This media release and key points were issued with the annual report series, Trade and Assistance Review, on 20 December 2002.

Total assistance to Australian industry has continued to decline, but was still over $14 billion in 2001-02, with manufacturing the major recipient, according to a Productivity Commission report.

Trade and Assistance Review 2001-02 provides the Commission’s latest estimates of Commonwealth assistance, and updates estimates of State assistance last published in the mid-1990s.

The report shows that budgetary assistance (grants, tax concessions, etc) now provide more assistance to industry than tariffs. State outlays have grown to $3.3 billion — 15 per cent higher in real terms than in 1994-95. Commonwealth budgetary assistance has edged up to almost $4 billion.

Most Australian industries have relatively low rates of assistance by historical standards, but pockets of high assistance remain. The Commission said that assistance programs are increasingly designed to provide incentives for industries to adjust to market pressures. The four most highly assisted industries — textiles, clothing and footwear, the automotive industry, dairying and sugar — are all on adjustment programs.

The report notes that particular forms of assistance, such as R&D subsidies, can deliver net community benefits if well designed.

But it also warns that industry assistance can entail significant costs to consumers, taxpayers and other industry — for example, tariffs on manufactured imports penalised businesses in the services sector by some $2.3 billion in 2001-02.