An economic climate to create investment and jobs
It is the private sector - not governments - that will create jobs for our young people. Therefore the Commonwealth is creating the economic climate where the private sector can invest with confidence, to create these jobs. The results of the Government's policies are already apparent:
Economic activity is expected to strengthen in 1997-98, underpinned by strong investment growth, low inflation and supportive international conditions. This is particularly the case for Australia's major trading partners, especially Japan, East Asia and the United States which will assure growing export opportunities for Australia's regions.
1% drop in interest rates - $170 million extra for farm sector
Lower interest rates are particularly important for our rural industries, with a 1 per cent drop in interest rates providing $170 million extra income to the farm sector.
Reduced pressure on interest rates
The Government's strategy to reduce the budget deficit will achieve its medium-term objective of having the budget in balance, on average, over the course of the economic cycle. This strategy should, over time, lead to improved current account deficits and help take pressure off market interest rates. This will assist in lifting economic growth, benefiting all sectors including rural and regional industries.
The Government's budgetary strategy will also ensure that we avoid a further ratcheting up of net debt which would constrain economic growth, burden future generations with paying for current spending, and reduce the Government's flexibility to use fiscal policy to alleviate unexpected downturns in the economy.
$48 million for Regional Forest Agreements
The Government has committed a further $48 million over the period 1996-97 to 1998-99 for studies leading to RFAs. The first RFA was signed between the Commonwealth and the Victorian Government for the East Gippsland region in February 1997. The long-term arrangements put in place by the RFA provide a much greater degree of certainty for industry and conservation interests, creating an environment that will stimulate economic and employment growth for the region.
Up to 400 jobs in regional Australia from the first RFA
The Government expects that the East Gippsland RFA will provide a boost of up to $140 million to the local economy and has the potential to create up to 400 new jobs.
Making exporting easier
A new woodchip export regime was established in 1996 to alleviate difficulties faced by exporters. Regulations have been made to remove export controls on wood harvested from regions covered by an RFA. From the year 2000, exports will only be allowed from those regions covered by an RFA.
In addition, separate export regulations for unprocessed wood now allow the removal of export controls on plantation grown wood where State codes of practice protect environmental and heritage values. Controls have already been lifted for Victorian and Tasmanian plantation grown wood, removing a significant impediment to plantation expansion. Action in relation to the other States is proceeding.
$100 million to assist adjustment
The Government has committed over $100 million under the Forest Industry Structural Adjustment Package (FISAP) to assist native forest industry businesses and workers in regional Australia adjust to changes as a result of RFAs. The FISAP provides significant assistance to the forest industry to move to higher value-adding production, promoting a more efficient and economically viable forest and forest products sector.
More competitive wood and paper industries create jobs
The Government has committed more than $30 million over four years to the Wood and Paper Industry Strategy to improve the competitiveness of the industries and therefore increase job opportunities. Under the Strategy the Government will encourage greater industry innovation, value adding and downstream processing, remove investment impediments, open export markets and encourage expansion of the resource base. Under the Strategy, the Government has already provided $17 million to the Farm Forestry Programme and the Community Rainforest Reforestation Programme to promote commercial farm forestry. In addition, the Government will expand the Farm Forestry Programme with a further $22 million from the Natural Heritage Trust.
To improve the competitiveness of firms in the wood and paper sectors, client managers are being appointed (initially in New South Wales, Victoria and Tasmania) to provide firms with business planning, training and support for innovation. As part of the AusIndustry network, they will also help companies, particularly those in regional areas, to access the range of services provided by Commonwealth and State Governments.
Mining is a significant industry for regional Australia, providing infrastructure, investment and jobs. Increased mining investment will provide significant economic opportunities for regional Australia. The Regional Minerals Programme provides a coordinated regional approach to encourage development of new mines, mineral processing and related infrastructure. Through the programme, the Commonwealth and State governments and industry work together to identify the mineral resources and processing potential of selected regions, coordinate planning of infrastructure and government services and streamline approval processes.
The programme began with previous assessments of the Carpentaria-Mt Isa region of Queensland and the Northern Goldfields Region of Western Australia. The Commonwealth has allocated $1.2 million over four years to assess other regions, with funding to be matched by equal contributions from State governments and industry. Regions being examined at present are the Gawler Craton region in SA, North West Tasmania, the Central West of NSW and the Surat Basin/Dawson Valley Region of Queensland.
Lower transport costs are vital to lifting investment and jobs in regional Australia. Greater involvement by the private sector in interstate rail operations will provide users with cheaper, higher quality services. The Government's objective is to ensure the rail sector's long-term future by making rail transport more competitive with road. The productivity of government-owned railways in Australia remains well behind world's best practice, as represented by private sector north American systems, which are up to four times more efficient. The Commonwealth will sell its equity in National Rail and the Australian National Railways Commission (AN). The private sector has shown considerable interest in the sales. Lower freight costs will provide benefits for miners, farmers, business and the wider community.
New opportunities for rail businesses
Under the new arrangements, existing AN businesses, such as the workshops, will be able to bid for non-rail contracts, for example in the mining industry, providing substantial economic and employment opportunities. Prior to these new arrangements, they were prevented from seeking these opportunities.
$20 million in transitional assistance
While the Government's reforms will bring substantial benefits, there is likely to be a transitional impact on those regions most affected. The Government has therefore introduced a $20 million Rail Reform Transition Programme to help alleviate the impact of the changes in South Australia and Tasmania. The Programme is being managed in partnership with the South Australian and Tasmanian governments, with the support of regional and State-based consultative arrangements. The Programme will support projects that will generate sustainable employment growth.
$175 million for rail improvements
In a major boost to rural industries heavily reliant on rail transport, the Government plans to set aside $175 million to upgrade Australia's inefficient mainline rail tracks, starting in 1997-98. This will enable rail to compete more aggressively with road transport in the vital inter-capital sector, providing significant benefits to regional industry.
The Commonwealth roads programme addresses the commercial, travel and social needs of regional Australia. In 1997-98, more than 90 per cent of funding for the National Highways and Roads of National Importance will be spent in rural areas. A primary objective is to support regional development by providing improved links from rural and provincial centres to cities and major ports. Commonwealth roads expenditure is expected to create or sustain around 19,000 jobs in 1997-98.
Improving the links between regions and their markets
An estimated 15 per cent of all vehicle travel is served by the National Highway. It carries a high proportion of heavy freight vehicles and serves one third of all road journeys in rural areas. In addition to the capital cities, it joins 75 towns with a population greater than 10,000 people and numerous smaller communities. The Government will spend $696 million on the National Highway in 1997-98, with major projects including:
The Government will also allocate $112 million to Roads of National Importance, including the Pacific Highway in New South Wales and Queensland, the Calder Highway in Victoria, the Mitchell Freeway in Western Australia and the Devonport port access road in Tasmania. These are among routes of major economic importance for Australia.
In addition to these funds, the Commonwealth will provide over $370 million to local government in identified, untied roads grants and $391 million to State governments in addition to their spending on major intra-state freight routes not part of the National Highway.
$1.3 billion saving to industry
Many of Australia's bridges are ageing and need repair. In 1997-98 the Commonwealth will contribute to an $11 million national survey of bridge requirements. Focussing initially on major freight routes, the survey is necessary to permit eventual introduction of increased mass limits for heavy vehicles fitted with 'road friendly' air suspension systems. The Commonwealth supports increased mass limits as it will mean less heavy vehicles on the road for a given quantity of freight. The reduction in transport costs is expected to increase Gross Domestic Product by up to $1.3 billion annually. Rural industries will become more competitive, leading to more jobs and the final cost of goods sold in local communities will be lower.
Black Spot road funding for regions
In 1996-97, the Government established a Road Safety Black Spot Programme and will spend over $36 million a year, maintained in real terms, to reduce the road toll through cost-effective, safety-oriented projects.
The programme relies on widespread community consultation to ensure that local concerns are addressed. Community groups, motorist associations, industry organisations, councils and others are invited to nominate Black Spot sites around Australia to be considered for improvement. The Government has ensured that 50 per cent of Black Spot funding will be directed to rural road projects.
Over the next five years, the Commonwealth will provide $250 million for the new Regional Telecommunications Infrastructure Fund. The Fund will:
Regional and rural Australians will be encouraged to identify their particular communications needs and propose solutions for funding. Applications are expected to be invited from mid-1997 with the first funded projects beginning from mid to late 1997.
The Infrastructure Borrowings Taxation Concession will be replaced by the Infrastructure Borrowings Tax Rebate programme (up to $75 million per annum including running costs). The new programme, designed to promote private sector investment in certain new public infrastructure, will provide successful applicants with a tax rebate for interest which has been incurred.
Of particular importance to regional Australia, the programme is available for new road and rail projects and their related facilities and, as a transitional measure, for project proponents that had made applications for the Infrastructure Borrowings Taxation Concession at the time the concession was terminated, and for extensions of projects that had previously been certified to use the concession. The rebate will apply to a select number of projects that satisfy a range of criteria (see Budget Paper No. 2).
The Investment Promotion and Facilitation Programme has a strong focus towards regional Australia, particularly through its Major Project Facilitation role. There are currently 22 projects under facilitation worth an estimated $22.7 billion with the majority in regional areas. In addition to the Programme's facilitation role, proposals are under development to strengthen investment promotion activities to increase support for regional Australia.
The Prime Minister has added a special adviser, Mr Bob Mansfield, to his staff to work on major projects facilitation.
In many regions of Australia, there is a lack of understanding about how to obtain private sector finance for infrastructure proposals.
Linking regions and investors
The Institutional Investor Information Service (IIIS) was established by the Commonwealth in partnership with States and Territories to facilitate private sector financing of infrastructure projects in regional Australia. The three components of the IIIS are: an educational element of workshops targeted at project proponents; a register of 'investor-ready' projects; and a promotional element to inform private sector financiers of the investment opportunities in regional Australia. The Government is providing $500,000 over two years to the IIIS, with additional funding being provided by the participating States and Territories.
Research and development
The R&D Start Programme, introduced in November 1996, provides a range of assistance programmes to encourage business to invest in research and development and innovative activity, particularly by assisting small to medium enterprises which have limited capacity to fund R&D. R&D Start will provide funding of around $500 million over four years.
Assistance will be provided in the form of grants and loans. Firms in regional Australia will be given the opportunity to participate in research and development programmes to assist them to develop internationally competitive products, processes or services.
In 1997-98 the Commonwealth will again provide in excess of $1.2 billion in local government financial assistance grants. For councils in regional Australia, these grants can be up to half the council's expenditure. Grants are distributed to councils according to recommendations of the Grants Commissions established in each State and the Northern Territory. There are two components: a general purpose component and a local road component. The grants are untied, which means that they can be spent according to local priorities. In 1996-97, around two out of every three dollars of the financial assistance grants went to regional and rural councils and a similar outcome is expected in 1997-98.
The Government is continuing to support projects and strategies targeting regional Australia. Over $1 million has been provided to assist with the development of regional strategies incorporating such things as housing, the environment, land use, community services, resources sharing, town planning, water usage and social planning. Over $2 million has been made available throughout Australia to assist local governments and Aboriginal and Torres Strait Islander communities with service delivery and community relations.
Government expenditure through the Department of Defence will also have a significant impact on regional Australia. By way of example, in 1997-98, Defence will undertake $400 million capital investment in regional centres such as Darwin, Newcastle, Weipa, Albury, Exmouth and Katherine. Defence also has a $120 million materiel procurement programme that will provide substantial benefits to regional Australia. In addition, Defence has major on-going operating and repair and maintenance expenditure on regional infrastructure.
Commonwealth agencies hold significant sources of information on the economic performance of regions, but there are often difficulties in accessing data at the regional level. Relevant agencies within the Commonwealth are developing strategies to make information available at the regional level to enhance economic assessments, performance benchmarking and strategies to support investment growth. The improved availability of these data will help regions improve their understanding of their own economies, and hence help them to develop and implement economic development strategies.
A cultural change is needed from family farming to family business. Research has identified direct links between agricultural education and training and farm profitability, as well as with the likelihood of farmers changing their practices to improve long-term profitability and viability.
$265 million on rural programmes
The Government has decided to develop a new Integrated Rural Policy Package in response to recent major policy reviews. The package will address rural adjustment, drought, risk management, farm family welfare, farmer skills development and training, and rural community development. The new package will remove poorly targeted and ineffective assistance measures and replace them with initiatives to encourage greater self reliance and business acumen in the rural sector. Funding for initiatives under the integrated package will be some $198 million over four years. Total expenditure on rural programmes, including existing commitments and transitional arrangements, will be $265 million, similar to previous funding levels for the Rural Adjustment Scheme and the Rural Communities Access Programme.
A Business Plan for Australian Agriculture
The Government will be consulting with states and farm groups over the next few months to finalise the details of the package as part of consultation processes associated with the Business Plan for Australian Agriculture. Details of the package will be announced in the second half of 1997.
The Business Plan will outline a broad vision for the sector and set goals for the next decade based on reforms which must be achieved if Australian agriculture is to improve its international competitiveness and realise its significant growth potential. The Business Plan will also identify the roles and responsibilities for industry and other stakeholders, including governments, in creating an environment in which Australian agriculture will prosper in the twenty-first century.
Extra drought assistance
The Government has also maintained its commitment to provide assistance to those farms continuing to experience severe drought conditions in Queensland and New South Wales. Existing Drought Exceptional Circumstances assistance measures, including Drought Relief Payment and interest subsidies under the Rural Adjustment Scheme, will remain available for the duration of the drought and the 12 month post-drought recovery period.
$11m for rural partnerships
The Rural Partnership Programme (RPP) is continuing to address nationally significant agricultural, resource management and social issues. Strategies are currently being implemented in South-West Queensland, the Eyre Peninsula of South Australia, the Western Division of NSW, and the Loddon-Torrumbarry region of Victoria. Some $4.6 million will be spent in RPP regions in 1996-97 with a further $11 million allocated for 1997-98. Community-based strategies are being developed in a number of other areas including Atherton Tablelands (Qld), Sunraysia (Vic), North East Valleys of Victoria, Gascoyne - Murchison (WA), Riverina (NSW) and Riverland (SA). The RPP will be further developed as part of the integrated rural policy package.
Extra $75 million for quarantine
The Government has committed an additional $75 million to the Australian Quarantine and Inspection Service (AQIS) over the next four years to upgrade Australia's quarantine system and provide the resources necessary to adequately protect the nation's unique environment and important agricultural industries worth around $29 billion. Of the additional funding, $25.3 million will be provided through industry and cost-recovery operations.
The Government's decisions are a clear expression of its commitment to restore the domestic and international reputation of its national quarantine systems by substantially upgrading its scientific and technical capacity and boosting its border inspection and surveillance systems.
Lower costs to industry
The Government will reform the AQIS meat inspection programme over the next three years. The reform strategy will involve trials of Government supervised quality assurance systems to enhance food safety in the meat industry, while at the same time boosting the industry's competitiveness by lowering inspection costs.
As part of these reforms, AQIS is developing and trialing Hazard Analysis and Critical Control Point based Quality Assurance systems at a number of export registered meat establishments. The trial of this system places Australia at the forefront of meat processing control, inspection and certification systems.
The Supermarket to Asia Strategy announced last year is the cornerstone of efforts to achieve the Government's vision of a globally competitive Australian agri-food industry. The Government is contributing $11.8 million to the Strategy over three years, to help Australian food exporters take advantage of the enormous opportunities in the growing Asian markets.
The Supermarket to Asia Council, chaired by the Prime Minister, brings together government and industry leaders to provide the leadership and to drive necessary reforms to achieve success in export markets. The Council's mission is to remove barriers to export, develop a more competitive export culture amongst the Australian agri-food industry and to promote the benefits of Australian food products in Asian markets.
The Strategy will provide long-term benefits to regional Australia through increased export opportunities and further growth, investment and jobs in regional areas.
Better access to export markets
Recent initiatives include the appointment of two new quarantine experts, one in Japan and one in Korea, with the aim of removing the significant technical barriers to exporting food to these countries and neighbouring regions. The Government is also providing $1 million in 1997-98 to assist rural producers diversify into food products for high value niche markets in Asia.
Australia's capacity to create new jobs, and to raise the living standards of all Australians, relies more and more on increasing our natural wealth through trade. The Government's trade policy is aimed at securing the best possible conditions for Australian exporters, particularly market access. The Government has been able to secure improved access to key markets such as China, Korea, India, Mexico and the United States, for exports as diverse as sugar, wool and wool products, processed foods, and services. These successes will bring substantial long-term benefits to businesses in regional Australia, and to regional communities. For example, an improved market access package with Taiwan will result in an additional $30 million in exports this year and in excess of $500 million following Taiwan's accession to the World Trade Organisation. Australia has also maintained its share of the Canadian beef tariff quota, worth $103 million annually.
Major reforms to the industrial relations system are promoting business development and investment in regional Australia. The new Federal Workplace Relations Act 1996 supports a more direct relationship between employers and employees, with a much reduced role for third party intervention and greater labour market flexibility.
The award system is to be simplified, providing a safety net of fair and enforceable minimum wages and conditions. Actual wages and conditions and working arrangements will be determined as far as possible by agreement of employers and employees at the workplace level. A range of options for making more effective agreements is now available under the new Act. The options include: collective agreements or certified agreements which may be made with unions or directly with employees; and individual employment agreements or Australian Workplace Agreements made between an employer and an employee. These agreements will allow employers and employees to make genuinely innovative and flexible agreements. However, businesses that do not wish to pursue formal arrangements will continue to have access to informal over-award arrangements.
Unfair dismissal system simplified
A new unfair dismissal system applies to the federal jurisdiction, based on the principle of a 'fair go all round' for both employers and employees. It is less legalistic and costly, with an emphasis on conciliation. New regulations to be introduced under the Act will further reduce the burden on small business by excluding from federal unfair dismissal laws new employees of small businesses with fifteen or fewer employees who have less than one year's continuous service.
Harmonising the industrial relations system
The Government is also seeking to harmonise federal and State systems of industrial relations, through complementary legislation and through a cooperative approach to administrative arrangements and service delivery. Following the referral of industrial relations powers by Victoria to the Commonwealth, from 1 January 1997, Victoria now has a single industrial relations system. Complementary State legislation has been passed in Queensland and the services provided by the State and the Commonwealth have been co-located to provide a single telephone enquiry service and an integrated regional advisory service. Discussions are underway with other States and the Territories on the integration of services through similar one-stop-shop arrangements.
The Government is committed to improving the efficiency of Australia's waterfront. A high cost waterfront costs jobs in other industries and sectors, including in regional Australia. A more efficient waterfront will mean that regional exporters will be able to get goods to international markets quickly and more competitively, with enormous benefits not only for exporters but also for regional communities.
The proposed removal of cabotage - thereby opening Australia's coastal shipping industry to international competition - will also improve the industry's efficiency. The report of the Shipping Reform Group found that high shipping costs in Australia are an impediment to development in some industry sectors, for example in the downstream processing of natural resources, a critical industry for regional Australia. The Shipping Reform Group has estimated that the removal of cabotage could lead to reductions in freight rates of between 20 per cent and 25 per cent, or $120 million to $150 million on current figures.
Small business is vital to the economic well being of regional Australia and is a major source of new jobs. The More Time for Business package launched by the Prime Minister in March 1997 will give regional small businesses greater opportunity to expand and create jobs. The package provides initiatives to cut red tape and regulation. Regional small businesses and primary producers will be assisted by a number of measures, in particular:
The More Time for Business package includes the comprehensive National Business Information Service which will provide business licensing and regulatory information across all three levels of government, including relevant information for small business (such as employer obligations and taxation guides), from a single point by June 1998. $21.8 million has been allocated to this over four years from 1997-98.
This means that businesses in regional Australia will have much better access to business related information without having to deal with a multitude of different government agencies or have to travel large distances.
The final report of the Financial System Inquiry (the Wallis Report) has made recommendations with implications for regional communities.
A central thrust of the report is to increase competition and efficiency in the financial system. This is likely to benefit all Australians, including those in regional areas, as services become better tailored to meet the specific needs of customers. Of particular relevance is the proposal to put building societies and credit unions, many of which have strong regional associations, on a more equal standing vis-a-vis banks in terms of common regulatory and prudential framework.
The Government initiated and jointly funded a National Forum on Women in Agriculture and Resource Management in Canberra in March 1997. The Forum examined ways in which governments, industry and farmer organisations in partnership with rural women can engage the skills and perspectives of women in the sector to more effectively bring about profitable and sustainable primary industries and viable rural communities.
National Action Plan for rural women
As a result of the Forum all major stakeholders in agriculture and resource management are contributing to the National Action Plan which will be implemented with organisations throughout the sector over a period of five years. The Plan will, for example, include ideas for enhancing the leadership skills of women, increase their representation in decision making fora and ensure programmes are more effectively targeted to women.
A new three-year, $30 million Indigenous Business Incentive Programme within the Aboriginal and Torres Strait Islander Commission will create indigenous employment through sustainable enterprises and joint partnerships. The new Programme will:
Australia's immigration programme will continue to emphasise skilled and business migration, and includes initiatives to encourage migrants to consider settling in regional Australia. These initiatives include the Regional Sponsored Migration Scheme, under which employers in regional Australia are able to nominate skilled workers for migration from overseas. The new migration category Regional Established Business Class of Australia comes into effect from 1 July 1997, providing an incentive for potential migrants to establish businesses in regional Australia and generate jobs. This allows temporary residents holding a business long-stay visa and who have owned and operated a business in a designated area of Australia for two years or more to obtain permanent residence without having to apply outside Australia.
The Government will provide over $21 million for the Work for the Dole initiative, which is based on the principle of mutual obligation: that it is fair and just that people be asked to work in return for payment of unemployment allowance. Work for the Dole will have a strong regional focus, with the programme to be piloted in those areas with the highest levels of youth unemployment, and an emphasis on non-metropolitan regions. Around fifty projects will be allocated to these regions, with another twenty projects to be available both in regional and metropolitan centres. It is expected that up to 10,000 people will participate in the initiative, with the first projects expected to start later this year.
Projects will be for a minimum of three and a maximum of twelve months and be selected on the basis of the benefit of the project to the wider community and not to a private sector interest. There will be no minimum size for projects.
Green Corp -training and jobs for young Australians
The Government is providing more than $41 million over the next three years for the Green Corps. This will allow 3500 young Australians to have the opportunity to take part in projects that will develop their own career prospects and help restore the environment. Young Australians aged between 17 and 20 years will work full time on projects for 26 weeks with an option to extend for a full year.
Special assistance for regional Australia
A dedicated Assistance to Depressed Regions Programme will commence in July 1997, to support strategies to improve the skills base of regions experiencing adjustment pressures, high levels of unemployment or that are disadvantaged by their remoteness. Funding under the programme will assist initiatives which:
The Forest Industry Labour Adjustment Package will continue until 30 June 2000, as part of the Government's strategy to assist the forest industry and rural communities. The programme was developed for workers displaced from the native forest industry as a result of Government decisions affecting the industry.
Jobs in regions
Area Consultative Committees (ACCs) advise the Minister for Employment, Education, Training and Youth Affairs on employment issues and on ways to improve job and training opportunities in their regions. ACCs will consult with regional employer and community interests regarding the Government's reforms to employment and training services both during the transition period and after the commencement of the employment services reforms in March 1998.
ACCs are well placed to provide early warning of changes in the economic and employment conditions of their regions, particularly if these are structural in nature.
The Government is delivering on its commitment, outlined in the 1996-97 Budget, to achieve equality for Tasmanians in developing opportunities for their State. Initiatives that are being implemented include:
The tourism industry is a major employer in regional Australia. The Government has allocated $10.4 million over two years, including $5.2 million in 1997-98, for a National Tourism Development Programme, to stimulate the new tourism products and facilities throughout regional and rural Australia. Funding has been made available on a competitive basis for initiatives to build domestic and international tourism potential, and focus on job creation and spreading the economic benefits of tourism to regional and rural Australia.
The programme guidelines support projects in the following broad areas: Regional and Rural Tourism Infrastructure Development; Managing Tourism in Natural Environments; Indigenous Tourism Enterprise Development; and National Industry Development and Coordination.
Tourism research-a better industry
The Government is providing $14.72 million over seven years to establish a Cooperative Research Centre for Sustainable Tourism. This Commonwealth assistance, combined with cash and in-kind contributions from industry and participating universities, will create an investment of close to $60 million in travel and tourism research over the next seven years. The Centre's research focus will be to enhance the economic and ecological sustainability of the Australian tourism industry, which will bring substantial benefits to regional tourism operators and resulting economic benefits to regional communities.
