bacci,given both the state and federal handouts to the car manufacturers,I beleive it behoves us to give the people who work there an oppurtunity to getout while the gettings good.
PHILLIP TONER: Over time the actual levels of assistance going to the car industry have dropped dramatically. Tariff rates have gone from, what 80 per cent down to about currently about 5 per cent, I think.
EMILY BOURKE: But we are looking at multi-billion dollar packages now and into the future. EMILY BOURKE: Can this sector ever be self-sustaining?
PHILLIP TONER: Well, it certainly is. Look, the value of the assistance going to the motor vehicle industry is a hell of a lot less than the value of its total production.
EMILY BOURKE: The industry often points to the 55,000 jobs that it created within auto manufacturing and how that has spin-off employment for 200,000-odd Australians. Politically, it may not be wise to stop supporting that but economically what would be the impact if you turned the tap off? Chris Berg?
CHRIS BERG: Well, it would definitely there be some change, as there always is structural change in an economy when regulatory or market conditions change but I don't think that we should pretend that suddenly 55,000 jobs will be drained out of the economy.
People will find other work and people will find hopefully better non-taxpayer subsidised work that is more efficient, it is presumably in most cases higher paid work, and work that doesn't rely on taxpayer funding. And I don't think people who are in an unsustainable industry like that should really feel that confident about their own jobs as it is.
EMILY BOURKE: Well, how should car makers reorient themselves, restructure given the changing conditions?
Now no amount of money we throw at the car sector is going to change the fact that we have an enormously booming manufacturing economy in China for example. It is not going to change these huge waves of economic change that are going through the world at the moment. It is not going to change the Australian dollar.
I don't think that we can pretend that throwing a few billion at one industry is going to suddenly hold the tide back. And the problem is when you try to hold the tide back, it only comes harder and it only comes more aggressively and it wipes out whole industries who have become to learn on the reliance of those subsidies instead of becoming flexible and being able to respond to the changing market dynamics.
Under the system of tariffs on imported cars and hefty subsidies for the local industry, car buyers are effectively paying twice, said David Pearce, executive director of the Canberra-based Centre for International Economics.
''[You] pay for it out of your taxes and then you pay the full price. Doesn't sound like a very good deal to me,'' he said.
Read more: http://www.smh.com.au/business/crunch-time-for-australias-car-makers-20120211-1syck.html#ixzz21OYiy9yY In 2009-10, the industry produced more than 231,000 cars. In that time, total government assistance, including subsidies, tax breaks and tariffs, was $1.625 billion, according to the Productivity Commission. In other words, each car was subsidised by just over $7000. At an average price of $25,000, that means a subsidy of nearly 30 per cent of the price of an Australian car, Mr Pearce said.
The government, by contrast, says direct car industry assistance - as opposed to indirect assistance such as tariffs - is a total of $573 million, or $17.80 a taxpayer.
The industry, spread across three car makers, employs 46,000 building cars and 200,000 indirectly in parts, service and sales.
Citing the strong Australian dollar and increased competition, this month Holden cut 100 casual and contract jobs at its Adelaide plant, while last month Toyota announced it would axe 350 jobs. They are the first cuts since Mitsubishi closed its Adelaide plant in 2008 leading to the loss of 930 jobs.
The cuts are a blow to an industry reeling from the Coalition's decision to slash $500 million from the subsidy package, putting pressure on Mr Abbott to reveal his long-term plans for car manufacturing. Prime Minister Julia Gillard said she was committed to local car manufacturing but acknowledged the industry and government were under intense pressure.
