Government helping industry
Refer also to left hand column.
|Opinions expressed about government initiatives in Australia|
Australia's attractiveness as a place to do business should improve over the next four years to 2005 according to the Economist Intelligence Unit's Global Outlook, released August 2001. It predicts Australia will climb one spot from the 15th best place in the world to do business to 14th by 2005, with its qualitative assessment being upgraded from good to very good. Australia had done much in the past decade to shake off its image as a union-dominated, inflexible, unproductive economy.
The EIU ratings predict the Netherlands will overtake the United States as the best place to do business, with the United Kingdom moving into third place and Hong Kong plummeting from third to 10th. Canada, Switzerland, Ireland, Finland, Singapore and Sweden are the other top 10 countries, in that order, while New Zealand is predicted to drop from No.11 to No.16.
More recently the state and federal governments has been providing direct grants and loans relevant to chemicals these include for:
|$137M of interest-free loan repayable at Rio Tinto's discretion during 20 year period. This loan includes $102 million for a 36 megawatt coal-fired power plant and $35 million for work on "sustainable minerals industry programs". Rio plans to apply the funds to group-wide research aimed at reducing its green-house gas emissions and will retain full commercial rights over any resulting initiatives.|
|$150 million from the Queensland government for common use infrastructure mostly upgraded port facilities.|
Rio has undertaken to
|To power the plant's calcining plant which accounts for 25 per cent of energy consumption with coal-seam methane.|
|Convert the the power plant to natural gas once supply becomes available and "economically attractive". Rio therefore has no obligation to become a foundation member of either Timor Sea or Papua New Guinea gas.|
NOTE: A major contribution has been made to General Motors Holden. The Victorian and Federal governments is contributing in 2001, A$160 million (40 per cent) of the $400 million cost of an engine plant with a capacity of 214 000 engines per year (ie. representing a subsidy of $7 400 per unit annual capacity ($295 000 per job created). This is part of the Australian government A$2 billion, five-year fund effective from January 2001 as an incentive for automotive and automotive parts makers to invest in Australia.
A$200 million has been offered to Mitsubishi to maintain production at 30,000 vehicles per year in Adelaide South Australia having threatened to close down to leave Australia's 19 million still with three motor vehicle producers (GM, Ford and Toyota).
We suggest these are mature "branch office" industries. Australia could do much better.
Direct grants and indirect price support schemes (tariffs) amounts to $A$3.6 billion per year (1999-2000). For the motor vehicle industry it contributed 7 per cent of the value added. Manufacturing received one-half of assistance ($1.5 bn) followed by services ($994 million), agriculture ($762 million) and mining ($220 million). The petroleum and chemical industry received $292 million in federal assistance.
Research and Development
Though it provided a bounty on one activity (citric acid - now defunct), it maintains research and development (R&D) tax concessions (which allows up to 125% of qualifying expenditure incurred on eligible R&D activities to be deducted from assessable income in the year incurred), innovation and infrastructure export assistance.
In March 2001, the government announced a A$155 million Major National Research Facilities Program. It aims to provide investment in national research infrastructure in partnership with state and territory governments, universities and research-industry consortia. It provides funding for expensive, large items of equipment or highly specialised laboratories.
Other R&D measures are available through R&D Start.
A federal government publication
The Federal Government has produced Investing for Growth which defines its role in promoting investment. It will consider incentives such as grants, tax relief or the provision of infrastructure services based on eligibility criteria.
|Federal Government criteria for considering incentives for investment|
|The Federal Government will consider incentives
such as grants, tax relief or the provision of infrastructure services
based on eligibility criteria.
The investment incentives will be considered
in limited and special circumstances on the basis of the following indicative
Capital gains taxCapital gains on taxable Australian assets acquired after 19 September 1985 are taxed at corporate income tax rates for companies or at the top marginal rate for individuals. There are certain exempt assets, such as a principle place of residence, and the cost of assets held for over 12 months which are subject to indexation relief with regard to the Consumer Price Index.
Double taxation agreementsIn addition to unilateral relief from double taxation provided by a foreign tax credit system, Australia has comprehensive agreements for the avoidance of double taxation with many countries.
Foreign investmentAustralia’s foreign investment policy aims to encourage investment in Australia and to ensure investment is consistent with the needs of the community. Proposals are readily approved in most industry sectors unless judged to be contrary to the national interest.
Investment is restricted in civil aviation, the media, banking, uranium and some categories of real estate. The policy is administered by the Foreign Investment Review Board based on guidelines rather than inflexible rules.
The Foreign Investment Review Board will review;
|acquisitions of 15% or more of the shareholding of Australian companies with assets of A$5 million or more (or A$ 3 million or more if more than 50% of the assets are in rural land);|
|take-overs of Australian companies and businesses by means other than the acquisition of shares where the total assets of the targeted company or business are valued at A$5 million or more (or A$ 3 million or more if more than 50% of the assets are in rural land);|
|take-overs of non-resident companies that have Australian subsidiaries or assets valued at A$20 million or more; proposals, irrespective of size, relating to the media sector;|
|proposals to establish new businesses in other sectors where the total amount of the investment is A$10 million or more; and|
|direct investments by foreign governments or their agencies, regardless of size|
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