Reduced tariffs but more funding: Bracks

Steve Brack's Review of Australia's Automotive Industry was officially released today.

Compiled by the former Victorian Premier, the 200-page report has recommended the Federal Government push forward with the reduction of tariffs on imported new cars and bring forward and double, to $1 billion, the Green Car Innovation Fund.

The report also recommends the axing of ACIS (Automotive Competitiveness and Investment Scheme), with the funding program to be replaced by a "new and retargeted Global Automotive Transition Scheme (GATS) designed to support research, development, design and export.

Bracks' own press release says the recommendations in the report "aim to continue the transformation that started with the Button Plan in the 1980s". To this end the report recommends tariffs be cut from 10 per cent to five by 2010, but stops short of abolishing import duties altogether.

The report also recommends including road transport (including fuel) in Australia's emissions trading scheme.

"The Review's recommendations are predicated on changing the behaviour of automotive firms and the industry to make them more competitive and better able to meet global challenges, including the move to a lower carbon environment," Bracks said referring to the report's nine key recommendations.

The report was released by Senator Kim Carr, Minister for Innovation, Industry, Science and Research earlier today. The government is yet to make any substantive comment on the report's contents.

On the report's publication, Senator Carr said: "Mr Bracks has supplied a comprehensive and thoughtful report that provides the basis for making informed policy choices. The government's response will tackle the tough issues outlined in the report and will be released shortly.

"The Rudd Labor Government firmly believes that there is every reason to be optimistic about the future of the nation's automotive industry if the right policy decisions are made now. This is what this review is all about," Carr said. 

According to Bracks, compiling the report involved considering more than 130 public submissions and discussions with a "broad range of stakeholders including industry, governments, associations and individuals."

The report states the Australian automotive industry employs over 64,000 people and last year produced "about 335,000 cars worth $7.7 billion". Exports of $4.7 billion put the industry among Australia's top 10 export earners, Bracks says.

"There is no doubt that the industry is under considerable pressure because of the high Australian dollar, the cost of fuel, cleaner emission requirements and intense worldwide competition," Bracks opined.

"Despite these challenges, the industry is transforming itself and my recommendations aim to assist that transformation out to 2020.

"But these challenges can be turned into opportunities. For example, responding to climate change is opening up possibilities for more fuel-efficient and lower-carbon dioxide emission technologies. The Australian industry also has the potential to be a bigger supplier to global automotive supply chains," the ex-Premier said.

Set to replace ACIS, GATS would be funded to the tune of $1.5b and run from 2010-2015. Just over half (55 per cent) the funding would be allocated to carmakers, with the remainder aimed at supply chain participants. An addition $1b would be available to extend the scheme through to 2020.

Though most manufacturers are still to comment on the review's recommendations, Holden has already questioned whether Brack's proposed initiatives would "offset the impact of further tariff reductions".

GM Holden Chairman and Managing Director, Mark Reuss, said there was concern within GM Holden, and parent company General Motors, that the 2010 tariff reduction "would outweigh the benefits of new programs suggested in the review".

"This is a well considered report and we will need time to determine the impact of these recommendations, should they be adopted," Reuss said.

"We applaud the panel in recommending longer term transitional arrangements [Ed: replacing ACIS with GATS], but cutting tariffs would fundamentally erode our ability to compete against other nations for future investment.

"Australia currently has one of the lowest tariffs of any automotive producing country so the playing field is already not level," Reuss said.

Key importers the Carsales Network spoke to this morning said they would not comment officially until they had had time to "digest the implications of the recommendations".

They said they were "broadly supportive' of the reports findings, however.

Review of Australia's Automotive Industry key recommendations
1. Replacing the current Automotive Competitiveness and Investment Scheme (ACIS) with the Global Automotive Transition Scheme -- designed to support research, development, design and export.
2. Bringing forward, and doubling to $1 billion, the Green Car Innovation Fund;
3. Contributing to a short-term restructuring fund to assist the automotive supply chain to improve economies of scale;
4. Reducing the passenger motor vehicle tariff from 10 to 5 per cent by 2010;
5. Including road transport in an emissions trading scheme;
6. Encouraging automotive exports through expanded free trade agreements, particularly with the Gulf States, ASEAN and South Africa;
7. Expanding access to overseas automotive supply chains through a 'Team Australia' approach using eminent automotive ambassadors;
8. Harmonising, and in some cases reducing, state and territory passenger motor vehicle taxes, while encouraging governments to support an environmentally sustainable Australian industry;
9. Establishing a new Automotive Industry Innovation Council to provide advice and oversight in relation to the new transitional arrangements.

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