Forget the greenwash, the key statement in today’s car package is this one from the Prime Minister.

Only 15 or so countries in the world can design, engineer and build a car from scratch and we are determined to maintain that capacity.

There it sits in the press release, unadorned with any supporting evidence or justification of any kind. We’re just gonna have a car industry.

The other prize example of question-begging is to be found in the Executive Summary of the policy launched this morning:

While the Government has recognised the scale of the transformation required by extending support to 2020, our ultimate goal is that industry should be self-sufficient.

As St Augustine famously said about Hippo’s troubled chariot industry, Lord, make us self-sufficient, but not yet. What would most Australian businesses give to be told they had 12 years to become commercially viable, but that taxpayers and consumers would pick up the tab until then, thanks.

Kevin Rudd this morning was emphasising the green aspects of the automotive package. You got the impression we were going to drive our way to a low-carbon future in an Australian-made green machine. And true, the second biggest item in the package is an additional $130m in 2009-10 to kick off the bigger, longer, faster, greener Green Car contestable grants program, which wasn’t scheduled to start until 2010. Now it will go for 10 years, at $130m a year, rather than five years at $50m pa. The Government didn’t specify the conditions for receiving grants under the program, but judging by the Toyota hybrid car announcement earlier this year, pretty much anything with the words “low emissions” in it will get a few million.

By the end of the 10 years of the Green Car program, the industry will be nearing the end of the extended assistance program that is the big budget ticket in the package: an extra $100m a year from 2011-15 on top of the $200m it was scheduled to get, and a further $200m a year from 2016-20, when it wasn’t getting anything.

Anyone who thinks 2020 will be the end of the taxpayer largesse to these multinationals and their tame unions is mad. This nonsense will keep going for decades unless someone with some guts calls time on the handouts.

There are some small additional measures. LPG conversions get an immediate boost that will take a further $10.5m off this year’s surplus. There’ll be just over $6m a year to further encourage exports (quite why multinationals need help to export stuff is a complete mystery). The only faintly responsible part of the package is a $116.3m adjustment package intended to help the less viable parts of the components industry and its workers “adjust” — i.e. close. That’s another nearly $60m off this year’s surplus — if one is left.

In total, we’re talking $2.4b and change in extra funding between now and 2020.

The other element of the Government’s spin was its claim that this was somehow leveraged investment by taxpayers. “The governments expects this assistance to stimulate industry investment of at least $16b … It is about mutual obligation all round — a genuine partnership.”

Doubtless the number crunchers in Detroit, currently working out what sort of three-into-two merger will save the US auto industry, will be breathing a little easier knowing that they’ll continue to get assistance in Australia from 2016.

And the lack of actual announcements about new investments — strangely enough, given the turmoil besetting the world car industry — gives the game away. There’s no commitment to additional investment from the big car makers beyond what they’ve already announced. The Government has leveraged precisely nothing in its package. It’s not even clear Ford and General Motors will still be around in their current forms next year.

This is ALP tradition at its very worst. Because of the financial generosity and strength of the manufacturing unions, because of John Button’s legacy, and because, almost certainly, of an absurd left-wing conviction that only the manufacture of physical objects is somehow a real economic activity, Australian consumers and taxpayers are condemned to continue paying too much for imported cars and subsidising 60,000 jobs. Other industries should be furious that this rort, this scam, this extended exercise in economic and fiscal vandalism, is being continued and exacerbated by a supposedly free market government.

What’s the bet, though, that they’ll stay silent in the hope of attracting some assistance of their own? When it comes to rent-seeking, everyone is a strategic industry.

The Government’s package is an exercise in keeping a brain-dead body ticking over. It’s brain-dead because it has failed to meet the changing needs of Australian consumers over the past decade and relied on assistance as its primary commercial strategy. And even with assistance, parts of the body have routinely died. It’s time to cut off the life support and let the car industry operate like the majority of Australian businesses.

Peter Fray

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