The Impact Of Subsidies And Tariffs On The Motor Vehicle Industry

1512 WordsJun 21, 20157 Pages
Introduction “Ford Australia post $191 million loss: in the red by a staggering $1.3 billion over 10 years” Published May 22, 2015 written by Joshua Dowling, and published on News.com.au. The key issues raised in the article include: • Australian domestic car sales in steady decline and in 2014 fall to a 48 year low • $1.3B loss over 10 years • $1.1B of government funding over 13 years • Ford to close manufacturing plants in Australia in 2016 • Keep 1500 engineering jobs in Australia This paper explores the impact of subsidies and tariffs on the motor vehicle industry; the reduction of domestic Australian vehicle sales; the impact in the shift from low skilled to high skilled jobs; as well as a critique on the article. Subsidies and Import Tariffs Public debate erupted in 2014 when it was publicised that Ford, Holden and Toyota collectively had been receiving up to $500m annually of government subsidies to retain the car manufacturing industry in Australia. In March 2014, the Australian Governments - Productivity commission completed a report into Australia’s Automotive Manufacturing Industry. The report stated (pg.129): “The economic costs of the ongoing industry-specific assistance to automotive manufacturing outweigh the benefits.” The report confirmed that government assistance of approximately $500m annually resulted in activity in the Australian economy of $21.5b. However, the commission explained that this does not take into account the opportunity cost, and we
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