Industry opportunities in manufacturing a stand-out in Federal Budget
Last week the Federal Government handed down its 2020-21 budget and while there was no new funding for waste and recycling initiatives there’s plenty of opportunity for our sector to take advantage of in manufacturing priorities and tax changes, writes NWRIC CEO Rose Read.
‘One of the most stimulatory budgets we have ever seen’ is how one of the big four banks described last week’s federal budget.
It’s also one of enormous opportunity and potential. Opportunity to build capacity in our manufacturing capabilities and potential to bring the complete supply chain together – to scale up and drive a truly circular economy.
The announcement of the Government’s Modern Manufacturing Strategy, with an allocation of $1.5b over five years to improve competitiveness, scale and resilience in Australian manufacturing will encourage much needed investment and create jobs.
The cornerstone of the Strategy is the establishment of a $1.3b Modern Manufacturing Initiative, focusing on strategic projects within six national manufacturing priorities: resources technology and critical minerals processing, food and beverages; medical products, recycling and clean energy, defence and space
Under the Initiative, the recycling industry has the opportunity to create the roadmap, priorities and goals for a two, five- and 10-year horizon, focusing on innovation and opening up new markets. This initiative has the potential to grow the recycling sector in its own right as a processor and importantly establish itself as a supplier of quality raw materials to Australia’s manufacturers.
The announcement of a $52.8 million expansion of the Manufacturing Modernisation Fund (MMF) will further focus small and medium manufacturing businesses on opportunities to innovate, adopt new technologies, invest in transformative manufacturing processes and both reskill and upskill the workforce.
There is real potential for businesses to grow – small to become medium and medium to become large by looking for potential market opportunities through manufacturing; for example investigating the different types of plastics that can be recycled into locally manufactured medical, defence and space products, food and beverage packaging and infrastructure projects – going further than just putting recycled content into roads.
NWRIC has long been advocating for stronger markets for recovered materials and the stimulatory nature of this budget provides a good framework for market development in both Australia and overseas. Both mandated recycled content in products and packaging and government procurement of recovered materials will go a long way to making that happen and now is not the time to take our foot off the pedal.
Export waste bans being progressively introduced from next year covering glass, plastics, paper and tyres provide further impetus for businesses to innovate and repurpose some of the four million tonnes of waste materials exported overseas.
Additional stimulatory measures included in the budget and also designed to encourage business investment were a number of tax changes, including a substantial expansion of instant asset write off.
Companies with a turnover of less than $5bn (covering around 99% of businesses) can now deduct the full cost of eligible capital assets until 30 June 2022. This will apply to new depreciable assets and the cost of improvements to existing eligible assets. SMEs (with aggregated annual turnover of less than $50m), can also fully expense second-hand assets.
The Australian Financial Review reported that these measures would enable businesses to ‘speed up investment, boost cashflow and send more money flowing around the economy’.
Australia’s waste and resource recovery industry has been valued at $16 billion and there are more than 5500 small, medium and large businesses operating across the country and servicing almost every supply chain in Australia.
The federal budget has provided a number of measures that will enable the sector to support Australia’s economic recovery post COVID-19. Not only is the waste and recycling sector an essential service but moving towards a circular economy it will continue to grow as a supplier of resources to the manufacturing and infrastructure sectors, and a driver of economic and environmental resilience through the creation of more sustainable jobs and supply chains.