Fed: PM announces more subsidies, tariff protection for cars

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Fed: PM announces more subsidies, tariff protection for cars

CANBERRA, Dec 13 AAP - Car manufacturers have won an extra $4.2 billion in taxpayer-fundedassistance and at least another five years of tariff protection under a government packageannounced today.

Prime Minister John Howard said the 10-year program would start in 2005, when currentsubsidies under the Automotive Competitiveness and Investment Scheme (ACIS) were due toexpire.

Tariffs on imported passenger cars and components will be cut to 10 per cent from 15per cent in 2005, as previously planned.

Mr Howard said tariffs would be cut again in 2010, to five per cent, despite Australia'scommitment to the APEC target of zero tariffs by 2010.

The government will also establish a $150 million research and development fund toencourage the take-up of new technologies.

Mr Howard said the package, which has been welcomed by the automotive industry, wouldprovide job security for workers and certainty for overseas manufacturers.

"It will provide certainty to the industry, at least to 2015 and beyond," he told reporters.

"This package is important not only to the car industry, it's very important to thecomponent industry and, very significantly, it's important because it delivers job securityfor the thousands of Australian men and women who are employed in the motor manufacturingindustry."

Mr Howard dismissed questions about Australia's commitment to the APEC free trade deadlineof 2010, saying the difference between five per cent and zero tariffs could be wiped outby currency fluctuations.

"When you bear in mind that for practical purposes there is not a lot of differencebetween zero and five per cent, and when you bear in mind we are at least the equal ifnot ahead in that area of other countries in the APEC area, it is wholly consistent andin total harmony with what we are committed to under (APEC)," he said.

He also refused to rule out the possibility another review by the Productivity Commissionto be conducted in 2008 might recommend against the proposed cut.

"It will be a legislated tariff cut ... but it's important that we have the opportunityof looking at how things are going two years before the step-down (from) 10 to five (percent)," Mr Howard said.

"The tariff cut will be legislated and unless the law is changed it will go ahead."

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KEYWORD: TARIFFS HOWARD 2ND LEAD