Governments might decide that they want a local car industry. The federal government's present economic adviser, the Productivity Commission, has just declared that the economy will grow more rapidly without a car industry. To this a government might reply: even if that is true we have strong reasons for keeping a car industry. We don't mind a slower-growing economy.

The Productivity Commission was asked to be a humble adviser about the car industry. It was asked to identify and evaluate possible alternative public support mechanisms for the industry so that it could be set up for the long term. This part of its instructions it has brazenly ignored. Having decided that the overall economy would be better off without the car industry, it saw no need to bother with support in any form.

The commission was also asked to report on the support the car industry receives in other countries. Nearly all countries that have a car industry support it in one way or another. The commission reported that these methods are so various and so secretive that it could not estimate their extent. Nothing more is said on the topic. Of course Australia is to be quite open and transparent on this issue by not supporting the car industry at all!

The commission did not reconsider its position in the light of the fact that other countries support their car industries. It regards this support as evidence that the overseas competition in this market is too strong.

In its interim report on the car industry in December it noted that while Thailand can export cars freely into Australia, Thailand imposes an excise that handicaps Australian sale of cars to Thailand. Anyone but an economist working for the Productivity Commission would surely recommend that Australia should put tariffs on Thai cars until it drops the excise on ours. But no; this again is evidence that the game is too hard. It's not wrong for Thailand to protect its industry; protection is bad only if we do it.