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The Productivity Commission is required under its Act to report annually on industry assistance and its effects on the economy. Trade & Assistance Review 2012-13 contains the Commission’s latest quantitative estimates of Australian Government assistance to industry.
• Government assistance to industry is provided through an array of measures including tariffs, budgetary outlays, tax concessions, and restrictions on competition.
– This benefits the industry receiving it, but comes at a cost to other industries, taxpayers or consumers. A critical issue is whether the benefits accruing to industry outweigh the costs.
• Estimated tariff assistance to industry was $7.8 billion in 2012-13 in gross terms, accruing overwhelmingly to manufacturing. Budget and tax related support was worth a further $7.8 billion, thus total gross assistance was $15.6 billion.
• After deducting the cost penalty of tariffs on imported inputs ($7.1 billion, two thirds incurred by services industries) net assistance to industry was $8.5 billion.
• Budgetary assistance in 2012-13 was about $2.2 billion less than in 2011-12. The largest reductions were from the winding down of transitional assistance afforded by the Energy Security Fund ($1 billion), the Coal Sector Jobs Package ($219 million) and the Steel Transformation Plan ($164 million).
• Since November 2013, the current Government has announced, amongst other things, that it would:
• reduce funding to motor vehicle manufacturing between 2015–2017 by $500 million, not provide a debt guarantee or line of credit to Qantas, nor provide assistance requested by processing company SPC Ardmona, but would proceed with support to Cadbury for a tourist facility.
• Australia recently agreed to bilateral trade agreements with Korea and Japan. Trade agreements can distort comparative advantage between nations and consequently reduce efficient resource allocation.
– The rules of origin in Australia’s nine bilateral agreements differ widely, are likely to impede competition and add to the compliance costs of firms engaging in trade.
Established in 1917, Clarke Global Logistics is a reputable Australian Customs Broker and Freight Forwarder; offering a totally integrated trade service both locally and globally.