NATIONAL: By the time of its release on September 19, Professor Roy Green's TCF Review received a mixed response.
While widely hailed for its bravery in delineating a new, innovation-focused TCF sector, its triumph was somewhat marred by a new countervailing factor; the outbreak of a worldwide economic meltdown that has been described, at least in its eWhile the scale of the problem could not have been foreseen in April, when the review was commissioned by Minister for Innovation, Industry, Science and Research Senator Kim Carr, it now seems all too pervasive.
Lines of credit are shrinking, retailers are tightening their budgets, and designers and manufacturers are consequently feeling the pinch. Meanwhile exporters are confronting exchange rate losses in the face of global recession.
Despite, or perhaps because of the new economic landscape, Professor Green - whose role in the review is now officially over - maintains the key proposals contained in it are sound.
"What we're talking about is cultural change from a system where structural adjustment was the main source of policy in light of falling tariffs, to a culture of innovation. There's nothing that has occurred that would alter the direction of the review. In fact I would say the current downturn reinforces the need to position companies for a knowledge-based future."
However TCF industry peak body, the Council of Textile and Fashion Industries of Australia (TFIA) claims extra funding will be required to smooth the transition towards that "culture of innovation". As it stands the review proposes a TCF Innovation Assistance Package from 2009 to 2015 with a budget of $250 million. Meanwhile, in the context of further tariff reductions, it also recommends continuing industry assistance in the 2010 to 2015 period of transition from the old "structural adjustment" based system to the new innovation oriented one, but in a new form superseding current assistance measures. This assistance would be provided as a $200 million TCF Innovation Capability Program (TCF ICP), accessible to all firms and organisations, with a specific allocation for small businesses.
However, in light of the recent $6.2 billion lifeline extended to the automotive industry, the TFIA has stepped up its lobbying efforts to ensure adequate funding from the Government, says executive director Jo Kellock.
"We'll be asking the government to boost the $200 million 'transition funding' to $500 million, given the added uncertainty caused by the current downturn," she said.
Kellock acknowledges gaining support for the TCF industry will be a challenge. Firstly, many other sectors are looking for support. Secondly, because the auto industry is made up of a handful of global car brands it's a far easier "sell" than assisting the thousands of small companies that comprise the TCF sector.
Senator Kim Carr says the Government will respond to the review early next year, with a "considered response that takes into account the full range of issues affecting the Australian TCF industries, which include the impact of the global financial crisis and the slowing global economy".
But as to whether the TCF industry might receive an emergency funding injection, the jury is still out.
"I do not propose to speculate on the quantum of the level of any support that may result from our response. What I will say is that this Government is committed to putting in place policies that will result in sustainable manufacturing industries."
Whether that commitment will save some TCF businesses remains an unknown. Companies such as the Australian arm of French fashion design software giant Lectra have a "front row" view of the effect of the down turn on industry. Lectra managing director Peter Richardson said an industry wide contraction is already underway.
"Many of my customers are small family businesses and since August everything has gone very quiet. Clearly a lot of companies are starting to tighten their belts and reduce costs," he said.
Continuing uncertainty over the extent of Australia's exposure to global problems is the real killer for businesses, because it means they are unable to plan with any confidence. However, it's unlikely a clear "What we really need is some tea-leaves and a gypsy fortune teller, because right now no-one really knows how this will play out."
By Belinda Smart