In the case of the vehicle industry, the other car manufacturing countries protect their car industry and most, if not all, have higher levels of protection for their local industries than does Australia. Free trade purists argue that the remaining 5 per cent tariff on imports should be scrapped, giving a billion-dollar windfall to new car buyers. This raises questions: what tax should be increased in its place; what spending can be reduced to fund the revenue shortfall; or might the revenue be better used to help those losing jobs in the industry? Arguably, taxes that discourage car use and increase Australia's charge on pollution (which raised $7.6 billion last year) are superior to most other taxes and charges, which don't contribute to reductions in greenhouse gas emissions. According to estimates by the Australian Energy Market Commission and others, the renewable energy target adds about 3 per cent to electricity bills at most. What the inquiry is really about, according to the renewable industry newsletter Renew Economy, ''is protecting the interests of incumbent retailers, generators and network providers. They are losing money and their assets are being forced out of the market. This is very much about self-preservation for these businesses.'' Assistance to the renewable energy industry is not protection. The carbon price and regulation in the form of the renewable energy target ensure that polluters pay for at least part of their pollution in the form of greenhouse gas emissions, rather than the community paying.

The external costs of pollution are internalised, public subsidies for polluting activities are reduced and the competitiveness of less polluting forms of production is increased. The costs of the pollution charges and regulation are far outweighed by the benefits derived from a reduction in greenhouse gas emissions. The feed-in tariff for surplus electricity produced by roof-top solar panels has been cut from 30 cents to 8 cents per kWh. This reduces the incentive for more households to switch from thermal to renewable electricity sources and simply boosts retailers' profits. Government leadership is indispensable in the creation of new, high-quality jobs. The federal government is primarily responsible for this. It must adopt a budgetary policy that is aimed primarily at balancing the economy and creating full employment, so the budget will balance itself later. There is a long list of infrastructure projects that can yield a return much higher than the cost of borrowing. Within an expansionary budget framework, there is scope for industry policies that add to capacity, reduce our carbon footprint, create continuing jobs and fill at least part of the gap left by the demise of the vehicle industry.

Specifically, the engineering skills made redundant in the vehicle industry could form the basis for expanding local rolling stock construction for trams and trains. While there are several Australian plants that build or assemble such equipment now, there is considerable scope for expansion. The key to a transformation of the industry is government commitment to buy rolling stock fully built in Australia. The potential demand is huge. There are plans to build tram/ light rail systems in most capitals, plus the Gold Coast and Newcastle. There are seven new tram or light rail systems planned or under construction around the country. As well, a study by Deloitte for the Australasian Rail Association has calculated that 11,000 heavy rail passenger carriages will be needed by 2043. Yet, in the face of the prospect of recession in Victoria, the offerings of the state Coalition government and Labor opposition are pathetic. The government's highest priority is the east-west road link, which can't support a credible business case and would generate virtually no continued employment. And Labor's ''Project 10,000'' (jobs) glossy pamphlet looks like an RACV wish-list - apart from a vague promise to build the Metro rail tunnel at some stage. It stands out like lipstick on a pig. Kenneth Davidson is a senior columnist for The Age. Email: kdavidson@dissent.com.au

Clarification Loading Loddon Mallee Housing Services Ltd, trading as Haven; Home, Safe. The Age published an article on January 27 headed ''Private roofs are leaking badly''. The article was wrong in asserting that the company received an operating grant of $8.9 million to subsidise the management of social rental housing. The grant was in fact used to fund homelessness support, intervention and personal support services, and not to subsidise the operating cost of homes managed by Haven; Home, Safe. The Age acknowledges that as a result, the assertion in the article that Haven; Home, Safe's management of social housing is more expensive than the state government public housing model is also incorrect and we retract that claim as unfounded.