The federal government handed down its last budget this week before the election, expected sometime in May. Treasurer Jim Chalmers said the measures would help build a stronger economy, but the business response has been one largely of underwhelm – a lack of vision and real reform. For the food and beverage sector it was unsurprising with more tinkering around the edges with no meaningful policy development or direction.
The main commitments:
Pausing indexation on draught beer excise and excise equivalent customs duty rates and by support available under the existing excise remission scheme for manufacturers of alcoholic beverages and Wine Equalisation Tax Producer rebate. This is estimated to decrease receipts by $165 million over five years from 2024–25;
- $60 million to help small businesses uplift their digital and cyber security capabilities
- $20 million to support Australian producers through the Buy Australian Campaign, aiming to encourage consumers to buy Australian made products;
- $17.1 billion over ten years to improved regional infrastructure, including road and rail projects to improve the efficiency and resilience for manufacturers and their transport and logistics networks;
- $6.8 million for the Department of Agriculture, Fisheries and Forestry to sustain non‑regulatory agricultural export and trade functions, including international engagement in multilateral forums and technical market access services;
- $3.5 million over two years from 2025–26 to develop a National Food Security Strategy;
- $2.9 million over three years from 2025–26 to assist fresh produce suppliers to understand and enforce their rights under the Food and Grocery Code to achieve more favourable commercial outcomes when negotiating with large grocery businesses;
- $8 billion additional investment in renewable energy and low emissions technologies through a $2 billion expansion of the Clean Energy Finance Corporation; and
- fiscal support for manufacturers to reduce energy costs through subsidies.
National employer association, AI Group, expressed its frustration at the budget, saying it was time for “hollow tax reform promises” to end.
“We urgently need to get serious about boosting our competitiveness and productivity,” CEO Innes Willox said. “We labour under a cumbersome two-tier corporate tax system that discourages investment and growth.”
“Policy leaders can’t afford to avoid tax reform leading into the next election. Piecemeal changes that deliver Australians $5 a week in 15 months is not tax reform. A budget that does not address uncompetitive corporate taxes is not reformist. A budget that declines to face into structural tax reform is a major disappointment. Taking on these challenges is crucial to enhancing prosperity. Not addressing it is a major blind spot in our national debate,” Willox said.
The Australian Food and Grocery Council (AFGC) said the tax cuts to ease financial pressure on households was welcomed, but lasting relief was dependent on a “strong, viable domestic manufacturing sector that can keep shelves reliably stocked with affordable products”.
IT is calling for a food first approach to national policy. “Cost-of-living support works best when paired with a robust cost-of-doing-business agenda,” it said.
“A cost-of-doing-business agenda would bring in coordinated actions that reduce the financial and regulatory strain on essential industries – boosting efficiency, resilience and competitiveness.”
The council outlined actions that would help achieve that:
- Government tax incentives to modernise processes in the industry through automation and digitisation;
- Investing in more resilient transport infrastructure to protect against natural disaster disruptions;
- Ensuring access to stable, affordable energy for manufacturers; and
- Addressing workforce shortages, particularly in regional and rural areas.
- The concept of a “food first national policy” is a clanging symbol vibrating at a pitch the current government seems unable to hear.
There have been two federal inquiries in the last two years into our food and beverage system and manufacturing capabilities – Food for Thought: The opportunities and challenges for Australia’s food and beverage manufacturing industry last year, and Australian Food Story: Feeding the Nation and Beyond in 2023.
The Australian Food & Agriculture Taskforce, voluntarily formed by industry CEOs and board members from across the value chain, completed a year-long investigation and consultation last year to develop a position paper on how to accelerate the transformation to a resilient, equitable, nutritious, and profitable food system.
The two inquiries have provided 58 recommendations for building such a system. The key ones were:
- create a comprehensive National Food Plan;
- appoint a Minister for Food;
- establish a National Food Council;
- develop a National Food Supply Chain Map;
- develop measures to facilitate innovation in the production of food; and
- develop measures to eliminate food waste including a Food Waste Tax.
Meanwhile, taskforce has provided a clear path on how to unlock the country’s potential to become a food superpower with actions required by all the moving parts of the value chain – farmers, food processors, retailers, tech companies, financiers, and government. It also addresses how to develop greater public and private collaboration and face the challenges of building an interconnected food system at pace and at scale.
While the sector is dealing with the same issues as manufacturing more broadly – increased input costs, cost of labour and raw materials, and labour and skills shortages – its key point of difference is the fact it is a complex, interconnected system with multiple government departments involved and no central organisation or policy to encourage an efficient and cohesive framework.
Consider that in the context of our food and beverage manufacturing sector being the largest manufacturing employer with 237,000 employees – that’s 25.9 per cent of all manufacturing jobs. It is also estimated that 87 per cent of the industry are SMEs generating around $31.8 billion in gross value-add in 2022-23.
Take one component of the sector – the organics industry. We are the only country in the OECD that does not have domestic regulation for organic certification. The first attempt at doing so was legislation tabled in 1987. At the time Australia was at the forefront of the industry.
Thirty-seven years later, there is still no standard, and our organics industry is locked out of export markets because of it. Given the right conditions, the sector is forecast to double to $5.8 billion over the next five years. Given the right opportunities.
When Prime Minister Anthony Albanese announced the Future Made in Australia policy, he talked about economic and national sovereignty, about it being time for the government to be “hands on, not a spectator” and that “reactive patchwork approaches” be replaced with maximising long term opportunities.
This budget is another missed opportunity for the government to set out a vision and roadmap to do exactly that for our vital food and beverage system.
