Three times more government assistance for cars than food

Despite food being the biggest subsector of Australia’s manufacturing industry, it receives almost three times less in government support than car manufacturing, according to the latest Productivity Commission review.

In 2011-12, the rate of combined assistance, including government programs, tariffs and regulatory assistance, was 9.4 percent for car manufacturers and 7.3 percent for the textile, clothing and footwear industries, but just 3.3 percent for the food, beverage and tobacco industries.

The food and beverage manufacturing sector received $106m in government programs and tax concessions, while cars and parts manufacturers pocketed $621m, the review states.

Food did do better than cars in regards to tariff rates on output for 2011-12. Food and beverage manufacturers – mostly those in horticulture and fruit growing – received $1.7b worth of tariff assistance, while car manufacturers only received $0.8b.

According to the ABC, the review notes that assistance for both the food and automotive groups has declined significantly in recent decades because of big reductions in tariffs and the removal of import quotas.

While the viability of Australia’s car manufacturing industry is increasingly in doubt, especially following the recent announcement by Ford that it will stop manufacturing in Australia in 2016, the food industry and government has spoken of the best ways to capitalise on Australia’s ability to produce high quality food and wine, perhaps even becoming the “food bowl” for Asia.

However high labour costs, competition from cheap imports and the high Australian dollar have been enormous concerns for food manufacturers, with a number of very high profile brands falling victim to the tough times, including Rosella, Spring Gully, Darrell Lea, SPC and Cowra's Windsor Farm Food.

SPC had to let go of 170 fruit growers in May with the high exchange rate and a decline in export markets causing the brand to significantly reduce its fruit intake.

SPC issued an urgent request to the federal government asking for special protection measures, which could include an emergency tax on imports.

The Productivity Commission's review found the overall rate of assistance for the Australian primary industries was 3.3 percent in 2011-12 with sheep, beef cattle and grain farming industries receiving the biggest cut – $567.9 million out of a total $1.4b.


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