Govt announces "Buy Australian" car policy

Taxpayers will end up paying twice for locally-made cars as the Rudd Government adopts an urgent "buy Australian" policy in a last-ditch attempt to prop up the ailing industry.

In addition to pledging $200 million in emergency funding to support local car makers last Friday -- on top of the $5.4 billion pledged over 10 years -- Federal Government departments will now be forced to buy more Australian-made vehicles.

The mandate announced overnight by the Federal Minister for Industry, Senator Kim Carr, comes as production of locally-made vehicles dips to its lowest since 1957 because Australians are buying a record number of imported cars which are more fuel-efficient and better suit their needs.

Locally-made cars accounted for just 9 per cent of all new vehicles sales in the first six months of this year, an all-time low in terms of market share. When the Japanese-made Mazda3 ended the Holden Commodore's record 15-year winning streak two years ago it was the first time an imported car had led the market since World War I, according to automotive historians.

The Rudd Government will also try to push the “buy Australian” policy on State Governments, a move that will almost certainly put it on a collision course with the states. Some locally-made cars don't meet certain State Government “green vehicle” targets or are among the thirstiest in their respective categories.

The Commonwealth will change aspects of its vehicle purchasing policies to improve the eligibility of Australian-made cars. Only in extreme circumstances will Federal Government departments be exempt from the “buy Australian” rules. Car sales to all governments have plummeted 26 per cent since 2008 as the new-car market overall has grown by 9 per cent.

Senator Carr, who last Friday announced a $200 million rescue package for Toyota, Holden and Ford to make up for the damage caused by changes to Fringe Benefits Tax rules on July 16, estimates the new ruling will boost sales of locally-made cars by 18,000 units, or 8 per cent of their forecast combined output.

Figures from the Federal Chamber of Automotive Industries show just 51,000 cars were sold to local, state and federal government agencies in 2012 and 19,500 in the first six months of this year, a decline of 27 per cent compared with the same period the previous year.

“The automotive industry is vital to Australia’s economic future and we are determined to increase sales of locally made cars,” Senator Carr said in a prepared statement released overnight.

“The Government provides a range of support measures to the automotive industry and today we are adding to that by putting $200 million on the table and introducing a 100 per cent target for Australian made cars for Commonwealth fleets. Our actions will provide crucial ongoing support for an industry that has been under considerable pressure with a high Australian dollar over an extended period and an increasingly competitive global market.”

This reporter is on Twitter: @JoshuaDowling