SPCA future on the line

30 Jan, 2014 12:00 PM
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Prime Minister Tony Abbott:
What is more un-Australian than allowing Australian jobs to go offshore?
Prime Minister Tony Abbott: "in the end, businesses have got to put their house in order”.

UPDATED 6pm: THE Abbott government has rejected supporting the SPC Ardmona (SPCA) $25 million rescue package, following today's cabinet meeting.

The Victorian Farmers' Federation (VFF) slammed the move as "a slap in the face to cannery workers, growers and the entire Goulburn Valley community".

VFF president Peter Tuohey said the decision was "unconscionable".

“We need support for Australian jobs and most importantly we need strong support for Aussie growers.

“The loss of SPCA to the regional community would be a great economic and social loss for Victoria,” Mr Tuohey said.

When talking about the future of SPCA in May 2013, the then Leader of the Opposition, Mr Abbott, criticised the Gillard government for ignoring the pleas of farmers and the company alike.

“It’s hypocritical to now take the same approach,” Mr Tuohey said.

Federal Industry Minister Ian Macfarlane said the decision was “a clear delineation of where this government believes we need to go with industry policy”.

He said the decision was based on two premises; firstly that SPCA's parent company Coca-Cola Amatil (CCA), under the chairmanship of David Gonski, was “a very, very strong corporate citizen… and a very profitable business”.

“And we have confidence that they’ll stand behind SPCA and the community of Shepparton,” he said.

SPCA managing director Peter Kelly said the Cabinet decision came as a surprise and would be a shock to food manufacturers in Australia.

Mr Kelly said: “This is an unexpected and extremely disappointing decision by the Coalition, particularly after the enormous support we have received for our business plans from the local community and beyond”.

“To build a sustainable and profitable business in Australia you need to innovate; to innovate you need to invest,” he said.

“Without investment some of Australia’s best loved packaged fruit and vegetables brands may disappear and consumers won’t have a choice to buy clean, green Australian packaged grown fruit at retailers.”

Mr Kelly said in light of this decision SPCA would now review their business plans with CCA.

The Coalition’s first full cabinet meeting for 2014 in Canberra today declined to contribute to the processor's modernisation plan, jeopardising thousands of jobs in rural Victoria.

SPCA was seeking $25 million from the federal government and the same amount from the Victorian government to modernise its large fruit processing plant and avoid going broke.

CCA had pledged to invest up to $150 million in the rescue mission to go with the requested State and federal government funds.

But the funding proposition has caused angst within Coalition ranks, with leading rural figures backing the $25 million proposal, while Prime Minister Tony Abbott, Treasurer Joe Hockey and other economic rationalists baulked at the proposal.

Mr Abbott said a very good and lengthy cabinet discussion was held today of about three hours where “oppositions were put and everyone had a chance to say their piece”.

“The best thing the government can do for the workers of Australia is not to borrow money to give it to highly profitable business like Coca-Cola," he said.

“The best thing that government can do for the workers of Australia, is to get the frameworks right and to encourage the management of these businesses to do what they need to do for these businesses to be profitable in the medium and long term."

Mr Abbott said SPCA had strong support from one of Australia’s most profitable companies, given that CCA is a $9 billion market capitalisation.

He said in the last six months, CCA's reported pre-tax profit was just a whisker under $300m for the period with an after-tax profit about $215m.

“This is a very, very strong business and is a business which well and truly has the resources to ensure SPCA is in a strong position to restructure in a way which will enable this company and these jobs to flourish into the future,” he said.

Mr Abbott said SPCA was “a really fine century old business that has evolved many times of the years to deal with changing issues”.

He said millions of dollars have already been invested into that restructure process, with new management and plans to tackle new market opportunities at home and abroad.

Mr Abbott said a key aspect for completing that restructure process would be renegotiating Enterprise Bargaining Agreements which contained conditions in excess of awards.

He said the EBAs “need to be very extensively re-negotiated if this restructure is to be completed” and both companies would have government support to complete those negotiations.

“As a subsidiary of CCA, SPCA does have a very strong future and Shepparton will continue to be a very dynamic town, and I think that the agricultural industries of Shepparton have a bright future with a business like CCA as the owner of SPCA,” he said.

Victorian Liberal Murray MP Sharman Stone had made a concerted push for the assistance package, along with Industry Minister Ian Macfarlane who presented the proposal to today’s meeting.

Their push was backed by Federal Agriculture Minister Barnaby Joyce who told Fairfax Media ahead of today’s cabinet meeting that his colleagues should not take “an all or nothing view” on government assistance.

SPCA’s processing plant at Shepparton in northern Victoria employs up to 1200 people who will be directly impacted by any potential factory closure.

Economic reports say more than 3000 jobs are on the line indirectly, including fruit and vegetable growers in Victoria and Queensland.

A proposal for government assistance had been tabled since July last year in response to a crisis triggered by a "perfect storm" of economic events over the past five years.

Those factors include an ongoing high Australian dollar, the dumping of imported fruit onto the local market and consumers choosing to buy cheaper imported products over locally grown items.

Declining sales created an oversupply of produce from growers linked to the nation’s last remaining fruit and vegetable processing plant.

Last April, SPCA was forced to tell some of its growers the company was no longer able to buy their product.

Today, Dr Stone made several statements on Twitter around the Coalition’s cabinet meeting with one referring to the Coalition granting Cadbury $15 million last year in a marginal Tasmanian seat, despite its parent company Mondelez having earnings of $15 billion net of tax, in 2012.

Acting Opposition leader Tanya Plibersek attacked the Coalition’s ambivalence over supporting SPCA.

“What you see today are further divisions in the Abbott Cabinet between those who back Australian jobs and those who are prepared see them go offshore,” she said.

“In the last couple of days you’ve heard Tony Abbott talking about 'Team Australia' and being on the side of Australia when it comes to the ABC - but what is more un-Australian than allowing SPCA Australian jobs to go offshore?

“SPCA is the last fresh fruit processing company in Australia, and if those jobs go offshore we lose that capacity for the future.

“Of course those food processing jobs are very important to the Australian manufacturing sector, but of course they're also very important to Australia farmers.”

Ms Plibersek said the funding proposal had been evaluated by the former government and an independent inquiry more recently “as good value for taxpayers' money and a good investment in keeping manufacturing jobs here in Australia”.

She also funding for the Cadbury factory in Hobart wasn’t a plan but “one promise”.

Ms Plibersek said promising funding for one seat in Tasmania was “not the same as having a plan to keep food processing jobs in Australia to support our farmers, to support our food manufacturing workers, and to support the broader manufacturing sector in Australia”.

Last night on ABC television, the Treasurer questioned why profitable CCA was requesting $50 million of taxpayers’ money.

“I think you can understand why we are being very cautious, very careful about handing out taxpayers' money,” he said.

But Dr Stone said without the extra funds, the Australian fruit processing industry would die and thousands of jobs would be lost.

On SKY TV today, Liberal MP Jamie Briggs said when subsidising business “it is the poor that pay the highest price because you are basically choosing one industry over another”.

“You have to be very, very careful when making that decision,” he said.

“The Labor Party are happy to chuck money around like confetti and that’s why we’ve got half a trillion dollars worth of debt thanks to their six years in government.

“We will seek to reduce the cost of doing business in Australia, so all Australian businesses can prosper - not just the chosen few where the Labor Party think they’ve got special interests.”

On Tuesday, Mr Abbott was asked whether his government was leaning towards providing SPCA assistance to support regional jobs.

He said it was “very important that we take seriously the requests that different organisations might put to us as a government, but in the end, businesses have got to put their house in order”.

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Philip Downie
30/01/2014 1:31:10 PM

Who gave money to Cadbury in Tas. pre election of course, another international company that made a profit Joe and not employing as many people indirectly or otherwise . Hey the peasants have not fruit, let them eat chocolate ay Tony and Joe.
optimum
30/01/2014 3:18:14 PM

I agree, it is a shame; but the National Party and the VFF blew all their political influence away by ignorantly forcing the Liberals to block the ADM/ Graincorp deal. The workers at SPC would have been saved if it wasn't for the international embarrassment the Nats made for Abbott and his team.
ken
30/01/2014 3:24:15 PM

Sadly I think this is the correct decision. As a struggling farmer enduring severe drought conditions I would be angry to see my taxes helping prop up a subsiduary of a multi national company. This is all too common now, a struggling local industry due to high wages and benefits, high A$, high operating costs, and cheap imports flooding the country.
Bushie Bill
30/01/2014 3:27:02 PM

There was no other possible decision. The Bunny and his mate Shrek would have been tarred, feathered and drummed out of the regiment if it had been any other way. This is an important step in putting down agrarian socialism and corporate welfare, and allowing true corporate rationality to flourish. This is a win for rational economics and encourages efficient use of resources.
optimum
30/01/2014 3:53:36 PM

I agree, it is a shame; but the National Party and the VFF blew all their political influence away by ignorantly forcing the Liberals to block the ADM/ Graincorp deal. The workers at SPC would have been saved if it wasn't for the international embarrassment the Nats made for Abbott and his team.
Joe
30/01/2014 5:25:33 PM

Well well, Barney and Fred (Truss) are now knackered. Abott (the adult) and his team are back in charge. If governments reward unprofitable business, it will only restrict the growth of successful businesses. Maybe Australia should reward successful businesses instead !
LTF
30/01/2014 6:09:58 PM

Ken, your is the best summary so far. It is a totally different issue to the ADM issue. In this case, our Govt was being asked give away taxpayers money to cover up deeper problems. They are, poor financial performance by a factory being forced to make something with artificially inflated, non market based labor costs, and then not being able to recover those costs in the market place. If we want freedom to buy the cheapest, we cant afford the dearest or least productive factories.
drought farmer 2
30/01/2014 10:32:45 PM

In reply to Kens comment, watch out you could be next drought doesn't stand in the way of our little extreme right wing little man in Canberra. If you need help which we do in the bush, little tony will run away ,sad day for Australia as more Aussie jobs go offshore. Can we outsource the Primeminister ...please
Wens
31/01/2014 12:20:56 AM

Ken you'll be really angry to hear that during the election, Tony Abbott promised $5 mil to Brisbane Broncos Ltd. 68 percent owned by National News: parent company is non other than Mr Murdochs News Corp.
Tigerdicky
31/01/2014 6:00:11 AM

Multinationals and Liberal mates owned companies given buckets of money! But a true blue company like SPC and its workers left to rot on the vine!
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