End car subsidies: Productivity Commission

Written By Unknown on Jumat, 31 Januari 2014 | 11.51

THE Productivity Commission believes the automotive sector should not receive any further taxpayer assistance beyond 2020.

In a report commissioned by the federal coalition government, the commission described as "weak" the arguments for more financial assistance.

It said the community would be better off with subsidies ending.

"Our draft proposal is that there should be no further industry specific funding beyond 2020," the commission's deputy chairman Mike Woods said in a statement on Friday.

The commission opposes a supplementary rescue package for Toyota and component manufacturers.

Instead governments could better assist by undertaking broad-based economic and regulatory reforms and removing impediments to greater workplace flexibility.

However, Mr Woods said any "significant or uneven" reduction of subsidy funding in the next few years, as outlined in December's mid-year budget review, could elevate risks of earlier closures by Ford and Holden.

It might also negatively impact on investment decisions by Toyota and its component suppliers, Mr Woods said.

The government had asked the commission for the review in October, shortly after the coalition came to power.

The request came at a time when Ford had decided to end car manufacturing in Australia in 2016 and before a decision by GM Holden to cease local manufacturing by 2017.

Toyota is expected to make a decision about its future in Australia within months as it seeks changes to an enterprise bargaining agreement with its workers.

The commission is taking submissions to its interim report by February 13.

Public hearings will be held in late February and a final report submitted to the government by March 31.

The commission is specifically seeking views on the best ways to assist employees and their communities adjust to the industry changes.

It also wants to know whether employees of some component firms that might close face more difficult circumstances than employees of Ford and Holden, and whether the benefits of early budget savings could result in even greater adjustment costs to the industry.

The Australian Manufacturing Workers Union says the commission's report has been tailored to support the government's policy.

"We are dismayed ... but we are not surprised," national secretary David Smith said in a statement.

The report and decisions taken by the government would likely force Toyota's hand to end manufacturing in Australia, he said.

"This government forced Holden out of Australia. Now it seems intent on destroying of what's left of the Australian car manufacturing industry," he said.


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