Since the late 1940s, Australia has bought itself a car industry, first through very high tariff protection that rose to around 57% by the 1980s, and then through financial assistance that, in part, replaced the benefits of tariff protection to the industry. Billions of dollars of taxpayers’ money have been wasted supporting an industry that isn’t viable in Australia due to our small domestic market which limits the economies of scale manufacturers can exploit.
Car industry assistance has been disproportionately costly to Queensland, because it mainly benefits businesses and workers located in Victoria and South Australia. Hence I hope the new federal Government sticks to its hard line on the car industry and refuses calls for it to commit to additional funding for Holden (see the AFR report, Car industry on brink as SA Premier seeks Abbott’s support).
I have a number of previous posts on car industry assistance, including:
I also had this article published in Policy in 2011: