On the upside, the 2014 Federal Budget's $11.6bn Infrastructure Growth Package will be a significant boost to the food and grocery sectors, according to the Australian Food and Grocery Council (AFGC).

AFGC CEO Gary Dawson, however, also noted the magnitude of the government’s task in instilling budget discipline to return a surplus without harming consumer confidence while also stimulating growth.

“Massive budget deficits create a climate of uncertainty for business which undermines confidence and investment, essential to underpin jobs and growth. This budget’s concerted effort to rein in spending and streamline services sends positive signals to business of the Government’s fiscally responsible approach to public finances,” he said.

According to Dawson, the $11.6bn Infrastructure Growth Package would be a significant boost in stimulating growth and confidence food and grocery and agribusiness sectors.

“For the food and grocery and agri-food sectors, which are spread across the length and breadth of the continent, this massive boost in infrastructure planning and delivery is essential in developing supply chain solutions that create world leading, efficient channels to market."

However he noted other announcements may have a dampening effect on consumer spending, such as tax increases and curtailed business assistance programs and R&D tax concessions.
He said this could be ameliorated through a concerted attack on its high cost base through regulatory and energy market reform.

“Government can off-set the impact of a debt levy and fuel excise indexation on confidence and demand, by aggressively targeting existing and imminent cost challenges that are in the form of excessive regulations.”

Dawson said this Government had “clearly staked its reputation” on getting the settings right to kickstart growth and investment to drive productivity and competitiveness gains.

“Getting costs down to improve competitiveness is urgent, and regulatory costs and energy costs are two areas where we seem to have a great capacity for self-inflicted damage.”

“Clear and decisive action ruling out regulatory threats such as a national container deposition scheme which could cost upwards of $1.4 billion along with abolishing the Carbon Tax and delivering on the 1.5 percentage point cut to the company tax rate are imperative,” Dawson said.

The AFGC said it also welcomed the $20 billion Medical Research Future Fund, which it said represented a step-change in advancing Australia’s medical research capability, while streamlining health agencies will remove duplication and waste which will ultimately improve the performance of the health sector.

“This represents a step away from prescriptive policy intervention with a renewed emphasis on greater collaboration between government, industry and other stakeholders,” Dawson said.

“Food manufacturers have for sometime engaged with retailers, stakeholders, and State and Federal Government to address lifestyle-related non-communicable diseases.”

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A new national circular economy framework will be released by the end of the year, which will outline innovations and priorities needed for the country to transition.

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