8 October 2020
The Federal Budget 2020-21 contained a variety of measures which will assist businesses in the manufacturing sector in the same manner in which they are intended to assist the broader economy.
In addition, the Government announced its Modern Manufacturing Strategy to further support certain types of Australian manufacturers.
The announced measures were flagged in a 1 October 2020 press release issued by the Prime Minister and the Minister for Industry, Science and Technology, and focus on six areas of comparative advantage and strategic interest, being:
- Resources technology and critical minerals processing.
- Food and beverages.
- Medical products.
- Recycling and clean energy.
The focused nature of these measures indicates the Government is betting on certain areas within the manufacturing sector to help reverse, or at least slow, the decline in investment in Australian manufacturing which has been evident for some time now.
Whilst businesses within the comparative advantage / strategic interest areas will welcome the additional funding availability, significant additional support will be required to realise the Government’s stated intent to launch a “new era of Australian manufacturing”.
The Modern Manufacturing Strategy contains:
- Modern Manufacturing Initiative - the Government has committed $1.3 billion in co-funding to manufacturing initiatives beginning in the first half of 2021 with annual funding rounds to be spread over the next four years.
- Supply Chain Resilience Initiative - to help identify vulnerabilities in Australia’s domestic and international supply chains, starting with health and medical products and extending to other sectors. $107.2m in funding will be available over four years for projects designed to address an identified supply chain vulnerability.
- Manufacturing Modernisation Fund - to provide grants of between $300k and $1m on a 3-to-1 funding basis for transformative investments in technologies and processes.
- Advanced Manufacturing Growth Centre and Industry Growth Centres - to provide an additional $50m to support the existing Advanced Manufacturing Growth Centre and a further $20m for existing Industry Growth Centres for 2021-2022 in:
- Advanced Manufacturing.
- Cyber Security.
- Food and Agribusiness.
- Medical Technologies and Pharmaceuticals.
- Mining Equipment, Technology and Services.
- Oil, Gas and Energy Resources.
For manufacturing businesses that wish to access some of the announced support measures, the job now will be to:
- Assess whether they are eligible.
- Consider how the measures, along with broader incentives, may support their planned strategic initiatives.
- Begin to construct required business case documentation and implement plans to facilitate access to funding and support.
For others, the announcements may accelerate plans to pivot their business operations to focus on areas which align with future government support as well as assessing their options regarding funding, mergers & acquisitions, supply chain and key markets.
For more information on the Modern Manufacturing Strategy announced in Federal Budget 2020/21, talk to your adviser or contact the Findex Tax Advisory team.
For more Federal Budget coverage and news as it comes to hand, visit our Federal Budget Resource Centre.