2023 Federal Budget: what does it deliver?

Last night Treasurer Jim Chalmers delivered the Australian Federal Budget 2022–23. So what’s in it for the food and beverage manufacturing sector?

While overall the Labor budget remains supportive of Australian sovereign manufacturing capability, Jessica Olivier, RSM Australia National Leader, Manufacturing was disappointed to note that the ‘priority areas’ for the National Reconstruction Fund (NRF) have changed a little in their wording but basically, the NRF now includes Transport but excludes Food & Beverage and Space.

The budget does include a clear focus on energy transition, supporting this through clean energy and decarbonisation of existing industries and low emissions/renewable technologies.

Australian Food and Grocery Council (AFGC) CEO Tanya Barden welcomed the support for small businesses in the transition to a clean energy future with the $310m Small Business Energy Incentive.

“This budget provides much-needed cost of living relief while initiatives such as the Small Business Energy Incentive can help small and medium food and grocery manufacturers invest in upgraded, energy-saving plant and equipment.

“This is sensible support for a vital industry that keeps supermarket shelves stocked but is still facing fragile supply chains, soaring input costs and subsidised foreign competitors.”

Asset write-off

Olivier noted manufacturers may be disappointed on the asset write-off front. “While this budget increased the previous $1K instant asset write-off to $20K instant (per) asset write-off, we note that the current Temporary Full Expensing (“COVID”) measures were not extended, so any manufacturing company waiting on delayed equipment delivery will no longer access the TFE provisions and it’s also unlikely to benefit them given strict criteria (eg, <$10m turnover, asset costing $20K or less).”

Migration

The government’s flagged review of the migration system sees a sizeable increase in the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900 to $70,000 from 1 July — the first time the threshold has increased in 10 years.

While this will likely put significant pressure on the lower-paid hospitality and care industries, from a manufacturing perspective it is hoped that this will attract (and retain) genuinely skilled migrants to Australia with trades to be used in this sector.

Olivier said this could assist in increasing productivity due to resourcing constraints that have affected the sector since COVID (as well as a more general shortage of skilled tradespeople affecting the industry as highlighted across the manufacturing, construction, motor and mining sectors back in 2018).

Image credit: iStock.com/julos