Australian Treasurer,Wayne Swan has disappointed food growers, producers and retailers with little new being offered them in the latest Federal budget, which was released by Mr Swan on 14 May 2013.

Some in the Australian food industry are hoping that the forecast deficits of $19.4bn this financial year and $18bn next financial year underline a weakness in the economy that might trigger a drop in the Australian dollar.

Some food manufacturers are now pinning their hopes on a predicted decline in value of the Australian dollar against key foreign currencies to revive local food production by making  Australian products more competitive in overseas food consumer product or  commodity markets.

Any weakening of the Australian dollar might also help stem a flood of foreign-sourced home brands in Australian supermarkets.

AFGC response

The Australian Food and Grocery Council (AFGC)’s CEO Gary Dawson said there was little in the budget to stimulate growth and confidence, and nothing to relieve the ever increasing regulatory burden on business.

“In addition, a number of the savings measures such as the axing of the baby bonus, tax increases, deferral of tax cuts and reductions in family assistance, will further crimp consumer spending in an already weak economy.

“Food and grocery manufacturers and suppliers have been reporting for some time the negative combined effects of the high Australian dollar, rising input costs and retail price deflation, creating the most challenging trading conditions for decades,” he said.

Mr Dawson warned that continuing budget deficits could create a climate of uncertainty for business which undermines confidence and investment, essential to underpin jobs and growth.

“One of the few bright spots in the budget is that the widely mooted reduction in the Clean Technology Program did not occur. The program has been maintained and rephased to take account of high demand, Mr Dawson said.

“Many food and grocery manufacturers have sought assistance through the Food and Foundries element of the Clean Technology program to invest in low emission and energy efficient technologies to offset the higher costs flowing from the introduction of the Carbon Tax.

“However for a trade exposed sector that is critical to the nation’s manufacturing base there is nothing in this budget to attack the regulatory burden choking investment and growth, ” he said.

The $110 billion food, beverage and grocery manufacturing sector directly employs almost 300,000 Australians, half of them in regional areas. It is still Australia’s largest manufacturing sector.

Agriculture sector’s response

Meanwhile, the peak national body representing the Australian agriculture sector says tonight’s Federal Budget has brought little change for Australian farmers – and the little change there has been is simply a re-diversion of funds from one Government-funded project to another.

The National Farmers’ Federation (NFF) says it is pleased that agriculture has been spared from major cuts in the Budget, but is disappointed that the Government is simply moving funds around within agriculture and other portfolios, rather than committing additional funds to new projects.

“The biggest news for agriculture is that tonight the Treasurer has announced $99.4 million in farm household support under the new drought policy assistance package,” NFF President Duncan Fraser said. “But these funds were already committed to the Government’s Caring for our Country project, the Federal environmental management program which provides funding support for farmers and land managers to engage in natural resource management, helping to protect our valuable resources in the best interests of the Australian public.

“What the Government has done tonight is rob Peter to pay Paul. The Budget papers show that there will be a redirection of $141.5 million of Caring for our Country funds over five years to fund the household support package and other initiatives.

“In addition, while agriculture has been spared major cuts under the Budget, cuts in other areas may have a flow on effect to our farmers. For instance, the Government is cutting $3.9 billion from the assistance it provides to industries affected by the carbon tax – including agricultural processors. Essentially, this means that those processors, who will now feel the full brunt of the carbon tax, will have little choice but to pass the full cost of this on to farmers.

“Additionally, the Government has also made a change to the PAYG system, which means that farm businesses that operate as trusts and sole traders will now have to report PAYG monthly, not quarterly. This will be a major regulatory burden on farmers at a time when the Government has said it is committed to reducing red tape.

“We are pleased to see the Government recognising the importance of infrastructure, through the announcement of a $24 billion investment in road and rail, including freight corridors. While these are not agriculture specific, it is positive to note that two thirds of these infrastructure projects will be in rural and regional Australia, providing a flow on benefit to agriculture.

“Overall though, tonight’s Budget is a disappointing one for the Australian agricultural sector. The Government is not taking a long term, strategic view and investing in the future of this important sector – rather it is simply moving money around within the existing tight agricultural budget. For instance, there was no recognition of our calls for an increase in the total Government spend on agricultural research and development to ensure future growth, innovation and productivity on farm.

“The Government needed to do two things tonight: firstly, provide the foundation that allows agriculture to continue to grow in the face of major challenges, and secondly, demonstrate a commitment to the long-term future of Australian agriculture. Unfortunately they have done neither. And while the Treasurer has tonight focused his attention on jobs and growth, the Government has provided little to help agriculture on either front,” Mr Fraser said.

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