TCF Review causes fashion stink
NATIONAL: Australian fashion businesses stand to lose millions of dollars in Federal Government funding if a new industry proposal gets the green light, a leading consultancy firm has claimed.
Sydney-headquartered TCF Services, which has assisted over 80 national fashion and clothing firms in applying for grants under the Strategic Investment Program (SIP), has branded several recommendations in a review into the industry as a "shocking" blow for independent designers.
Conducted by Professor Roy Green and released to the public late last month, the review has recommended an overhaul of the $17.5 million per annum allocated for clothing and household SIP claims from 2010 to 2015.
Instead, a competitive Innovation Capability Program (ICP) would open up $37.5 million per annum in funding to all sectors of the industry, including technical textiles and carpet firms.
TCF Services executive Llew Whetham said the decision to broaden funding across new categories could potentially destroy independent clothing businesses. Statistics in the report showed the clothing sector had improved its share of the post-2005 SIP grant pool from 35 to 40 per cent between 2005/06 and 2006/07.
"It would be unlikely that the clothing sector would continue to win 40 per cent of the pool when faced with competition from the likes of large technical textile companies or the carpet sector," he argued. "The fashion and clothing industry has been effectively ignored in this review."
Whetham said the ICP would be a competitive program where firms had to meet eligibility and operational criteria to determine whether they received any financial benefits. This is dramatically different to the post-2005 SIP, which offered entitlement grants for a variety of fashion businesses including smaller, design led claimants.
"While clothing firms who take a 'whole of business' approach to their development will have no problem meeting the eligibility criteria, it would be fair to say that industry claimants, with a greater focus on research and development and technical innovation, would have a greater chance of meeting the operational criteria and competing for support."
Fashion brands which have prospered under the current SIP scheme include Collette Dinnigan, Zimmermann, Charlie Brown, Ksubi, Seafolly, Cue, Easton Pearson, Willow, AussieBum, Jets and Ducker Edmiston. Type 1 grants could be used to assist in funding local and international trade shows or purchasing state of the art hardware/software while type 2 grants can be used to generate new products, differentiate existing products in the global marketplace or to register brand names across the world. Under the current SIP scheme, fashion firms can claim a maximum grant capped to five per cent of locally produced sales a year.
"If you are generating locally produced sales of $5 million a year, then losing an entitlement grant of $250,000 per year definitely makes a difference to your behaviour and approach to strategic business investment," said TCF Services managing director Gerry Frittman. "I really think it stinks for those firms who may have made plans that will effectively be gazumped by these new policies."
However, industry consultant Dominic Beirne believed the proposed funding would force designers to think more strategically about their businesses. He said the decision to open financial assistance to all sectors of the industry - including technical textile firms - would crush the "entitlement belief" built around the post-2005 SIP.
"Why should a business receive funds just for being there?," he questioned. "If a designer is worried about competing against technical textile firms for funding, then they should start thinking about building capabilities and strategic innovations within their own business. This industry is not about receiving handouts and it's not about entitlements. You want to compete? Start by looking at your business processes."
By Assia Benmedjdoub