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Automotive Industry

Industry Commission Inquiry report

The Industry Commission Inquiry Report, The Automotive Industry, was signed on 26 May 1997 and released by the Commonwealth Government in two volumes, Volume 1: The Report and Volume 2: Appendices. The report contains the findings of the inquiry into the automotive industry which commenced on 4 August 1996.

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    Volume 1

    Preliminaries
    Cover, Copyright, Signing Page, Disclosure of Interests, Contents, Abbreviations, Terms of Reference, Overview, Recommendations and Findings, Minority Recommendations and Findings

    1   The Inquiry
    1.1   Government assistance to the automotive industry
    1.2   Terms of reference
    1.3   Australia's automotive industry
    1.4   Inquiry participation
    1.5   The Commission's approach
    1.6   Scope of the inquiry
    1.7   Report structure

    2   The Industry in a Global Context
    2.1   Introduction
    2.2   Worldwide automotive production and sales
    2.3   Emerging manufacturers and markets
    2.4   Globalisation
    2.5   Implications for the Australian industry

    3   The Australian Automotive Industry - Structure and Markets
    3.1   Scope of the Australian automotive industry
    3.2   The motor vehicle stock in Australia
    3.3   Automotive components in Australia
    3.4   International automotive trade
    3.5   Australian automotive services industry
    3.6   Summary

    4   The Performance of the Australian Automotive Industry
    4.1   Introduction
    4.2   Productivity
    4.3   Other measures of performance in the automotive industry
    4.4   Factors affecting the performance of the Australian automotive industry
    4.5   Industry linkages
    4.6   Summary

    5   Taxation
    5.1   Introduction
    5.2   Participants' views
    5.3   Taxation of the automotive industry
    5.4   Economic welfare, taxation and the automotive industry
    5.5   The case for broad ranging tax reform
    5.6   Taxation and Tariff Reform

    6   Microeconomic Reform and the Automotive Industry
    6.1   Reforms to the industry operating environment
    6.2   Tariff reductions
    6.3   Labour markets and workplace reform
    6.4   Economic infrastructure and government regulation
    6.5   The task ahead
    6.6   Linking tariff reductions to microeconomic reform

    7   International Trade Issues
    7.1   Introduction
    7.2   Issues in world trade
    7.3   Trade in automotive products
    7.4   Restrictions on automotive trade
    7.5   Factors affecting Australia's access to automotive markets
    7.6   Policy issues

    8   Current Assistance Arrangements
    8.1   Introduction
    8.2   Industry specific assistance
    8.3   General industry programs
    8.4   State Government assistance
    8.5   Levels of assistance
    8.6   Impact of assistance
    8.7   Impact of changing assistance

    9   Environment and Safety Regulation
    9.1   Introduction
    9.2   Current safety and environmental regulation framework
    9.3   Environmental issues
    9.4   Alternative environmental policy measures
    9.5   Safety issues
    9.6   Using environment and safety regulation to stimulate vehicle demand
    9.7   Summary

    10   Potential for Further Development of the Automotive Industry
    10.1   Introduction
    10.2   Product and market developments
    10.3   Role of industry in further development
    10.4   The role of governments in further development
    10.5   Australia as an investment location
    10.6   Summary

    11   Conclusions
    11.1   Introduction
    11.2   Current assistance arrangements
    11.3   Should the automotive industry receive preferential treatment?
    11.4   Arguments for suspending or phasing further tariff cuts
    11.5   The Commission's recommendations on assistance after 2000
    11.6   Tariffs on micro/light passenger motor vehicles
    11.7   Tariffs on four wheel drives
    11.8   Fifteen per cent automatic duty free entitlement
    11.9   Export facilitation scheme
    11.10   A production bounty

    12   Adjustment and Regional Issues
    12.1   Introduction
    12.2   Change and adjustment in the automotive industry
    12.3   Regional adjustment issues
    12.4   General labour market adjustment issues
    12.5   Labour market programs
    12.6   Assessment

    Minority Report

    References

    Volume 2

    Preliminaries
    Cover, Copyright, Contents, Abbreviations, Terms of Reference

    A   Conduct of the inquiry
    A.1   Introduction
    A.2   Submissions received
    A.3   Visits
    A.4   Round table participants
    A.5   Public hearing participants

    B   The international automotive industry
    B.1   Introduction
    B.2   Worldwide vehicle production and sales
    B.3   Automotive industry structure, trade and investment
    B.4   Summary

    C   Australian automotive industry
    C.1   Scope of the Australian automotive industry
    C.2   Local PMV production
    C.3   PMV exports
    C.4   PMV imports
    C.5   Automotive components in Australia
    C.6   Australian automotive services industry

    D   The Australian vehicle market
    D.1   The motor vehicle stock in Australia
    D.2   Local PMV market
    D.3   Commercial Vehicle market

    E   Labour productivity at the firm level
    E.1   Introduction
    E.2   Labour productivity of the individual PMV producers
    E.3   Productivity of firms in the component sector

    F   Automotive technology, research and development
    F.1   Introduction
    F.2   Business expenditure on R&D
    F.3   Strategic importance of R&D
    F.4   Vehicle design and R&D
    F.5   Australia as an R&D and design base for the Asia Pacific region
    F.6   R&D infrastructure

    G   Occupational education and training in the automotive industry
    G.1   Introduction
    G.2   Government involvement in occupational education and training
    G.3   Vocational educational and training in the automotive industry
    G.4   Skills shortages

    H   The labour market
    H.1   Employment in the motor vehicle industry
    H.2   Industrial relations in the automotive manufacturing industry
    H.3   Labour productivity
    H.4   Where to from here?

    I   International trading environment for automotive products
    I.1   Introduction
    I.2   World trade in goods
    I.3   International trade agreements
    I.4   Australia’s obligations and commitments under international trade agreements
    I.5   Implications of international trade agreements for Australia’s automotive export opportunities
    I.6   Access to automotive export markets

    J   Environment and safety
    J.1   Legislative framework
    J.2   Vehicle emissions and fuel consumption targets
    J.3   Vehicle safety

    K   History of assistance
    K.1   Overview
    K.2   Comparable levels of assistance — 1900 to 1965
    K.3   High levels of assistance — 1965 to 1985
    K.4   Declining levels of assistance — 1985 to 2000

    L   Export facilitation
    L.1   Past arrangements
    L.2   Current arrangements
    L.3   Effects of the scheme

    M   Historical simulations
    M.1   Introduction
    M.2   Observed changes, 1986–87 to 1993–94
    M.3   The contribution of factors affecting the output of the motor vehicle industry
    M.4   Summary

    N   The economy-wide effects of reducing the tariff
    N.1   Introduction
    N.2   Basecase
    N.3   Scenarios
    N.4   Results for scenarios A and B
    N.5   Results for scenarios C and D
    N.6   Summary

    O   The Monash model
    O.1   Introduction
    O.2   Why use MONASH?
    O.3   MONASH modelling framework
    O.4   Modelling tariff policy
    O.5   Regional disaggregation of results
    O.6   Theoretical developments
    O.7   Conclusion

    P   Issues in evaluating changes in the tariffs
    P.1   Introduction
    P.2   Criteria to evaluate changes in the tariff
    P.3   Real consumption and capital stock
    P.4   Real consumption and the government sector
    P.5   Demand for exports and the terms of trade
    P.6   Labour and capital markets
    P.7   Import substitution
    P.8   Aggregation and distortions
    P.9   Economies of scale
    P.10   Rent seeking
    P.11   Dynamic efficiency
    P.12   Adjustment over time
    P.13   Regional disaggregation
    P.14   Summary

    Q   Labour market programs
    Q.1   Introduction
    Q.2   Types of labour market programs
    Q.3   Australia’s past and current labour market programs
    Q.4   Effects of labour market programs
    Q.5   Effectiveness of labour market programs

    References

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