Australian car industry needs increased government support

Car industry needs increased government support to arrest decline

Attempts by Minister Kim Carr to revive the Australian car industry will only help if the government intends to continue to support the car industry's operations and if the car firms can be convinced this is the case, says Dr John Mikler from the University of Sydney.

“Otherwise, the long-term scenario for the industry in Australia is a further winding down of operations to focus more on imported products and the assembly of vehicles designed with a global market in mind.”

Kim Carr, Minister for Manufacturing and Defence Materiel, is holding meetings with top car industry executives in Detroit to address the current crisis.

Dr Mikler is from the University’s Department of Government and International Relations and has undertaken extensive research on the international car industry.

“Although we like to think that we have an Australian car industry, and fear losing it, the reality is that we have an American and Japanese car industry with operations located in Australia. This is why the Minister needs to go to America to rescue 'our' industry.

“One of the major problems with the industry is that it is hard for the companies to sustain a product development and manufacturing presence in Australia without the government providing an environment and support conducive to this.

“Another problem is that in global terms, we are a small market for which the development and manufacture of unique products looks increasingly unsustainable.”

“Since the John Button car plan of the 1980s, Australian governments have wound back their support for the car industry in Australia,” Dr Mikler observed.

“Subsidies and other forms of protection have been wound back over time, and industry policy in general, with the strategic intervention and planning this entails, is regarded less favourably than it once was.

“Yet the reality is that without government support it is more cost effective for the firms to develop global products that are manufactured in cheaper countries, and import them to Australia,” Dr Mikler said.

Dr Mikler is the author of Greening the Car Industry: Varieties of Capitalism and Climate Change (2009).

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