29 September 2014
Coalition urged to fire up food sector with investment incentives
Food and grocery manufacturers are calling for the reintroduction of investment incentives, increased labour-market flexibility and the reinvigoration of the competitiveness agenda, as new statistics show capital investment is flat and employment is falling despite export growth.
Australian Food and Grocery Council executive director Gary Dawson said labour and energy costs — particularly gas price rises — could not be ignored as key drags on the industry’s competitiveness. The food and grocery sector makes up nearly 30 per cent of Australia’s manufacturing base by turnover.
While Mr Banks said he accepted that the Coalition had promised not to embark on major industrial relations reform this term, the AFGC had to put it on to the table. “It feeds into lack of competitiveness and if we are focusing on growth investment and jobs, you can’t take that out of the equation,” he said.
The latest snapshot for the industry shows that in 2012-13 turnover rose 0.9 per cent in inflation-adjusted terms, but capital expenditure rose by only 0.3 per cent. Employment fell by 2571, or 0.9 per cent, from the previous year, to 299,731.
Exports grew 8.6 per cent as a lower Australia dollar and growing global demand boosted sales. Exports of processed meat (up 24.5 per cent), seafood (up 23.1 per cent) and cheese and other dairy (up 19 per cent) came ahead of the signing of free-trade agreements with South Korea and Japan and negotiations of a free-trade deal with China. These are likely to push exports up further.
Mr Dawson said the key takeout from the annual industry snapshot was that “this is a sector worth backing’’ as part of the federal government’s policy of playing to national economic strengths. “As a nation, we have a competitive advantage in agriculture, and adjacency drives comparative advantage into food processing,’’ he said.
He said there had been growth, despite the squeeze of the high Australian dollar and high costs. But the number of jobs had dropped. “This should set some alarm bells ringing because that means we need to grow faster to maintain jobs,’’ Mr Dawson said.
He said that to grow, the industry had to attract further investment and traditionally that had come from offshore. “The focus has to be on jobs, growth and investment, and reinvigorating that competition reform agenda is critical,’’ Mr Dawson said.
He said the government should offer some investment incentives to attract capital, including accelerated depreciation.
He also encouraged the Coalition to continue with its push to direct research and development into commercial outcomes.
Mr Dawson said likely gas price rises were another potential drag on competitiveness.
He said the AFGC was not arguing for gas reservation or radical intervention, but reform had to produce a market that was working properly.
Under the current system, gas suppliers have been allowed to sit on gas reserves while waiting for an export market to emerge or governments had allowed reserves to be locked up. Local gas users were suffering.
“The longer we lock down these reserves with blanket bans, the more pain there is going to be for the industry and consumers,’’ Mr Dawson said.
The AFGC industry snapshot cites Deloitte research showing that, if current gas price assumptions are realised, there will be a cumulative loss of output in the food, beverage and grocery manufacturing sector of $9.7 billion up to 2021, and a loss of almost 3000 jobs.