Nails in car-making coffin

The government should end all car-related funding when the last marque calls time on local manufacturing in late 2017, the Productivity Commission says in its final 326-page report on Australia’s car industry. Tabled by Federal Treasurer Joe Hockey, it says the best thing the government can do is switch off taxpayer-funded support for motor vehicle makers and components suppliers as soon as the last Australian-made car rolls off the production line. It states: “The commission has considered options for assistance to firms that manufacture components, including extending the automotive new markets programme [AMNP] and altering the design of the automotive transformation scheme [ATS], but hasn’t been able to identify an option with net benefits. “In the case of the ANMP, there is little convincing evidence of additional investment being generated by the scheme, nor of businesses being likely to achieve longer term sustainability. “Other reviews of assistance schemes have also raised concerns over the additionality and net benefits generated by them. Accordingly, the commission considers industry-specific assistance to component manufacturing firms beyond the end of 2017 would not result in net benefits. “More generally, governments should not provide any further ongoing or ad-hoc assistance to the industry beyond that already committed.” The commission describes the automotive manufacturing industry as one of Australia’s most heavily assisted. It estimates net combined assistance of about AU$30 billion was provided to it between 1997 and 2012 in the form of tariffs and various subsidies. “The estimated effective rate of assistance provided to the industry – the value of assistance as a proportion of an industry’s unassisted value added – was 9.4 per cent for 2011-12.”