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New report claims auto subsidies good value for money

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A new report commissioned by the Federal Chamber of Automotive Industries claims that the auto sector’s disappearance would cost Australia’s GDP $7.3 billion and 40,000 jobs.

News Corp and others report that the research, prepared by Allen Consulting Group and based on figures from Monash University, claims that $500 million in yearly subsidies to the sector led to $21.5 billion in economic activity.

"When you compare the level of assistance provided by the Government, which is less than $500 million a year, the benefit for the economy is extremely large so this is very conservative modelling," said the FCAI’s chief Tony Weber of the findings, adding that the contribution to employment in SA and Victoria was significant.

"In Adelaide there'll be 6,600 less jobs and in Melbourne there'll be 33,000 less jobs," he said.

The report also compared the return on taxpayer investment in the sector favourably with subsidies in othercountries.

Assistance to the sector in Australia is worth $18 per person, compared to $30 in the UK.

Auto subsidies are currently the subject of a Productivity Commission inquiry, which will give its interim findings to the federal government on December 20, with the final report delivered at the end of March next year.

It was reported over the weekend that the opposition has called the timing of the Commission’s report’s delivery politically motivated, claiming that it is timed to come after the South Australian election.

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