The Productivity Commission’s report on automotive manufacturing, released yesterday, has been somewhat overtaken by events since it was first commissioned, with the local car industry now scheduled to close in 2017. Unsurprisingly, the PC is rather sanguine about the closure and notes that the likely job losses are a small fraction of the total number of Australians who lose their jobs (and gain others every year).
But there are a number of consequences of the looming cessation of the automotive industry with which the PC grapples. The commission recommends the gradual phasing-out of both the current $12,000 tariff on, and regulations restricting the import of, second-hand vehicles, over five years and subject to appropriate regulations relating to safety and environmental performance, as New Zealand allows. A transitional phase-out is recommended by the PC in recognition that existing businesses, such as car dealers and the salary packaging industry, have made investments based on the current restrictions.