The Bracks review of the car industry released this morning is already getting headlines for steering away from recommending the retention of the current 10% tariff on imported vehicles.

It’s a measure of how skewed our thinking is about automobile manufacturing that we accept that it is legitimate for governments to impose a huge tax on imports like this. Even at 5% — the scheduled tariff in 2010, which the review supports — will still be a hefty addition to the price of imported vehicles.

That’s the good news.

The bad news is the review recommends a two billion dollar handout above and beyond what the industry was already going to get.

Currently the Automotive Competitiveness and Investment Scheme is intended to start winding back from 2011-2015, with $1b available over that period.

That’s not enough for Bracks and co, who want to re-badge ACIS as the more exciting “Global Automotive Transitional Scheme” (gives the impression of movement and world-class competitiveness, see, and the WTO didn’t need the GATS acronym anymore), increase the available funding to $1.5b, and extend assistance to 2020 for another $1b.

They also want to bring forward the Government Green Car Innovation Fund to next year and “if successful” (it’s not clear how success is to be assessed) double its funding to $1b. Oh, and extend that beyond five years as well.

The review also supports an Automotive Industry Innovation Council run by manufacturers, unions and government. Reckon you’ll get some high-quality policy advice out of that sort of gathering? Don’t complain — that’ll be paid for by the taxpayers as well.

It may be rich stuff, but at least the review team has a wonderful sense of irony. It urges that the Government work to address “beyond-border” protectionism and non-tariff barriers in free trade agreements — presumably including other governments giving bloody great handouts to their industries to enable them to compete better with our cars.

This is the New Protectionism. Gone are the days when protectionists unashamedly declared an interest in protecting Aussie jobs at the expense of consumers, and complained that everyone else in the world did it anyway. And tariffs aren’t really the Australian way anymore.

We’re more sophisticated now – we call protectionism funding “innovation” — with its own particular form of fashionable greenwash in fuel efficiency technologies — and “transition” and “structural adjustment”. It’s no less absurd than the French protecting their agriculture for heritage and cultural values.

We somehow never get to the point to which our car industry is supposed to “transitioning” or “adjusting” to — we were supposed to get there by 2015 under ACIS, but now it won’t be until 2020. And where’s the innovation? Our cars are less fuel-efficient than European or American or Chinese cars.

At least the review gets right the fact that an emissions trading scheme is necessary to drive manufacturers to provide better fuel efficiency. Giving them handouts for “innovation” and “green cars” hasn’t before and won’t in the future.

Other manufacturing sub-sectors, and other sectors of the economy, are entitled to demand to know why they must compete against the rest of the world, without tariffs and without handouts, while the multinationals who make cars here are looked after with billions of taxpayer dollars. And consumers, too, should wonder why we’re supposed to applaud the dropping of import tariffs to a mere 5%. The greatest benefits of ending protectionism flow to the country that does it. Why have we forgotten that about cars?

Peter Fray

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