Industry Policy
The automotive industry is one of Australia’s major manufacturing sectors. It accounts for approximately six per cent of the total value added in manufacturing, and around one per cent of Australia’s gross domestic product.
The industry faces an evolving global business environment and constant competitive pressures and the large investment decisions required to manufacture passenger vehicles necessitates a level of certainty from government.
The Australian Government is scheduled to undertake a broad ranging review of policy arrangements relating to automotive manufacturing in 2008. The review is expected to address a range of policy issues, including the future quantum and structure of investment support; tariff and trade policy issues; future directions in innovation, engineering and vehicle design; and the industry’s capability to respond to emerging environmental challenges, including global climate change.
Over the past five years or so the competitive environment facing the Australian automotive industry has changed signifi-cantly. In particular exchange rate influences, increases in fuel costs and shifting patterns of consumer demand have all added to the competitive pressures on local vehicle manufacturers.
Critical to securing international investment in the industry has been the Automotive Competitiveness and Investment Scheme which is budgeted to provide more than $4.2 billion in support to the industry over 10 years, from 2005. The scheme provides incentives in the form of duty credits, which may be used to pay Customs duty on eligible imports.
The ongoing support of the Australian Government through the ACIS program will be essential to building upon the competitiveness of the industry.