CONTROVERSIAL car tariff cuts scheduled for 2010 should proceed but a generous new $2.5 billion grants scheme should be set up to help the automotive industry until 2020.
These are among the key recommendations of the long-awaited Bracks report, upon which the Rudd Government has said it will base its new “car plan” to ensure a future for the Australian automotive industry.
Exactly! I always thought removing a tariff and replacing it with a subsidy makes economics sense (just kidding). Well it does to this government any way.
Former Premier Bracks certainly earned his advisory fee for this well thought out micro-economic advice. Can’t wait for what else is in store. Thinking about it, subsidies can actually be worse than a tariff because the kiddies can play teachers pet and therefore make the poker game prone to shady deals on the side with the individual carmakers. We’re now at the bottom of the 5th inning and still waiting for a market friendly economic policy from these guys save the income tax cuts which they had to copy anyway.
Here’s my bet: the subsidies will directly correlate to union demands, so the government will make transfers to the firms and part of the money will make its way into union pockets. It’s a union rort made to look like “good” economic policy. So the taxpayer ends up funding the rort. In other words a daisy chain of rorts and payoffs. It will prove even bloody worse than tariffs.