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Bracks Report « Previous | |Next »
August 17, 2008

The industry review headed by Steve Bracks, the former premier of Victoria, proposes $2 billion in subsidies to the car industry over the next decade (2020) to enable it to go through a transition process in return for a planned cut in tariffs from 10 p% to 5%. What is unclear is the transition to what? The aim from what I can gather is to secure the future of the local industry. To ensure that it survives in a global world, or achieves "economic and environmental sustainability by 2020" in the words of the Bracks' report. So we have a car industry policy based on budget subsidy, and this is held to be preferable to a policy based on a tariff wall.

Spoonercarindustry.jpg Spooner

Maybe. Yet this is an industry that has spent around a third of its 60 years in intensive care under structural adjustment programmes. It seems as if it is has been on a structural adjustment program since the 1980s. Yet it still continues to lose domestic market share after two decades of structural adjustment, and it struggles to make this up in increased exports.

The car industry has a small output--not much more than the capacity of world-class new plant--and its expertise is in building large cars when consumers are switching to smaller cars as a response to higher fuel prices and emission concerns. According to Bracks the industry's future lay in being "internationally competitive, more globally integrated and greener", and Industry Minister Kim Carr wants the emphasis on skill, innovation and new forms of public assistance to ensure this. Treasurer Swan says that tariff cuts have alway been accompanied by transitional assistance.

Why not devote the $2 billion to building a renewable green manufacturing industry in Australia?The skills and knowledge gained could then be used to help India and China become more environmentally. sustainable. Carbon sequestration will take 20-30 years to be commercially viable whilst some of the the mining companies are calling for nuclear power to reduce emissions.

| Posted by Gary Sauer-Thompson at 11:18 PM | | Comments (4)
Comments

Comments

Gary
I heard on the radio that the local car industry is going to oppose pushing ahead with the Bracks report's recommendation tocut tariffs from 10% to 5% by 2010.They welcome the $2billion transitional assistance subsidy though. Some things never change.

Nan, I'm guessing you heard the same interview I did, where some bloke from GMH avoided answering any of Fran Kelly's question. The thing that annoyed me the most was that it was obvious he felt the car industry was entitled to as many taxpayer-funded subsidies as they felt they needed.

David,
corporate welfare is annoying isn't it. Rann, the Premier of SA, is even calling for an end in the slow reduction of tariffs.

(muttering darkly) The only good thing about Rann is that he isn't Hamilton-Smith, or Olsen, or Dean Beige, or ...

I think we actually do need manufacturing industry even if it would be more economically rational to import everything, but I'm not convinced that the car industry is the horse we should back. I think we'd get more benefit if we still made agricultural equipment or white goods, or really anything that didn't involve subsidising foreign-owned companies to stay in Australia.