Australian industry gets A$17 bln in govt protection - report

CANBERRA, June 12 Tue Jun 11, 2013 10:14am EDT

CANBERRA, June 12 (Reuters) - Australian industries received more than A$17 billion ($16.05 billion) in government protection in the previous fiscal year, including tax breaks, tariffs and handouts, with hard-pressed car builders and manufacturers the biggest beneficiaries, a new report shows.

As the government considers more support for car builders after Ford Motor Co announced it would close two Australian auto plants due to a strong currency and local costs, the report about government support said the auto industry received A$1.1 billion in assistance in the year that ended June 30, 2012.

Net assistance for all industry that year amounted to an estimated A$10.5 billion, said the report prepared by the independent Productivity Commission, the government's main advisory body on competition issues.

Australia's government is a strong supporter of free trade and low tariff barriers, and is often critical of support for agriculture given by export competitors including the United States and Japan.

But the report, released on Wednesday, said primary producers in Australia received almost A$1.6 billion in combined assistance last fiscal year, including A$891 million in taxpayer support and A$548 million in tax concessions.

"The effective rate of assistance for manufacturing is around 4 percent and 3 percent for agriculture," the commission said.

The biggest individual recipient sectors in primary production were beef, sheep and grain growers, who received combined assistance worth A$550 million, it added.

The country's powerful resource sector, which is only just coming down from a record mining export boom, received support worth A$492 million, including A$400 million in budget support, even though tariff support was wound back.

The biggest sector to benefit was manufacturing, which received more than A$7.3 billion in support, including almost A$1.4 billion in public funding from the budget, A$362 million in tax concessions and A$5.6 billion in net tariff support.

The country's powerful coal, petroleum and chemical industries received assistance worth A$926 million, outstripped only by the food, tobacco and beverages sectors.

While Toyota Motor Corp this week said it was committed to continued manufacture in Australia, the commission report found effective assistance rates for car manufacturers and automotive parts suppliers of around 9 percent.

Also well above average was support granted to textiles and footwear manufacturers - also hit hard by overseas competition and high local costs - with effective assistance worth 7 percent.

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