Australian Primeminister Tony Abbott

“As expected, the Australian Automotive Manufacturing Industry Report by the Productivity Commission has proved to be a complete waste of time. It’s delivered little of substance, it’s out of touch with the industry and proved economists have a complete lack of understanding about the automotive industry,” VACC Executive Director, David Purchase, said.

“The Federal Government has issued its initial response to the Report and VACC hopes the Abbott Government will talk directly to the automotive industry and listens to our views, as we are the ones who really know what’s going on.

“With car making on its way out, it is time to focus on the majority of the automotive industry, the Retail, Service and Repair sector. Three out of four employees in Australia’s automotive industry, or approximately 320,000 people, work in the RSR sector. We will be lobbying the Government intensely and calling on it to reject many of the Commission’s views,” Mr Purchase said.

VACC calls on the Federal Government to:

Reject the phasing in of used car imports or ‘Grey Imports’

  • Used car importation should not even have been considered by the Commission as it was outside the terms of reference of the review – it had nothing to do with manufacturing.   
  • The current restrictions on importing used cars from overseas markets work well and do not need to change.
  • The consequence of relaxing used car importation, even progressively, from limited countries of origin and with new regulatory compliance frameworks, is likely to result in more unsafe vehicles on our roads
  • Who is to say how long these so-called cheap cars will remain affordable and what are they cheap compared to? Australia will be flooded by unwanted vehicles dumped from overseas markets, and they will have dubious histories, questionable paper work and suspicious odometer readings.
  • Consumers will face finance, insurance, spare parts and technical information issues making purchasing, maintenance, servicing and upkeep expensive.
  • When dissatisfied buyers try to vent their frustration, they’ll do so, unfairly, on manufacturers, dealers and repairers, who will be able to do little to assist.
  • Purchasers of used car imports face uncertain resale values 
  • The Commission’s view that the relaxation of second-hand vehicle import restrictions should begin with vehicles under five years old, flies in the face of a recent decision by the Victorian Government.  Victoria is to maintain its state roadworthy certificate on transfer system because it recognizes vehicle safety is not about age, but about the vehicle’s condition.

Completely abolish the Luxury Car Tax (LCT)

  • VACC called for the abolition of the Luxury Car Tax, with support from its national body, the Australian Motor Industry Federation, which said the LCT was ‘unconscionable’ and ‘served no purpose other than being a revenue raiser’.
  • At first glance, the Productivity Commission’s view that the LCT should be removed appears to be welcome. However, don’t be fooled into thinking removed means abolished, because the PC recommends LCT is replaced with ‘more efficient sources of revenue’ in the Australian Government’s Taxation White Paper.
  • VACC is concerned the replacement will be a worse option and calls for details of the alternative to be released immediately. 
  • Ken Henry must be wondering why he bothered making his LCT tax reform recommendation in the first place.
  • Simply changing the name of something is not progress. The automotive industry wants the tax on luxury vehicles to be abolished completely. 

Consider LPG vehicle production proposal

  • A joint VACC and Gas Energy Australia (GEA) LPG vehicle initiative, re-employing skilled workers, revitalising car production communities and reinvigorating an important industry has been totally ignored by the Productivity Commission, which claimed it was ‘unnecessary’ and ‘unlikely to have an substantial effect on the industry’.
  • This initiative is well conceived and has been presented to Federal and State Governments at a time when job opportunities in the automotive industry are at a premium. It is baffling that this viable plan has fallen on deaf ears and that a Report into future of automotive manufacturing completely overlooks a sensible and practical proposition.
  • VACC and GEA will continue to promote the LPG proposal