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Car industry subsidies worthwhile, study concludes

Tuesday, 5 November 2013
Author: ABC News

The Federal Chamber of Automotive Industries says it thinks a report showing dire economic consequences if the car industry collapses in Australia will change many people's views.

The report was compiled for the chamber by the Allen Consulting Group and Monash University researchers.

It concluded the economy was $21.5 billion better off because of government subsidies to the car industry and nearly 40,000 jobs would be lost if car makers pulled out of Australia this decade.

Chamber chief executive Tony Weber said even it was surprised by the findings.

"When you compare the level of assistance provided by the Government, which is less than $500 million a year, the benefit for the economy is extremely large so this is very conservative modelling," he said.

The report said losing the automotive industry would hit the nation's GDP by $7.3 billion.

Mr Weber said Adelaide and Melbourne would be devastated by ensuing job losses.

"In Adelaide there'll be 6,600 less jobs and in Melbourne there'll be 33,000 less jobs," he said.

The Chamber said it would use the report as the basis of its submission to the Productivity Commission, which is reviewing the car manufacturing sector and due to hand down its report at the end of March.

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