When Kim Carr gets around to releasing the report of the Bracks Inquiry into the Australian automotive sector handed to the Government last week, let’s hope the quality media give it the attention it deserves.

Meaning, they should be ripping into it. It’s high time we stopped treating the Australian automotive industry as a special case and saw it as the costly rort it is. Malcolm Farr made a good start yesterday on Insiders, explaining just what sort of economies of scale are needed to be seriously competitive in car manufacturing — and why Australia is wasting its time propping up its industry.

Car policy is Labor at its worst. The reflexive instinct to engage in meddlesome industry policy, the ready imposition of costs on consumers and taxpayers, the desire to placate unions and multinationals. Not to mention how it contradicts the Government’s professed intent to get serious about carbon mitigation. Australian built vehicles are significantly less fuel-efficient than European, US or even Chinese cars.

Labor was eager in 2003 to damn the Howard Government for protecting big donor Manildra from ethanol imports. The protection of the car industry is no different — except that it’s vastly more expensive.

According to the Productivity Commission, as car buyers and taxpayers we handed out nearly $1.13b to the car industry in 2006-07. One top of this, the Government is intent on handing out $100 million a year over five years as part of its Green Car fund.

This is for an industry that employs only 48,000 people directly and another 20,000 indirectly. This is barely 6% of employment in the manufacturing sector — only a third of the number who work in food, drink and tobacco manufacturing, less than those working in printing and publishing — even less than those in wood and paper manufacturing. More Australians work in arts and recreation services or media and telecommunications.

It is, on the other hand, very significant in Victoria, where it dominates manufacturing and is a major employer. There are car plants in the safe Labor seats of Gellibrand (Nicola Roxon), Calwell (Maria Vamvakinou), Corio (Richard Marles) and Melbourne Ports (Michael Danby). The key car union, the Australian Manufacturing Workers’ Union, gave more than $166,000 to the Victorian ALP in 2006-07 alone, as well as over $63,000 to the South Australian ALP.

Like other unions, the AMWU is facing hard times trying to retain and increase its membership. But it has the added difficulty of trying to do so in an industry that is going backwards. Manufacturing in Australia has lost over 100,000 jobs since 1996.

For the AMWU, car industry assistance isn’t just industry policy, it’s a life support mechanism. That’s why the union’s Ian Jones called the Productivity Commission “retarded” when its submission to the Bracks Inquiry showed the benefits that would flow from removing the current 10% automobile tariff.

Other manufacturing sectors — apart from TCF — don’t get the sort of assistance the automobile sector gets, even if they employ far more people or produce significantly more elaborate and high-skill products. Despite talk of a recession, other sectors would give their eye-teeth to tap into 68,000 skilled or semi-skilled workers, and they wouldn’t need a $24,000 subsidy per worker either.

Kevin Rudd declared last week that Labor was instinctively pro-free trade. We’ll let’s see him live up to that when Kim Carr takes a Bracks-inspired submission for more car industry protectionism to Cabinet.

Peter Fray

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