Trade and Assistance Review 2010-11

Annual report series

Trade and Assistance Review 2010-11 was released on 6 June 2012. The methodological annex was released on 11 July 2012.

The review contains the Commission's latest quantitative estimates of Australian Government assistance to industry. The Review also:

identifies recent developments in assistance to industries and sectors of the economy
reports on budgetary measures that have provided adjustment assistance to industry
reports on recent international policy developments affecting Australia's trade and disputes settlement in the global trading system.

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Methodological Annex: Changes to the Commission's Assistance Estimates (PDF - 412 Kb)

Methodological Annex: Changes to the Commission's Assistance Estimates (Word - 128 Kb)

Government assistance to industry is provided through tariffs, budgetary outlays, taxation concessions, regulatory restrictions on competition and other measures.
- Assistance generally benefits the industry receiving it and, if well targeted and designed, can deliver wider community benefits, but it can also come at a cost to other industries, taxpayers and consumers.
For 2010-11, total measured assistance by the Australian Government to industries was $17.7 billion in gross terms.
- It comprised $8.7 billion in tariff assistance, $3.6 billion in budgetary outlays and $5.4 billion in tax concessions.
- After allowing for the cost to industries of tariffs on imported inputs, amounting to $7.9 billion, net assistance to industry was $9.8 billion.
In the 12 months prior to the May 2012 Budget, the Australian Government announced further budgetary assistance of over $700 million, mostly to be expended over the next five years.
- Most of this is directed at forestry, rural activities, R&D and innovation.
The Australian Government also announced the Clean Energy Future Plan involving budgetary support to industry over several years amounting to around $28 billion, a large part of which is compensation for the carbon price.
- Around $10 billion of this is for investments by the Clean Energy Finance Corporation, while a further $8.6 billion relates to the Jobs and Competitiveness Program.
- The Plan also includes a number of activity and industry-specific support measures, such as for the coal and steel industries.
The Commission has identified 70 budgetary measures by the Australian Government since 1996-97 that have provided adjustment assistance to business.
- Total estimated support was equivalent to about $22 billion in present day values (2010-11 dollars).
- This adjustment assistance represents about 20 per cent of estimated total budgetary assistance to industry over the 16-year period.
Given program costs and uncertainties about efficiency, there would be merit in a more detailed assessment of different adjustment assistance programs, in order for any lessons to be incorporated into future program design and delivery.
The Doha Round of multilateral trade negotiations remained stalled during 2011 under its conventional negotiating framework.
- Attention has therefore turned to negotiating strategies that may advance specific elements of the Doha Development Agenda where consensus might be reached.

Government assistance to industry

In 2010-11, Australian Government budgetary outlays, tax concessions and import tariffs provided Australian industry with $17.7 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 $9.8 billion in aggregate.

Trade & Assistance Review 2010-11 sets out the Commission's latest estimates of the Australian Government's assistance to industry. It also documents recent industry and trade policy announcements, and developments relating to industry assistance.

The textiles, clothing and footwear and the automotive industries remain the most highly assisted activities, although assistance to both groups has declined more rapidly than for manufacturing as a whole following recent further tariff reductions.

The Review notes that, since May 2011, the Australian Government has announced over $700 million in industry assistance proposals. This support relates to traditional forms of Government assistance and is targeted to forestry, rural activities, and research and development and innovation. In addition, the Australian Government announced the Clean Energy Future Plan, involving budgetary support to industry over several years amounting to around $28 billion, a large part of which is compensation for the imposition of a price on carbon emissions.

The Review also reports on Australian Government budgetary measures that have provided adjustment assistance to business since 1996-97. The Commission has identified 70 budgetary measures totalling around $22 billion (in present day values) in adjustment support. This adjustment assistance represents about 20 per cent of estimated total budgetary assistance to industry over the 16-year period to 2010-11. The Commission indicated that a more detailed assessment of past schemes would assist in designing future programs.

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Trade and Assistance Review 2010-11

Annual report series

Download the report

Methodological Annex

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