Should the government subsidise the car industry?

2 Feb 2012
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(AAP)

(AAP)

Auto maker Holden said it would cut around 100 jobs, blaming the strength of the Australian dollar, one week after fellow car giant Toyota sacked 350 workers.

The federal government pledged $A34 million to help prop up production at Ford's operations earlier this month, saying it was vital to maintain competition in the local market.
  
That followed a multi-billion-dollar lifeline to the nation's ailing auto industry at the height of the global financial crisis, after Ford cut 450 jobs. Should Canberra prop the Australian car industry?
  

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It didn't help did it

silverfish - from oz, 1 year

After all those month it is still here, it looks good now for two of them and if we look closely, it doesn't matter where the government spends our money, one is broke the other close with no change in sight, 10,000 out of work, who must support them now?

ThirdWorld

David - from Sydney, 1 year

The Australian Car industry is subsidised. Just look at the comparative cost of the same vehicles in the United States. At the extreme more than three times the price. We have heard the past BS over differing volumes and distance giving weight to old arguments. We end up paying for a Holden or Ford whenever we buy a foreign vehicle. Politicians / Governments have been blackmailed endlessly to keep the hoax alive. Car Industry ..nice to have but please end the charade and emotional blackmail.

Manufacturing in OZ

silvertongue - from OZ, 1 year

If you want a future for our grandchildren, we have to do manufacturing. In the case of Holden, the 'Volt' should be in mass production, the $M40 Rudd wasted on Toyota for and OZ eco car was patently stupid. T. would have done it anyway. We need manufacturing so should NOT ALLOW ANY tax breaks on non Oz built cars, 4WD should be taxed enormously if not used for business purposes, they are too big for roads, shop parking and most drivers cannot drive them and bad for the enviroment anyway.

subsidised uncompetitive industry ?

Jake - from Canberra, 1 year

Not if it means throwing more borrowed money at it.

MRRT funds ??

robb - from geelong, 1 year

This is the other side of the coin to the MRRT. The resource boom has contributed to the high Aust $ and is partially responsible for other industries becoming uncompetitive. Meanwhile, overseas owners are scooping massive profits out of the ground and taking offshore. Funds generated from the MRRT is meant to help industry not benefiting from the resource boom. If the MRRT revenue is not meant to help strategic industries then what exactly is it for.

@nickwalnut

Clavdivs - from Sydney, 1 year

All market forces are artificial. That is they are not real physical forces just abstractions used to explain money movement created by regulation (law). If we are "destined" to make cars? I don't think the concept of destiny helps either - or is it some version of laissez-faire? Focusing energy could be useful, if we focus enough to sustain fusion reactors. Then we could have cheap energy and be more competitive, but I suppose they would tax that too, because we already have cheap energy.

Hello did I miss something

geo - from gold coast, 1 year

Can you believe it, there is some debate on whether to prop up the ailing car industry, and right out of nowhere the unions screw us the tax payers for a 22 per cent increase in wages for the car workers. . .when do we say enough is enough. Let the industry stand on its own feet, if it doesnt then blame the unions for pushing the owners too far. time to make a move australia.

govenment is clueless

J Percival - from Sydney, 1 year

The main form of "subsidy" our munufacturing industries, including the car industry require to regain competitiveness is to shed the burden of the carbon tax which will be the single biggest impediment to future growth and prosperity in this country.

Basic Economics

nickwalnut - from Sydney, 1 year

I studied economics in high school several years ago, and while I've forgotten most of what I learned I did come away with one very strong resolution in mind; that creating artificial market forces by subsidising or protecting certain industries was ultimately futile and a wasteful use of resources. If we are destined to make cars, we will on our own. If we can't afford to compete with the other nations of the world, then we should be focussing our energies on more profitable endeavours.

@Paul

Clavdivs - from Sydney, 1 year

I appreciate you points, but still think that car manufacturing should be encouraged and preserved. By doing this manufacturing in general will be promoted. So "shrink the country" ie provide better transport and communications (infrastructure). Stop exporting pollution or CO2 emissions. Locally manufactured products pollute less that many imports. We could do something clever like make a large sedans here powered by cheap, clean LPG as opposed to importing high tech electric hybrids.

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