500 million or more. Under this measure all large projects will be required to provide a plan outlining the opportunities for involvement available to local industry.  Whilst in principle the maximisation of local industry involvement has been welcomed, an industry group pointed out that just increasing the opportunity to tender is not enough for a bid to succeed. It notes that issues such as knowing how to tender, having appropriate management systems and being able to meet a variety of legislative requirements are what prevent local business from winning work.[8]

Notwithstanding its relatively low funding levels, the establishment of the Services Leaders Group is an interesting development and may be signalling the Government’s willingness to support the growth of more knowledge-based and higher value-add sectors in Australia.

In short, whilst it is unclear how much these measures will help increase the competitiveness of Australia’s industry, the focus on supporting advanced manufacturing and services is positive.  

[1].       Australian Services Union and the Finance Sector Union, Off-shore and off work: the future of Australia’s service industries in a global economy – an update, report prepared by the National Institute of Economic and Industry Research, 2012, accessed 15 May 2013.

[2].       Australian Government, Budget measures: budget paper no.2: 2013–14, 2013, accessed 15 May 2013.

[3].       Australian Government, Review of venture capital and entrepreneurial skills, report prepared by the Treasury and the Department of Industry, Innovation, Science, Research and Tertiary Education, 2012, accessed 15 May 2013.

[4].       For more information on the recent legislative reforms on Australia’s anti-dumping system see L Ferris and E Karanikolas, Custom Amendment (Anti-dumping Commission) Bill 2013, Bills Digest, 82, 2012–2013, Parliamentary Library, Canberra, 2013, accessed 15 May 2013; J Brumby, Review into anti-dumping arrangements, report, Commonwealth of Australia, November 2012, accessed 15 May 2013.  

[5].       Australian Government, Budget measures: budget paper no.2: 2013–14, 2013, accessed 15 May 2013.

[6].       Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, Manufacturing Precinct, accessed 16 May 2013. 

[7].       ‘Innovation plan more aimed at unions rather than industry: ACCI’, Business Spectator, 18 February 2013, accessed 16 May 2013. 

[8].       Australian Petroleum Production and Exploration Association (APPEA), Submission to the Senate Legislative Committee, Exposure Draft of the Australian Jobs Bill 2013 , 2013, accessed 16 May 2013.  

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