In light of the recent production shutdowns being announced by companies in the automotive and food manufacturing industry, the latest review from the Australian Productivity Commission shows that car production received three times the rate of government support given to food processing.
The review found that companies who made motor vehicles and parts received about $621million in government programs and tax concessions for the period of 2011/12. This was mainly in the form of the Automotive Transformation Scheme, the Green Car Innovation Fund, Assistance to Ford Australia and the TRADEX scheme.
Meanwhile food processors received only $106million.
The rate of combined assistance, which includes programs, tariff and regulatory assistance, was 9.4 percent for car makers in 2011-12. This rate, which grew from 8.7 in the previous period 2010/11, remains well above the average for manufacturing, which is about 4.1 percent.
The food, beverage and tobacco sector, however, received assistance at a rate of only 3.3 percent. The rate has been constant for the past three years, and is a decrease from the 3.4 percent that was allocated to the sector in 2008/09.
In terms of tariff rates on output the Productivity Commission review reported that the food and beverage sector received a more favorable figure than car manufacturing. Food and beverages received $1.7 billion worth of tariff assistance while the motor vehicle and parts sector received $0.8 billion.
Simplot surprised the food industry last week when it announced that its food manufacturing plants at Bathurst, New South Wales and Devonport, Tasmania are under threat of closure.
The Bathurst plant, which employs about 160 permanent workers and hundreds on seasonal basis, is the largest corn processor in Australia. Meanwhile, the plant at Devonport is the last vegetable freezing plant left in Australia.
“Simplot’s closure would be a massive blow to jobs in Bathurst. It would be a blow to NSW farmers who sell their local produce to Simplot and leave consumers without the option to buy Australian-made tinned fruit and veges when they go to the supermarket,” said AMWU NSW Secretary Tim Ayres in a media release.
The food processing sector in Australia has been beset with challenging factors including high labor costs and the high Australian dollar. Following Simplot’s announcement, Teys Australia’s chief executive Brad Teys says the cost of labor makes the country uncompetitive.
According to Teys, by the time an animal is boxed and ready for sale in Australia it already costs around $300, while the process would only result to a value of about $150 in the US, and between $110 and $115 in Brazil.
Australia currently has the third highest hourly wage in manufacturing after Denmark and Switzerland, according to a 2012/13 study from the International Labour Organization.
Aside from the motor vehicle and parts sector, five other sectors received higher rates of combined assistance for 2011/12. Textile, Clothing & Footwear received 7.3 percent, Wood & Paper products received 4.6, Printed and Recorded media got 3.4, Metal and fabricated products received 4.7 percent, and Furniture and other products received 4.4.
