The Federal Budget: how will it affect food manufacturing? [poll]

The release of the 2014 Federal Budget has sparked debate about which industries are this year’s winners and which are the losers, but it’s not necessarily that simple.

The Australian Food and Grocery Council (AFGC) CEO, Gary Dawson, said the government is facing an enormous task to return a surplus without harming consumer confidence while also stimulating growth.

“Massive budget deficits create a climate of uncertainty for business which undermines confidence and investment, essential to underpin jobs and growth. This Budget’s concerted effort to rein in spending and streamline services sends positive signals to business of the government’s fiscally responsible approach to public finances,” Dawson said. “The $11.6 billion Infrastructure Growth Package will be a significant boost in stimulating growth and confidence [in the] food and grocery and agribusiness sectors.

“For the food and grocery and agri-food sectors, which are spread across the length and breadth of the continent, this massive boost in infrastructure planning and delivery is essential in developing supply chain solutions that create world leading, efficient channels to market,” Dawson said.

The AFGC is also in support of the health reforms brought in by the Budget, which will see a $20 billion Medical Research Future Fund, which the government said will be the biggest in the world.

“The Medical Research Future Fund is a bold initiative that will deliver world class research into key National Health Priorities,” Dawson said. “The decision to incorporate the National Preventive Health Agency into the Department of Health and cease the National Partnership Agreement on Preventive Health will reduce complexity and overlapping jurisdictions.

“This represents a step away from prescriptive policy intervention with a renewed emphasis on greater collaboration between government, industry and other stakeholders.

“Food manufacturers have for some time engaged with retailers, stakeholders, and state and federal government to address lifestyle-related non-communicable diseases.”

But not everyone is satisfied with the Budget.

Tony Pititto, national head of food and beverage at Grant Thornton said the government’s reduction of the research and development rate by 1.5 percent will stifle product innovation.

“According to our recent study, Australian food and beverage companies currently spend only one percent of turnover on R&D for product innovation, which is significantly below their US counterparts who spend closer to two percent. New reforms will see an even further reduction in spend in Australia,” Pititto said.

“Australian food and beverage companies are becoming more challenged with private labels increasingly moving onto supermarket shelves. The development of new products is one way companies can reduce reliance on private labels by opening up new opportunities for their products, either through existing channels or new channels such as export markets.

“The change is likely to lead to less innovation in an industry which must innovate to combat the challenges of the duopoly supermarket position in Australia and must look at product innovation for export markets and new distribution channels,” Pititto said.

To the right of this screen you will see a black box with Food magazine's latest poll. We're asking what impact you think the 2014 Federal Budget will have on your business. Please share your thoughts!


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