grants to the need to produce more environmentally friendly large passenger cars.
The key issues include: CUTTING tariff protection from 10 per cent to 5 per cent from 2010 or freezing it at 10 per cent THE future of special automotive subsidies THE threshold for the luxury tax on cars THE effectiveness and appropriateness of the Automotive Competitiveness and Investment Scheme TOUGHER carbon emission standards
The review group is now taking submissions from the car industry and will issue its final report by July 31.
The review is also being used to help roll out the Government’s $500 million Green Car Innovation Fund. This is designed to attract investment to build environmentally friendly cars.
It calls for a one-to-three contribution from carmakers to the $500 million government package.
Car companies have their own agenda and want the review to look outside Australia so it can assess a range of competitive pressures.
These include the push for freetrade agreements with key trading partners against a background of nontariff barriers in some countries.
Ford Australia’s new chairman, Bill Osborne, says some ASEAN countries are reducing direct trade barriers but are slow to react on non-trade barriers.
He cites Malaysia, which still has an indirect tax that hits imports with engines larger than a 2-litre capacity.
Not surprisingly, unions want tariffs to stay.
Australian Manufacturing Workers’ Union national secretary Dave Oliver says if competitors are lifting tariffs, then ‘‘we shouldn’t lower tariffs’’.
‘‘The idea of pure free trade is a furphy. To realise that, you just need to look at what countries in our region are doing.
‘‘Malaysia has a 150 per cent tariff, India 60 per cent and China 40 per cent,’’ he says.
‘‘What we have to be looking at in any kind of trade negotiations is removing other countries’ tariffs and making it a truly level playing field.’’
Several carmakers believe that any gains from a 5 per cent tariff reduction in 2010 have been wiped out by the rampaging Australian dollar.
Concerns about free-trade agreements and non-trade barriers are raised by Federal Chamber of Automotive Industries president and Toyota Australia and chairman emeritus John Conomos.
He welcomes the Federal Government’s green-car initiative.
‘‘It is impossible to understate the potential positive impact this can deliver,’’ he says.
‘‘But equally we believe this new government must be more demanding in its negotiation of free-trade agreements. The attainment of genuine reciprocal sales access is paramount to our success in export markets.
‘‘To consider further cutting tariffs without agreed reciprocity can only adversely affect our global market position.
‘‘The pursuit of that goal desirably should extend also to non-tariff trade barriers, not only in FTA negotiations but between other countries as well.’’
Federal chamber chief executive Andrew McKellar says Bracks’ midterm review will allow the Government and the motor industry to take stock of carmaking’s contribution to the economy.
The Australian automotive industry is a key source of innovation and design capability, investing $700 million on research and development every year.
‘‘The reality is, Australian carmakers are designing and producing vehicles at world standard, not just for the local market but also for export,’’ McKellar says.
‘‘Last year Australia exported more than 140,000 cars and we have an opportunity to build on that success.
‘‘It is essential that the outcome of the review provides the certainty and stability in policy settings necessary to secure continuing investment in model development and production here.’’
The Bracks review and the end of Mitsubishi’s local manufacturing have concentrated attention on the future of our car industry, write NEIL McDONALD and PAUL GOVER