I was stunned when I read that Holden boss Mike Devereux has called for an independent review of the car industry, presumably in relation to Government assistance (see ‘Deadline looms’ for car industry). The Australian car industry should be extremely grateful it didn’t get an independent review by the Productivity Commission in 2008 and instead got a weak, economically illiterate review from former Victorian Premier Steve Bracks, which recommended a substantial increase and extension of assistance. I’ve previously discussed this woeful piece of public policy making in my Policy article from last year: Carr’s car cash and Australia’s reform malaise.
Australian Governments must be reaching the point where they are fed up with more calls for assistance to the car industry. Given the budgetary challenges arising from slower growth, as forecast by the OECD today (see OECD report warns of weakening global economy), I expect there will be vigorous debate within the Federal Government around whether it should commit more funding or cut its losses.