Days out from the 2020/21 Federal Budget announcement, the Prime Minister Scott Morrison delivered the traditional pre-budget address at the National Press Club on Thursday 1 October 2020. The Federal Budget is usually brought down in May each year but due to coronavirus, it was deferred from May to October so it could better address the economic fall-out caused by the pandemic. The PM’s address focussed on the announcement of a $1.5 billion package over 4 years to support key areas of the manufacturing sector.
In his speech, the Prime Minister said the package was structured to strengthen supply chains, build global scale and ensure Australia was better prepared in the future. Support has been flagged for 6 priority areas in the manufacturing sector with the objective to create sovereignty and of course jobs.
These priority areas are Mining and Resources, Food and Beverage, Medical, Clean Energy and Recycling, Defence and Space.
Sovereignty in manufacture was raised during the peak of the coronavirus pandemic when PPE and ventilators were needed to be sourced from overseas suppliers. This prompted intense scrutiny of Australia’s manufacturing capacity and motivated many companies to pivot their operations to produce the necessary medical equipment and other goods. This situation also highlighted issues with some supply chains.
This new support package, which is yet to be presented in full detail, is part of the Government’s overall Modern Manufacturing Strategy. This strategy has three components:-
- Modern Manufacturing Initiative and National Manufacturing Priorities
- Supply Chain Resilience Initiative
- Round 2, Manufacturing Modernisation Fund
In presenting the plan, the government estimates it could create as many as 80,000 jobs directly and an additional 300,000 indirectly.
Modern Manufacturing Plan: Detail
While the specific details of the plan are yet to be developed, the Prime Minister outlined the support would be, in part, by way of grants for manufacturers to shore up jobs for the future as the plan falls under the wider JobMaker banner which was announced some months prior.
Key points in the PM’s speech included:-
- Plan is driven by technology and he emphasised the role of technology in manufacturing.
- Technology not only in the actual production phase, but in the laboratories carrying out R&D, designing of products, robotics in production and tech in the sales and marketing process.
- Actions to open international markets for Australian exporters.
- Create a business environment where businesses can be competitive.
- Align resources and provide cheaper energy amongst other aspects.
- Designed to secure sovereign capabilities in areas of national interest.
- Overcoming the barriers to scale through collaboration, translation and integration.
- The Translation Stream will focus on assisting manufacturers to transform ideas into commercial outcomes.
The Prime Minister said that in addition to tax incentives and other support, grants of $100,000 to $1 million would be available in the next round of the Manufacturing Modernisation Fund. He said the next phase of the overall plan is to co-design an industry-led roadmap to guide future investment and alignment. Funding applications are due to open in early 2021.
He went on to say that manufacturing will play a key role in the country’s COVID-19 recovery.
Supply Chain Resilience Initiative
This initiative is part of the whole of Government approach to supporting manufacturing equipment and designed to put Australia on the front foot when facing future supply chain disruption. The Government will be working with industry to identify essential goods and services, map supply chains and evaluate supply chain resilience.
According to the Government website, from 1 July 2021, eligible businesses will be able to access support to either establish or to scale capabilities identified to address a vulnerability in the supply chain. The eligibility criteria have been published and you can review if your business may be eligible for support with initial information here. Further detail on eligibility is due for release in early 2021.
Moving Forward
Manufacturers operating in the 6 priority areas and businesses in their supply chains will no doubt welcome this announcement. However, the budget first has to pass through both houses of the Federal Parliament, then the details of these packages finalised before funding applications are open.
If you don’t want to wait till next year to secure finance to purchase equipment for your business or you are not eligible for a grant under this scheme, Jade Equipment Finance can provide assistance right now. As your finance company, we can source you quotes on finance for a wide range of equipment, at the cheapest interest rates from across our vast range lending panel.
We approach every request for equipment finance on an individual basis, negotiating for the cheapest interest rates and working with our lenders to structure loan packages which best meet the financial objectives of our customers. That means getting repayments to a level that will work with your cash flow and loan terms that will work with your long-term contracts and goals.
Jade Equipment Finance can provide services and finance that complement, supplement and enhance any possible support you may be granted under Government schemes.
To discuss how we can assist your manufacturing business, talk to us at Jade Equipment Finance on 1300 000 003
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