Insiders advise against car subsidies

Fighting over the remaining ten-percent tariff is pointless in the current—and medium-term—market conditions. The strong exchange rate, the strength of our terms-of-trade vis-a-vis manufactures and the remarkable competitiveness of China makes an import tax of five or even ten percent utterly irrelevant.

The real economic debate is over the size of the proposed subsidies to capital that the Labour government is considering. Why on earth...? There can hardly be a stronger example of throwing good money after bad.

The Productivity Commission has done the sums on this. The taxpayer and consumer support to the industry was worth about $1.1billion last year. The PC reckons that each job 'saved' in the industry costs us $300,000 a year.

Now two former industry leaders—former beneficiaries of the largesse—have offered the common sense view:

"Two top car industry figures earlier this month warned that further handouts to automakers will be a waste of taxpayers' money. Former Mitsubishi Australia boss Graham Spurling, who headed a review of the industry for the South Australian Government, said 'running up the white flag' on carmaking was preferable to propping up the existing big three manufacturers with direct financial support. He was backed by another veteran car industry executive, Bob Manning, who played an important role in developing Mitsubishi's ill-fated 380 sedan with government support in South Australia."  extract from: The Australian newspaper emphasis added