A final report on the future of Australian car manufacturing has recommended federal and state governments give no further taxpayer support to carmakers.
The Productivity Commission report endorsed a Federal Government move to scrap the Automotive Transformation Scheme after Holden, Ford and Toyota end their manufacturing in Australia.
Holden and Toyota will end their local operations by 2017 and Ford is to end its local car making in late 2016.
The Federal Government has also been urged to consider removing a 5 per cent tariff on imported vehicles once the local carmakers close their operations.
The report also recommended a progressive relaxation of restrictions on imports of second-hand passenger and light commercial vehicles.
It said an easing of those restrictions should apply for vehicles from countries that have design standards consistent with those recognised in Australia.
The report said the imported vehicles should be under five years old and a specific $12,000 duty that applies should end as soon as possible.
The Federal Government said it would consider relaxing import restrictions on second-hand vehicles but would ensure Australia did not become a dumping ground for older cars.
Industry Minister Ian Macfarlane said the issue would be considered as part of the Government’s review of the Motor Vehicle Standards Act.
He said the Government would be mindful of any possible impact on the domestic retail market for cars and also would ensure continued high levels of consumer protection.
Ian Weber from the Federal Chamber of Automotive Industries said he feared letting second-hand imports into Australia would end up compromising the current high safety standards for used cars.
“Part of that’s driven by the safety of cars coming into this country that is regulated by our members who bring them in and our members are held to the highest standards,” he said.
“If we drop those standards by letting ‘grey’ imports in I think that would be an enormous mistake.”
‘Virtual closure’ facing local car industry
The Australian Industry Group, a not-for-profit business support organisation, said the Productivity Commission’s report seriously downplayed the impact the end of car making could have for Australia.
Chief executive Innes Willox said the end of local manufacturing was much more than the economic “adjustment” the report was claiming.
“The report fails to acknowledge that the situation facing the auto sector is not just another minor adjustment in the economy [but] represents the virtual closure of an entire industry,” he said.
“This will happen within a relatively short span of time and it will affect a large number of businesses, employees and communities.”
Mr Willox said the Productivity Commission seemed to be putting potential job losses at the optimistic end of the scale.
“The commission predicts that 40,000 people will lose their jobs. They assume that 80 per cent of workers in the direct auto assembly workforce plus 40 per cent of workers in the automotive components supply chain will be retrenched,” he said.
“This is considerably more optimistic than other estimates of future job losses.”
He said too the report had a disturbing lack of practical recommendations for an orderly transition of businesses out of supplying local auto makers.
“It is difficult to see how 60 per cent of Australia’s automotive components industry will be able to survive unaffected by the demise of local passenger car assembly, or be able to successfully transition into other opportunities,” he said.
South Australia’s Automotive Transformation Minister Susan Close dismissed the report as a 326-page obit to the car industry.
“Having conducted a post-mortem of the automotive industry, the Productivity Commission is now advising governments on how to dispose of the body,” she said.
She said many thousands of workers and businesses would be disappointed by the “cold-blooded” findings of the report.