Aust. industry incentives worth $1 billion p.a.

Press, 21 July 1982, Page 10

Aust. industry incentives worth $1 billion p.a.

NZPA Canberra Australia’s industrialists, farmers, and miners will share industry incentives that will be worth $1 billion a year under a plan to counter the recession, which the Government now acknowledges. Under the plan, to be financed on a deferred basis, the Government is also aborting its policy of making fresh cuts in the protection enjoyed by Australian industry.

In doing so, the Government is rejecting advice the industries assistance commission gave it on the matter..

Australia’s car industry and its clothing, textile and footwear industries had already been given special exemption from the general tariff review because of the impact the Government feared tariff cuts might have on their employment. The package was announced by the Prime Minister (Mr Malcolm Fraser).

Its full cost will not have to be met for five years. Mr Fraser said the plan was drawn up, in deteriorating economic circumstances, because the Government's responsibility was to create a climate in which industry could expand, jobs could be

created and living standards rise.

The plan was welcomed by both industry and the Opposition.

However, observers said its introduction was likely to preclude big tax cuts in’the forthcoming Budget. The main elements of the Government’s plan are: • accelerated depreciation provisions which will allow companies generally to write off the cost of new plant for tax purposes over a three or five-year period.

• new primary production plant will generally be depreciable over three years. © where applicable, the present investment allowance will still be available.

• mining and petroleum companies will continue to have the option of depreciating their plant under general depreciation provisions or under the special provisions of divisions 10 and 10 (aaa) of the Income Tax Assessment Act.

• deductible capital spending by mining companies will be deductible on the lesser of the life of a mine or a 10year period, on a straight line basis.

• spending on new non-resi-dential income-producing buildings, whose construction starts after the announcement, will be eligible for depreciation at a prime cost rate of 2.5 per cent.

Mr Fraser said the Government had decided not to proceed with its present pro-

gramme of further reductions in tariffs. He also said that the industrial research and development scheme should continue without major changes and the export market development scheme would be “significantly strengthened."

However, the Government’s export expansion grants scheme will be allowed to lapse on June 30 next year. Mr Fraser said that Australia was now "obviously" in a recession, but not a depression.

"I don't think there is any point in trying to hide that," he said.

The huge programme of industry incentives he announced, did not conflict with the plan for world economic recovery that he had been promoting, he said. Mr Fraser also said that the decisions announced involved a “winding-down of direct assistance to Australia’s exports."

The Australian Government is still promoting the world recovery plan and Mr Fraser said its views would be pressed at the November GATT ministerial meeting in Geneva.

“It is up to the countries meeting at the GATT ministerial meeting in November to decide whether they wish to act together and take the necessary steps to implement the proposals," Mr Fraser said. “In the event that the

major industrialised countries do so, Australia haf made clear that it will support them."

Mr Fraser said that in the period ahead, economic activity would con tinue to reflect the slumj now occurring in business profitability, as well as the prolonged international re cession.

Australia could not expec to see a return to a period ir which there would be sub stantial new investmen’ commitments, of the kinc that had been made a yeai or two ago.

. Wage growth and reducec hours, which were out of line with industrial settlements ir other countries, were making Australia’s industry less competitive than it had been. Mr Fraser said Australia’s manufacturing industry would benefit greatly from the decisions announced. Miners and rural industry would also benefit.

“We believe it will put our own industries on a. more competitive basis, especially with the kind of support offered by countries overseas,” Mr Fraser said. “As a result, it will provide a base to enable industries to undertake investment decisions and plan to take advantage of any world recovery when that comes.

He said the Government’s plan could be regarded as a long-term base for the development of Australian industry.