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Manufacturing outlook remains positive.



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MANUFACTURING OUTLOOK REMAINS POSITIVE

Minister for Industry Science and Resources, Senator Nick Minchin, says the outlook for Australian manufacturing remains positive, despite the latest Australian Industry Group (AIG) survey results. 31 May 2001

31 May 2001             01/246

MANUFACTURING OUTLOOK REMAINS POSITIVE

Minister for Industry Science and Resources, Senator Nick Minchin, says the outlook for Australian manufacturing remains positive, despite the latest Australian Industry Group (AIG) survey results.

“The fundamentals for manufacturing remain sound, as the Government has delivered low interest rates, low taxation and sustained high rates of growth in the domestic economy.

“The 2001-02 Budget will stimulate further manufacturing activity by delivering $5 billion worth of tax cuts to improve the competitiveness of Australian business.

Senator Minchin said the most recent Australian Bureau of Statistics data March 23) shows manufacturing employment was up in February 2001 (by 0.3 per cent) compared with three months earlier and was 0.9 per cent higher than in February 2000.

“Manufacturers' profits before tax (seasonally adjusted) rose by 10.4 per cent in the March quarter to be 28.2 per cent higher than a year ago.  By value, manufactured exports in the March quarter at current prices were up by 15 per cent compared with a year earlier.

“Manufacturing profits are expected to rise by 10.7 per cent in the June quarter 2001.  And in a recent study, the Reserve Bank reported that the increasing export orientation of Australia's manufacturing sector has made the sector less sensitive to changes in domestic demand than in the past.

“Australian products are more and more cost competitive on world markets as government reforms result in lower cost structures for manufacturing operations.

“Tax reform has delivered to manufacturers a huge increase in cost competitiveness.  With the removal of Wholesale Sales Tax we have removed a discriminatory tax which fell almost entirely on manufactured goods. 

“The Federal Government has removed embedded taxes from manufacturing operations. As well as the reduction in the corporate tax rate to 30%, we are seeing the removal of many state taxes whose burden fell on manufacturers.”    

“Confidence in the construction sector however has been boosted by the Government’s doubling of the

First Home Owners Grants Scheme to $14,000 for new dwellings.

“It is likely the AIG survey results are heavily influenced by the temporary slowdown of activity in sectors such as construction, with the housing industry’s adjustment to the GST.

Contact: Jennifer Eddy, Minister’s office, 02 6277 7580

CMR295-01

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