Liberal backbencher attacks auto industry subsidies

A federal Liberal backbencher has slammed government support of the struggling automotive sector, calling such assistance corporate welfare.

AAP reports that, writing in The Australian Financial Review, Kelly O’Dwyer said that the government should not prop up uncompetitive businesses that are not able to survive on their own in the marketplace.

“The government’s role is not to be a piggy bank for uncompetitive industries,” O’Dwyer said.

She said that the $500 million a year that the car industry receives would be better spent on other areas of the economy that are more competitive.

The issue is causing divisions in the Federal Government which is considering providing struggling car maker Holden with short term funding before Christmas as it waits to finalise its long term plans for the industry.

The government has “basically agreed” to the terms of references for a Productivity Commission inquiry into Australia’s car manufacturing industry and it may release an interim report before the new year.

If the government were to take O’Dwyer’s advice and stop supporting the automotive sector, it would need to be prepared to accept some significant political fallout.

For example, there have been estimates that the end of manufacturing for Holden at Elizabeth in South Australia would cost the economy $1.24 billion and 13,200 jobs.