Trade and Assistance Review 2009-10

• 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 2009-10, total measured assistance to industries was $17.3 billion in gross terms and $9.3 billion in net terms.
  • It comprised $9.4 billion in tariff assistance, $3.7 billion in budgetary outlays and $4.1 billion in tax concessions.
  • The cost to industries of tariffs on imported inputs amounted to $8.0 billion.
• In the 12 months prior to the May 2011 Budget, the Australian Government announced budget outlays affording industry assistance of around $700 million, mostly to be expended within five years.
  • Nearly half of the proposed expenditure ($370 million) relates to carbon emission reduction and energy programs.
  • The remainder (over $300 million) relates to 'traditional' forms of Government support to industry, research and development and innovation.
• Following the 2010-11 floods and other natural disasters, the Australian Government announced changes in funding arrangements for existing programs and new funding to support regions and businesses affected by natural disasters.
  • Concurrently, the Australian and Queensland governments announced $5.6 billion in support for recovery and reconstruction from floods in Queensland.
  • To help fund recovery and rehabilitation work, the Australian Government announced it would terminate certain industry programs, including the Green Car Rebate Scheme and the Green Car Innovation Fund, saving around $1 billion.
• State and Territory government expenditures on programs and services identified as supporting industry policy objectives are estimated at around $4.1 billion in 2008-09.
  • These expenditures include not only grants and subsidies, marketing and promotion and agricultural research but also employee and administration costs.
  • Programs relating to primary industries and resources account for about 60 per cent of this expenditure.
• In April 2011, the Australian Government released a major Trade Policy Statement that responded, amongst other things, to the Commission's report on bilateral and regional trade agreements.
  • The Government endorsed the broad approach favouring domestic reform and non-discriminatory provisions in trade agreements, as well as transparent evaluation processes.

In 2009-10, Australian Government budgetary outlays, tax concessions and import tariffs provided Australian industry with $17.3 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 $9.3 billion.

Trade & Assistance Review 2009-10 sets out the Commission's latest estimates of the Australian Government's assistance to industry. It also documents recent policy announcements and developments relating to industry assistance.

The Review notes that, since May 2010, the Australian Government has announced around $700 million of industry assistance expenditure proposals. Nearly half of the proposed expenditure ($370 million) relates to carbon emission reduction and energy programs. The remainder (over $300 million) relates to more traditional forms of Government support. This support is targeted at primary, manufacturing and service industries, as well as research, development and innovation.

The Review provides an updated picture of state and territory government assistance to industry. Expenditures by these governments on programs and services identified as supporting industry policy objectives are estimated at around $4.1 billion. These expenditures include grants and subsidies, marketing and promotion, and agricultural research as well as employee and administration costs.

• 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
  3.3 Manufacturing
  3.4 Broadcasting and communications
  3.5 Carbon emissions reduction and energy efficiency
  3.6 Infrastructure provision and regional development
  3.7 Industry assistance related to recent natural disasters
  3.8 Other developments
  3.9 Summing up
• Chapter 4 State and Territory assistance to industry
  4.1 The role of State and Territory governments in industry assistance
  4.2 Coverage and approach
  4.3 Estimated State government expenditure on industry support
  4.4 Some considerations that currently shape state assistance to industry
  4.5 Some implications
• Chapter 5 Recent developments in trade policy
  5.1 Trade agreements
  5.2 Dispute settlement in the global trading system
• Appendix A Detailed estimates of Australian Government assistance to industry
• Appendix B Anti-dumping and countervailing activity
• Appendix C Details of State and Territory government outlays supporting industry
• References

• Chapter 2 - Tables and figures (XLS - 97 Kb)
• Appendix A - Detailed estimates of assistance (XLS - 463 Kb)
• Appendix C - State assistance (XLS - 576 Kb)
• Australian Government budgetary assistance by program, 2003-04 to 2009-10 (XLS - 41 Kb)