Budget 2020: Write-offs build food firm’s appetite for growth

Manufacturers have welcomed the government’s measures to boost business investment by expanding instant asset write-off.

CEO Paul O’Brien with staff at Birch & Waite in Sydney. Picture: John Feder

More mustard and mayonnaise will flow at Birch & Waite on the back of a move by the Morrison government to allow businesses with a turnover up to $5bn to write off the full cost of assets until 2022.

CEO Paul O’Brien welcomed the move, saying it was essential to achieving his goal of growing the food business’s production and workforce.

“We’re a growth business and we need to invest to achieve that growth and this will allow us to ­accelerate our growth plans,” he said. “We’re a medium-sized Australian company and many of our competitors have international sources of funds and this gives us the opportunity to go out and more aggressively invest in innovation and quality.”

Treasurer Josh Frydenberg said the plan to allow greater ­access to asset write-offs would provide $26.7bn in additional tax relief over the next four years for businesses.

Birch & Waite has already ­invested in research and development on the back of announcements from the government this year that allowed it to write off some of the cost of a food research kitchen at the company’s headquarters in the Sydney suburb of Marrickville.

“The investments we previously made were under $150,000. Now it enables us to ­invest more,” he said.

“The budget brought forward our investments, it enables us to make investments that we otherwise might not have been able to make.

“The next investments we’ll be making will be quite significant for us and will create growth avenues in north Asia and south Asia and would be between $7m and $10m.”

More than 150 people work for the up-market food maker, but Mr O’Brien said he hoped to grow the business by a further 20 people on the back of its expansion plans.

He also hopes to grow the variety of products the company ­offers, from current levels of 350 different production lines, ­increasing it by between 150 and 180.

“These investments will allow us to increase the volumes of a number of those and allow us to invest in different packaging formats and processing technologies which will allow our products to be more premium than alternatives,” he said.

“It also enables us to pursue more environmentally sustainable packaging in certain product formats.”

Food Service Association of Australia chief executive Vince Crawley said the scheme announced on Tuesday was very welcome.

“Anything that can help stimulate the food manufacturing industry and support that I think is very positive,” he said.

“If there are initiatives to encourage them to invest in their business that cannot be anything but a good thing.”