Trade and Assistance Review 2008-09

• Government assistance to industry is provided by tariffs, budgetary outlays, taxation concessions, regulatory restrictions on competition and other measures.  
  • Assistance generally benefits the industry receiving it, but can come at a cost to other industries, taxpayers and consumers.
  • Some assistance programs such as those relating to R&D and environmental objectives, can deliver net community benefits if they are well designed and effectively implemented.
• For 2008 09, total measured assistance to industries was $17.2 billion in gross terms and $9.0 billion in net terms.
  • It comprised $9.5 billion in output tariff assistance, $3.7 billion of budgetary outlays and $4.0 billion in tax concessions.
  • The cost impost on industries of import tariffs amounted to $8.1 billion.
• Since May 2009, the Australian Government has announced industry assistance budget outlays of at least $6.2 billion, mostly to be expended over the next five years.
  • The bulk of the proposed expenditure ($4.6 billion) relates to carbon emission reduction and energy programs.
  • The remainder (around $1.5 billion) relates to 'traditional' forms of Government support to industry, exports, research and development and innovation.
• The structure and performance of the Australian finance sector is shaped by a variety of government policy measures, including recent global financial crisis-related measures. Budgetary measures relating to the sector are largely tax concessions.
  • Finance sector-specific taxation concessions are estimated at $330 million for 2008 09 and are largely intended to promote Australia as a financial services centre.
  • Superannuation taxation concessions advantage complying superannuation savings vehicles and incidentally advantage superannuation service providers.
  • The GST treatment of financial supplies (input taxing) also confers a sizeable incidental benefit to the finance sector (estimated at $2.8 billion in 2008 09).
• While Government support introduced in response to the financial crisis was temporary and is now being progressively withdrawn, it is likely to have some enduring effects.
• Despite efforts to bring about a successful conclusion to the Doha Round of trade talks, little progress was achieved in 2009 and early 2010 and prospects remain uncertain.

In 2008-09, Australian Government budgetary outlays, tax concessions and import tariffs provided Australian industry with $17.2 billion in assistance in gross terms, according to the latest annual review by the Productivity Commission. After allowing for the cost impost of import tariffs on industries using goods as inputs, the net assistance received by industry was estimated at $9.0 billion.

Trade & Assistance Review 2008-09 sets out the Commission's latest estimates of assistance to industry that is provided by the Australian Government. It also documents recent policy announcements and developments.

While tariff assistance has declined significantly in recent years, budgetary assistance to industry has been increasing.

The Review identifies industry assistance that has been announced since May 2009. This involves proposed budget outlays of around $6.2 billion, most of which are planned to be expended over the next five years. The bulk of the proposed expenditure ($4.6 billion) relates to carbon emission reduction and energy efficiency programs. The remainder ($1.5 billion) relates to 'traditional' forms of support to primary, manufacturing and service industries, as well as for exports, research and development and innovation.

In response to the global financial crisis, the Australian Government implemented a number of measures aimed at maintaining finance sector liquidity and bolstering confidence. In addition to reporting on these temporary measures the Review indentifies a range of ongoing tax concessions that benefit the finance sector.

• Preliminaries
  Cover, Copyright, Foreword, Contents, and Abbreviations
• Overview - including key points
• Chapter 1 Introduction
• Chapter 2 Assistance estimates
  2.1 Tariff assistance
  2.2 Australian Government budgetary assistance
  2.3 Combined assistance
  2.4 Effective rates of industry assistance since 1970
  2.5 Summing up
• Chapter 3 Recent developments in industry assistance
  3.1 Research, development and innovation
  3.2 Rural sector
  3.3 Water use and irrigation
  3.4 Manufacturing sector
  3.5 Small business
  3.6 Government procurement and support for Australian industry participation
  3.7 Exports
  3.8 Carbon emissions reduction and energy efficiency
  3.9 Infrastructure provision and regional development
  3.10 Other developments
  3.11 Summing up
• Chapter 4 Measures affecting the finance sector
  4.1 Identifying measures affecting the finance sector
  4.2 Australian Government budgetary support
  4.3 Financial stabilisation and regulatory frameworks
  4.4 Implications of finance measures
• Chapter 5 Recent developments in trade policy
  5.1 Trade agreements
  5.2 Dispute settlement in the global trading system
  5.3 Proposed changes to import duty concessions schemes
• Appendix A Detailed estimates of Australian Government assistance to industry
• Appendix B Anti-dumping and countervailing activity
• Appendix C WTO trade disputes in which Australia has third party status
• References

• Chapter 2 - Graphs and figures (XLS - 40 Kb)
• Chapter 2 - Tables (XLS - 66 Kb)
• Appendix A - Detailed estimates of assistance (XLS - 477 Kb)
• Australian Government budgetary assistance by program, 2003-04 to 2008-09 (XLS - 34 Kb)