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Federal election 2013: how will your industry be affected?

20 August, 2013

As election day approaches, IBISWorld weighs in on key Labor and coalition policies — and the industries they will affect.

The 2013 federal government election will be dominated by concerns about the economy. The end of the mining investment boom and the continued decline of the manufacturing sector have set a pessimistic tone among Australian businesses.

The Labor government has taken a 'glass half full' approach, pointing out Australia's strong economic position relative to other advanced economies and successful economic guidance during the global financial crisis. In contrast, the coalition points out a widening Federal Budget deficit, a declining economic growth rate, low business confidence and a weak economic performance relative to neighbouring countries.

The winner of the election will have to balance the government's role to provide fiscal stimulus and counter-cyclical spending with budget responsibility and a plan to reduce government debt.

The coalition intends to reform government regulations to reduce red-tape costs to businesses while repealing the carbon and mining taxes. The biggest expenditure pledged by the coalition is a 1.5 per cent reduction in the company tax rate, scheduled for 2015, which will cost $5 billion over the next four years. Pledges are to be paid for by reducing unnecessary government spending, increasing efficiency in the public sector and making changes to the National Broadband Network (NBN).

The Productivity Commission has estimated that there are $12 billion worth of cost-cutting and efficiency savings available to the federal government. The coalition has backed away from providing a date for a return to surplus, but asserts it will be sooner than a Labor surplus.

Labor has announced a fast-tracked plan to convert the carbon tax into an emissions trading scheme, which is expected to result in a large fall in the carbon price, reducing the cost to businesses and households. This will not stimulate the economy by as much as the coalition's full repeal of the carbon tax, but will have a smaller impact on government revenue.

The reduction in government revenue will be paid for by making changes to the Fringe Benefits Tax (FBT) for company-provided cars. The FBT change will be combined with $200 million in new subsidies for the domestic automotive industry to protect car makers from the expected reduction in demand for new cars. Labor will pay for downward revisions to government revenue forecasts by increasing the excise tax on tobacco. Labor forecasts a return to budget surplus in 2016-17, driven by savings made during 2015-16 and 2016-17 when the economy is expected to be in a healthier state than it is presently.

Workplace reform

Labor plans to have a 'hands on' approach in the labour market, actively helping to create jobs, with an emphasis on the manufacturing sector. Subsidies to the automotive industry and regulating work for Australian businesses in large projects form the core of Labor's policy.

Labor's Australian Industry Participation Plan will regulate an emphasis on Australian companies being involved in large-scale projects. The coalition will do the opposite, reducing subsidies for uncompetitive industries such as the automotive industry, and reforming workplace regulations to encourage hiring.

The coalition's repeal of the carbon tax will directly and indirectly reduce a wide range of costs for Australian firms, allowing them to be more competitive internationally.

Labor's policy is likely to have a more immediate effect on employment. While removing regulatory restrictions on job growth and business development will be cheaper and more sustainable in the long run than subsidies and regulation, it will take time.

In the long run Labor's policies might create inefficiencies in the Australian economy and discourage foreign investment.


The two major policies that will affect the performance of the electricity supply sector are changes to the Clean Energy Future Plan and the treatment of the Renewable Energy Target (RET).

Australia has had renewable energy targets since 2001. The current RET compels large energy users to invest in renewable energy, to the benefit of industries such as wind and, to an extent, hydro-electricity generation.

The RET introduces more capacity into electricity markets and pushes down wholesale electricity prices, which challenges fossil fuel electricity generators. Changes to the RET will affect these industries directly and their upstream industries, such as oil and gas extraction, brown coal mining and black coal mining, indirectly.

Labor is committed to a 5 per cent to 25 per cent reduction of emissions by 2020 compared with 2000 levels, and an 80 per cent reduction on 2000 levels by 2050. Labor has announced an early transition from the carbon tax to an emissions trading scheme in July 2014, rather than 2015. This means that carbon dioxide equivalent would have a floating price that is linked to the prices of the European Union's emissions trading scheme.

Under such a policy, the per tonne price for carbon dioxide equivalent emissions is likely to be much lower than would otherwise be the case. The impact of an earlier move to a trading scheme on the industry assistance packages included within the Clean Energy Future Plan is uncertain.

The tax cuts given to consumers will remain in place. Labor supports the current 20 per cent RET and has made a commitment to not review the target until 2016.

The coalition is committed to a 5 per cent to 25 per cent reduction of emissions by 2020 compared with 2000 levels, and will review this commitment in 2015. The coalition intends to wind back many of the provisions of the Clean Energy Future Plan. This includes abolishing the carbon price and disbanding the Clean Energy Finance Corporation, the Climate Change Authority, the Climate Commission and the Energy Security Fund. The consequences for assistance package commitments made to industries are uncertain.

The coalition supports a 20 per cent RET, which it will review in 2014. The earlier review may increase the perceived uncertainty around investment in the electricity supply sector. The coalition intends to expand the existing Emissions Reduction Fund to introduce a buyback.

There are also plans to expand the Carbon Farming Initiative to achieve emissions reductions in the absence of an explicit carbon price.

Changes to the Clean Energy Future Plan will create new winners and losers across energy-intensive industries. Labor's changes maintain a pricing mechanism as a strategy to reduce carbon dioxide equivalent emissions. This policy direction has been in place since the Howard Government and so is understood by industry.

The coalition's plans to meet emissions commitments will be more disruptive to electricity supply industries and their downstream industries.

Coming up next: Resources and the Broadband network

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dave d | Wednesday, August 21, 2013, 10:43 AM
What you have to consider when taking this in is WHY? Why haven't the current government achieved any of this over the last 6 years - was it due to the economy being in a mess when they took over ? Was it because they didn't think this was important at the time,was it because they are incompetent of achieving their goals,or more simply did they have no goals, or was it because they spent the last Six years infighting and scrambling for secure positions and the top job -I know which one I would put my money on - an eachway bet on all of these!!-
jonno | Wednesday, August 21, 2013, 11:27 AM
Nice to see a direct policy-based comparison instead of the emotive rubbish we tend to see in mainstream media :)