The manufacturing process from start to finish can be a long one that some companies might find hard to participate in given the state of the economy.
Despite this, messages promoting continued innovation come loud and clear, because without it, economic recovery could be slow.
AusIndustry, a principal business program delivery arm of the Australian government, delivers $2 billion worth of grants and concessions each year, many of which are relevant to manufacturing and designed to help businesses move from one stage to the next.
For example, the more than 30 programs are delivered annually to about 10,000 businesses and 100,000 individuals who are in various stages of production.
Companies trying to commercialise their products, with a version just one step away from a prototype, would benefit. Others might have been in the market for one or two years and looking to expand. And still others might be attempting to diversify their products, and perhaps developing a new version to meet customer demand.
Finding a need
Figures from the Bureau of Statistics illustrate the significance of manufacturing to the Australian economy.
The sector accounted for almost 10 per cent of Australia’s gross domestic product in 2008, and it employs almost 1 million workers, comprising about 9.2 per cent of the total Australian workforce.
However, manufacturing jobs haven’t been immune to the global financial crisis. Statistics show that employment in the sector has fallen 7.1 per cent in the period from May 2008 to May 2009.
This reality underlines the need for government grants.
AusIndustry assists industry
AusIndustry’s grants cross a wide range of sectors — and some are for specific industries such as automotive and textiles.
COMET
For start-up companies, one of the programs to look at is Commercialising Emerging Technologies (COMET). The program is designed to help businesses commercialise innovative products, processes, and services.
COMET grant recipients also receive guidance from a private-sector business adviser who works with the business to identify priorities and develop a plan specific to the company’s needs.
The grants help companies access service providers who have expertise in areas, such as management skills, strategic business planning, market research, intellectual property strategies, developing a working prototype, and proven technology activities.
COMET offers grants of between $5000 and $120,000.
In 2008-09, AusIndustry assisted 352 businesses with $11.38 million in COMET funding. For the 2009-10 period, COMET has a grant funding budget of $13.2 million, which is expected to help an estimated 440 businesses. The latest round of grant recipients was announced today.
Clean Business Australia
The government’s $240 million Clean Business Australia initiative is delivered through AusIndustry.
The Clean Business Australia program has three parts: the Green Building Fund, Re-tooling for Climate Change and Climate Ready.
Re-tooling for Climate Change is designed to help small to medium-sized Australian manufacturing companies reduce their environmental footprint by taking on projects to improve the energy and/or water efficiency of their production processes.
Additional rounds for the program have been announced for 2010: Round 5 closes on 30 November 2009 and round 6 closes on 22 March 2010.
The program provides grants between $10,000 and $500,000, and the government funds up to a maximum of half of the cost of each project.
A list of projects that have received offers of funding in previous rounds is available here.
Some examples of Re-tooling for Climate Change grants awarded in the manufacturing sector support projects, such as storm water capture and recycling, solar power systems, and insulation initiatives.
R&D Tax Concession
Companies registered for the R&D Tax Concession can claim 125 per cent of their expenses on research and development when they lodge their tax returns.
It’s a way to increase cash flow and spend on the other essentials of running a business, such as employing staff and paying the bills.
Companies need to register their activities with AusIndustry each year to claim a concession.
A record number of 6,806 firms registered for the R&D Tax Concession program in 2006-07, an increase of 6 per cent over the previous year.
These companies reported spending a total of $11.6 billion in research and development.
The R&D Tax Concession will be replaced by the R&D Tax Credit starting in the 2010-11 income year.
An important change to the R&D Tax Concession for the 2009-10 income year is an interim measure before the new program starts.
Under the previous rules, companies were able to lodge a claim for up to $1 million in research and development expenses. However, for the 2009-10 income year, this threshold will double. Companies will be able to claim for up to $2 million in research and development expenses.
The R&D Tax Credit is still being finalised, but its key points will include:
- a 45 per cent refundable tax credit (equivalent to a 150 per cent concession), which will be provided to small firms with a turnover of less than $20 million a year, and
- a 40 per cent tax credit (the equivalent of a 133 per cent deduction), which will be provided to foreign-owned firms and firms with a turnover of more than $20 million a year.
Textiles, clothing, footwear
AusIndustry also has a range of grants for the textile, clothing, and footwear industry, which employs 45,000 people across Australia.
In May, the government announced several changes to these grants, which include:
- introducing a new $30 million TCF Strategic Capability Program to support large projects focused on innovation
- providing $22.5 million per annum to the Clothing and Household Textile Building Innovative Capability Program to replace the last five years of the current TCF Post-2005 (SIP) scheme and Product Diversification Scheme, and
- establishing a TCF Industries Innovation Council to bring together business, unions, researchers and government.
Tradex
Tradex provides an upfront exemption on GST and Customs duty. Sometimes a business needs to import a product into Australia, which will then be exported, or used as part of a product that will be exported.
The concession tries to ensure that these companies can be internationally competitive, even if they have to import products into Australia. Not paying duty and GST upfront can provide significant cash-flow benefits to Tradex users.
Businesses need to apply for this program before they import their goods. Since the start of the scheme, more than 2,000 companies have registered for Tradex. Each year, the companies avoid paying about $80 million in customs duty and $140 million in GST.
-- AusIndustry
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