Today I visited major Australian chemical manufacturer Incitec Pivot at Brisbane's Gibson Island to inspect a proposed new capital project that will benefit from the Government's new 10 per cent investment allowance.
The company is planning to install an additional compressor in its Urea Plant - a capital investment of up to $20 million. The investment is expected to increase production, improve reliability and reduce carbon dioxide emissions from the facility.
This investment is very welcome in the face of the global financial crisis and shows that firms are continuing to invest despite the difficult global environment.
I commend Incitec Pivot for this investment because it is a show of faith in the Australian economy.
The Rudd Government recently announced a series of measures aimed at encouraging and sustaining business investment, including a $1.6 billion investment allowance.
The Government's investment allowance provides an additional 10 per cent tax deduction for the cost of an eligible asset. The objective of the investment allowance is to provide Australian businesses with an additional incentive to invest in plant and equipment - critical for underpinning economic growth and supporting jobs.
It will provide short-term economic stimulus and a boost for business confidence.
The 10 per cent investment allowance is designed to give businesses the confidence to sustain investment in difficult economic times. The project I am visiting today is an example of the benefit companies can draw from the additional Government support.
The project also demonstrates that new investments in lowering carbon pollution are sensible longer-term business decisions that help prepare companies for a carbon-constrained future.
The allowance applies to most new tangible depreciating assets - including most plant and equipment - acquired or ordered by the end of the 2008-09 financial year and in place by the end of the 2009-10 financial year.