Australia’s four car makers appear to have been granted a reprieve of zero tariff protection from imported vehicles, writes Mike Duffy.
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The federal government’s productivity commission’s position paper, released today, recommends protection stabilise at 10% for five years and drop to 5% in 2010.
The commission said tariffs should remain at 5% until 2015.
But associate commissioner Philip Weickhardtit warned: “By 2015, the industry must be capable of prospering on its own merits. A decade of policy certainty is desirable to give the industry further time to adjust and become truly internationally competitive.
“However, we believe this should be the last period of special treatment.”
The commission also recommended continuing grants to manufacturers and component makers for investment and research and development, through the Automotive Competitiveness and Investment Scheme.
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By GlobalData
The paper, due for more discussion and deliberation before the Government hands down its final decision, said there were good reasons for optimism about the industry’s future.
But it described the adversarial industrial relations environment as “a key weakness”.
This was jeopardising the industry’s efforts to meet the demanding delivery needs of its customers and achieve international best practice to its productivity performance, it said.
“Changes to the industrial relations legislation would help, but a closer alignment between the interests of employees, unions and the industry is also needed.”
However, the report acknowledged considerable progress had been made over the last decade or so.
A final report will be prepared by the productivity commission before the federal government hands down its findings on tariff protection before the end of the year.
But government sources today appeared to approve of the contents of the paper.
The report was met with universal approval from the industry and car makers.
The South Australia secretary of the AMWU, John Camillo, called on the government to maintain tariffs at 15% until the end of the decade.
“Even at this level, we have the most open market in the world,” he said.
That claim would probably be disputed by neighbouring New Zealand, whose CKD assembly industry was killed off by moves towards zero tariffs in the mid-1990s.
The country’s minimal import, emissions and safety restrictions allow vast quantities of used vehicles to be imported alongside those shipped in new, something that Australia has largely prevented.
