Trade and Assistance Review 2019-20

Pandemic led to significant new industry assistance

Significant new emergency assistance measures — including assistance provided to industry — were rolled out in 2019-20 to help prevent job losses and maintain viable businesses during the COVID-19 pandemic.

The annual Trade and Assistance Review released by the Productivity Commission estimates that $12.1 billion in assistance was provided to businesses in 2019-20, a small increase from the previous year.

The review outlines many new measures introduced in 2019-20 in response to the pandemic, but as most of the money for these initiatives was spent in 2020-21, they will be fully reflected in next year’s review.

“A feature of the pandemic — more so than in past recessions — was the highly specific effect of restrictions on specific industries,” Productivity Commission Chair Michael Brennan said.

“Well-targeted industry assistance measures have been a valuable part of the pandemic response,” Mr Brennan said.

“As always, the art is to maintain such measures long enough to help viable businesses through the crisis, without them becoming a permanent feature,” Mr Brennan said.

2019-20 saw a continuation of the long term trend of industry assistance taking the form of budgetary outlays — such as subsidies and grants — and tax concessions, rather than tariffs.

The review also examines the range of trade measures that China has imposed on some Australian exports over the past year — including on barley, coal, wine, cotton and timber.

For some of these products — such as barley and coal — producers have rapidly expanded into other markets while, for more differentiated products such as wine, finding new markets has proved more challenging.

Notwithstanding these trade measures and their impacts on exporters, strong iron ore exports has meant that the value of goods exported to China in 2020 was similar to 2019.

Flows of foreign direct investment into Australia fell from over $56 billion in 2019 to under $30 billion in 2020 — a reflection of the dampening effect of the pandemic on investment flows globally — with Australia’s largest flows coming from Japan, the United Kingdom and Singapore.

The Trade and Assistance Review 2019-20 can be found at: www.pc.gov.au/tar2019-20

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Trade and Assistance Review 2019-20

Australian industry received $12.1 billion in assistance from the Government in 2019-20.

• Net tariff assistance $0.3 billion
• Budgetary outlays $5.1 billion
• Tax concessions $6.7 billion

Levels of assistance and economic value varied between sectors, industries and businesses.

Primary production

• Net assistance 20%
• Economic output 2%

Mining

• Net assistance 4%
• Economic output 11%

Manufacturing

• Net assistance 29%
• Economic output 6%

Services

• Net assistance 47%
• Economic output 80%

New emergency assistance measures were rolled out to maintain viable businesses and help prevent job losses.

However most emergency spending occurred in 2020-21.

"Well-targeted industry assistance measures have been a valuable part of the pandemic response"
Michael Brennan, Productivity Commission Chair

Read the Trade and Assistance Review 2019-20 at pc.gov.au