With No Particular Place to Go: The Federal Government’s Ill-Conceived Support for the Australian Car Industry - The Centre for Independent Studies
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With No Particular Place to Go: The Federal Government’s Ill-Conceived Support for the Australian Car Industry

HOLDEN SHOULD BE ON RUDD’S AGENDA IN WASHINGTON NEXT WEEK

With the US car manufacturing industry faltering further, the Rudd government’s massive taxpayer-funded support for the Australian car industry is doomed to fail, says a new report being released on Tuesday.

In the report With No Particular Place to Go: The Federal Government’s Ill-Conceived Support for the Australian Car Industry, Dr Oliver Hartwich argues that it would be better to phase out assistance to the Australian car industry sooner rather than later as the industry’s decline is now unavoidable.

‘Manufacturing is one of the most globalised industries, and it is not nations that build cars, but privately owned companies. Yet, the Prime Minister Rudd is handing over taxpayer subsidies to the Australian subsidiaries of General Motors (GM) and Ford which may eventually end up in the coffers of their ailing parents in Detroit,’ says Hartwich.

‘On top of this, the US government’s emergency funding deal for GM includes a clause giving the US president final say on asset sales within GM. This means that the fate of Holden should be put on the agenda when Rudd meets Obama in Washington next Tuesday 24th March,’ says Hartwich.

‘In its restructuring plan submitted to the US Treasury, Holden’s parent company GM has subtly pressured the Australian government, stating that without taxpayer support the company would quit the Australian market,’ says Hartwich.

‘The Rudd government has offered $100,000 of taxpayer funds to subsidise each job in the car industry over the next 13 years in a doomed bid to save high-skilled jobs. This money should not be poured into a shrinking industry.’

The report criticises the government’s car policy as an old-fashioned protectionist industry policy, masked as a ‘green measure’ to combat climate change. ‘It makes no sense to exempt petrol from the ETS, in favour of giving car manufacturers subsidies,’ says Hartwich.

The embargoed report is available at https://www.cis.org.au/issue_analysis/IA108.pdf

Dr Oliver Hartwich is a research fellow at the Centre for Independent Studies.
He is available for comment.

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