Update on Government Assistance to Industry

Media Release

Issued with Trade & Assistance Review 2006-07 on 04/04/2008.

Import tariffs, budgetary grants and tax concessions provided Australian industry with nearly $16 billion in assistance last financial year, equivalent to around $8 billion in net terms, according to a Productivity Commission report.

Trade & Assistance Review 2006-07 sets out the Commission's latest estimates of industry assistance provided at the Commonwealth level.

Most Australian industries have relatively low rates of assistance by historical standards, but pockets of high assistance remain.

The textiles, clothing and footwear and the automotive industries remain the most highly assisted manufacturing industry groupings. Assistance arrangements for these industries are currently being reviewed by panels established by the Australian Government.

Assistance to the primary production sector has increased recently. It currently receives a higher average rate of assistance than the manufacturing sector, in part because of substantial 'exceptional circumstances' drought support, which totalled more than $700 million last financial year.

The report notes that some forms of assistance, such as R&D subsidies, can deliver net community benefits if well designed. But it also indicates that industry assistance can entail significant costs to consumers, taxpayers and other industry - for example, tariffs on manufactured imports effectively taxed businesses in the services sector by more than $4 billion in 2006-07.

To ensure that assistance measures provide a net pay-off to the community, the report emphasises the importance of the rigorous design and evaluation of measures, including public scrutiny of proposals.

Background Information
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Tom Nankivell, Research Manager
Leonora Nicol, Media and Publications