Government support for manufacturing raises concerns of handout reliance

The Australian government’s plan to revitalize domestic manufacturing has come under scrutiny, with concerns it could create businesses overly reliant on government subsidies.

The Productivity Commission, an independent government body, has warned that the “Future Made in Australia Act” could lead to a situation where businesses become dependent on financial support. Commission chair Danielle Wood argues a clear exit strategy is needed to prevent businesses from becoming reliant on handouts.

Industry groups acknowledge the risk. Innes Willox, chief executive of the Australian Industry Group, recognizes the potential for businesses to become overly reliant on government support.

However, proponents of the plan argue it’s necessary to counter challenges faced by Australian manufacturers. Opposition Leader Peter Dutton contends that high energy costs and complex regulations are driving manufacturers offshore, and government intervention is essential to safeguard these industries.

The debate highlights the complex issue of government support for industry. While some see it as crucial to maintaining Australia’s manufacturing base, others fear it could create a culture of dependency. The success of the government’s plan may hinge on its ability to strike a balance between supporting industry and fostering long-term competitiveness.

source The Australian Financial Review.

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