Skills and training, energy and manufacturing are all set to benefit from measures announced in Jim Chalmers’ October 25 Federal Budget, bringing some relief for business as economic growth slows in the coming year.
Reflecting grim times ahead, the Treasurer’s interim budget was one of restraint, with spending allocation largely directed towards setting up programs that will come into effect next year.
“In many ways, this was a place-setter for the budget in May of next year,” Ai Group Chief Executive Innes Willox said at an online member briefing.
“It’s clear the Government has been trying to portray this budget as one of restraint by holding back on spending at a time when the Federal Treasury believes the economy is heading into a period of slowdown.”
Budget indicators that point to constrained times include:
“Growth forecast has been reduced and there is certainly a view that the economy is going to significantly slow as we grapple with domestic and international factors pushing against us,” Mr Willox said.
Ai Group Chief Policy Advisor Peter Burn noted the slowdown was a deliberate outcome of the imperative to reduce inflation.
The Reserve Bank of Australia has tightened monetary policy by raising interest rates — and it has foreshadowed there is more to come.
With the October budget less expansionary than the pre-election budget handed down in March, it will take some of the burden of reducing inflation from the shoulders of the reserve bank.
For skills and training, the budget cemented initiatives already announced.
These covered:
A total of 180,000 fee-free TAFE places announced at the Jobs and Skills Summit were accounted for in the budget.
“Those places are just for 2023, so it's a huge number,” Ai Group Head of Education and Training Megan Lilly said.
“It's half a billion dollars from the Commonwealth, equally matched by the states and territories.
“The conversation now is about where those places go, in terms of geography and industry areas and how they meet needs.
“There is no doubt we need to continually and significantly upskill people across the economy.”
Another 480,000 places will become available under a five-year funding agreement to be negotiated.
The budget will also fund 20,000 extra university places targeted to equity groups and regional and remote locations.
A university accord, which sets up policy for university education in Australia over the next 10 years, also received funding.
“Industry will be a key driver in that, and Ai Group is already involved and will continue to do so,” Ms Lilly said.
“It's very important that universities and the tertiary sector work hand-in-glove with what industry needs — now and tomorrow.”
A total of $13million has been allocated to establish this entity, which is replacing the National Skills Commission.
“Ai Group has been working closely with the Government on this,” Ms Lilly said.
“Jobs and Skills Australia (JSA) will be industry-driven with an industry board and will try to bring the states and Commonwealth governments together, along with a range of other key stakeholders, most notably industry.”
The budget has allocated funding for a taskforce to determine the skills needed for a clean energy workforce over the next decade.
In addition, people undertaking clean energy apprenticeships or traineeships will be able to access incentives of $10,000 from January 1.
A ten-year funding commitment was also given to identify emerging skills related to clean energy issues, including initiatives such as rebuilding the grid.
Many foundation skills programs are already funded by the Commonwealth but some are under-subscribed.
Money was announced in the budget to undertake a six-month study, starting immediately, to determine what is really needed and to establish the foundation skills levels of Australian workers.
The study will drive funding on foundation skills, which include language, literacy, numeracy and digital skills.
“These are very important for employment and employability,” Ms Lilly said.
“The study will likely drive what will be set out in the May budget in how we're going to tackle this in a more sustained way and what the program initiatives will look like.”
Jeff Wilson, Ai Group’s Director of Economics and Research, highlighted major initiatives in energy, manufacturing and infrastructure.
Energy
A number of government investments have been committed to Australia’s energy system, Dr Wilson said.
These fall under the Rewiring the Nation program, which comprises $20billion of investments to upgrade electricity transmission grids across Australia.
“A lot of projects are involved in this, but they are united by the theme of getting the grid ready for the renewables transition,” Dr Wilson said.
Funding includes $2billion for regional energy distribution grids and $71million for a hydrogen hub in Townsville.
A pilot program for community solar banks, energy-efficiency grants for SMEs replacing old, inefficient equipment and investment in clean transport technology will also receive funding.
The Australian Competition & Consumer Commission (ACCC) will receive money to improve its monitoring-enforcement activities around the Australian gas market.
Manufacturing
The big-ticket item is the announcement of the $15billion National Reconstruction Fund.
Under this initiative, the government will make co-investments with the private sector in seven priority areas including advanced manufacturing, biotechnology, clean energy and manufacturing and critical technologies.
The fund is in the set-up phase and investments will start being made in the next financial year.
Regions
While nine regional manufacturing capabilities and some recycling and manufacturing projects received funding, cuts have also been made.
The Modern Manufacturing Initiative (MMI), established by the Morrison Government to support advanced manufacturing and critical technologies, is being phased out.
Existing MMI grants will be honoured, but no further grants will be given.
The Entrepreneurs’ Program, which supports business coaching and advisory services for SMEs, is also being grandfathered.
Infrastructure
While the government committed to ten projects at a cost of $8billion a year over the next 10 years, it cancelled others including the controversial Hells Gate Dam and Rockhampton Ring Rd projects in Townsville.
“There's a little bit out and a little bit in,” Dr Wilson said.
“The big questions about the future of Australian industry policy are being kicked over to the next budget.
“The real work for us now is to have those conversations and shape those outcomes to be effective for Australian industry.”
Federal Budget 2022/23 – October
Wendy Larter is Communications Manager at the Australian Industry Group. She has more than 20 years’ experience as a reporter, features writer, contributor and sub-editor for newspapers and magazines including The Courier-Mail in Brisbane and Metro, the News of the World, The Times and Elle in the UK.
